Business Growth Plan: Evaluating Options for Merchants and Mills

This report provides a comprehensive growth plan for Merchants and Mills, a small retail fabric store in Rye, England. It begins with a PESTLE analysis to evaluate the external business environment, followed by Porter's generic strategies for competitive advantage. The Ansoff matrix is used to explore growth options such as market penetration, market development, product development, and diversification. The report identifies cost leadership as a viable strategy for Merchants and Mills, while also acknowledging the associated risks. Various funding sources, including angel investors, are considered, and a detailed business strategy involving strategic objectives and financial information is outlined. Finally, the report discusses succession and exit choices for the firm, providing a comparative evaluation and justification for the recommended option. Desklib offers a wide range of resources including past papers and solved assignments to aid students in their studies.

Planning for Growth

Contents
INTRODUCTION...........................................................................................................................1
P1: Evaluation of growth opportunities with the proper justification..........................................1
P2 Ansoff matrix for Growth analysis.........................................................................................3
M1: Option for growth to Merchants and Mills to achieve competitive advantage....................4
D1: Evaluation of option associated risk ....................................................................................4
P3 various sources of fund to explore the business.....................................................................5
M2 justification and analysation to recommended source of fund:.............................................6
D2 Evaluation of recommended source of in with respect with Merchant & Mills....................6
P4 Characteristic business strategy to M&M involving its strategic objectives and financial
information to explore the business.............................................................................................7
M3 detailed business strategy involving vision and plans of firm to expansion of firm.............8
D3 business strategy describing the efforts of firm to apply plan in achieving the aims of the
business........................................................................................................................................8
P5 succession and exit choices to small firm...............................................................................9
M4 comparative Evaluation of recommended Exit or Succession option.................................11
D4 analysation of the recommended choice justification to M&M...........................................11
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
The planning for growth is refer as essential component that show organised statement of
firm aim and purpose. It usually consists of vision that is based on organisation and elaboration
of operation to well performed to make achieve towards the firm goals and objective for further
growth and development. It is well evaluated that business needs to vision expand the scale of
their business, they business growth plan to defined the new vision for company and develop the
appropriate growth strategies to follow the make path (Ahmad, and Ahmad, 2019). It needs to
determine available opportunities in the market which is showing the behaviour which is
competitive advantage. In this report, the major of discussion is based on growth planning of
Merchants and Mills. The chosen above have small based retail fabric store in Rye, established
in England that they are initially and finally deal with handmade fabrics, cloth roll, weaving,
sewing button and so on which is based on various factor. It is also analysing that they are
elaborating the PESTLE analysis which may create impact on the porter and other essential
measurement which is required in order to create factor that is bounded to grow the business on
larger scale. Further, the source of fund it will require to expand the business will also be dealt in
this report. Therefore, they also include exit and succession option for the firm which is in this
report (Alam, and Uddin, 2019).
P1: Evaluation of growth opportunities with the proper justification
PESTLE Analysis
It is referring as the framework to analyse the external business environment and it show
impact on the business. It usually includes the evaluation of six factor that impact the firm that is
political, economic social, technical, and legal factor that constitute the macro environment of
the business. In addition, PESTLE analysis of Merchants & Mills that is given hereunder
(Brinckmann, Dew, Read, Mayer-Haug, and Grichnik, 2019).
Political factor: The factor which is based on the various government policies, international
trade policies and also based on the proper regulation of foreign countries which is fall under the
political factor. Therefore, due to emergence of lockdown, UK fashion industry is well deal with
lot of sustainability as number of imports of fabrics and other component which is related with
clothing made in Europe. It is also analysing that the challenge within trade relation after the
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Brexit. The Merchants & Mills which is also faced import that is well related with the restriction
due to the arising issue of Brexit and currently due to the lock down.
Economic factor: Such factor is usually including economic condition of country which is well
related with disposable income of the population, interest rate and foreign exchange rate and so
on. The production of the cloth is usually costly in the United Kingdom. Therefore, Merchants &
Mills which is based on the various factor that can reduce their production cost by producing the
good and service like other countries named China and India, it helps get the competitive
advantage.
Social factor: The major preference of the consumer for fashion and clothing, location of the
cloth store, and make trend of fashion fall under the social factor. To enhance the customer base,
Merchants & Mills that enhance the number of fabric to make the store national as well as
international level.
Technological factor: It is also referring as the use of innovative sewing machine that help to
make the automatic machine that is useful to reduce time and enhance productivity. Therefore,
UK is currently in the phase of advancement of modern scenario where digitisation taken place.
In the reference to the Merchants & Mills, it is clearly analysing that show aspect where deal is
used to taken in the button, scissor and other tool which is well required to make the proper cloth
manufacturing. It is also enhancing the fast delivery process by taking the advantage of the
current upgraded technology (Cleave, and Arku, 2020).
Environment factor: These factor is usually avoiding pollution and take the proper measure of
the sustainability in the current environment. Whereas, UK clothing and fashion industry is well
accountable for the ten percent global greenhouse gas release. There are tons of wastage of
clothing that is well taken in order to make the burning every year. In reference to chosen firm,
Merchants and Mills should focus on the reduction of waste that is occur due to the clothing.
Legal factor: It usually include legislation and law that is applied in the organisation. In context
with the Merchants and Mills is the current fashion store. It is also adhering the rules and
regulation which is related with the protection of company law and income tax law etc. It can
save it cost by adhering to the laws of the country.
Porter generic strategic
The model usually offers three basic strategies to get the competitive advantage. These ways
that is introduced by Michael porter that used to facilitate the business to get competitive
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advantage in market. The three strategies which is usually included are Cost leadership strategy,
Differentiation strategy and focus strategy. Such strategy is usually helpful for to elaborate in
reference to Merchants & Mills.
Cost leadership strategy: In this, strategy is well helpful in order to provide the cost of
product in the low price that customer attracted towards the product and firm gain proper
competitive advantage in the retail market. In order to maintain the long term profitability of the
business, companies usually allow to sell their product at the average price of market. To make
expansion market share, companies to sell their product that is below average price of the
market. Merchants and Mills which can get the proper advantage that is based on economic by
following cost effective production method while changing average price prevailing in the
market which show the expansion business. In reference to Merchants and Mills, they can get
proper competitive advantage (Jayawarna, and Dissanayake, 2019).
Differentiation strategy: It is suggesting to add that show unique feature to product and
charge premium price for the proper differentiation of product. In addition, business is usually
considering that they are offering the product at higher price that cover the cost of company. It is
also requiring high skills and knowledge to sale and work as team for the development of good
and service. For example, if Merchants and Mills require expansion the product line by
innovating new product, it can be usually help to introduce leather jacket and cardigan etc.
Focus strategy: It is well considering that is narrow segment to be well focus on. It is also
divided into the two more strategies. It is also cost focus strategy state keep the cost of target
segment low. The cost differentiation is helpful in order to consider the differentiation product
which the new narrow segment. In context with Merchants and Mills, they are initially focus on
the either expansion of haberdashery or clothing business. Expanding the business that is
associated with cloth is more helpful to gain advantage and opportunities (Kumar, and Parveen,
2022).
P2 Ansoff matrix for Growth analysis
This growth analysis matrix is well developed by Igor Ansoff, it is business expansion
method that is used for the growth of firm with the new strategies. It usually offers a wide range
of business factor in order to promote the expansion that business by adopting the new strategy
according to the new product or market growth, such as market share. Merchants and Mills
usually adopt one of major strategy for the growth of organisation.
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Market penetration: It is referring as the growth strategy which have lowest risk for firm in
order to enhance sale of current product in the existing market to enhance the it market share.
Merchants and Mills is well operating on the small scale in the UK market. It is currently offer
the product such as Rye, England that can penetrate the UK by conducting the advertising
campaigns at different location and demographic that should enhance the distribution network to
enhance the customer as well as market share in the UK. With this, the online haberdashery, they
should be showing the fabric and sewing the pattern on online basis.
Market development: In this current strategy, firm offer their existing product in the new market.
Merchants and Mills that need to have the advance technology to make proper introduction in
product in the new market, it is also show the proper introduction it is showing woollen cloth at
other different location apart from Rye location in England.
Product development: In this, the firm focus in the introduction of new product on existing
market. Merchants and Mills that can introduce new product such as leather jacket and cardigans
with the current offering which is showing the invest in research and development to face the
competition. It is all small business that cannot affords big investment with limited market share.
Diversification: It is more likely one of the riskiest strategy as the new product by the company
in the new market to diversify the product line globally. The firm needs to develop it product as
well market to follow this strategy. Merchants and Mills want to diversify its product, it can be
introducing fabrics in Indian and Chinese market as per the customer preference (Kumar, and
Parveen, 2022).
M1: Option for growth to Merchants and Mills to achieve competitive advantage
Merchants and Mills that adopt the cost leadership strategy in order to made the
competitive advantage in the present market by focusing of low cost material and also show the
innovative designing in the manufacturing process to become cost leader in the market. It is
usually assisted in the gaining the capital in the further for the production that show new
competitor to enter in market.
D1: Evaluation of option associated risk
Cost leadership is useful in order to get the competitive advantage, but the other competitor
in the present market that show their cost as the technology advancement in the production
process which is assessed by various competitor as well it can have used to reduce the
competitive advantage of Merchants and Mills (Kumar, and Parveen, 2022).
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P3 various sources of fund to explore the business
To explore the scale of the operation, all business requires to arrange the funds. Merchant
and mills required to raise capital from the proper sources of the market as they are launching its
product in the new market of UK. From one of the following sources, Merchant and mills can
raise the funds (Angotti, 2018).
1. Angel investors: this is an group of individuals and individual which provide capitals to
small or new firm to the expansion of business. They need very high return on their
investment.
Benefits of angle investors:
 source of business knowledge: organisation gather information regarding the plans of
other organisation through contacting business angel funding as angel investors have
knowledge much about start ups or business expansion.
 No repayment: angel investor does not claim any capital repayment in the case of any
loss which is done by debt or bank loan. They have also not claim over firm's personal
resources.
Disadvantages of Angel investors:
 Availability: angel investors are commonly hard to take or find a very long time period
to find as they are mostly individuals. They don't give large amount of funds to big
exploration projects (Bitala, and et.al., 2022).
2. Venture Capital: This is a privet fund investor who invest in the small start up business.
Its main aim is to get long period fund achieves. They invest in the firm accounting their
development elements as capability to scale up the firm and so on.
Benefits of venture capital:
 No repayment: it do not claim any repayment for the fund as they get share of the firm in
exchange.
 Networking: The business can achieve consult with them because venture capital has
huge network
Disadvantages of venture capital:
 Higher returns: Firm, which raises fund from venture capitals will have to pay larger
returns to the venture capitalists as they share a significant capital to the firm. Also,
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through providing huge share, they achieve higher satisfaction in the control and
management of the firms.
 Self interest: The venture capitalist desire earlier returns means within five years
therefore, as to gain profits (Bosah, 2022).
3. Bank loan: To finance the requirement of working capital and operations of business,
bank loan is a source of fund for small firm. This is provided with an advanced
repayment program as per the duration of interest rate and loan.
Advantages of bank loan
 No claim profits: In the revenue of firm, bankers do not demand any share.
 No loss of control: There are no any fear of losing the control of business.
Disadvantages of bank loan
 Collateral: Bank have right to seize the assets of firm, if they are unable to repay the
instalments.
 High interest rates: Banker claim huge interest rates from firms (Ferreira, and von
Schönfeld, 2020).
By these argument, Merchant & Mills has been recommended to take funds from the Venture
capitalist as it is the most relevant source as per the need of the firm. As Merchant & Mills has
the capability to increase its business through development of market in the London And
England markets. It requires to invest on promotional activities and infrastructure, getting funds
through bank or angel investors will not fulfil the requirement of fund of firm.
M2 justification and analysation to recommended source of fund:
As per the above discussion, from above three source, Venture capitals is best source of
funding as it gives large funds with respect to others. It does not have any right on the assets of
firm or it does not claim any interest. However, it claim more returns, but consult and support
the organisation in expansion matters and business. Angel investors and venture capitalists both
demand huge returns but venture capitalists can give larger amount to firm with respect to angel
investors.
D2 Evaluation of recommended source of in with respect with Merchant & Mills
As Venture capital is the best and relevant source as per the need of the business growth
of the firm, Merchant & Mills is needed to take funds from the Venture capital. As M&M is a
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small firm which requires to enlarge the scale of operations, for its funds need venture capital
will suit most (Lee, and Jung,2020).
P4 Characteristic business strategy to M&M involving its strategic objectives and financial
information to explore the business.
In case with M&M, launching of the existing services into a new market needs ab
strategic and relevant business plan as follows:
Summary
M&M is striving to stick England and London market with its services to enhancing the
market percentage domestically and business exploration. It is needed to evolve an impactful
business development plan to achieve the competitive benefit. It should evaluate the macro
culture and recognise the opportunities to develop market development plans.
Vision
By making a broader market percentage in the UK market exploration of the business by
achieving competitive benefits.
Mission
Increasing the number of customer in the London market by market growth plan of
development through enhancing the outlets number of haberdashery and clothing in London and
England with advancement of technology (Man, and et. al., 2022).
Strategy
M&M should accept the market development and cost leadership plan to achieve the
enhance market stake and competitive benefits. Through achieving impactful approaches and
low price materials of production and sewing, this will be capable to produce more benefits with
respect to contenders and became the price leader. By enhancing its stores of fabric throughout
England and London market, this will be capable to explore domestically with segments of new
buyer.
Marketing Mix Strategy
This is a structure of many components which assist the business in making consumer
base through enhancing the order of its service in the market. As per entrance in new markets,
M&M marketing mix plans are following:
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 Product strategy: M&M is launching its products i.e. fabrics as oilskin, linen, woollen
and patterns of sewing with haberdashery tools in the England and London New market
(Mazzarol, and Reboud, 2020).
 Distribution strategy: As M&M is entering in the advanced market and different
geographical space with various customers, it is needed to make a new potentiate
consumer base which is probable by multiple chain of suppliers and effective distribution
network to fulfil the preference and demands of the consumers.
 Promotion strategy: It is most essential plan to M&M as it is introducing in the latest
market of London which requires different promotional activities as hoardings,
demonstration of products, advertising campaigns through online service and so on.
 Pricing strategy: Merchant & Mills has accepted the costing plan of cost leadership to
achieve the competitive benefit. It is accepting price effective approach of production to
achieve the price benefit over its services (Mishra, and et.al., 2019).
Control and monitoring:
for measuring the firm performance, firms requirement to execute different controlling
strategies. In this scenario, M&M can utilise performance measurement benchmarking tool as it
compare the business performance with appropriate practices of business and assists in
eliminating any variance.
M3 detailed business strategy involving vision and plans of firm to expansion of firm
Business strategy is a brief description of mission and vision of the firm and plans which
it follows to get the fixed aims of the firm. It keeps the monitoring policies and financial
information of the firm. As per the growth plan accepted, it keeps the marketing mix plan of the
firm. Business plan is required to be formulated to exploration for small firms.
D3 business strategy describing the efforts of firm to apply plan in achieving the aims of the
business
As per the size and suitability of the firm and accounting the involved risk M&M Ltd. has
accepted two latest plans to explore business i.e. price leadership plan to face the market
evolvement plan and competition to pierce the local markets of England and London to enhance
base of consumer locally and then enhance market percentage in the latest market. As per, it
accepting needed marketing mix plan with relevant monitoring measures (OnePetro.Raza, and
et.al., 2022).
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P5 succession and exit choices to small firm
Exit choices
1. Winding Up of Business: It means to closing the functions of the firm. It involves sell of
whole resources and and pay all the debts.
Benefits
 The money included in closing the firm is not as much as in case of liability because the
liquidation official needs the fees from the sale's amount while managing the process to
liquidation.
 Amount obtained from sales of resources after the liquidation of firm, can be utilised to
settle the collector which assists the firm in decreasing the repayment pressure and move
on the different assignment.
Disadvantages
 Administrator afraid for low credit score to needs of fund in going forward to different
new venture after closing up the present firm (Palgrave Macmillan, Cham.Chan, and Tai,
2022).
 All resource and saving of the firm is used to settle the creditors and liability.
2. Sales of business : It refers to sell the firm to another administrator.
Benefits
 When the need of the firm is more in the market so as to get a huge amount of funds,
vending the firm at very high price will produced large revenue.
 When the present business is not producing more profits or not having chances to the
future, it would be good to sell the firm and using the amount to different project which
gives chances to exploration.
Disadvantages
 It involves large protocol to sell the firm such as legal formalities and negotiation which
makes it a time lapsing procedure.
 Vending a profitable firm which have chances of exploration outcomes in losing the flow
of revenue of the firm.
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