Strategic Planning and Growth Analysis for Guildford Tyre Company

This report provides a comprehensive analysis of growth strategies for Guildford Tyre Company, a small-scale business. It begins by evaluating growth opportunities within the organizational context, emphasizing competitive advantages and the application of Porter's Generic strategies. The report then assesses the external environment using PESTEL analysis. The second section focuses on applying Ansoff's growth vector matrix to evaluate market penetration, development, product development, and diversification strategies. The report further explores potential funding sources available to businesses, discussing the benefits and drawbacks of bank loans and overdrafts. A business plan for growth is designed, incorporating financial information and strategic objectives. Finally, the report assesses exit and succession options for a small business, outlining the advantages and disadvantages of each, providing a holistic view of business growth and strategic planning.

Planning for Growth

Table of Contents
INTRODUCTION...........................................................................................................................2
TASK 1............................................................................................................................................2
P1.Evaluating growth opportunities and considerations within an organisational context........2
P2 Evaluate the opportunities for growth applying Ansoff's growth vector matrix...................5
TASK 2............................................................................................................................................6
P3. Assess potential sources of funding available to businesses and discuss benefits and
drawbacks of each source............................................................................................................6
TASK 3 ...........................................................................................................................................8
P4. Design business plan for growth which include financial information and strategic
objectives for scaling up a business............................................................................................8
TASK 4 .........................................................................................................................................10
P5.Assess exit or succession options for a small business expanding the benefits and
drawback of each option...........................................................................................................10
Conclusion.....................................................................................................................................12
.......................................................................................................................................................12
References......................................................................................................................................13
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INTRODUCTION
Growth and development are essential for every organisation to sustain in the
marketplace. The management of company is responsible for implementing effective planning
for achieving goals and objectives (Barbour and Deakin, 2012). The organisation selected for
conducting this report is Guildford tyre company that is a private limited company started on 29
June, 1976. They offers products and services like air conditioning, batteries, brakes, vehicles
diagnostics, exhausts, repairing of mechanical, mobile tyre fitting and wheel alignment. The
various topics explained in this report are evaluation of growth opportunities, methods by which
organisation access funds and development of business plan. It also includes different ways
thorough which a small business owner can exit their business.
TASK 1
P1.Evaluating growth opportunities and considerations within an organisational context
For small or medium scale businesses, it is quite difficult to grab opportunities and utilise
them in an effective and efficient way (Brinckmann, Grichnik and Kapsa, 2010). These
opportunities can be related to marketing of enterprise or expansion of business on a large scale.
Management team or directors of small business need to develop creative and innovative plans
for their business. Guildford Tyre is a small scale business enterprise with approximately 250
employees. To grab opportunities in a fruitful manner, it is necessary for the management team
to design innovative plan or strategies which is beneficial for their overall growth. There are
various factors and elements which can be effective for the overall development, growth or
success of the organisation.
Competitive advantages:-
Competitive advantage refers to the situation where any organisation or company seeks a
positive or favourable position, to gain more profits and market share as compared to its rivalry
companies. In order to gain competitive advantage, it is the duty of managers of Guildford Tyre
Company to prepare effective strategies and plans, for overall growth of company. There are
various strategies which is commonly used by enterprises to get competitive advantage.
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Competitive advantage as a foundation of growth
In the present context, Porter's Generic strategy model is used by Guildford Tyre
Company in order to achieve competitive advantage.
Before changing any strategies or plans, it is necessary for an organisation or enterprise
to analyse or evaluate their current position at marketplace. To examine market and its trends in
an effective or efficient manner, Guildford Tyre Company uses Porter's Generic model. Cost leadership- In this model, by offering low price products and services, company
create an effective position at marketplace. This model is used by Guildford Tyre
Company to analyse market trends and their targeted audience. With the help of which
they can evaluate demands and requirements of products and services offered by the
company (Burton, 2010). If rival companies or firms are unable to lower their prices,
company may sustain in the competitive marketplace on the basis of cost leadership. In
context to this company, management team decides to sale their products or services in
low price but with good quality products. As a result they may attract more customers
and increase their profit margins as well as market share. Differentiation leadership- In differentiation strategy, company develop unique feature
or attribute in the product, which attract huge amount of customers. To attract more
customers in new market, Guildford Tyre Company design products or services which
have some unique technology or feature. Along with this company can charge premium
price, because of increasing value of product which is cased by adding new feature or
element. Cost focus- Main focus of companies in this model is to focus on a particular market
along with this customers loyalty is high in this case. It is the strategy of Guildford Tyre
Company to analyse and evaluate the market condition, demands and requirements of
customer's and then design their products and services which is low in cost but still fulfil
their needs and wants (Chapin, 2012). In this case, company mainly focuses on only one
market and develop their products according to the requirements.
 Differentiation focus- As per this strategy, products and services are developed with a
different or unique feature by a company and by this they are taking consideration of a
specific target market. Guildford Tyre Company innovate or design products with a
special attribute which will attract customers in a target market. Along with this, they
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produce goods and services according to the requirements or demand of their targeted
customers.
Management team of Guildford Tyre Company after analysing all strategies and policies
decides to select differentiation focus strategy for gaining competitive advantages at
marketplace. In this strategy they develop goods according to the requirements or demand of
their customer's of France where they are expanding their business.
Competitive advantage with opportunities for growth
To analysis the external environment and identify opportunities for Guildford Tyre
Company use PESTEL analysis. PESLET in context of respective company is discussed below:- Political- When any company decides to enter into foreign countries for capturing market
they have to evaluate political factors, which includes policies, law, rules and regulation,
barriers for new entries in that country (Christofakis and Papadaskalopoulos, 2011). It is
advisable for Guildford Tyre Company to analyse rules and policies of countries before
introducing product in their markets. Economical- Economical status of the company helps to know the condition of
customers. Thus, Guildford tyre company evaluates the economic status of the company
for designing strategies according to the economic rate of the country. Social- It refers to the beliefs and values of populations and it include various factors
such as population growth, health concern, age distributions and many more. Technological- It refers to the advancement of technology in the company for
expanding business in other markets. Guildford Tyre Company does an effective research
about technology and plan strategy according to it so that they attract more customers by
their innovative products and service. Environmental- Guildford Tyre Company conduct research about environmental factors
and plan their product process according to it so that process does not get affected by
climate change (Eddleston And et. al., 2013). The environment factors didn't affect
manufacturing of tyres on large basis which seems as opportunity for this company.
 Legal- This factors include different laws which a company has to follow to conduct its
business operations and functions such as discrimination law, consumer law, antitrust
law, employment law and health and safety law .
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After evaluation of all the factors Guildford Tyre Company able to know that social and
technological factors is more effective and appropriate for them.
P2 Evaluate the opportunities for growth applying Ansoff's growth vector matrix
Ansoff's matrix was introduced by Igor Ansoff which represents the alternative growth
strategies. There are four possibilities of market-product combination when a new product is
introduced in new market. They are market penetration, market development, product
development and diversification (Grover, Bokalo and Greenway, 2014). A company can evaluate
the position of it's potential market and products by using this matrix. Ansoff matrix is used by
Guildford tyre company to know their current position in the market and implement strategies to
expand it's market accordingly. The Ansoff matrix in the context of Guildford Tyre company is
discussed below-
Market penetration- This is the least risky strategy as in market penetration an existing
product is introduced in existing market by adding innovations and changes. This results in
enhancing current market scenario of the organisation and expanding services and products in
new market. Due to this market share of company increases and growth and opportunities for
the company's development also increases. The company can implement this strategy by
decreasing the price of the products, increasing awareness of the products and services, offers
and promotions, etc. Guildford tyre company can use this strategy if they want to expand the
market share in the existing services and products.
Market development- This market strategy is used when a company wants to expand its
market share in a new market with existing service or product. This is a beneficial strategy for
company as the chances of success are high (Hough and et. al., 2010). The company can initiate
this strategy by involving new packaging of the product according to the culture of that particular
country or area, adopting various pricing strategies, identifying new distribution channel, etc.
Guildford Tyre company can use this strategy to target foreign customers and enhancing the
market share in new market with their existing products and services.
Product development- This strategy exists when a new product or service is introduced in
existing marketplace. The company is involved in maximising the product range and improvise
their position in the market. Guildford Tyre company undergoes a research to evaluate the
requires innovation and changes in their product to capture more and more customers. When the
organisation wants to introduce a new product in the existing marketplace this strategy is used.
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Diversification- This is the most risky market strategy. This is the situation when a
company wants to introduce a new product in a new market (Keough, 2015). The company is not
familiar with marketplace and it requires a deep research to capture such markets by offering a
very new product. The Guildford Tyre company can use this strategy when target customers are
new and the product is also new. For capturing such marketplace, the company has to perform a
successful research to attract target customers.
The Guildford Tyre Company can use market development strategy for their business. As
It is small firm it is very beneficial for it to expand its market share to maximise profits. On the
other hand, this strategy is less risky and changes of success are very high.
TASK 2
P3. Assess potential sources of funding available to businesses and discuss benefits and
drawbacks of each source
The sources of funding means to provide financial resources to a company for better
growth or life of their business. It can be used for both short term and long term purpose. At the
time of starting a business, finance plays a very important role. In context of Guildford Tyre
Company Ltd., they provide services to their customers like air conditioning, batteries, exhausts,
wheel alignments, brakes ans so on. Their main motive is to provide a best services to their
customers and enhance their profitability or growth in a marketplace and also to capture a market
share (Li, Mobin and Keyser, 2016). So,funding plays an very important role for their growth
and success of their business at a marketplace. Some sources of funding are give as below:
Bank loan: Bank loan is a very common source of arranging funds for small medium
enterprises. In this source company borrow some amount from banks for specific time period on
some fixed interest charges. In context of Guildford Tyre Company, they borrow a loan from
bank and they charged some interest on it which is deductible in tax. This source of funding also
helps Guildford Tyre Company for their business growth and also to make a level into a
marketplace.
Benefits:
 As comparison to other sources, banks are more cost effective because they charge low
interest on bank loans.
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 At a time of bank loan they also provide tax benefits, such as an interest which is them to
a bank is deductible in tax.
Drawbacks:
 At a time of bank loan they have to faced many legal formalities. Sometimes interest rate can be variable because of changes occurs at a market place.
Overdraft: This facility is given by a bank on their bank account, to withdrawal a cash at
any time and it plays a very important role in day-to-day operations (MacLeod, 2013). In context
of Guildford Tyre Company, it is very good source for arranging a fund on urgent basis and it is
also a flexible in nature which also helps in to manage a cash flow effectively.
Benefits:
 it is easiest form for arranging a fund.
 It is flexible in nature, and it is available at any time whenever there is a need of financial
resources.
Drawbacks:
 this source is charged high interest rate as comparison to others sources of borrowing.
 Sometimes there is a risk of reduction in limit especially when a company gives a poor
performance.
Angel finances: Angel finance is also called angel investors. These investors are invest
on other business at a time of start up of their business and helps them for who are searching for
funding (Mitchelmore and Rowley, 2013). They especially invest their fund or small and
medium scale enterprises. In context of Guildford Tyre Company Ltd., this source is very useful
for them because it also a small company and they does not ask for any collateral security.
Benefits:
 The most important benefit of this source is they do not want any collateral or security
from companies owner.
 They also share their knowledge with young and new entrepreneur which is very useful
for them at a time of start up of their business.
Drawbacks:
 Investors has power to control on new businesses so sometimes owners feel frustrated
from investors because they are not able to take right decision for their company.
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 Sometimes investors not invest their fund because they have fear or risk of losing more
money.
After analysing all sources of funding, Guildford Tyre Company Ltd. must prefer
overdraft because it is easily arranged whenever there is a need of finance and it is more
flexible in nature.
TASK 3
P4. Design business plan for growth which include financial information and strategic objectives
for scaling up a business
It is essential for an organisation to develop appropriate goals and objectives in order to
attain profits and growth. A business requires different factors of planning process like
designing, monitoring, producing, operating, controlling, implementing and distribution. These
factors are operated effectively in an organisation for developing a competitive advantage in the
market (Moseley, 2013). A business plan is a document that represents information about new
product or service, financing and leadership of the company. It consists of strategies and plans
that will be used to enhance profitability of the company. The business plan is essential for
expansion of business as it consists information about organisation's policies, mission, vision and
goals. Guildford Tyre Company offers a variety of products and services like air conditioning,
batteries and brakes. Business plan of Guildford Tyre Company is given below:-
Concept of business:-
It consists of the process which contains the information about the organisation, services
or products, mission and vision, unique selling options, target customers, etc (Pallagst, 2010). It
involves information related to innovative products and services. The business concept of
Guildford Tyre Company is described below-
 Organization's products and services: Guildford Tyre company deals with
manufacturing of products like batteries, brakes, air conditioning, vehicle diagnosis,
wheel alignment, exhausts, mobile tyre fitting, etc. The products offered by this company
are made on the basis of demands of customers. The target customers of Guildford are the
manufacturers of car products.
 Mission and Vision of firm: The mission of Guildford Tyre company is develop market
image by providing good quality products and services to people and maximise profits
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for the company. The vision of this company is to make effective innovations in their
products to meet the demands of the customers.
 Operational strategy: Guildford Tyre Company uses customer driven strategy as the
operational strategy. According to this strategy products are designed on the basis of
demand of customers (Todes, 2012). This is a very effective operational strategy to
expand marketplace and profitability of the organisation.
 Unique selling option: Guildford Tyre Company uses private equity recapitalisation as
their selling option. This company sells a particular portion of their business to another
company for a duration of 3 to 5 years. This takes place through a legal agreement
between both companies. Guildford tyre company sells their 80 % portion to another car
manufacturing company and it's products are purchased by this manufacturing company.
 Strategic objective: To introduce existing product or service in new market within 60
days in order to maximise 30% of sales of the business.
The Industry/ market analysis:-
It is necessary for Guildford Tyre company to evaluate the effectiveness of their products
and services to determine that demands of customers are achieved (Valler, Phelps and Wood,
2012). A SWOT analysis is conducted for this company to know about the growth and
opportunities for growth of the company. SWOT analysis of Guildford Tyre Company is
discussed below:-
Strength Weakness
 Guildford tyre company offers quality
products at affordable price.
 They have a good research and
development team.
 Employees are productive and
motivated towards work.
 It has a number of loyal customers.
 The features of air conditioning of this
company is not according to the new
technology.
 It does not has an effective distribution
channel.
Opportunities Threats
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 Growing economy
 Use of new technology and innovation
in products designing (Wu, 2015).
 Expand business in foreign countries.
 Introduce products related to motor
sports vehicles.
 Cheap import of tyres and other car
products.
 Huge number of competitors in the
market.
Financial plan
Pre launch cash budget
Cash Flow budget
Particulars Feb Mar Apr May June J
Cash inflows
Investment
Credit sales 3000 3000 4500 1500 3500
Total inflows 3000 3000 4500 1500 3500
Cash outflows
Fixed : Equipment’s 2500 1500 2000 1200 1500
Variable : Direct material 300 200 300 150 500
Total outflows 2800 1700 2300 1350 2000
Net cash flow 200 1300 2200 150 1500
Opening balance 7700 7900 9200 11400 11500
closing balance 7900 9200 11400 11550 13000
TASK 4
P5.Assess exit or succession options for a small business expanding the benefits and drawback of
each option
There are various cases in organisations when they are not able to operate effectively and
make profits. In such cases the company is either closed or merged with some other company to
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maintain success of the organisation. In the case of Guildford Tyre Company they are facing
problems in their operations, production process, quality, employees behaviours and thus their
management decided to select succession option to survive in the marketplace. The different
succession a company can posses are discussed below-
Merger:- In such cases two companies come together and form a new organisation under
legal considerations. It is beneficial for the company as it increases the profitability of the
business and expand business in foreign markets (Ziari And et. al., 2012). Guildford tyre
company undergoes merger and it manufactures car products and other company fix these
products in cars. The advantages and disadvantages of merger are discussed below-
Advantage-
 Merger helps to operate functions effectively at higher level.
 Reduction or elimination of competition at marketplace.
 Market share of both the companies increases.
Disadvantage-
 Employees lose their jobs. Productivity of employees get affected because when a small company merges with a big
company there are difference in skills and abilities of the employees.
Joint Venture- It is a business condition where two business companies come together to
perform a particular task or project (Todes, 2012). This takes place under legal rules and
regulations. Both companies are able to perform well as their goals and objectives become same
and resources are used for making effective results. The joint venture is a temporary process and
both businesses share cost and risk in the completion of the project.
Advantage-
 It gives opportunity to both the companies to acquire new capabilities and expertise.
 Project cost and risk is shared among both the companies.
Disadvantage-
 It is important for the partners to have a good relation as they have to take mutual
decisions for operations. Joint ventures are sometimes more expensive than operating the business individually.
The Guildford Tyre Company selected merger for their succession option because it is
the best option for them. This company can make profits by merging with another firm as it will
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