Hichem Ltd: Comprehensive Report on Growth Planning and Strategy

This report provides a comprehensive analysis of Hichem Ltd's growth strategies, focusing on its launch in London. It begins with an introduction to planning and its importance for achieving business objectives. The report then delves into key considerations for evaluating growth opportunities, including Porter's generic strategies (cost leadership, differentiation, cost focus, and differentiation focus) and PESTLE analysis to assess the external environment. It then explores opportunities for growth using Ansoff's growth vector matrix (market penetration, market development, product development, and diversification). The report further examines various sources of funding, including internal and external options like bank loans, overdrafts, and crowdfunding, along with their respective advantages and disadvantages. A business plan for growth is presented, followed by a discussion of succession and exit strategies for the small business. The report concludes by summarizing the key findings and providing references.

Planning for Growth

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Key considerations for evaluating growth opportunities.......................................................3
P2 Opportunities for growth using Ansoff's growth vector matrix.............................................5
TASK 2............................................................................................................................................6
P3 Sources of funds with advantages and disadvantages............................................................6
TASK 3...........................................................................................................................................8
P4 Business plan for growth of business.....................................................................................8
TASK 4..........................................................................................................................................10
P5 Succession and exit plan for small business........................................................................10
CONCLUSIONS............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Planning refers to the development of strategies, assessment of goals, assumptions of
uncertainties. It helps to set objectives and perform activities in order to reach the same..
Management of an organisation plan for future risks and operations to improve the productivity
of the products. Managers plan for the activities and events that has to be performed by the
company in future (de Roo, 2017). Hichem Ltd is manufacturing company of chemical products,
and it is going to be launched in London . Company enters to a contract which is “Supply and
delivery of Chemical Substances” for launch.
This project report consist various topics such as Porter's five force model, PESTLE
analysis, Ansoff's growth vector matrix, sources of funding etc. Business plan with detailed
information and options for succession and exit are also covered under this report.
TASK 1
P1 Key considerations for evaluating growth opportunities
Planning is a tool which is required to achieve goals and make strategic decisions. It
helps to create various options to face future uncertainties. Hichem Ltd is a manufacturing
company of chemical products, it is going to be launched in London. To make the launch
successfully the managers are required to make plans for this motive. There are two identified
key considerations that may help to attain growth objectives.
Porter's generic strategy: It was introduced by Michael Porter. It can be adopted by the
organisations to reach to the level of competitive advantage, where they can get success more
than competitors by providing less costly and unique products to the customers (Dimitriou,
2013). It includes four different strategies, that are explained below:
 Cost leadership: In this strategy an organisation set objectives to minimize cost and be
the lower cost manufacturer in its industry. It can be adopted by Hichem Ltd to be the
lower cost producer in the industry so that it may help to attract customers. This strategy
relates to mass production, in which the company produces end number of products that
will reduce the cost of production. For example Hichem Ltd can set low price for its
products while launching, it will attract more and more customers.
 Differentiation: It suggests the companies to produce different products as compare to
competitors, it will help to attract customers who are willing to buy unique products. This
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strategy can be adopted by the managers of Hichem Ltd while launching its products in
London, because the products with the element of uniqueness will help to attract more
customers. It can be used by Hichem Ltd by providing different and quality products as
compare to other.
 Cost focus: In this strategy a company launch its products in a small market segment
with low cost. This strategy can be adopted by Hichem Ltd to launch its product in
London's market while launching products there. In this strategy, the price for the
products will be comparatively lower then others. For example Hichem Ltd is going to
introduce its product in a small market segment with low price, it will help to record
customer's reaction toward their products.
 Differentiation focus: In this strategy unique products are introduced in a small market
segment. It covers the needs of the customers while launching the products (Boserup,
2017). Hichem Ltd can use this strategy while launching its products in London. This will
help to target selected people and create various opportunities by fulfilling their needs
and creating a good market image in London. Hitech Ltd is going to introduce its
products in London, in a small market segment with low price which will help to attract
more customers and satisfy them by providing unique products as compare to other.
From the above mentioned strategies, the most relevant strategy for Hichem Ltd is
differentiation focus. As it is going to launch its business in London so it should select a small
market segment to introduce its products there. It will be more beneficial rather than launching in
a large market segment, because if the products are not according to the demand of customers or
they are not able to adopt those products than company can modify the products accordingly.
PESTLE analysis: It is a tool that helps the managers in strategic decision making, by
providing them actual information of external environment of work place (Kerzner and Kerzner,
2017). Hichem Ltd should conduct a PESTLE analysis to analyse the environment of the
London's market. Following factors can affect the business of the organisation in London:
 Political: These factors are related to the government, it includes various policies such as
fiscal, monetary, tax policies that are imposed by the government of the country. As UK
has constitutional autocracy, and the political environment is fair and stable hence, it is a
great opportunity for Hichem Ltd to launch its business in London.
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 Economical: These factors can directly affect the economy of a nation. It includes
interest rates, inflation rates etc. The economy of London is very strong and this is a good
opportunity for Hichem Ltd to introduce its business there to earn maximum profits.
 Social: These factors examine the social environment of that market where a company
launches its products. It includes cultural trends, social values, demographics, customer's
lifestyle etc. The people in London are so much concerned with new and innovative
products so it is a great opportunity for the company to launch a new product there.
 Technological: These factors are concerned with the technological aspects and
innovations of technology (Mitchelmore and Rowley, 2013). Hichem Ltd should consider
these factors while launching its products in London and should launch the products
according to the innovative technology. Common people of London are so much
technology friendly thus, it is a big opportunity for the company to launch its product
with the help of latest technology.
 Legal: These factors are mainly concerned with various laws that may affect the business
and the strategies that are planned by the management of the company. The Government
of London has formed strategies to introduce various chemical products in the country,
hence this could be a huge opportunity for Hichem Ltd to reach the higher level of
growth.
 Environmental: It consist various environmental protection acts and rules, that may
affect the business of an organisation. Hichem Ltd is concerned with environment
protection act and it will create a positive image in the mind of government and
customers of London, which can generate opportunities for the company to grow there.
P2 Opportunities for growth using Ansoff's growth vector matrix
Ansoff's growth vector matrix was introduced by H. Igor Ansoff. It is implemented by
various companies to evaluate various markets to introduce products. It helps to identify the
suitable market for the companies to launch their products there (Phelps, 2013). It includes four
different strategies that can be adopted by Hichem Ltd to launch its products in London. Those
strategies are described below:
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Source: Ansoff's growth Vector Matrix
 Market penetration: It refers to the sale of existing products or services in existing
market segment. Market penetration create opportunities to generate profits by acquiring
more customers in existing market segment and will help to increase market share. It will
also save the cost of promotions because the marketers already have the knowledge of
customer's demand.
 Market development: It is related to the introduction of existing products in new market
segment. While a company is willing to target various customers in different market
places this strategy will help to attract them. It will save the cost of modification but will
cost for research of selected segments (Gleeson, Dodson and Spiller, 2012).
 Product development: It refers to the launch of a new product in existing market
segment. It will help the company to grow faster because the marketers already have the
knowledge of customer's perception. If the company is having good market image then
this strategy can save cost of researches and promotions.
 Diversification: This strategy is related to the introduction of new product in a new
market segment. It will help the company to launch the products in a new market by
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Illustration 1: Ansoff's Growth Vector Matrix

targeting new customers. If the products get success in attracting customers it will help in
organisational growth (Haughton, Allmendinger and Oosterlynck, 2013).
From the above mentioned different strategies differentiation strategy should be selected by
the marketers of Hichem Ltd because it totally related to the situation of the company. As it is
going to launch its products in London's market with the launch of new product, this strategy will
help to reach to the higher level of growth. It provide direction to the companies to launch their
business globally.
TASK 2
P3 Sources of funds with advantages and disadvantages
Funds are the monetary resources that a company use to execute its business operations.
Funds are very important for a company to run its activities. Hichem Ltd requires £300000 while
launching it self in London but it only has £20000, and the rest amount of £280000 will be
collected from various sources of funds. Company enters to a contract which is “Supply and
delivery of Chemical Substances” to launch its business. The identified sources of raising funds
are explained below:
Internal sources: It refers to the medium of finance that are available inside the
organisation. Hichem Ltd can collect funds from sales of assets, retained earnings, share capital
etc. to successfully launch its business in London.
External sources: It refers to the sources that are available outside of the organisation
and help companies to run their business (Batty and Marshall, 2012). Following are the examples
of external sources of funds.
Bank loans: It is an easy way to generate funds for the business by giving collateral to
the bank. It is mainly used to run start-ups, expansion or purchase of business assets. The
management of Hichem Ltd can apply for bank loans to launch the business successfully in
London. Bank loans are provided for a fixed period and the borrower have to repay the amount
to the bank at the maturity date.
 Advantages: It is an easy way to raise funds when the company is able to give collateral
to the bank. The interest rates on the bank loans are fixed so the borrower will have the
idea of actual repayable amount.
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 Disadvantages: If a company is not able to give collateral to the bank than it will not be
easy for the company to get a loan approval form the bank.
Overdraft: It refers to the withdrawal of an amount from the bank account which is more
then the balance of the account. Bank provide this facility to a few customers and charge a high
rate of interest on such type of withdrawal (Pothukuchi, 2015). Hichem Ltd can use this option to
generate funds when there is an urgent requirement of funds.
 Advantages: It reduces the load of high paper work and fulfil the urgent requirement of
the funds of company.
 Disadvantages: Banks charge very high interest rate on overdrafts and some times
business assets are seized by the bank when the withdrawer fails to repay the amount on
due date.
Crowd funding: It refers to the collection of small amount from various investors. It is
possible with the help of technology, the owner of the business can invite various investors with
the help of emails, social media, websites etc. to invest in his business (Holman and Rydin,
2013). Hichem Ltd can raise funds from crowd funding if the execution plan is effective and
interesting.
 Advantages: It a good and easy way to gather investors for the business. There are
various investors who can provide their guidance to make modification in the plans of
execution activities.
 Disadvantages: It will create problems when there is not a good market image of the
company. If the company fails to collect the targeted amount then the remaining collected
amount will be returned to the investors and company will have nothing as investment.
Angel financing: It refers to the persons who get attracted with the outstanding business
plan. Hichem Ltd can pull various business angels to invest in its business by attracting them
with excellent business plan.
 Advantages: If company is funded by angel financing then there is no need to pay
interest and no need of debts from other outsider parties.
 Disadvantages: The owner of the business have to share authority, control, power,
shares, decision making with business angels.
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TASK 3
P4 Business plan for growth of business
Business plan is a written document that provides internal information of the company to
the shareholders and other stakeholders. It includes vision, mission objectives and financial
information of the company (Business plan, 2018). Hichem Ltd is manufacturing company of
chemical products which is going to be launched in London, so the management should make a
proper business plan to achieve organisational growth. The main goal of business plan is to
attract more and more investors to generate business opportunities that will help to grow its
business and increase profits. Business plan help to form strategies for future and make policies
to reduce risks involved in various operational activities. Thus the management of the company
is suggested to make a business plan before running the expansion activities. The plan is as
follows:
Vision: The vision of Hichem Ltd is to produce various products and offer them to the
different segment of the customers and to be on the top of the chemical products industry.
Mission: The mission of the company is to identify the needs of the customers and
provide them products according to their requirement so that it will help to create a positive
market image and attract various types of customers from different market places.
Strategic objective: The main objective of Hichem Ltd is to successfully launch its
business in London by creating a brand value there and to increase the profits by 10% to 15% in
upcoming years. The second main objective is to acquire market share of London and satisfy the
customers there by providing them products according to their perception. This can be achieved
by proper maintenance of business activities and control over execution process of business.
Financial information: The success of the business activities is totally depends upon
proper planning and control over operation of the business. Hichem Ltd need funds to perform
all the activities and the funds can be generated from internal as well as external sources of
funds. Finance is lifeblood of a business and it is very important to run the business. If monetary
resources are available in the organisation then it will be more easy to achieve the goals.
While planning for expansion the management of Hichem Ltd have to prepare a budget
plan that will provide the information of those fields where funds are required and how the funds
are going to be utilised. This budget can show the expenses that may occur while expansion i.e.
promotions, technology installation, transportation etc.
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Forecasted budget of Hichem Ltd:
Particular 31/12/15 21/12/16 21/12/17
Costs:
Implementing technology 15000 Nil Nil
Promotion 9000 7500 8500
Advertisement 5500 5000 4000
Catalogues 4000 2500 4500
Training 6500 7500 7000
Total Cost 40000 22500 24000
From the above budget management of Hichem Ltd can get the idea expenses that may
occur in future, while launching its business in London.
TASK 4
P5 Succession and exit plan for small business
Hichem Ltd is a manufacturing company of chemical products, which is going to be
introduces inLondon by launching new products, hence it is very important for the company to
make succession or exit plan to face future risks and uncertainties and may leave negative impact
on the business execution activities. It facilitates the decision making of managers by providing
them various option to face issues that may occur in future. Following are the types of succession
and exit plans:
Exit plan: It is a strategy which is used to close the business fully or hand over the
authority to the another person. It helps the owner of the company by providing them various
options to exit their business (Thapa and Murayama, 2012). When a company is in loss from a
long period it is suggested to the owner to of the enterprise to exit the business concern. This
options for exiting are as follows:
Winding up: It is an exit option for a business in which owners of the company sale out
all the assets, pay off all the creditors and distribute remaining funds and assets to the
shareholders and investors of the company. If Hichem Ltd did not get success in London this
option can be adopted by the company.
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 Advantages: The main advantages of winding up is that the owner will be free from the
debts and another advantage is that the company will not have to face more losses.
 Disadvantages: All the assets of the business will be sold and company will lose
effective workforce of the company.
Selling in open market: It refers to the sale of business in an open market and the
business will be purchased by a third party outside of the business. The business operations and
other activities will remain same but the owner of the business will be changed (Ozanne, Biggs
and Kurowski, 2014).
 Advantages: The main advantage of this option is that it will not harm the business
image and activities because the buyer will purchase a running business, that will not
affect the operations. Disadvantages: The drawback of this option is that the owner will lose his authority and
skilled employees of his business.
Succession plan: It is a future plan which is used to identify new and experienced leaders
who can replace old leaders when they leave or retire. It helps to increase the number of
experienced employees. Following succession option can be adopted by the company:
Merger and acquisition: Merger is a option in which two companies merge and
establish a new business most commonly with a new name. In acquisition a large business outlet
buys a small business and acquire its assets and liabilities.
 Advantages: It helps to increase the size and to reduce the number of competitors from
the market place.
 Disadvantages: If both companies who are involved in merger and acquisition have
debts it will increase the debts and liabilities for the new business.
It is suggested to Hichem Ltd to make succession plan because merger and acquisition is
the most relevant plan for the organisation if it fails in the expansion plan in London. It will help
the organisation to attain organisational growth.
CONCLUSIONS
Planning is the process of determining goals, objectives, future events and risks for the
company to identify opportunities that may help to reach the goals. If there is a company who is
willing to launch its business in different market places then it can conduct PESTLE analysis to
analyse the factors that may affect its business. Ansoff's model can help to select best strategy for
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the market segment. To make the expansion plan successful the owners should prepare business
plan that include insider information of vision, mission, objectives and financial information. It
will help to attract investors. An organisation should also make exit or succession plans to deal
any future event that may result negatively.
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