HTI Group Toy: Expansion, Financing, and Business Plan

This report examines the business strategy and growth prospects of the HTI Group Toy manufacturing company. It begins by outlining the company's competitive advantages, including resource capabilities, product uniqueness, and customer segmentation. The report then analyzes the growth opportunities available to HTI Group, applying Porter's generic strategies (cost leadership, differentiation, and focus). Ansoff's matrix is used to assess market penetration, product development, market development, and diversification strategies. Furthermore, the report evaluates various financing options for growth, including bank loans, crowdfunding, angel investors, and venture capital. The report also considers exit and succession options, culminating in recommendations for the business and a comprehensive business plan including start-up steps and action plans.

UNIT 42 – PLANNING FOR
GROWTH

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
An explanation of the basis of competitive advantage for the business:.....................................3
Critical analysis opportunities available to the Hit group toys company....................................4
Critical assessment of growth options through Ansoff Matrix....................................................5
Critical evaluate the options for financing growth as well as souces of funding........................6
Exit and succession options for Hit group Toy............................................................................9
Recommendation for the business.............................................................................................10
Business plan:............................................................................................................................10
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Every business organization desire to expand their unit across the world, dream of
international dealing. Expansion is one of the most challenging part and occur after achieving
success in local market, firm who have ability to expand in new market have to face certain type
of challenges because business carry no experience in new market, expansion is only possible if
business have strategic alignment with the market condition (Wright, 2020). This study is based
on HTI Group, this toy manufacturing unit providing wide range of children's toy dealing in
market of the UK and nearby nations. This report will discuss basis of competitive advantage and
growth opportunities available with the company. Later this report will discuss Ansoff's growth
matrix along with financing option and will discuss exit and succession option and key
recommendation to the company. At last, this report will discuss complete business plan
including 7 steps for start up and action plan.
MAIN BODY
An explanation of the basis of competitive advantage for the business:
Every business organization know the value and importance of getting ahead from their
competitors, this is only possible when firm have ability to gain internal stability with some sort
of uniqueness. However, business carry certain type of area which provide them competitive
advantage (Jiménez and et.al., 2020). For example, HTI Group carry uniqueness in their product
design allowing them to become competitive in the market. It is very clear that company focus
on basis of getting competitive advantage, there are certain type of basis found internally in the
business, these are:
Resource and production capabilities: This is one of the most important area for
manufacturing company to gain competitive advantage in the market, when firm have
capabilities to arrange resource in affordable cost and ability to maintain production speed then
gaining market leadership become easy. For example; HTI Group have resource and production
capabilities allowing them to become leading toy manufacturing company in the UK, they
haven't changed their price range even after COVID-19 impact because they have capabilities to
satisfy their customer. Here, resource capabilities does matter, firm need to gain internal stability
to become competitive in the market.
Uniqueness: Uniqueness does matter when it comes to gaining competitive advantage in the
market, firm who have uniqueness in their product, service or strategic aligment then they have

higher chances of gaining market leadership. It is very clear that consumer demand those product
which are completely unique and carry special feature. For example; toys or products of HTI
Group is unique in terms of design and feature allowing company to become competitive in the
market and help them to deliver products full of innovative features.
Customer segmentation: Consumer carry certain type of factors, when business examine these
factors and act accordingly then they have higher chance of getting competitive advantage in the
market. A careful segmentation of customer does matter, this allows company to get clear idea
about marketing process (Onileowo and et.al., 2021). For example; HTI Group have ability to
segmented their customer accordingly, they target parent as customer, they even segment age
and income level to get better idea.
Critical analysis opportunities available to the Hit group toys company
Poter described the three generic statrgies as opportunities under which a company can
choose irrespect of their size (small, big or medium) to pursue their competitive advantages.
Here, three strategies are differentiated, lower cost and focus.
Cost leadership strategy:
In this strategy the copany offer low prices as compare to the competitors. The Hit group
toys has already adopted this strategy because by this strategies company can easily increase
profits by the reducing cost. Increasing market share by charging lower price. The company is
also trying to grab consumers from this way as well (Khan, Niqab, and Hanson, 2021). The
company has been attracting their customers with the low prices that are offered in the market
place to attract more customers. This also allows Hit group to sell their products at fair or low
prices as well as they earn profits by thin margins gained from large volumes of the business.
Differentiation strategy:
This make business products and services different from their competitors as well as
more attractive than the competitors. This is best strategy to cover the whole market and gain
more consumers in market place by making various products from all other products that are
available today (Knight, Moen, and Madsen, 2020). The Hit group toys company is already
developing as well as innovating its products generally by offering according to the needs and
requirements of the consumers. So to make success of this strategy business need to do good
reserch, innovation as well as development. Also, ability to deliver the good or high quality

products to the customers. Mainly large buiness pursu this stategy in orger to stay agile with new
products development process.
Focus strategy:
The business that use this strategies concentrate on the niche mrket as well as by
understanding dynamic market and unique needs of thie target customers. Generally this makes
market segment less attractive to the competitors. The Hit group toys company is targeting Kids
segment mainly as there are more excited about toys and varieties of product that are available in
the industry.
As more young professionls is living away from their home as well as working parents
who generally want to give kids best gifts. Therefore, their target group is usually increasing fast.
The another opportunity for the business is they can expand their network, and better range of
the products as well as reach by opening up more stores in the differents countries as well as
cities. So the Hit group company can expand their business to get more success as well as it will
increase their revenue or profits.
Critical assessment of growth options through Ansoff Matrix
Developmental growth can be analyzed through Ansoff growth vector matrix which a
product expansion grid used by firms for te assessment of growth strategies (Zanjani and et.al.,
2020). Following analysis has been made for the business expansion of the HTI Group Toy
Manufacturing company.
Market penetration
In this context, the UK based HTI group toy manufacturing company can invest its
financial resources in the area of production increment where the firm can try to control its
overhead costs that will in turn lead to the establishment of competitive prices for its target
customer segments in similar markets. Also, in order to enhance its varied product distribution of
unique toys the company can generate a wider consumer reach by appealing to their preferences
along with supply-chain improvement.
Product development
The existing toy models of this business can take a forward plunge if new features are
added in its production function through R&D activities. Several new launches of different and
unique products can also boost their increased disseminaton among the purchasing segment
along with striking a good level of sales augmentation. Along with all this the area of srategic

partnerships can also be explored by the respective business for limiting its risks and increasing
product quality. There is also the risk of the new product not being popular or failure in its sales
(Cendana and Widjaja, 2022, February).
Market development
The HTI groupt of toy manufacturing company can further enhance its existing market
potential by exploring new regions where the local dealing areas of its toy products could be
successfully diversified with the buying zone expansion. Here there are two things to be kept in
mind by the HTI toy manufacturing firm – which is of both gains and losses. This is so because
with entering new market areas there always is the risk of things going wrong if the invested
human/financial/technological resources might get wasted if the new market areas do not
comprise the right kind of buying audience.
Diversification
The fourth dimension of the Ansoff matrix consists of the diversification element where
as the name itself suggests the product and its relative market both get diversified by entering
new channels and routes of product market expansion. Here the HTI toy manufacturing business
firm can experiment with either vertical diversification where the new product additions fall
under the existing line or else it can use the horizontal diversification method through which the
newly launched goods are engaged and associated with new range of product market line. This
strategy also includes the options of mergers and acquisitions where the company can collaborate
and shoulder both risks and profits (Matrix and Ansoff).
Critical evaluate the options for financing growth as well as souces of funding
Bank loans
Most of banks provide the loans to small businesses so the Hit group toys can contact the bank in
order to expand their business so the business loan is the correct option for it. Most of the banks
also provide the credits, business lines with other resources to find out the right alternative for
the business. So the company can take loan from banks to increase their capital.
Advantages of the bank loans
 Allow business to grow
 No interfrance of trhe bank in business operations
 Potenially favourable interest rate as compare to the credit cards
Disadvantages of bank loans

 There is strict eligibility criteria
 Secured loans carry risk factor of losing business asset Lengthy application process
Crowd funding
This is other source of finance for a small business that grown popularity due to increase
of social media to simply reach many people throughout the world. crowdfunding is generally
using small amounts of the capital from the large number of people to the finance small business
But this include running a reward-based and equity-based crowdfunding campaign. With equity-
based crowdfunding campaign here, investors have taken part in the ownership of the business
(Mochkabadi and Volkmann, 2020). Whereas, in the reward-based crowdfunding campaign
business not give the ownership but they gives right to receive some of the rewards for their
own fund or capital.
Advantages of crowdfunding
 it is fast way to raise funds with no fees
 Reward flexibility
 investors can track business performance
 Increase momentum
 new opportunities
Disadvantages of crowdfunding
 low success rate
 Fail project risk
 reputation risk
 High pressure
Angel investors
The angle investors are normally private individuals who generally invest in others
organizations. In other words, they are individuals with good financial resources which they
invest in small businesses owned by the others. In some cases, angle investors generally operated
as team in order to finance small businesses (Grant, Croteau, and Aziz, 2019). The angle
investors are generally involved in the management of businesses for supervision. They
typically work with the small as well as mid size business or start ups that need limited fuds.
Advantages of angel investors

 No interest or repayments
 Better discipline because of outside scrutiny
Disadvantages of angel investors
 Control
 Less transparent
 Giving up share of business
 Takes time to identifying angel investor
venture capital
It is the another source of funding raised from private business is called venture
capitalists. In other words such investors provides funds to the small businesses and start up that
are belived to give long term growth potentials. They are mainally comes from investment
banks, well off investors, as well as other financial institutions (Pinkow, and Iversen, 2020).
These venture capitalists offer funds for firms that are at very early stages of the company cycle
or when major changes are done as result of the new products. Hence, venture capitalists are
more interested in the businesses with growth potential in industry. The major different between
venture capitalist and angel investors is business size as well as structure of deal according to
the financial experts.
Advantages
 Monthly payments not required
 Help in managing risk
 Large amount fund can be easily raised
Disadvantages
 Businesses has to give ownership interest from their business
 Difficult to obtain
so, hit group toy can take any sources to expand their business.
Exit and succession options for Hit group Toy
Selling business stake to the investors:
as lonfg as the business is not sole business owner, they can sell their stake to venture capital
investor or partner while business run as normally. Here, the term friendly buyer is mostly uszed
in such type of exit strategy, thus it is likely that the businessman would sell their stake to
someone trusted as well as known.

Advantages
the business can continue to run successfully with minimal disruption to the business as normal,
by keeping revenue streams steady.
Generally, its like that the person has interest in in business and committed to the success in long
term.
Disadvantages
finding investor or buyer for business can be difficult
sale may less objectives
Merger and acquisition
Merger or acquisition is strong plan option for business with their organization for
growth. Here, the business can sell their business to another organization, or merge who
generally want to enhance their geographic footprint, acquire talent, product and infrastructure.
Mainly acquisition is where one organization takes control of other company, normally with
money state exchange (Segal, Guthrie, and Dumay, 2021.). Here, the acquired company not
having the rights and even their name of the company will also change. Some benefits of the
acquisition is its reduces entry barriers, increase market share of company and access of capital
etc. but, there are some negative points such as conflicting objective, as well as damage the
existing brand image etc. Hit group toy for globally expansion they can merge with other
successful business, so they will easily take competitive advantages and increase their customers.
Advantages
 Economies of scale
 Increase economic of scope
 Competitive advantages
 Access to many resources
Disadvantages
 Increase legal costs
 Potentially lost opportunities
Recommendation for the business
The Hit group toy can increase their customer segment so its will increase company
revenues. So company can increase their customer based that will help company to attrect more
customer by their products. Even company can make products according to the need and

requirement of the customers. So the customers are satisfy with the organization products which
will help to enhance the brand image. If the business give innovate products to their customers
than this will also help to get more customers. Because today the customers want unique for their
children so they want toy which will give them satisfy. This also an competative advantage as
company offer innovate products which another company can not so its increase brand value.
Even company can use various social media plateform to increase company products. These
social media platform are Facebook, Instagram, twitter, and many more which help company to
market their products. Hit group toy also exapan their business in different country to increase
their customers as well as revenue for this they can take merge with another firm which is leader
of that country. This will help organization to get mpore and more success in future. Keep
customers happy is one of the major task for every company so they also focus on this to get
competative advantage.
Business plan:
Company description:
Wooden Toy Company is ready to introduce its wide range of toys completely made from
rich wood, these toys are safe to play and include no harmful material like nails or sharp cuts
(Tipu, 2018). Wooden Toys Company will deliver new range of wooden toys with innovative
and attractive design allowing children to enjoy and most importantly learn at early age. Wooden
Toys Company carry mission and vision, these are: Mission: Our Mission is to delivery high quality wooden toy products which are safe to
use and ensure learning.
 Vision: Our vision is to become leading toy manufacturing company in the UK and gain
market leadership in toy industry.
Product and service:
Wooden Toy Company is planning to introduce new range of product and service
allowing company to attract and retain customer for longer period of time, there are certain type
of product including service, these are:
Product range: Wooden Toy Company will introduce wooden toy including, wooden toy
vehicle, cars, board games, musical toy and even toy house fitted for at least four children. These
products will provide learning as well, company is planning to add those feature which ensure
child learn with toys (McKeever, 2018). Wooden Toy Company is planning to introduce those

products which are quite big which means exercise toy allowing children to enjoy exercise with
movement. Other toys segment will be planned according to the market demand, Wooden Toy
Company is ready to deal in toy market of the UK.
Service range: Wooden Toy Company is product based company demand little and no service
model, this company will ensure customer remain satisfy with their product (Fichter and
Tiemann, 2020). However, service may include; in house toy arrangement; this service is
provided those customers who have purchase large toys including complete toy house, service of
assembling will be provided to the customer, other service may include replacement service
within provided time frame and according to the terms and conditions.
Pestle analysis:
Political factor: This is one of the most important factor impacting company's performance,
political decision influence business growth. For example; after Brexit, the UK government took
decision to increase trade restriction which means Wooden Toy Company will have to limit their
toy supply in nearby nation.
Economical factor: This is another common and important factor, economic stability does
matter when it comes to business growth. After COVID-19, economy of every country became
unstable which means there is high inflation rate in the market impacting price of raw material. It
will be challenging for Wooden Toy Company to arrange raw material like finest wood and
timber.
Social factor: Social factor simply means consumer factor, after COVID-19, consumer factor
have faced drastic change (Perera, 2017). Spending capacity of consumer have reduced overtime
impacting firm's pricing policy, Wooden Toy Company need to set pricing according to the
market condition and consumer spending capacity.
Technological factor: Technology change when industry demand innovation, it is very clear
that due to rapid development in technology area, Wooden Toy Company need to purchase those
technologies which allow them to ensure internal stability. Company need to adopt both,
software and hardware technological advancement allowing firm to become stable and gain
momentum in the market.
Environmental factor: This simply means measure taken by government to control carbon
footprint, UK government is planning to introduce new forms of policy including sustainability

measures and restriction. For example; restriction on timber and woods will impact Wooden Toy
Company's manufacturing process.
Legal factor: This is critical factor, business need to complete all legal responsibility to manage
their growth, Wooden Toy Company is planning to introduce wooden toys which means they
have gain certain type of licence including timber and woods licence, this company is new to the
market which means legal measure often to be taken.
Competitive analysis:
Rivalry: This is critical area impacting firm's performance in the market, it is very clear every
business organization face heavy competition in the market. For example; Wooden Toy
Company will going to face competition from HTI Group, Prime Toys, Lego and other toy
manufacturing company who have stable growth and global footprint.
New entry: This is another important area in which company face competition from those
business unit who are newly entered into the market. Wooden Toy Company is new as well, this
might face competition from same scale company dealing in same scale customer segment, these
new enter have capital power to ensure flow of budget.
Power of customer: Consumer carry certain type of power in the market, this may include
power of bargaining (Bruijl and Gerard, 2018). Wooden Toy Company will going to face
competition when consumer bargain price of products and may shift to competitors for lower
price recall, Wooden Toy Company have to set price accordingly.
Power of supplier: Supplier carry certain type of power in the market, including power to
ensure smooth flow of supplies including raw material. Wooden Toy Company need to find
those supplier who provide raw material including timber, woods and other material in lower
rates which bring easiness to production process.
Threat of substitute: This is another area which impact firm's performance in the market, threat
of substitute simply means new entry or already established company copy product of Wooden
Toy Company, this may provide competition because Wooden Toy Company carry uniqueness
and have special features in their product range.
Financial:
Start up expenses
Legal $1600