HND in Business Management: iHerb's Growth Plan, Funding & Exit Plan

This report evaluates growth opportunities for iHerb, an online supplement seller. It uses Ansoff's matrix to identify growth opportunities and explores potential funding sources, including bank loans, owner's investment, and crowdfunding, weighing their advantages and disadvantages. A business plan is developed, covering company description, market analysis, organization and management, product lines, marketing and sales, and required funding. The report also examines exit strategies for iHerb, considering their impacts and providing recommendations. Tools such as Porter's Five Forces and the BCG matrix are used for analysis. The document provides a comprehensive overview of strategic planning for iHerb's growth and sustainability. Desklib provides students with access to this document and many more solved assignments.

PLANNING FOR
GROWTH

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
P1 key consideration for evaluation of growth and opportunities..............................................1
P2 Ansoff's matrix to identify opportunity..................................................................................3
M1 Options for range of analytical frameworks ........................................................................4
P3 The potential source of funding ............................................................................................4
M2 Appropriate sources of fund ................................................................................................6
P4 Business plan.........................................................................................................................6
Company description..................................................................................................................7
Market analysis...........................................................................................................................7
Organization and management....................................................................................................8
Products and service line.............................................................................................................8
Marketing and sales.....................................................................................................................9
Required fund..............................................................................................................................9
P5 Exit strategies with its impacts on the business...................................................................10
M4 Recommendation for the exit strategy................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
The planning is the primary task in every activities or to achieve an particular goal. The
planning is also become more important when any organization is expanding and growing in the
specific area (Abinowi, 2021). Before planning there are different market analysis and sources
are inspected by the company to iHerb is an online product seller of supplement allover Britain
market they are providing the best quality supplements. This report evaluate the growth
opportunities within the iHerb. The ansoff matrix is being used to determine the opportunities
for growth, the sources of funds are explained with the current source of fund to the company
with the advantage and disadvantages of using it. Further in this business plan is develop to
grow in the market moreover the exit and succession option for the iHerb with the benefits and
drawbacks.
MAIN BODY
P1 key consideration for evaluation of growth and opportunities
Porter's five forces
This is the framework to analyse the market competition of a particular businesses in this
there are five forces that helps in determining the intensity in which the business is performing
its task (Gregg, 2021). iHerb can use the porters five forces to evaluate its growth opportunities.
The iHerb is one of the effective online product seller and they are trying to enhance their target
market and identifying the market opportunities. With the help of this company can know to
develop the competitive advantage.
Threats of new entrants(High): The online product seller are usually come in the market with
an innovative style that provide an different experience to the customers. This will influence the
iHerb to reduce its prices so that the customer remain with the company. The online sale of
products are being very common and any one can start an online business so the iHerb have an
higher threat from the new entrant in its market. For resolving this issue the company should
introduce new products and services regularly so that customer are influenced with the company
and attracted towards the brand. The iHerb should also do its activities after researching the
market place and identifying the better option.
Bargaining power of suppliers (Medium): the companies who are supplying the products
online they are purchasing the raw materials from different sources in the market. The supplier
are also have some power to reduce the margin that the company is earning in the particular
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market. iHerb is also purchase its products from different supplier in the market yet company
can shift to some other supplier when the profit margin get reduced. iHerb can tackle this with
the effective supplier chain in the market and different suppliers (Bernal Escoto, Montero
Delgado and Rivera Aguirre, 2021). The company can also find alternative raw materials so that
the company can shift to that that is more effective.
Bargaining power of buyers(High): The customers in the market are normally demands
different products and services. The buyer in the market are trying to buy such commodity with
better value at lower price. The customer can control the pricing of the company because when
the iHerb enhance the price then customer easily shift to some other competitive brand. The
company can over come with this by connecting more customers and enhance the product and
sale of the iHerb products. The company also innovate the commodities and provide different
offers to the customers so that they remain stick to the brand.
Threats of substitute (High): The online retail industry are also have the which similarly fulfill
the needs of the customer in different manner. When the value proposition high then the threat
of substitute get enhanced. The iHerb should be service provider more then product and
understand what customers needed.
Rivalry among the existing competitors (High): there are lots of competitors of iHerb in its
existing market and this industry is very competitive. This also effective in the long term
profitability of iHerb company. To tackle this iHerb can make its products more sustainable as
compared to others.
Boston consultancy group matrix
This is one of the tool to plan which is one of the best way to present the goods and
services that are being supplied. In this helpful to evaluate the things that company need to carry
on and what are the segment that must be stopped (Veverková, 2021). The market value is also
identified of the commodities and effectively managed as well. The iHerb online retailing
company can easily make use of it. Their are four segment in this matrix which are options for
the company to adopt.
Dogs: This is the segment in which the brand products are not able to capture much market share
and having less amount of profits as well as less growing area. In this type of segment the
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company should not continue with that product and liquidate it. In iHerb the company should not
continue highly process products that are less effective so this is dog for iHerb.
Cash cows: In this the products category which is having more effective market share yet the
company not have much grow in that category is cash cows. In this condition the company
should not invest much in this area yet that products must be continue in the market. For iHerb
the vitamins and omega are the cash cows as the product sale is higher yet in this growth is less
(Gehl and Porter, 2020).
Question marks: When the product area is having higher growth yet the products are less
effective in the market. In this the commodities are being analyses to find the value that has to
be maintain. The whey protein is question marks as this product is one of the best in which the
company can grow its business, Yet the company is not having effective market share.
Stars: This are the segment in this matrix where the company has effective opportunity to grow
in the market and one category of the company is also performing effective in that. iHerb is also
enhancing its profit and market share, energy drinks are the stars for the iHerb.
P2 Ansoff's matrix to identify opportunity
This is the tool or method to develop the plan and determine the approaches to grow in
the market. This is one of the effective tool that is helpful to identified the risk and also provide
the method to manage and resolve them (Kuntamas and Shoommuangpak, 2020). iHerb can
easily make use of this matrix to develop its marketing strategies and to sustain the market.
Market penetration: This is an strategy in which iHerb will going to offer the previous and
existing products to the customer in the existing market in comparatively different way. They
will use those tools which are helpful to reach more customer in unique manner. When the
customer are attracted towards the product then the sale get increase and company is going to
earn more profit. In this iHerb can use the digital technologies to promote the goods and services
in which the customer are highly active.
Market development: In this method the iHerb is going to enter in the new market in different
style with the same products. iHerb can effectively enter in the new marketplace with existing
product range in wider area customers. The promotion activity get more effective when the
company develop its marketplace. Wider area people know about the brand and its sale of
existing products also get increases. In the UK the market is getting smaller after the Brexit so
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with the help of this strategy the iHerb can effectively grow its business outside the nation and
grow its customer base.
Product development: the development of product is also an effective method to sustain in the
market and attract the customers towards the company (Tokarchuk, 2021). In this process the
iHerb is going to lunch the new product in the existing market to attract the customers more.
When the iHerb will make use of it then the existing and new customer will find the company
more effective and they are going to retain with the company for long. iHerb can develop its
supplements products in the existing market and grab the opportunities effectively. The whey
protein is one of the best category to innovate so company should invest much in this area and
try to develop the product more.
Diversification: This is one of the best method to change the brand image and grab the wider
area customers. This can be effectively use by iHerb to expand in new marketplace with an more
effective product that is needed by the customer. The company uses to inspect the market and
customer preference so that they can offer more efficient product in that market. iHerb can also
move to some other industry rather then supplement and offer in different market so the people
are know the company also uses to deal in this sector.
M1 Options for range of analytical frameworks
iHerb can make use of BCG matrix and porter's five forces model to identify the growth
opportunities and competitive advantages (Duin and Thoben, 2020). This frameworks are
effective in finding the best way that iHerb can use so that their profit and market share get
enhanced. The organisation also get more effective and get the competitive advantage by using
this.
P3 The potential source of funding
iHerb is an online business who uses to provide supplements product through digital
technologies so there are different source which are helpful for iHerb to perform its business
activities.
Bank loan: The loan from bank is an source of funding for iHerb as this is an small scale
company and owners are not distribute the shares in the market so this is effective way to
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arrange the fund for the company can it is needed (Kalogiannidis and Mavratzas, 2020). The
company have to repay this loan amount with an certain rate of interest.
Advantage
 The company can collect this fund wherever the company is in need and want fund to
perform its task. Their not distribution of authorities when the bank provide the loan they are not
controlling the company.
Disadvantages
 Bank loans are usually charge higher rate of interest as compared to others and lack in
instalment deposit will marked as penalties.
 Bank loan also needed different documentation and formalities to get.
Owners investment: This is potential source for the iHerb as SME are not having investors so
owner it self have to contribute in the activities of business so that business can perform
effectively.
Advantage
 This is the fund which is invested by the owner itself so the company not have to pay
any kind of interest or any charge in return. This is the quickest way to collect the fund for the iHerb because owner own money is
invest in this.
Disadvantages
 The risk factor are higher because if the business is failure all the money of owner is not
going to come back. The amount is being limited to some extent so it can not fulfil the requirements.
Crowdfunding: The company also making use of this potential source to arrange fund for the
iHerb business as in this type of fund different investor come together to collectively help the
company so they uses to invest their fund and collectively provided to the company. iHerb can
expand its market with the help of this fund and sustain in the market for long.
Advantage
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This is simple and effective method to arrange fund for the company that can be used
effectively.
This method is digital so this is more valuable an efficient that is help the company to attract the
customer towards brand.
Disadvantages
 The control on the decision making is being distributed in the investor who have invested
their funds in the iHerb.
 Their are chances that the investor face conflict at the time of investment returns.
M2 Appropriate sources of fund
The iHerb have many option that are appropriate to use by the company as they can undertake
the bank loans, owner investment and crowdfunding as all the suitable for the iHerb because the
SME company are working on comparatively small scale and this sources are effective to
arrange the fund for the iHerb company.
P4 Business plan
This is description of the main business activities, objectives and planning to achieve the
goals are determined in this plan (Forkner and et. al., 2018). Iherb is an online supplier of
supplements products, and they are going to plan to develop physical stores in the market of UK.
The company is going to make an effective business plan that will assist in opening the stores in
Britain market.
Executive summary
In this plan related to the business will undertaken different activities and functions,
objectives and plans that are going to contribute in the goals of that is fixed by the Iherb. The
approaches and strategies are effectively presented for the opening of physical iherb stores
(Morais, 2020). The company is having an effective online presence to enhance its sale they are
trying to open physical store which are helpful in enhance the sales and also promote the brand
in the targeted marketplace. In this plan the analysis are done to know the current market
conditions, organizational structures further the market strategies and financial proposition etc
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are conduct in this planning. The budget is also being prepared which is required to perform all
the activities of the business plan.
Company description
iHerb is being founded in the year of 1996 and working internationally through digital
technologies. The supplement product which are offered by the iHerb is exclusive, and they are
also sale their product through third party applications (Mogaji and Yoon, 2019). The website of
the iHerb not charge any fees from its user the customer can buy the product when they want to
buy. They are offering the latest and fresh products to its customers as possible. The products are
firstly checked and then come in the market for the customers. As they are working online so the
company offers 24/7 customer care services to contact with the buyers.
Market analysis
The market analysis is vital before performing the task which is new and with the help of
this iHerb can easily know its target customers, their choice and preference, competitors, current
threats in the market and many more (Adie, Hall and Prayag, 2018). The current condition of
the company can identified by internal analysis that is effectively done with SWOT analysis
frameworks.
Strength
 The quality of the supplements that are provided by iHerb is unique in the market where
they perform the business activities.
 The company also provide 24/7 services to its customers and satisfying them by
resolving the queries.
 iHerb is storing its stock in cleaner and air-conditioned warehouse where the products
are safer. All type of supplements are available with this brand so customer don't have to make
more efforts.
Weakness
 The brand provide free services of shopping so the risk related to the margin and less
effective in optimizing the cost (Demming, Jahn and Boztuğ, 2017). The company is not inventing they are going this as per the current competitors in the
market.
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Opportunities
 The company also invest and research to provide the secure and safer way of shopping as
this is become one of the biggest issue in the minds of customers.
 The company should also offer its own brand products on its website so that customers
will attracted and connected with the brand. Iherb can open the physical stores all over the UK market this will promote the sale and
marketing the brand.
Threats
 There is a huge competition in the online retailing market and new entrant also feel free
to enter this market.
 When the company introduces the physical store then there are chances that sales of
iherb products remain same.
Organization and management
When the business plan is come to implement than the leaders and managers have to
perform their duties to perform all the task related to the business plan in right way. Iherb
managers will undertake the hierarchical structure which will help to divide all the authority and
responsibilities within all the department of the company (Phadermrod, Crowder and Wills,
2019). This is one of the traditional concept to control and organize the activities with in the
company. In this all the employees of iherb will coordinate with the managers for the activities
related to store opening with an effective marketing strategies. The hierarchical structure of
organization is one of the effective way in which iherb employees are clear about the things that
has to be performed by them.
Products and service line
Iherb is a multinational online product retailer mostly deal in supplements and health
related products (Cui, Allan and Lin, 2019). The customers of Iherb uses to buy the product
using online way of distribution. The company is having around 60 employees who are
contributing their efforts to reach the desired goal of the company. The products are basically
valuable and to enhance the sale company also want some physical evidence of the brand and
products. The main work of the Iherb is to provide most effective supplements of premium
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brand to its customers. With this business plan the company is making use of its research and
human resource people who are responsible to manage the functions.
Marketing and sales
The marketing strategies are being used by iHerb to open the physical store more popular and
valuable for the customers (Duvall-Young, 2019). The company will make aware about the
physical store to its existing customers in the market and provide all the information which is
needed according to the buyers in the market. They are one of the effective company operating
digitally so for the promotion they will also make use of social media marketing and digital
marketing tools to reach to its existing and new audience attracted towards the brand. They will
also good content on the social networks because the customers are more active on these
networks and with the help of effective post and images the iHerb can create more value.
Initially when they will open the store then they will provide the products in discounted prices
and also provide different combs which are comparative less in the price. For performing the
marketing practice they will also use sales and marketing team and researching process that is
being the reason for effective marketing which will contribute in completion of the plan.
Required fund
To develop an open physical stores in UK market iHerb will need fund to perform all the
activities which are needed in this (Sikder and Hossain, 2018). There are some sources through
company can generate fund for the company.
Bank loan: This is effective method through which company can raise the fund, the bank are
always wanted that the business enterprise will take a big amount to invest in their business. The
bank will charge can fixed interest rate from the iHerb on monthly or yearly basis. The bank
loans are not being taking part in the organizational decisions and not even taking any shares in
the business. The company can take this fund at any time and this method is on of the effective
way to arrange large amount of fund together. The company can use its business plan by
generating fund from this effectively.
Owners investment: This is an investment which is done by owner itself in the business so the
Iherb can also make use of this type of investment in the business plan activities and functions.
There are number of benefits when the iHerb owner will invest its own fund in the business
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work. When the owner will invest its personal money in the business then the business not have
to pay any kind of interest and all the profit which is generated by company will take by the
owner itself (Boschmans and Pissareva, 2018). When the company need limited amount then
this is one of the suitable way to fulfil the fund requirement in iHerb.
Financial projections
Particular Cost
Labor $ 2000
Raw materials $1600
R&D $1800
Marketing expenses $1200
Training cost $400
Other expenses $1000
total $ 8000
From the given budget the investment is distributed among different functions and
activities as per the needs of all the department. In a way that all the functions and duties are
effectively performed.
P5 Exit strategies with its impacts on the business
This is one of the critical stage in which planning which is one of the vital part of develop the
business. In this strategy the individual who is controlling the decisions of the company will
make a decision to leave the business activities (Carbonara, Tran and Santarelli, 2019). The
individual must develop its exit strategy in the starting phase which is being helpful to the iHerb
are:
Liquidation: This an effective method through which company can close its business by selling
all its assets and settle the creditor and shares that are distributed in the market. This can be done
with the company through two ways that are closing the business and sale all the assets of the
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