Lion Hudson Ltd. Growth Strategy: A Business Development Report

Desklib provides solved assignments and past papers to help students succeed.

PLANNING FOR GROWTH
1

Contents
INTRODUCTION...........................................................................................................................................3
LO1..............................................................................................................................................................4
KEY COMPONENTS THAT ARE TO BE CONSIDERED WHEN GROWTH OPPORTUNITIES ARE TO BE
EVALUATED WITH JUSTIFICATION APPLYING ANSOFF’S GROWTH MATRIX..........................................4
LO 2...........................................................................................................................................................11
EVALUATE AVAILABLE SOURCES OF FUNDING TO A BUSINESS AND ADVANTAGES AND
DISADVANTAGES OF EACH SOURCE WITH JUSTIFICATION FOR ADOPTING A PARTICULAR SOURCE....11
LO3............................................................................................................................................................15
DESIGNING OF DETAILED BUSINESS PLAN.............................................................................................15
LO4............................................................................................................................................................17
EXIT PLANS FOR LION HUDSON COMPANY............................................................................................17
CONCLUSION.............................................................................................................................................18
REFERENCES..............................................................................................................................................19
2

INTRODUCTION
Small and Medium-sized enterprises are businesses that are determined by the number of
employees they have. In the United Kingdom, the number of people employed is less than 250
and has an annual turnover of not more than £ 50 million (Bridge and Dodds, 2018). At the year
ending of 2018, it was estimated that approximately 5.8 million small and medium-sized
companies work in the United Kingdom. Almost, all the businesses in the United Kingdom fall
under small and medium-sized enterprises and their ability to bring out creative and innovative
solutions for the common issues that arise which acts as an important aspect in finding
investors for the company (Madsen and Walker, 2015).
The report would be discussing Lion Hudson Ltd. Lion Hudson is book publishing enterprise
which has its headquarters in Oxford, England, United Kingdom. The company came into
existence in 2003 with the merger of Lion publishing and Hudson international. The number of
employees working at Lion Hudson is approximately 60-65 (Bridge and Dodds, 2018). The
company has a strong customer base which mainly includes both adults and children. Lion
Hudson publishes books under various categories of lion books, lion children's book, lion fiction,
candle books and monarch books which reflect a Christian view. The company's current status
is good enough to go for expansion. The expansion would require investment so potential
investors could be angel investors, banks, etc.
3

LO1
KEY COMPONENTS THAT ARE TO BE CONSIDERED WHEN GROWTH
OPPORTUNITIES ARE TO BE EVALUATED WITH JUSTIFICATION APPLYING
ANSOFF’S GROWTH MATRIX
ANALYZING RESOURCES OF LION HUDSON
There are mainly three varieties of resources are required for gaining competitive advantage
which is: Physical, human resources and financial resources. Physical resources of the
enterprise are the offerings that are manufactured which are different from other similar
companies (Madsen and Walker, 2015). Then human resources are the employees that have a
creative set of mind that helps in providing an edge over other companies. And, financial
resources that include the ability to invest manage funds from various sources of funding which
is a competitive advantage.
COMPETITIVE ADVANTAGE
A competitive advantage is an advantage that a company gets over its competitors which can
be based on the financial resources, human resources or the physical resources. Lion Hudson is
a book publishing company that caters the need of adults as well as kids. Their books are being
translated into 200 languages (Albrecht et al., 2015). The competitive advantage that Lion
Hudson has over other book publishing companies is that it has a range of products that target
both kids and adults, also their books have specific Christian that can help people learn more
about their culture also they translate the books in over 200 languages so that people all over
the world can read. This wide reach is a robust competitive advantage for Lion Hudson (Madsen
and Walker, 2015).
PORTER’S GENERIC STRATEGIES MODEL
4

This model was developed by Michael Porter. It has laid down various strategies that can help
the company in gaining competitive advantage by placing the offerings of the company in such
a way that it provides maximum profit levels (Pulaj et al., 2015). The strategies are:
5

Cost Leadership
This strategy emphasizes that to gain market leadership the company should keep the prices of
its offerings extremely low (Pulaj et al., 2015). This would help the company gain a competitive
advantage by keeping the prices low. Airlines use this strategy where the profit margin is low
based on each customer but considering the high volume, the company's overall profit is
maximized.
Differentiation
This strategy aims at getting advantage by offering products that are different from other
companies that are customized and are according to the customer’s choice. Products can be
differentiated based on their features, appearance, price, quality, etc. For this strategy, the
company should know the frequently changing needs of the customers (Pulaj et al., 2015).
Focus
The company should focus upon one particular method which can product differentiation or
cost leadership. Both things cannot be done simultaneously. If the company wants cost
leadership then it must understand the market changes (Schawel and Billing, 2018). And if the
company wants to adopt product differentiation then it must focus on the changing customer
needs and preferences.
For Lion Hudson to expand it should follow the focus differentiation strategy because it is the
most suitable strategy for it. Wherein, the books should be different enough which attracts the
potential customers and can customize according to their preference by keeping a particular
language or displaying of visual arts. This would help in selling more hence, achieving profits
(Pulaj et al., 2015).
6

PESTLE ANALYSIS FOR LION HUDSON LTD.
POLITICAL FACTORS
 There should be a stable political environment so that it has a positive impact on the
growth of Lion Hudson (Rastogi et al., 2016).
 The government of the United Kingdom should be supportive enough by providing
affordable taxation policies for the businesses so that they can grow.
 To carry out operations of the company in a smooth manner government should
provide basic infrastructural facilities that include water, paved roads, adequate
electricity, etc. (Pulaj et al., 2015).
 Government of the United Kingdom should come in full support of the organization for
its expansion.
ECONOMIC FACTORS
 Environmental factors like low inflation rates can have a positive impact on the business.
 When expanding the business recession and lower employment rates should be
carefully analyzed as this can negatively impact on the company (Rastogi et al., 2016).
 All foreign exchange rates should be considered because it will have an impact on the
business when expanding in the global markets.
 The final price of the product can be impacted through the cost that is involved in
incurring the raw materials (Madsen and Walker, 2015).
SOCIAL FACTORS
 The changing needs and preferences of the customers imply the business and its profit
margin (Rastogi et al., 2016).
 Newer platforms like digital platform help the companies in getting better reach to its
potential audience with minimum cost.
 Lion Hudson needs to get in connection with its customer on an online platform by
selling online, taking reviews and feedbacks online, etc. (Rastogi et al., 2016).
7

 For building contacts, Lion Hudson should work on digital platforms.
TECHNOLOGICAL FACTORS
 Lion Hudson should adopt the latest technologies that are prevailing in the market so
that it becomes productivity for the same (Pulaj et al., 2015).
 New implementation of the technologies can bring about many changes in the
organization and the company needs to get the changes accepted by the employees.
 Technological up-gradation requires funds that need to be arranged by the company.
 Newer and better platforms to sell the books can help Lion Hudson adding new and
fresh customers to the business (Rastogi et al., 2016).
LEGAL FACTORS
 Lion Hudson should be adhered by the legal framework that is formulated by the
authorities of the United Kingdom (Schawel and Billing, 2018).
 Legislative changes can also impact the business of Lion Hudson.
 There should be no discrimination made based on gender, age, caste, colour, etc. at Lion
Hudson so that the employees work without any inhibitions (Rastogi et al., 2016). Legal policies that are formulated should be in favour of the employees at Lion Hudson.
ENVIRONMENTAL FACTORS
 As Lion Hudson is a book publishing company therefore, it should contribute more
towards the environment by using a replacement for the paper (Schawel and Billing,
2018).
 Lion Hudson should establish an effluent treatment machine which would help in
controlling the waste caused by these companies.
 Customers tend to prefer companies that are environmentally friendly and contribute to
the environment positively (Pulaj et al., 2015).
 Every company should do CSR activities to be socially responsible for the environment.
8

The above-discussed PESTLE analysis would provide deep insight into the social and economic
factors that can have a positive implication on the successful growth of the company (Rastogi et
al., 2016). Also, selecting the most appropriate technology is a very critical step that the
company has to undertake which it does after comparing all the possible advantages and
disadvantages of using a specified technology. This would help lion Hudson in analyzing the
lifestyle and choices of the current customer base (Schawel and Billing, 2018).
SUGGESTED RISKS INVOLVED IN GROWTH
The present competitive environment that surrounds Lion Hudson should be evaluated, with
the future developed goals as the strategy that is suggested above is the differentiation strategy
and cost leadership strategy (Madsen and Walker, 2015). It's important to evaluate the
necessary risks that can slow down the growth and development of the organization.
Therefore, various associated risks are:
Cultural Barrier
Different cultures can have the different impact of the needs, wants and demands of the
customer. Absence of appropriate customer engagement in the local markets can lead to the
loss of the potential customer, or the business might lose control in some cases (Schawel and
Billing, 2018).
Higher Competition
When any company develops a new product it wants it to face less competition. But when the
product is introduced into the market it tends to face aggressive competition which can lead to
declining of its sales. To survive in higher competition the company must evaluate its
competitors business and develop strategies accordingly (Madsen and Walker, 2015).
9

Challenges related to Human resource
When any company goes for expansion it must assess the number of employees it will need
shortly. New and fresh talents would be recruited and needed because every expansion
requires more manpower (Madsen and Walker, 2015). The employees recruited should be in
accordance with the job position to be filled. The employees that are new to the environment
would require proper training and motivation so that it can cope with the dynamic
environment.
ASSESSING OPPORTUNITIES THROUGH ANSOFF’S VECTOR MATRIX
Figure 1: ANSOFF'S VECTOR MATRIX
(Source: Schawel and Billing, 2018)
MARKET PENETRATION STRATEGY
Under this strategy, the organization strives to increase its present product offerings in the
present market only. This can be expanded using various forms of advertising and increasing
communication with the customers (Schawel and Billing, 2018). This strategy focuses on
growing the market share in the current marketing scenario and segments. Here, the company
tends to sell more to already existing customers and also search to build a new customer base
by adding more customers from the existing markets (Gurcaylilar-Yenidogan et al., 2018).
10

PRODUCT DEVELOPMENT STRATEGY
Under this strategy, the organization tries to develop a new product that focuses on targeting
the current markets helping in attain growth. Before introducing a product in the market the
company must conduct market research and analyze what products the competitors are
offering (Cerqueiro et al., 2016). But it may also happen that the new product might get
recognition as it is launched by an existing brand. This is a creative approach where a company
tries to introduce a new and different product in the market, involving a high amount of risk
(Madsen and Walker, 2015).
MARKET DEVELOPMENT STRATEGY
Under this strategy, the organization tends to expand its geographical boundaries with the
motive of exploring new markets. Here, the company offers its existing products with
minimalistic changes in the market (Gurcaylilar-Yenidogan et al., 2018). The company must
conduct a research on the market and understand the customer's mindset before entering into
a new market which can be a foreign market. This strategy can be an advantage for the
company when it is facing aggressive competition and wants to tap into new markets
(Cerqueiro et al., 2016).
DIVERSIFICATION STRATEGY
Under this strategy, the organizations attempt to increase their market share by developing
new products for the new markets. The strategy is claimed to be the most risky one as here
both product and market development is undertaken (Gurcaylilar-Yenidogan et al., 2018). Here,
the company gets the first mover advantage which helps in lowering down the risk factor and
increases the chance of attaining more profit.
In the end, the market development strategy is the most recommended one for Lion Hudson.
As this strategy is based mainly on the expansion of the customer base, which would be
appropriate for the growth and development of Lion Hudson. There are many book readers all
over the United Kingdom therefore; expansion will help achieve growth and objectives
(Gurcaylilar-Yenidogan et al., 2018).
11

LO 2
EVALUATE AVAILABLE SOURCES OF FUNDING TO A BUSINESS AND
ADVANTAGES AND DISADVANTAGES OF EACH SOURCE WITH JUSTIFICATION
FOR ADOPTING A PARTICULAR SOURCE
LOANS FROM BANKS
Bank lends money to individuals or businesses on a specific rate of interest which has to be
repaid in a certain interval of time (Belleflamme et al., 2015). The interest rate that is charged
differs from bank to bank. That is why it’s important for an individual or businesses to keenly
analyze the interest rates.
Advantages
 It is easier to get loans from banks and also as the credit rating of Lion Hudson is positive
which acts as a support in getting loans (Cerqueiro et al., 2016).
 There is a specified procedure for the repayment of loans. And this specified procedure
of acquiring a loan and repaying it makes it more relatable.
 When Lion Hudson wants a large amount of capital it can opt for bank loans, as these
are easy to acquire (Madsen and Walker, 2015).
Disadvantages
 The loan taken requires interest to be paid on it, which is very high (Gurcaylilar-
Yenidogan et al., 2018).
 If in case, Lion Hudson is unable to repay the loan amount, then its credit ratings might
get deteriorated and in worst case scenario the company might get liquidated.
12