Business Growth Plan: Merchant & Mills Expansion and Financials

This report evaluates growth opportunities for Merchant & Mills, a micro-level business in the UK fashion industry, using PESTEL and Ansoff Matrix analyses. It explores market penetration, market development, product development, and diversification strategies. The report also examines Porter's generic strategies, including cost leadership, differentiation, and focus strategies, to achieve a competitive advantage. Furthermore, it discusses various funding sources and suggests a business plan with financial information and strategic objectives for expansion. The report concludes by evaluating exit and succession options for small businesses, providing recommendations tailored to Merchant & Mills' context. Desklib offers more resources for students, including past papers and solved assignments.

Planning for Growth

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................4
P1 Evaluation of Growth Opportunities with Justification.........................................................4
P2 Ansoff Matrix of Growth Analysis........................................................................................6
M1 Option for growth to Merchant & Mills to get competitive advantage ...............................8
D1 Evaluation of the options with associated risks....................................................................8
M2 Evaluation and Justification for recommended source of fund..........................................10
D2 Analysis of recommended source of fund in context with Merchant & Mills....................11
P4 Suggestive Business Plan for Merchant & Mills including its Financial information and
Strategic Objectives to expand the business.............................................................................11
D3 Business Plan explaining the efforts of company to apply strategy in achieving the
objectives of the business .........................................................................................................13
P5 Exit and Succession options For small Businesses..............................................................13
M4 Comparative Evaluation of Recommended Exit or Succession option .............................15
D4 Evaluation of the Justification of Recommended option to Merchant & Mills..................15
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................15
Books and Journals........................................................................................................................15

INTRODUCTION
A growth plan of a business organisation is the blueprint of its business conduct including
company's goals and objectives. It contains foundational and fundamental principles which helps
in commencing the business and its major operations. A micro level business when extends its
business operations, they prepare a model which presents all the essentials and requisites
parameters for business expansion. Business growth plan facilitates in formulating the business
growth strategies. It sets an action plan to meet the essential requirements for its growth and
development(Asseraf Lages and Shoham 2018). This report covering all the essentials for
development planning of Merchant & Mills, together with its PESTEL Analysis, proper action
plan suggested from porter's generic plan of action and development analysis derived by Ansoff
model. This study covering the various source of funds which facilitates in business expansion.
TASK
P1 Evaluate Growth options for a business with Justification
PESTEL Analysis
 it refers to an action plan to critically examine the business affairs, especially outer
business affairs and its effect over the business conduct. There are six factors which
impact the business enterprises based on its evaluation. The six factors are: Political,
Economic, Social, Technological, Environmental and Legal which are essential for the
constitution of macro environment of business. Merchant & Mills PESTAL Analysis is
given below:
 Political Factor: varieties of sections such as government and its policies, global trade
policies, global market regulation and many more comes within the ambit of political
factor. During the pandemic due lockdown , the fashion industry of UK had incurred loss
and sustainability because the essential raw materials for its production sourced from the
other countries of Europe. It had faced worst circumstances and legal challenges in trade
after Brexit. The same challenges faced by the Merchant and Mills, the major challenges
was during worldwide lockdown and completion of Brexit transition period. Merchant
and mills (Bessière Stephany and Wirtz2018).

 Economic Factor: it covers the economic parameters of the country including salaries of
workers, interest rates and foreign monitory rates. The process of cloth manufacturing is
expensive in United Kingdom . Therefore, Merchant & Mills, even so reduce its
manufacturing cost by tendering its manufacturing and production rights of its products
in other countries. For instance, countries like India and China could be the best option
for manufacturing and manufacture of its product because they provide cheap labour
rates.
 Social Factors: the choices, likings of the consumers for fashion and clothing , the
location of store, the prevailing trends of fashion and all other factors which operates for
the customer preference falls within the category of Social Factor. To elevate the
customer footings in the store, the Merchant & Mills should increase its outlet at public
footing location at national level to create the buzz among the customers.
 Technological Factor: this factor is a crucial one because it provides for the use of latest
innovative technologies which could help in business growth. Technology facilitates in
enhancing and elevating business operation with more ease. It also enables to
commercialize its products through E-Commerce. The Merchant & Mills can also avail
this opportunity for commercialising its products online. It should also focus on its
product delivery criteria, especially fast delivery which is possible by adopting latest
technology(Bhattacharya Momaya and Iyer2020).
 Environmental Factors: these factor refers to the sustainability approach to be
maintained by the business organisation with a view to prevent the environment
pollution. As per the data about 10 percent of global greenhouse emission to which UK
fashion manufacturing industry is responsible. These industries are accountable for
harmful emission and prevention obligation should be imposed on them. The
Merchant&Mills should take measures to avoid wastage and scraps and promote
sustainability.
 Legal Factors: it refers to the laws, regulations, orders, enactment and its application on
cloth industry. M&M is a fashion merchandising,therefore comply with the rules and
regulation for customer security and prevent any infringement of rules such as mercantile
law, revenue law, buying and selling law etc.
Porter's generic Strategies

This framework offers three main plan of action to obtain the competing benefits. These schemes
were drafted by Michael Porter which helps the enterprises to obtain competing vantage in the
market. These schemes include- outlay leadership, operation strategy and Focus strategy. The
explanation in regard with M&M are :
 Cost Leading Plan of action: to obtain advantage in retail market the strategy of low
product cost is beneficial. The companies often sell their products at average price to
maintain their foundation and standing in the competitive market. M&M can avail
financial benefits by adapting less cost consuming production methods , whereas putting
the average prices in the existing market to expand business. Merchant & Mills on the
other part can get benefit of cost leadership if other competitor not able to bring their
costs down.
 Operational Scheme: It implies to integrate especial elements to the production and levy
premium for the product of different varieties. The strategy is to acknowledge that if the
business selling its commodity at high price which will cover the surplus cost in its
manufacturing . This operation requires high skilled team and coordination for the
improvement of its commodity. For instance, if M&M wish to extend its operation it
needs to improvise and bring creative features in its product , for example it can
embellish its product to make it more premium in quality.
 Focus Strategy: this segment requires focus and attention. This strategy is comprised of
two strategies: cost focus strategy which refers to consider and fix the value of the
targeted part to be remain low-level. Cost operational plan of action considers distinction
of product in low section. For instance, M&M can consider either to expand the clothing
store or the clothing business. Expansion of existing business is more economic and it
create ample of opportunities to grow business reputation in the market.
Merchant &Mills is a medium scale fabric business in retail sector, if it wants to elevate its
business status, it must follow the customer oriented approach and built customer base
domestically. UK cloths industry is consider to be very expensive ,therefore it should focus more
on cost effective measures in order to make production and sewing process. To achieve and
succeed in competitive market it is advisable to Merchant&Mills to adopt cost leadership plan of
action while charging normal price and get economic as well as competitive benefits. The global
trading by way of exporting its product to other markets will enable the company to accumulate

more foreign capital with cost effective manufacturing and producing that will directly elevate in
profit growth.
There are various other growth opportunities which can be considered by the Merchant
and Mills and these are mentioned below-
Innovation- It is essential for Merchant and Mills company to adapt innovative strategies to
grow well within their industry. They can use sustainable fabrics to produce their cloths which
will help them to gain the trust of customers which further help them to grow effectively.
Partnership- This is also one of the most effective growth opportunity for the Merchant and
Mills company. Here, they can agree to work with other clothing brand in the form of
partnership. This will help them to use their resources and customers. For example, if Merchant
and Mills will come in partnership with any large company then they will use their staff
members to conduct their business operations, they can also use their technology effectively.
Therefore, Merchant and Mills have the opportunity to grow well by attracting their customers
toward their cloths.
Use of technology- Using new and updated technology will also help the Merchant and Mills
company to grow well. High quality of tools and machines in production department will help
the company to use their raw material effectively without wasting them. Hence, this will help the
company minimize cost of production. Secondly, they can also use updated software to manage
their data and make their business grow well. For example, with the help of updated software of
data collection, they are able to collect data of their customers that which types and designs of
cloths their customers are preferring more so that the company will only invest in those cloths.
P2 Explain the Ansoff Matrix analysis on growth

Derived by Igor Ansoff. This is scheme gives the way to the business to expand its operation
and production and market with better planning and strategy. This theory is also known as
business growth strategies. It presents four categories of business to promote and elevate its
growth in the market i.e. following are the plan of action to extend the business of
Merchant&Mills :
 Market Penetration: this strategy, the companies use to increase its sale or their
existing product in the market in order to increase its market value, there is a lowest risk
associated with this strategy. Merchant&Mills operates as a micro level business
enterprises in the UK market space. Presently releasing its commodity at Rye situate in
England. It can enter in the UK market by adopting creative and compelling promotion
campaigns at different sites and it should make its dispersion system strong to meet
consumers demands. These measures will help in building customer base and increase
market share in UK.
 Market Evolution: this scheme enables the establishment to penetrates its product into
new market, new location with new customers. Market development is a wide concept it
can be used to develop a domestic market as well as an international market.
Merchant&Mills require to welcome advance technology launch its product into new
market. It requires a huge capital and investment for establishing infrastructure in foreign
markets. Therefore the best policy for Merchant&Mills to set and expand its business at

local and global level. Market is chancing and evolving, M&M should take the
opportunity of market evolution and produce products accordingly. It can use sustainable
innovation and bring something which does not exist in market , a product should be
different and authentic which could compel the customer to buy.
 Merchandise Development: according to this theory, an enterprise launches brand new
commodity in the prevailing market. Exploration and evolution of new product to be
introduced in the market to make a broad scope of merchandise line and a huge client
base for spreading business of a company. M&M can also take benefits of its existing
market , it can further expand its business by creating range of products following the
trends and the preference of its customers. Product development process requires huge
amount of investment to conduct research and development to meet the competition.
M&M can also play partnership with other garments merchants and apply their process
in manufacturing the products. This strategy will help both the merchant and enable them
to create or design new segment.
 Diversification: the most risky strategy because it deals with the introduction and
launching of new product. After having investment too much in launching product
globally to diversify the product line of a company it should be done with proper care and
caution. Merchant &Mills if looking forward to diversify its product line by
manufacturing varieties of new product , it needs to promote its product at best level. It
can also source different varieties of raw materials form other countries considering the
preference of the customers and create unique products.
It is suggested to the M&M to implement the market evolve strategies with different action plan
will create ample of opportunities to expand the scale of business in market. This requires
opening of more outlets to develop market share. The promotion of product also play crucial role
in determining the success of the new product, promotion of product at higher level is very cost
consuming but it is essential to compete with other markets. The effective fast delivery service is
also the concern for many customers, therefore the company needs to address the issue for
customer convenience. The focus should be on the customer preferences. The better service
delivery can create a good market value and reputation of the company(Ganji Shah and
Coutroubis2018).

M1 what are the options available fo M&M to get compititive market
M&M also consider implementation of price leadership scheme and its impact on its business.
The promising advantage which the cost leader strategy delivers is the company's market stance
which sells its product at reasonable rates. Not just the price but the quality also promising. The
cost leadership strategy assist in gaining more revenue which can be use as investment in the
company to expand and create more efficient product by increasing production capacity. The
Merchant&Mills should adopt this strategy in order to expand its business within the territories
of UK by opening multiple outlets at different location covering all the major cities which will
help in building client base and gain share in the United Kingdom market(Donnelly and
Silva2020).
D1 Evaluation of market growth option
This strategy undoubtedly assist in elevating competitive benefits. However, other businesses
can also do the same, if other competitor also reduces the cost as the technology advancement in
the production process can be analyse by other competitors. Market development has its own
drawbacks because it focus more on customer needs and preferences and the risk associated with
it is the change of trends, choice and customer preferences in the market. If there is a new
consumer piece, eventually there rise a risk of changing preference of customer at new location.
This plan of action is economic if there is good understanding about the behaviour of customer
of new market which is not much distinct from the the existing market. Therefore it is crucial to
keep update about the market at domestic level as well as at international level and keep
conducting the survey for knowing about the customer needs.
P3 explain the sources of funds which helps in financing businesses
It is imperative for each business organisation to arrange monetary resource to expand the
operations of business. Merchant&Mills attempts to introduce its product in new market of UK ,
for this it required huge financing. The options available for Merchant&Mills to raise funds
through following sources:
Capital Venture: in this investors invest in the micro scale business or newly established startup
with a view to earn long term monetary gains. Capital venture supports the business by investing
in it considering the business profile and their growth factor.
Merits of Venture Capital:

 Networking: an informal association integrated with other financial consultancy hubs.
The enterprise can avail many consultation options with them.
 No Repayment: no repayment is claimed by the capital venture because they acquire
equity rights of the business in exchange.
Disadvantage of venture capital:
 Self Interest: in venture capital there is a condition of an early repayment i e. within 5
years 5 years to gain more capital.
 Higher returns : the funds which company raise will have to pay higher returns to the
lenders because they play major role in business capital contribution. They also have
control in business to some extent.
Angel investors: it consist of sole investor or group of persons that avail funds to new small
scale business setups or existing business for expansion. They also expect high return on their
investment.
Advantage of Angel investors:
No Repayment : they do not claim any repayment of capital even if there is any loss in business.
They do not claim any right over the assets of the enterprises.
Sources of business knowledge: angel investors do know about the potential startups,
companies. They collect information about the strategies of other enterprises with the assistance
of angel funding institution(Wright and Siegel 2021).
Disadvantages of Angel investors:
 Loss of control: funds generated from angel investors is highly risky at some point of
time, especially when business gets wind up. On winding up of business angle investors
claim for the profit of business.
 Availability: the availability of angel investors in most cases is negative because of their
individuality. It becomes hard many times to find angel investor. They also do not show
interest in business idea, even if they agree they do not provide adequate funds for
business.
 Bank loan: this source of fund is open for all business formates micro scale to macro to
avail finance. Banks are the lenders which provides funds on certain terms and condition.
It is a good source to obtain funds for business expansion or for setup of new business.
Advantage of Bank Loan:

 No loss of control : bank has nothing to with the management of business. The bank
concerned more about the timely payment of interest along with the principle amount as
per the terms and conditions.
 No Claim profits: banks do not claim their rights in profit sharing with the company.
Demerits of bank loan:
 High Interest rates: banks usually charge high interest rates,especially in business
financing.
 Collateral: the lenders can lawfully take the possession of assets of the business in case
of failure to pay the instalment.
From the above relevant extract and study it is suggested to the M&M to raise the capital from
venture capital because it seems most convenient and approachable and there is less risk
associated with the option of venture capitalist. Considering the business status of
Merchant&Mills in terms of its operation and market value, it seems that it has ability and
capacity to grow and elevate and it will easily get many venture capitalist to put money in their
business which will help in its infrastructure and promotional activities(Hvass and
Pedersen2019).
M2 Evaluation and Justification for recommended source of fund
The most convenient and less risky source of funding institution in comparison with other
sources is capital venture. Capital venture can provide the required capital to the businesses like
Merchant&Mills which is small enterprise operating within the territory of UK. However ,
sometimes it demands for higher returns, but it also provides the service of consultation which
helps business in expanding its network in market. It also shows no interest in claiming the right
over business personal assets(Varley and et.al2018).
D2 examine the suggested modes of sources in in respect of M&M
As per the requirement of funds for Merchant&Mills for its business upgradation,the suitable
source would be the venture capital because it is a small business establishment and the
requirement can be avail through venture capital in order to expand the scale of its operations
along with the potential strategies(Singh and Srivastava2018).

P4 Business Idea for Merchant & Mills considering its Fiscal data and Plan of action to
grow business operations
In respect of existing product of Merchant&Mills with the purpose to penetrate them into new
market,a suitable and strategic plan is required :
Summary
M&M with the view to expand and increase its market share of its existing product attempting to
penetrate its product into the Market of London and England. It requires to develop and prepare
an effective plan of action to achieve market competition. A critical analysis,deep research and
study about the new market is crucial to understand the market demand and identify the
opportunities to meet the demands of the new market. This process will require huge capital and
investment on infrastructure and promotional activities. The funds for this process can be
acquired from the venture capital.
Vision
extension of business market by covering all the major markets within the territory of UK and to
built strong competitive market base.
Mission
The imperative mission of Merchant&Mills is to meet the customer preferences and to create a
buzz among the customers about its products through market development strategy and by
opening multiple outlets in those targeted domestic markets with the assistance of advance
technology(Tykvová 2018).
Plan of action
M&M should actively implement the price effective and market improvement action plan to
achieve the combative benefits and market stock accordingly. The idea is to adopt cost effective
methods for its sewing and production activity, this strategy will avail to generate more profits in
comparison to other competitor. By increasing fabric outlets throughout the London and England
market, it will get exposer and options to expand its scope domestically.
Marketing Mix Strategy
The application of several parameters for business growth helps in building strong customer base
which ultimately increase the demand of its product in the market. To make entry in new market
the Merchant&Mills required to adopt Marketing mix strategy.