New Car Deals: A Case Study in Business Growth Strategies for SMEs

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PLANNING FOR GROWTH
A CASE STUDY OF NEW CAR DEALS
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Table of Contents
INTRODUCTION......................................................................................................................................................... 3
LO1................................................................................................................................................................................... 4
LO2................................................................................................................................................................................ 10
LO3................................................................................................................................................................................ 14
LO4................................................................................................................................................................................ 18
CONCLUSION............................................................................................................................................................. 21
REFERENCES............................................................................................................................................................ 22
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INTRODUCTION
This assignment shows how small and medium business organizations plan and their
strategies in order to grow their business further. This assignment presents knowledge of
how small and medium business organizations use various strategies and techniques in
order to seek more opportunities to grow and develop their business and gain success. The
various sources through which New Car Deals can generate funds are also discussed in this
assignment (Wong et al., 2016). The assignment also presents a business plan for the New
Car Deals can achieve their business objectives as well as a various strategy through which
New Car Deals end its business activity.
New car deals is a family run business located in Horbury provides services of cars on lease
and sales to the customers. People can easily find their desired vehicle on the site of the
company and apply for a vehicle on lease on a contract basis. The ultimate aim of the
company is to expand its business and introduce specialized commercial vehicles.
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LO1
Consideration for Assessing Growth Opportunities
The SME’s company like new car deals needs to assess growth opportunities for the
business organization on a regular basis as this can helps business in order to gain
competitive advantage and achieve business goals and objectives.
Competitive advantage
Business can gain competitive advantage by identifying opportunities and grabbing them
for business perspectives. The leasing business provides many opportunities for the
business in order to gain a competitive advantage.
Resources
The New car deal is regulated by FCA (Financial conduct authority) which is very effective
in order to attract customers, as well as business, has enough suppliers that lend their
various types of vehicles (Wu, 2015). The company also has very talented and skilled
employees and technician. The company also has patents, trademark as well as has a very
positive brand image of the company.
Core Competencies
The company provides the utmost level of satisfaction to their customers through the
business services as they provide highly maintained vehicles and covers insurance of the
vehicle as well.
Capabilities
Following are the capabilities of new car deals
 Resource management
 Technical staff
 Easy and effective finance for cars
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Porter’s Generic Strategies
The strategy is very effective in order to gain a competitive advantage over business rivals
for the new car deals. The strategy focuses on cost leadership, differentiation, cost focus,
differentiation focus.
Figure: Porter’s Generic Strategy
Source: Wu, 2015
The new car deals can gain competitive advantage through two types according to Michael
porter which is cost focus and differentiation focus. The business can focus on reducing the
cost of the services provided to customers in order to gain a competitive advantage over
their rivals as customers prefer to buy products that are available in less cost compare to
their rival companies (Yu and Gao, 2016).
On the other hand, the company has so many varieties of the vehicle to provide on lease to
customers which also helps in order to attract customers as they can see the varieties on
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the company’s website. Along with it, new car deals introduce specialized commercial
vehicles that can be attraction point of the company’s business activates as not many
leasing companies provide specialized commercial vehicles to the people on the lease
(Watts, 2018).
Interlink between the competitive advances with the development starts
Evaluating external factors that affect business activity is very important for the business
organization as through external analysis business can be benefited in competitive
advantage. New car deals use PESTEL analysis in order to identify which external factor
affects business activities.
Figure: PESTEL Analysis
Source: Watts, 2018
Political factor
The political stability of the country makes the business activity of new car deals smooth
but the labor law and tax policy can possess a threat to the company's business activity.
Economical factor
The economic condition of the country is well stable that benefits the business activity of
the new car deals as well as the disposable income and unemployment rates are also well
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in control. All these economic elements benefit the business activity of the new car deal
efficient.
Social factor
The business should list vehicles according to their target customers and the lifestyle of the
region as people are the ultimate element that increases or decrease business growth
(Sridhar et al., 2015).
Technological factor
The introduction of electric vehicles on lease provided by the new car deals attracts
customers very much which increase the profit of the company. Also, the company
conducts a major of its activities through online which is a great way to increase business
reach.
Environmental factor
The adaptation of electric vehicle effective contributes positively to the environment of the
country also electric vehicles attract people of the UK more than normal vehicles.
Legal factor
The company is regulated and authorized by financial conduct authority which makes the
legal factor strong for the new car deals. Also, the company effectively protects the rights of
the customers and employees within the organization.
BCG Matrix
It is an effective strategy developed by the Boston Consulting group in 1970 that can help
new car deals in order to evaluate their products. It also helps the business to optimize
business resources which ultimately increase the value of the business and increase brand
value as well (Narins, 2017). The BCG matrix is divided into 4 parts:
The cash cow
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In this product line, new car deals can invest a large sum of money in a slow developing
industry in order to generate more revenues with respect to the amount invested.
The dogs
In this matrix, the company aims to generate enough revenue that can maintain
sustainability for the business such as equal revenue generation for equal investment.
The stars
In this company market share is large and the growth of the industry is also very fast. The
new car deals require a large amount to be invested to compete with their rivals.
The unknowns
It is a product line in which the company has little market share is a developed market to
ensures that the business gain the revenue worth investment.
Ansoff’s Growth Vector Matrix
Ansoff is a great tool in order to assess market condition for expanding the business and
increase market share. Following are the elements of Ansoff’s Growth vector matrix:
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Figure: Ansoff’s Growth Vector Matrix
Source: Narins, 2017
Market penetration
It is a process in which business can penetrate the existing market with existing products.
New car deals can reduce their product or services cost, use effective advertisement
techniques in order to penetrate the current market with current product services
(Adekola and Sergi, 2016).
Market development
It is the process of new market exploration with an existing product. New car deals can
expand its business by launching its existing product services into a new market.
Product development
It is a process in which business introduce a new product into an existing market. as new
car deals aim to introduce specialized commercial vehicles, it is a great way to attract more
customers by introducing new product service into the existing market (Denton et al.,
2017).
Diversification
It is a very risky process in which business can explore new market by introducing a new
product. New car deal can introduce its specialized commercial vehicle into a new market
in order to expand its business activity.
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LO2
Potential Sources of Funding
For every business organization financial resources is very important as it is the only thing
or resource through which all the expenses etc. can be paid off and invest it in order to
expand business activities. The New car Deals Company aims to expand its business and
introduce specialized commercial vehicles in the market which is great thinking and can
surely benefit the business but in order to do so business requires a large sum of the capital
or financial resource (Esposito et al., 2017). The company has various options through
which a company can generate funds and continue with its business plan. Following are the
various resources of finance:
Bank Loan
A bank loan is the most secure and safe source through which business can get money for
the business as per their requirements. The bank provides loan on an affordable interest
rate for the particular time but in return, it either checks business progress or demands
security for the loan they provide.
Benefits
 Safe and trusted source to take a loan for business
 Tax benefits
Drawbacks
 Confusing paperwork
 Not easily available for all
Angel investors
Angel investors are the wealthy people or group that provides loans to the business
organizations in return for equity shares of the business. Generally, angel investors provide
financial support to new business organizations that require capital in order to start new
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ventures (Guerra et al., 2016). It is a type of investment business for them to provide a
financial resource in order to gain equity shares of the business organization.
Benefits
 Easily available for the new business organization or continuously on-going
business in return for their shares.
 Flexible in terms and conditions
 Provide guidance to the entrepreneurs of the new ventures as well.
Drawbacks
 Hard terms and conditions
 As they gain some of the shares of the company which ultimately provides rights to
interfere in business activity.
 Lack of trusted angel investors
Share Capital
In this source business issues shares to the common public to buy their shares and become
the company's shareholders and earn fixed interest on their shares (Horowitz, 2017). This
is a very effective method to generate large funds as well as the company can decide how
many shares should issue so that it retains the control rights of the business activity.
Benefits
 Business can generate a large amount through the source of share capital
 Business can raise long-term capital
Drawbacks
 A not popular method in the current time of business and people are not interested
in becoming shareholders of the company.
 Risk of losing control over the business activities
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Peer to Peer lending (P2P)
It is very trending in the current world in order to raise a small amount for business
activity. Business can gain loan through financial organizations that provide money to the
individual or business through online after checking their bank details, cross-check their
address and for the business provide the loan after checking their business progress
through the balance sheet (Lupton et al., 2018).
Benefits
 P2P is a very quick way to raise a small amount of money.
 Lessor almost no paperwork to gain loan as well as no security deposit required
Drawback
 P2P provides only a small amount of loan to the business or individual
 P2P charges high-interest rates for providing loans without any security deposit.
Crowd-funding
Crowd-funding is also one of the popular sources through which a company can raise
money. In crowdfunding, the company raises a large amount from the many people or
investors, typically via online.
Benefit
 Easy process to raise a large sum of amount online
 No paperwork or guarantee required
Drawback
 It is hard to find some of the trusted sites through which business can generate
funds.
 Investors must be legally registered in order to invest through crowdfunding
New car deals can generate or raise funds through the above sources but in those bank
loans and crowdfunding is a very effective source to raise a large sum of amount for the
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