Business Growth Plan: Norsk European Wholesale Ltd. in China

This report presents a detailed growth plan for Norsk European Wholesale Ltd as it ventures into the Chinese market with its transportation, logistics, and wholesale business. It leverages Porter’s Generic Strategies, particularly focusing on differentiation focus to capture a niche market. The PESTEL analysis identifies key political, economic, social, technological, environmental, and legal factors influencing the business. The Ansoff matrix suggests market development as the optimal growth strategy, emphasizing attracting new customers with existing services. The report also explores potential funding sources like bank loans, detailing their benefits and drawbacks. Risk assessment and mitigation strategies are outlined to address potential challenges in the transportation business. This comprehensive plan aims to provide a strategic roadmap for Norsk European Wholesale Ltd.'s successful expansion into China. Desklib provides a platform for students to access similar solved assignments and past papers for their studies.

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Planning for growth
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Table of Contents
Introduction:...............................................................................................................................3
LO1:...........................................................................................................................................4
LO2:.........................................................................................................................................10
LO3..........................................................................................................................................14
LO4:.........................................................................................................................................17
Conclusion:..............................................................................................................................22
Reference:................................................................................................................................23
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Introduction:
Planning for growth of a business is very important in a small and medium business. Norsk
European Wholesale Ltd, the UK based company will be taken here for example. In this
scenario the company is going to introduce its new transportation business in China. Various
marketing tools are done here for determining the strengths and weaknesses of the company.
Various sources of funds are highlighted here for starting up of the business of the company.
The competitive market strategies and the exit strategies will also be highlighted in this
project.
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LO1:
Key considerations for growth options
P1:Analyze key considerations for evaluating growth opportunities and justify these
considerations within an organizational context
Norsk European Wholesale Ltd, a UK based company is going to introduce its transportation,
logistics and wholesale business in China. The company will offer express delivery to the
customers, warehousing and storage services to the customers. The following are some
business strategies of expanding its business in China:
Porter’s Generic Strategies
Porter’s Generic Strategies were discovered by Michael Porter in the year 1985. This tool is
used to determine the direction of an organization (Tansey et al., 2014). There are four
strategies under this tool. They are cost leadership, differentiation, cost focus and
differentiation of focus. The following is the Porter’s Generic strategies of Norsk European
Wholesale Ltd:
Cost leadership: In this strategy, Norsk European will target a broad market and will keep
the price at the lowest possible. The company will either keep its price as much as possible or
it will have a larger market share. In this way, the company will keep its cost as low as
possible.
Differentiation: This is the step in which Norsk European Whole Ltd. will have its unique
service of transportation in the market (D. Banker et al., 2014). Through this strategy, Norsk
European will make its service unique in the market and make the products attractive to its
customers.
Cost focus: In this step, Norsk European will target a niche market in China and then will
offer the service to the customers at the lowest price.
Differentiation focus: In this step, Norsk European will target a niche market in China and
represent its excellent service in the market to attract a large number of customers. This
strategy will increase a strong brand among the customers in the market.
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Analysis: In this case, the best strategy is the ‘Differentiation focus’ for Norsk European.
The company is going to introduce its new business in China and hence, through this
strategy, the company will first capture a niche market with its product differentiation at a
moderate price and thus, it will gain competitive advantages. This will be the capability and
core competency of the company.
PESTEL analysis
The following is the PESTEL analysis for the new business of Norsk European Wholesale
Ltd to identify the macro changes for its transportation and logistics business in China:
Political: Negative:
 The political rules and regulations by
China government have created many
barriers in the path of the new
entrepreneurs. Hence, China
government policies will be barriers
to Norsk European to some extent.
Economic: Positive:
 China is the second largest economy
in the whole world. China has made a
rapid economic growth. Hence, Norsk
European will find economically
strong buyers there.
Social: Positive:
 China, being the most populous
country in the world, has a massive
market for consumer products.
Transportation and warehouse
business is related to the consumer
products. Hence, there is a scope of
this business for Norsk European
Wholesale (Rahman, 2018).
 With the modernization in people’s
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life, the demand of consumers’ goods
is increasing and hence, there is a
scope for Norsk European.
Technological: Positive:
 About 72 million people in China are
connected to online marketing. Hence
the pioneers of Norsk European
Wholesale can take the opportunity of
this(Rahman,2018).
Negative:
 Slow growth rate in IT is considered
as one of the top challenges for the
logistics business in China. Hence,
Norsk European should develop its IT
department.
Environmental: Negative:
 China’s large population has affected
the natural environment and that has
led to air pollution, water pollution,
climatic change and others.
Transportation business is related to
environmental effects and the
company should be aware of this
(Rahman, 2018).
Legal: Negative:
 The chiefs of Norsk European
Wholesale should be aware of the
new laws that regulate the business
and employment practices in China.
For instances, the laws related to
employees remuneration, benefits of
employees, labour disputes and
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others.
Table 1: PESTEL analysis of Transportation business in China
Source:(Created by the learner)
P2: Evaluate the opportunities for growth applying Ansoff’s growth vector matrix.
Ansoff matrix is a commonly known matrix for product or services. There are four options in
this matrix for growth through the existing and new products of the company. Norsk
European Wholesale Ltd. is going to set up its transportation and logistics business in China.
Hence, the Ansof matrix will help the higher officials of the company to know the growth
strategy in the China market when they move from one section of the matrix to the other.
There are four growth strategies in the matrix and they are market penetration, market
development, product development and market diversification respectively.
Market development
(Norsk European
Wholesale Ltd.)
Diversification
Market penetration Product development
Table 2: Table of Ansoff’s Matrix
(Source: Created by the learner)
Market penetration: Through market penetration, more of the existing products or services
are sold in the existing market to the existing customers. To do this Norsk European
Wholesale Ltd. has to create loyalty in the minds of the existing customers. Long term appeal
and offering are necessary in this step. The chiefs of the company need not emphasize this
option as Norsk European is going to introduce its transport and logistics business in a new
country, China.
Market development: It is the best approach for a company to attract new customers with
existing products. The customers can be from a new country or from a new demographic
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background. This option will be the best option in order to increase the company’s
transportation and logistics service in China (Chiang et al., 2016).
Product development: In this option, a company create new products and variations of its
products to the present customers. Norsk European Warehouse Ltd. is expanding its existing
transportation and logistics business to the new customers in China and hence, this option is
not applicable to the company.
Product diversification: This is the highest risk strategy and in this option, new products are
sold in the new market (Yin, 2016). In such a situation a good business consultant can help a
business unit. Norsk European Wholesale Ltd. need not consider this option as it is not
introducing the new products and services in China.
Analysis: An Ansoff matrix can be used as the best tool for increasing sales in a business
unit. The pioneers of Norsk European Warehouse Ltd. has to consider out or the four options
which one will suit the best for the new business of the company in China. After analyzing
the four options above, it has been considered that the option ‘Market Development’ will be
the best option to increase the sales of the company. The chiefs of the company will conduct
a campaign to attract a large number of customers and they will make the customers aware of
the new transportation services, warehousing and storage services and other services in
China. The pioneers, at first, have to consider whether there is demand for the company’s
service in China or whether the business of Norsk European Wholesale can support the
demands of those new customers in China. If there is any deficiency, the chiefs of the
company should take over various strategies to attract new customers and increase the sale
volume.
Collaboration:
The pioneers of Norsk European Wholesale Ltd. will make joint ventures with some joint
venture partners as it is going to introduce a new business in China. The company, with the
help of those joint venture partners, will be able to know about the local market and local
competitors in China market and gain competitive advantage (Hellström et al., 2015).
Risks in the business:
The risks related to the transportation business of Norsk European Wholesale Ltd. are the
following:
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 The accidental risks of the cargo carried and the vehicle used in the road are the first
and foremost risks involved in the transportation business of Norsk European
Wholesale. The people related to the transportation job may also be injured in an
accident during transportation.
 The physical damage to the cargo due to the accident and due to the nature of inherent
vice is also an other risk in the transport business.
 In the wholesale and logistics business, maintenance risk of inventory is also another
type of risks. If the stocks are maintained and checked properly, then there may be a
risk for this.
Mitigation of risks:
 The cargo should be insured with physically to avoid any physical risks during
transportation. The insurer will compensate in case of any accident. The employees
involved with the transportation, are also to be insured with for compensation in case
of any death and injury.
 The inventory should be properly checked in the warehouse and should come in the
warehouse and go out from the warehouse in time
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LO2:
Sources of Funds and their Implications to the Business
P3:Access the potential sources of funding available to businesses and discuss benefits
and drawbacks of each sources
Sourcing of funds is necessary for various reasons in any type of business. Funds are
necessary for modification of business, purchase of raw materials, purchase of equipment and
other assets and for other reasons. Norsk European Wholesale Ltd. Is going to set up its new
transportation and logistics business in China and hence, funding is necessary for this new
business. The sources of finance for the company are the following:
Bank Loans: Bank loan is a most common factor that can be used for purchasing of assets
and other assets in the new transportation and logistics business of Norsk European
Wholesale Ltd. As the company is going to set up its new business in China, a huge source of
funds is necessary for the new business (Ponticelli and Alencar, 2016). The company can
borrow long-term or short-term loans from the government and non-government banks in the
United Kingdom. There are many banks in the UK like HSBC bank, ICICI Bank, Tesco PLC
bank in the UK. Norsk European Wholesale Ltd. Has decided to take long term loan from
Tesco Plc at a cheap rate of interest.
The positives of the bank Loan are the following:
 Tax benefits: The bank loan will be utilized by the company for various purposes and
then the interest on the bank loan will be a tax-free benefit to the company.
 Flexibility: The chiefs of Norsk European Wholesale Ltd. will make the payment of
instalment for the bank loan and they have to worry nothing about this. Furthermore,
the will not inquire about the fact how the Norsk European will utilize the loan.
The negatives of the bank loans are the following:
 Irregular payment of loan: If the Norsk European takes the loan from the bank on
variable interest of loan then the interest will change with the market conditions. In
such a case, it will be very tough for the pioneers of the company ton determine how
they will repay the loan borrowed from banks.
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 Burden of repayment: Normally the bank loan will become a repayment burden to
the higher authority of Norsk European. The company has to make a provision of a
loan repayment money every month and in case of failure of the repayment of loan,
the bank will charge the company with a high rate of interest for such non-payment of
loan.
Venture capital: Venture capital is the other source of funding through which fund is
collected from a business partner. The chiefs of Norsk European Wholesale Ltd. have found
some new franchises in China to collect funds from them (Mason and Harrison, 2017). The
new franchises in China will come forward and will gain ownership of business in exchange
of money.
The positives of the venture capital are the following:
 Obligation of the company: If the higher officials of Norsk European want to raise
the venture capital, there is no obligation if the company is non-profitable or is going
to wind up.
 Easy collection: It will be easy for the Norsk European to collect a venture capital
source as many venture partners will come forward to purchase the ownership of the
company.
 Advice from the venture partners: In case of any problem, the company will get
pieces of advice from the venture partner for the good of the business.
The negatives of the venture capital are the following:
 Misguidance: Advice from venture partners may misguide the pioneers of Norsk
European and this will lead to the non-productivity of the company.
 Losing control over business: Sometimes, for the involvement of the ownership of
others, Norsk European may lose control of business and it may lose the ownership.
Business Angels: Business angels are those who have retired from companies and who invest
directly in small and medium funds owned by others (White and Dumay, 2017). The chiefs of
Norsk European have contacted some business angels in the United Kingdom. The business
angels will not only lend money for the business of Norsk European but they will also give
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valuable advice and knowledge in the new business of the company. The loan amount from
the business angels will be not more than £100.000.
Positives of Angel funding:
 Wealthy individuals: Many successful business people like doctor, lawyers and
others will be available to the higher officials of Norsk European and they can collect
capital up to £100.000.
 Crowd funding: Online investing group can be found easily by the people of Norsk
European Wholesale Ltd. and it is an opportunity to the company.
Negatives of Angel funding:
 Ownership: The primary disadvantage of Angel funding is that Norsk European
Wholesale Ltd. may lose the complete control in ownership. If the business of the
company is sold, then the Angel investor will enjoy a portion of profit.
Friends and family members: The Directors of the company Norsk European Wholesale
Ltd. Have some reliable friends in the United Kingdom from whom they have decided to
borrow some money for the new transportation business in China. Apart from this, they have
also collected some money from their family members (Ward, 2016).
Positives of funding from friends and family:
Relation: The friends and family members of the chiefs of Norsk European know them well
very well
 Care: The friends and the family members will the chiefs because they care about the
chiefs.
The negatives of funding from friends and family:
 Understanding of the value of business: The friends and family members of the
chiefs of Norsk European will not be able to understand the business of the company
because they cannot add the value to the business.
 Breaking of the relationship: The friends and family members can break the
relationship with the chiefs of the company and hence, the business will suffer.
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