Stonehouse Limited: Planning for Growth and Business Expansion Report

This report analyzes the growth strategies of Stonehouse Limited, a company providing internal and external maintenance and decoration services. It begins by outlining key considerations for SME growth, including resources, capabilities, and core competencies, along with an application of Porter's generic strategies. The report then uses a PESTEL analysis to examine the political, economic, social, technological, environmental, and legal factors impacting the business. The core of the report evaluates growth opportunities using Ansoff's growth vector matrix, focusing on market penetration, market development, product development, and diversification strategies. The report also explores potential funding sources, their benefits, and drawbacks, culminating in a proposed business plan for growth and a discussion of succession and exit strategies for small businesses. The document provides a comprehensive overview of business expansion and strategic planning for small to medium sized enterprises.

Planning for Growth

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1 ...........................................................................................................................................1
P.1 Key considerations that SME's can consider in evaluating growth opportunities...........1
P.2 Evaluate opportunities of growth by applying Ansoff's growth vector Matrix...............4
TASK 2 ...........................................................................................................................................7
P.3 Potential sources of funding and benefits and drawbacks of each option........................7
TASK 3 ...........................................................................................................................................9
P.4 Business plan for growth of business...............................................................................9
TASK 4 .........................................................................................................................................12
P.5 Succession and exit plan for small business with the advantages and disadvantages ...12
CONSLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14

INTRODUCTION
Planning for growth is a method in which different plans and policies are developed so
that company can improve their business operations (Barbour and Deakin, 2012). It allows
business to allocate their resources in different fields and firm can perform all activities in
proper manner. The strategies and tactics included in growth plan focuses on important drivers
of revenue generation. Report explains about “Stonehouse Limited” which deals with internal
and external maintenance and decoration. Assignment describes about evaluating key
reconsideration's that SME's can consider while evaluating growth opportunities. It explains
about the methods through which company can access funds and different sources of funds
which are available for company. This discusses about developing business plan and
communicating the methods to scale up a business. It describes about different ways through
ehich a small business owner can exit business and implications of each option.
There is a Government Contract of internal and external planned maintenance,
decorations and minor works to five sheltered accommodation schemes. The bid does not
exceed £300,000.
TASK 1
P.1 Key considerations that SME's can consider in evaluating growth opportunities
There are different considerations that SME's can consider so that there is growth of the
company. This is important so that there is development and success of firm.
Key considerations considered by Stonehouse Limited are described below:
Resources: Stonehouse Limited has adequate resources to run the operation's and
activities in proper manner. For example: organization uses good quality of materials so that firm
can create strategies to decorate the rooms in parties. They arrange and maintain all things such
as food, decoration etc.
Capabilities: Company has different and unique capabilities in which it can decorate
rooms in effective manner. This helps the organization to earn huge revenues. For example:
Stonehouse Limited have distinct capabilities and they arrange all things in time so that people
do not face any problem. This helps the firm to give strong competition to other firm's.
Core competencies: These are the unique selling proposition through which organization
can increase their sales and can enhance the market share (Brinckmann, Grichnik and Kapsa,
2010). For example: company have a core competency that it can decorate the rooms for parties
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and other occasions in proper manner. Firm do not perform wastage of resources and this results
in increasing the productivity. This helps the company to earn more revenues (Burton, 2010).
Porter's generic strategy is described below (Porter's Model of Generic Strategies for
Competitive Advantage, 2018):
Cost leadership: Cost leadership is the part of marketing strategy which is highly
effective in acquiring market share and also framing the customers attention. Main goal is to
decrease the cost of operational and other process. This results in increasing the efficiency and
effectiveness level of firm. For example: Company creates strategies and policies to reduce the
cost of all operational and other methods so that they can earn huge revenues. It directly assists
the firm to perform activities and tasks in proper manner. Stonehouse Ltd. can decorate the
rooms in all parties and arrange all things in effective manner.
Differentiation: This define as the development of products and services which offer
unique attributes that are valued by customers. Company creates plans and policies so that they
can provide different and unique services to all people. This directly assists the form in
generating huge revenues. For example organization has provide rotational stage and classical
musics band in marriages. This helps in increasing the satisfaction level of all people. This helps
the enterprise to maintain good image in minds of all people.
Cost focus: This strategy require competition based on price to target narrow market and
the company are focus on target segmentation. It is an effective technique in which company
emphasis its cost and this resultant generating of huge revenues and enterprise can enhance the
market share. For example. firm has targetted on particular section of population i.e. young
people and adults. It decreases the cost of decoration services and maintenance services. This
directly helps the company to enhance the revenues and to increase the market share.
Differentiation focus: It is that strategy which target small groups or segments of
customers with differentiation products. Company is targetted to particular section of population.
For example Stonehouse Ltd. provides unique and different decoration services to all people.
This helps the firm to fulfil needs of all people (Chapin, 2012). This assists the firm to maintain
good image in minds of all people and they can enhance their reputation.
PESTEL analysis of Stonehouse Limited are described below:
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Source: PESTLE analysis, 2018
Political factors: It include the factors through which Government can influence
economy or certain industry (Christofakis and Papadaskalopoulos, 2011). For example
government can impose new taxes or duty to which revenue generating structure of company
might change. For example: company have to pay all taxes in time so that firm can easily survive
in market.
Economic factors: There are different economic factors such as inflation rate, interest
rate etc. Firm has to create strategies and policies so that they can adopt the factors and can
survive in market. For example if there is inflation then it decreases the purchasing power of
people. So, organization has to sell goods at lower rate so that they can attract more customers.
This results in earning of huge revenues and market share (Eddleston, and et. al., 2013).
Social factors: The needs and wants of people are continuously changing. Company has
to create policies to fulfil demand and requirements of all people. For example Stonehouse Ltd
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Illustration 1: Pestle analysis

has to create strategies to target a particular section and fulfil their needs and wants. They are
targetted to youths and adults as they only do parties and functions. Hence firm has to create
plans and policies to decimate the rooms in parties and to perform other arrangements. This helps
the enterprise to earn huge revenues and to expand their operation's (Grover, Bokalo and
Greenway, 2014).
Technological: Firm has to use latest technology so that they can earn huge revenues and
to operate all activities in proper manner. For example: Stonehouse Ltd. has to use advanced
techniques such as rotating Stage in marriages and small bands in children's parties. This helps
the company to enhance the revenues and company can expand their activities in minimum time.
Environmental factors: Firm has to create strategies so that they cannot pollute the
environment and they do not have to waste the resources. It is done so that company can protect
the environment. For example Stonehouse Ltd. Has to decorate the rooms in parties and throw
the waste in dustbins. It is done so that there is no damage to environment. This helps the
organization to maintain good image in minds of all people.
Legal factors: There are different legal factors which company has to follow in
performing operations. This helps the company to survive in market. For example firm have
equal opportunity to all people and it give full rights to all people. For example firm recruits and
selects all people and give training to all people. There is no discrimination among workers. This
assists the enterprise to run successfully. It leads to growth and development of company.
Justification of growth of Stonehouse Ltd.:
Organization has to fulfil the needs and requirements of all people by creating plans and
policies in firm. Company has to create strategies so that they can increase the satisfaction level
of all people. This helps the enterprise to earn the revenues and to enhance the market share. This
also assists the firm to maintain good image in minds of all people (Hough, and et. al., 2010).
P.2 Evaluate opportunities of growth by applying Ansoff's growth vector Matrix
Ansoff's Matrix is a planning tool that provides a framework to help executives, senior
manager to create strategies for future growth. Ansoff's matrix used by Stonehouse Ltd are
described below:
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Source: Ansoff's Matrix, 2018
Market penetration: It is the strategy in which organization tries to increase their
operations by providing existing offerings in existing market. It creates strategies to enhance the
market share (Keough, 2015). This results in generation of huge revenues. It is a unique method
in which goods or services are provided to established customers. It is a distinct method which
assists the company to increase the sales through distribution and effective promotion strategy. It
can be accomplished by reducing the price of services such as decoration and maintenance etc.
Stonehouse can create strategies which helps the company in promotion and distribution support.
Organization do not innovate products and sell existing products in market.
For example: Stonehouse Ltd provides existing decoration services to existing user's
This helps in attracting existing customer's and company can earn huge revenues.
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Illustration 2: Ansoff's Matrix

Market development: Organisation expand their activities and operations in new market
by providing them existing services (Li, Mobinn and Keyser, 2016). Company can segment
different customers into different criteria such as geographical, behavioural, psychological etc.
This strategy can be successful when company uses advanced and latest technology and then
enter into new market. It can get different benefits from economies of scale if it increases output.
These techniques are used by firm so that it can increase the market share. This results in
capturing of new customer's and company can increase the revenues.
For example: Stonehouse Ltd. can increase the activities and operation's in new market
by providing them them existing decoration services. This results in capturing of new people and
firm cam generate huge revenues and can enhance the market share.
Product development: In this strategy, company provides new decoration and
maintenance services to existing markets. New products can be bought by company by various
methods. Techniques include investment in research and development of extra services which
can be provided by company. Company can acquire rights to produce other's services and
organization can also perform joint development with ownership of another firm who need
access to company's distribution channel's or brands.
For example: Stonehouse Ltd. can provide new and unique decoration services to existing
markets. This helps the firm to capture customer's and to increase the revenues. It also assists the
organization to enhance the market share.
Diversification: Organization provides new products to new market. It is the risky
strategy as new service is provided by company in new market. So, organization has to create
new policies as it is targetting to new target market. This helps the company to capture new
customers and firm can earn huge revenues. This assists the organization to enhance the market
share. This is an effective strategy which is adopted by company to target to new customer.
For example: Stonehouse Ltd want to enter new market. It delivers new decoration and
maintenance services to new market. This results in increasing the revenues and to increase the
market share.
From above strategies of Ansoff's Matrix, Stonehouse Ltd. can use diversification
strategy in which company can target to new market and can provide new services to new target
market (MacLeod, 2013). This strategy is selected by company as it is targetted to new target
market by new services. This helps the firm in capturing new people and company can increase
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the revenues. This helps the organization to expand activities and operation's in many countries
(Mitchelmore and Rowley, 2013).
TASK 2
P.3 Potential sources of funding and benefits and drawbacks of each option
There are different sources of funds which are available for firm. Company can receive
funds from different sources and can operate all their activities and operation's. This helps the
company to earn huge revenues and to enhance the market share. The bid amount of Stonehouse
Ltd is 50K. The company bid on the amount This results in expansion of operations of
Stonehouse Ltd. Different sources of funds which are available for Stonehouse Ltd are described
below:
Bank loan: It is the method in which bank give funds to all customer's. Borrower has to
pay fixed amount of interest to Bank and they can easily manage activities and operation's.
Organization can receive funds from different institution's and can run their tasks in proper
manner. Advantages and disadvantages are described below:
Advantages:
Flexibility: In this method people do not have to take tension of regular instalment
payments on time. This is an advantage over overdraft in which people have to pay the full
amount when bank demands it.
Cost effective: It is cheapest option as compared to credit cards and overdrafts. It helps
the customer to save the money and it results in increasing satisfaction of all people.
Disadvantages:
Strict requirements: Many banks requires some collateral property against the loan
amount. So, it is difficult for company to take the loan.
Repayment burden: Loan borrowers have to pay the amount to the bank. This creates
burden and stress on the company.
Crown funding: It is another method which is used by the company. In this, funds can
be received from the public. It is possible only when organization presents the ideas to audience.
If audience is interested, they can give funds to the company.
Advantages:
 Crown funding can attract many people and it helps the company to handle all tasks in
proper manner. This helps the enterprise to generate huge revenues (Moseley, 2013).
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 This method helps the company to expand their operations through online applications
and can expand their tasks. This results in capturing more people in minimum time
(Pallagst, 2010).
Disadvantages:
 This idea can be duplicated by any other person as it is presented on Internet. So, any
organization cannot steal this idea. It is complicated method as company has to follow complicated techniques and methods.
It takes more time to receive funds from this source.
Peer to peer funding: It is a method in which borrowers and investors can exchange funds with
each other. This helps the firm to generate huge revenues.
Advantages:
 It is an online application process and it is fast method. It provides information and data
quickly to all customer's as compared to other methods. It has lower interest rates as compared to other methods. This method gives different
benefits to all consumer's.
Disadvantages:
 Through use of this method, company cannot receive loan in huge amount. It is difficult
for company to take loans in big amount. If company has less credit rating, then firm has to pay huge amount of interest. This
results in reduction of revenues of company.
Angel investors: It is the method in which finds are given to entrepreneurs and they can operate
their activities and tasks in proper manner. Advantages and disadvantages are described below:
Advantages:
 There is no need of collateral security and it helps the firm to receive loans without
giving any personal asset. This helps the company in generating huge revenues. Company do not have to pay interest or repayments. This result's in generating of the
revenues and to enhance the market share.
Disadvantages:
 It take huge time to find angel investor. So, it is a time consuming activity which take
huge time of firm (Todes, 2012) .
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 In this method, company have to pay the shares of the company. This is also a
disadvantage for the company.
TASK 3
P.4 Business plan for growth of business
The design which includes innovations into the business which create a great value to the
company. So the Stonehouse Ltd which need to work upon the new strategy development which
will expand company level into the international level so that many customer will easy to work
in appropriate way. Garbing the customer and opportunity will lead to growth of business in
effective way. Hence the vision and mission even segmentation, position which need to be
innovated at financial position of business. The main objective of Stonehouse which will
influence investors and targeting customer in affective manner. Some of the effective plans
which are as follow: -
Concept of business- Stonehouse Limited is a small enterprise which operate its business in
term of maintenance and decoration of rooms, house and banquets etc. The business concept of
the organisation includes information associated with vision, mission and objective etc. they are
as following:
Mission- The mission of the this organisation is to provide effective services to its customers so
that they can show they loyalty and help in enhancing productivity of the firm.
Vision- The vision statement of the company is to offer its services at affordable price so that the
needs of the customers can be fulfil in effective manner.
Strategic objective- the major aim of the company is to make maximization in the ales of the
firm by 15% within 2 years.
Product and services: Company is offering various range of products and services like
maintenance of rooms, houses and banquet etc. which is dealing in different sector which will
aid to improve good quality of services.
Situational analysis-
SWOT analysis are been discussed below:-
Strengths Weakness
Effective staff which aid to develop innovative
work in effective manner. Hence the channels
Due to adoption of new technology which will
affect the business, more over skilled nad
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of distribution which is used by the company
which help to capture growth of industry. This
company is famous in social media.
effective employees which is now less in the
organisation so which take challenges into the
organisation.
Opportunities Threats
The biggest opportunities that can help to
expand its business in high development which
lead to increase the growth of business. New
changes which affect customer in online
platforms.
Increase in raw material will make high cost
and decrease in profitability. Threats which
will enter of new competitors which will lead
to make innovations in affective way. Hence
due to regular supply of products which will
lead to make more threats in the market place.
Changes in policies and laws which will affect
the business
STP ( Segmentation and Targeting, Positioning): Company need to analyse this strategies
which need to be modified in affective manner so that work is be done in appropriate manner. So
hence the goals and achievements that need to be updated by the company which will increase
the level of the organisation in effective way.
Segmentation: The company can segment the customer according to income group, age
so that company can distribute there products in effective way.
Targeting: Different people have similar targets which will lead the company to focus on
product and services which need to be taken into the minds of business.
Positioning: Another part is Stonehouse which need ton focus on the family and elite
class people so that distribution of houses can be taken.
Budget- It refers to plan which is framed by the administration of the company when they are
thinking to establish a new business and make innovation in existing business. This plan take
place in context of fund and capital so that they can determination about the cost that how much
money can be assumed by it.
Activities Amount (pounds)
Internet marketing 9000
Employee training 6000
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Resource gathering 10000
New set up 10000
Other activities 5000
Total 40000
Financial planning-
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It is depicted that is paying taxes every year and its cash in hand value for all three years
that is 2015, 2016 and 2017 are £102203, £200354, £238503 respectively. On the other hand,
overall income of the company was around £72001.
Financial information :Finance is very important in each and every business for
operations as well as the for expending of business in different areas. In context to the company.
For collection of remaining finance, company can use different sources such as bank loan,
financing, overdraft facility from bank and many more. This will help the organization in profit
and wealth maximization.
Allocation of resource : The allocation of resources which need to be set by the
company hence this company should formulate the financial work and resources like labour that
should maintained in effective way.
Implementation of plan : The plan of action which need to accumulated and more over
the work need to assigned properly and draft which is made by the company that need to be
implemented into work.
Monitoring and controlling : This company which need control the the work and
procedures that will guide the employees as well as staff in affective manner.
TASK 4
P.5 Succession and exit plan for small business with the advantages and disadvantages
Expanding business is not a simple task. There can be various changes in activities and
tasks. It is important to know different aspects evaluation of internal and external forces of
change that can be done in the company. It is crucial that company creates different strategies
and policies (Wu, 2015).
Different ways of exit are described below:
Winding up: It is the method in which organization exit their business with intervention of many
bodies. Manger can pay off the liabilities. It is crucial that company make changes in activities
and operation's so that company can operate all functions and activities in proper manner. If
organization is not financially strong, then it decreases the revenues and it results in bad
performance of firm.
Benefits:
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There are less chances of frauds as there is intervention of all legal bodies. There is another
advantage in which firm can sell the assets and can pay the liabilities. Rest of amount is paid to
promoters and directors.
Disadvantage:
It is a time consuming process and manager has to create policies to related to this. Image
or goodwill has decreased as business has closed down.
Merger and Acquisition:
It is a method in which company can enter into new markets. It is a method in which companies
merge with another company to expand their operation's.
Advantages:
It helps in increasing brand image and productivity. It results in generation of huge
revenues.
Disadvantages:
There are chances of disputes and conflicts in company. Distribution of profit sharing
ration does not have confidentiality (Ziari, and et. al., 2012).
CONSLUSION
From above report, it has been concluded that it is crucial for company to create
strategies so that there is growth of company. Different key considerations are considered by
company in evaluating growth opportunities. Evaluation of different methods of sources of
funding so that company can determine the source and can select any option. Business plan is
created in which company's objectives, budget has been set. Evaluation of different ways in
which small business owner can exit or the business and implication of each option.
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Online
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Porter's Model of Generic Strategies for Competitive Advantage. 2018. [Online]. Available
through: <https://www.tutor2u.net/business/reference/porters-generic-strategies-for-
competitive-advantage >.
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