Qbic Hotel: Growth Planning, Financial Strategies, and Exit Options

This report provides a comprehensive analysis of growth strategies for Qbic Hotel, a budget-friendly hotel in London. It explores key considerations for SME growth, including financial components, competitive advantages, new product innovations, growth options via the Ansoff matrix (market penetration, product/service development, market development, and diversification), risk assessment, and the use of digital technology. The report details various sources of financing available to the hotel, such as investors, bank loans, personal savings, government grants, overdraft facilities, and hire purchase/leasing. It also examines the advantages and disadvantages of each funding source. The report concludes by discussing potential exit strategies for the business. The report uses the Ansoff matrix to assess growth options and provides justification for the market development strategy. This analysis is designed to help Qbic Hotel make informed decisions about its future expansion and financial management.

PLANNING FOR
GROWTH
1

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
LO 1.................................................................................................................................................3
P1.................................................................................................................................................3
P2.................................................................................................................................................4
LO.2.................................................................................................................................................7
P.3................................................................................................................................................7
LO.3.................................................................................................................................................9
P4.................................................................................................................................................9
LO.4...............................................................................................................................................13
P.5..............................................................................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16
2

INTRODUCTION
Small or medium sized enterprise defined by European Union as that company or
business which has: (1) less than 250 employees (2) whose annual balance sheet does not exceed
£34 million (3) those business whose voting rights or capital of 25% is not own by single firm or
jointly by other several organisations. This report will discuss about the key considerations that
SME should consider while seeking growth opportunities as well as various sources through
which organisation collect funds and the way of applying them in business. Assessing about
various ways through which organisation can exit from business will also be explained. Qbic
hotel is a budget friendly hotel located in the city of London that is chosen for the present study.
It is an urban hotel with all the basic amenities.
LO 1
P1.
It is important to analyse the key considerations in relation to growth opportunities.
Company should make detailed research of potential and pitfalls of business. Review about their
own potential, of making a business a successful enterprise. Thus, it is essential to look for the
key considerations while evaluating growth opportunities. The following factors are: Financial Components: Financial components refers to those resources that are being
needed by a business unit for smooth functioning of overall business operations. Qbic
hotel should properly evaluate various sources of finance through which it can borrow
money. Further, it should check its personal resources i.e. their savings and assets owned
by company. Evaluation of financial components help organisation to know from where
it can get money on cheaper rates. Also, banks and other lending institutions are satisfied
when an entrepreneur bring in business their own resources. Competitive Advantage: Competitive advantage refers to those advantages that can be
gained by a company through effective development of various strategies and plans in
context to improve the efficiency of facing competition in the market. This helps the Qbic
hotel to be in a superior position in relation to its competitors or other companies.
Company is able to know about its strength and then, it will generate profit to the firm.
The small business suffers from lack of proper resources; this made even more important
for entrepreneur to effectively and efficiently utilise them. Qbic hotel has a competitive
3

advantage of prime location with easy access to all public transports which enable hotel
to become a successful enterprise (Love and Roper, 2015). New products and Service innovations: Development of new products and services help
Qbic hotel to generate more growth opportunities and expand its business. Innovation in
products/ services help it to gain high market share and customers. Further, this helps in
utilising less resources and cost-effective techniques to produce the product. When a
company uses product innovation; this opens up a way for growth opportunities. Qbic
hotel’s innovation technique of making rooms on futuristic concept helps it to generate a
huge amount of revenue (Desai, 2013). Growth options: Evaluate growth options which are available in a hotel business. It can
be achieved through Ansoff Growth matrix, various growth opportunities like, market
penetration, product/service development, market development, diversification. Then
acquiring of market, calculating risk involved in. Making products/services according to
the market demands and formulating plans for expansion of business. It helps Qbic hotel
to make policies and objectives i.e. to be achieved by them for growing and sustaining
their business. Risk Assessment: It is essential to evaluate about the risk in a business. Company should
assess both; internal and external risk i.e. the state of economy, competitors in market,
credit worthiness of available loan or money, etc. Further, it should see whether it will be
benefited to organisation to take the particular risk, because it has negative impact on
Qbic hotel's growth if it is not properly evaluated.
 Digital Technology: The SME can be benefited with growing technologies. digital
technology refers to latest technological instruments that can be used by the business for
improving efficiency of working. It helps Qbic hotel to increase its profit margin in a
better way. Use of Digital Technology helps to increase the productivity of workforce or
process as well as enable to get innovative ideas to reach to customers. Technology helps
to reduce the errors in operations as most of the work is supported by electronic machines
and software which reduce the risk of mistakes which occur while manual working.
Also, it helps in reducing the wastage of resources through innovation of paperless
technology. Customer dissatisfaction is reduced with the digital technology and help
organisation to improve its performance (Blackburn, Hart and Wainwright, 2013).
4

P2.
To evaluate growth opportunities of market, the best tool that can be used is Ansoff
growth vector matrix. The matrix refers to a grid which explains various growth opportunities
that can be used to expand business and make strategies accordingly. It is widely used as
Product/Market Expansion Grid. It is being used for decades to guide and assist marketers. The
four growth opportunities are market penetration, market development, product/ service
development and diversification. This will Help to evaluate the current opportunities prevailing
in market.
Ansoff Growth Vector Matrix of Qbic Hotel is given as below:
New Markets Market Penetration
 This strategy refers to entering into
new market with its existing
products.
 To develop strategies to attract
more consumers.
 To avail the services/products of
company.
 Qbic hotel has introduced many
promotional schemes to attract
consumers like discount codes that
provide top-class basic services at
cheap price.
 Company has decided to open a
new market i.e. an online portal to
grab attention of young customers.
 Qbic hotel has launched its online
business with various other
tourism companies like
makemytrip.com to make it reach
to widespread customers.
 It has made use of social media
Diversification
 It refers to diversify and
add new products/services
to be sold to the existing
customers. It is a risky
operation and require
expertise skills.
 It is diversifying its
markets by introducing a
Qbic development project
that builds small and cosy
houses for people.
 Qbic has launched
innovative designs and
sustainable practices.
 It has diversified the food
services offered by them,
it introduces new meals in
their menu list focusing
over the local dishes of the
country.
 Through diversification
5

platforms to attract customers to
avail its services. These platforms
show company’s present and
future prospects, discounts
available on various deals, etc.
dependency of hotel on it
existing markets has been
reduced to a certain level,
this help it to get products
in cost effective manner.
Existing
Markets.
Market Development.
 To find out new markets for the
existing products.
 Hotel focuses over identifying new
markets and exploring the similar
needs for the same service.
 Qbic hotel has launched it new
hotel in Amsterdam to fulfil the
similar needs of that market.
 It has launched a new digital
market for it widespread
customers.
 Company has developed an
impactful market attracting large
number of customers from all over
world.
 Further, hotel has developed a
strong market for it services and it
is been benefited from the
increasing tourism industry.
Product Development.
 Developing of new
products for it existing
customers.
 It established new
products like design of
rooms and hotels with less
space and more amenities.
 It offers services
according to demand of
millennials, delivering all
essentials required by
them.
 Qbic hotel is trying to give
better experience to there
customers by providing all
top- class services at
affordable price.
 It has developed it rooms
with futuristic factors that
give great pleasure to
visitors and excellent
sustainability to hotel in
the industry.
6

Justification: In accordance with the above presented Ansoff’s growth matrix on which a
suitable matrix has been suggested to the professionals at Qbic hotel is market development.
Therefore, there are large number of competitors stated in the market on which making a reliable
plan would be effective in accordance with developing the operational identity of the firm.
LO.2.
P.3.
To finance business many sources are available. It can be in form of personal investment,
bank loans, etc. To choose a proper financing option it is a difficult task for a business. Each
source of finance comes with certain advantages and disadvantages. Thus, it is essential to
carefully choose a proper source of finance. Various sources are:
Methods of accessing funds for the company Investors: It refers to the person who invest in particular business with future financial
return. They can be in any form whether as silent investors or active partners who eagerly
waits for their share of investments. It is the most common source of finance and easily
available. They provide investment with cheaper rates for longer duration. Although, it
leads to Kalra and Gupta, 2014certain level of disadvantage as Qbic hotel has to share
their profits with their existing investors, along with this company needs to give some
share of control to them. Bank Loans: For small scale enterprises bank loans are great source of financing as they
provide secured loans for large operations. These loans help in leveraging the assets,
conducting big operations within company, etc. It provides great advantage as there is a
set limit of interest that will be charged on the amount given. Also, it helps Qbic hotel by
providing cash in hand for operational activities and personal use. The drawback of
repayment of loan on time, along with this it is a burden on company as they have to pay
interest on the given money even when business it suffering loss (Kalra and Gupta,
2014). Personal Saving: This refers to personal assets owned by the individual. They are among
great source of finance as there is advantage of taking up all the return on investment. It
provides advantage of control, further, the acquisition cost is minimal. The drawback of
7

using personal resources is losing up of all money in case of loss or bankruptcy in a
business. Government Grants and Loans: UK government provides various types of loans to
support the operations of Small and Medium size business. It provides loan for every 1
organisation out of 3. Government provides loan of £114 billion to support SME. Grants
are the form of donations given by government whereas loans are made available at much
cheaper rates in compare to bank loans. The major drawback of these grants and loans is
that it comes with excessive adherence to official rules and formalities, also it has impact
of change in budgets every year (Gupta, Guha and Krishnaswami, 2013). Overdraft facilities: It is given in relation to bank account hold by a person. In this
facility a person can withdraw more money than it has in bank account. This is facilities
help individual to withdraw money as when required by them. These facilities are
renewed every year so the person can use it on continue basis without any hurdles. It
provides benefits of timely payment and help in keeping good records, OD is flexible in
nature and required less amount of paperwork to be done. It creates a burden of high
interest rates and risk of seizing of collateral documents when payments are not made on
time (Duval‐Couetil, 2013).
 Hire purchase or Leasing: In this source of finance the assets of the firm are
leased/rented on to any third party and not own by the firm, whereas in Qbic hotel
becomes hire of assets when it acquired from that party. Hire purchaser of assets become
it is owner and thus, he is benefited by the depreciation on the assets hired by him/her.
Further, he/she is benefited on tax and interest payments. But, cost of financing through
hire purchase is very high and ownership of assets is transferred after last payment.
In leasing company is benefited with no risk of obsolescence of assets with better usage
of capital. Further, it provides good quality of asset with low capital expenditure. But,
leasing brings debt burden to the firm with fewer profits to equity holders. Also, it
requires maintenance of the leased assets (Duval‐Couetil, 2013.).
Justification: As per analysing the various sources of funding which are available for the
business in relation with generating a capital amount. Thus, on which the most reliable and
suitable source for the fund in the business would be investors. There will be chances of
8

generating a satisfactory amount of funds by selling the ownership of the organisation among the
investors stated in the market.
LO.3.
P4
Business concept
It has been planned by the professionals of Qbic hotel with reference to facilitate the
effective packages for seasonal holiday trips to peoples. There are variations in the packages as
per the number of days for stay, catering services and for Spa.
Mission and Vision
The mission of Qbic hotel is for generating the best market share in the limited time
frame. Satisfying consumers with the best holiday packages and services as per their desired
wants and needs.
Competitive advantages:
Hospitality industries has various number of competitors in the world. However, as per
analysing the rivalries of QBIC stated in UK there are various businesses such as Hilton Hotel,
Marline entertainment etc. Thus, to be competitive and challenging for the businesses on which
there will be requirement of conducting market survey and offering the best services among
consumers on limited budgets.
Projected Cash Flow statement:
Particulars
Initial
investme
nts
(In £)
Janu
ary
(In
£)
Febr
uary
(In
£)
Mar
ch
(In
£)
Apri
l
(In
£)
May
(In
£)
June
(In
£)
July
(In
£)
Aug
ust
(In
£)
Sept
emb
er
(In
£)
Octo
ber
(In
£)
Nove
mbe
r
(In
£)
Dece
mbe
r
(In
£)
Percentage
sale per
month
Consumers 2000 3000 3500 2500 2750 2865 3250 3360 3860 4250 4590 4800
Services Hote
l
room
Hote
l
room
Hote
l
room
Hote
l
room
Hote
l
room
Hote
l
room
Hote
l
room
Hote
l
room
Hote
l
room
Hote
l
room
Hote
l
room
Hote
l
room
9

servi
ces
servi
ces
servi
ces
servi
ces
servi
ces
servi
ces
servi
ces
servi
ces
servi
ces
servi
ces
servi
ces
servi
ces
Average
prices 350 350 350 350 350 350 350 350 350 350 350 350
Total
revenue
7000
00
1050
000
1225
000
8750
00
9625
00
1002
750
1137
500
1176
000
1351
000
1487
500
1606
500
1680
000
Percentage
sale per
month
Consumers 1500 1800 2500 2840 2950 3680 4050 4640 4850 4650 5000 5010
Services
Rest
aura
nt
Rest
aura
nt
Rest
aura
nt
Rest
aura
nt
Rest
aura
nt
Rest
aura
nt
Rest
aura
nt
Rest
aura
nt
Rest
aura
nt
Rest
aura
nt
Rest
aura
nt
Rest
aura
nt
Average
prices 180 180 180 180 180 180 180 180 180 180 180 180
Total
revenue
2700
00
3240
00
4500
00
5112
00
5310
00
6624
00
7290
00
8352
00
8730
00
8370
00
9000
00
9018
00
Total cash
inflows
9700
00
1374
000
1675
000
1386
200
1493
500
1665
150
1866
500
2011
200
2224
000
2324
500
2506
500
2581
800
CASH
OUTFLOW
S
Equipment 4500 0 0 7300 0 0 8600 0 9200 9600 0 0
Utensils 230 280 0 0 320 360 0 0 0 0 340 360
Accommodati
on facilities 1500 0 2000 0 1500 0 1850 1920 0 0 2500 2800
Advertising 360 360 360 360 360 360 360 360 360 360 360 360
Salaries to
workers
4500
0
4500
0
4500
0
4500
0
4500
0
4500
0
4500
0
4500
0
4500
0
4500
0
4500
0
4500
0
Electricity 480 480 480 480 480 480 480 480 480 480 480 480
10

Telephone [phone] 520 520 520 520 520 520 520
Interest on
loan
1200
0
1200
0
1200
0
1200
0
1200
0
1200
0
1200
0
1200
0
1200
0
1200
0
1200
0
1200
0
Total cash
outflows
6459
0
5864
0
6036
0
6566
0
6018
0
5872
0
6881
0
6028
0
6756
0
6796
0
6120
0
6152
0
Borrowings 280000
Net cash flow 300000
9054
10
1315
360
1614
640
1320
540
1433
320
1606
430
1797
690
1950
920
2156
440
2256
540
2445
300
2520
280
Beginning
cash balance 300000
3000
00
1205
410
2520
770
4135
410
5455
950
6889
270
8495
700
1029
3390
1224
4310
1440
0750
1665
7290
1910
2590
ENDING
CASH
BALANCE 300000
1205
410
2520
770
4135
410
5455
950
6889
270
8495
700
1029
3390
1224
4310
1440
0750
1665
7290
1910
2590
2162
2870
Interpretation: On the basis of above presented estimated cash flow statement on which
there has been various expenses and revenue has been transit. Thus, it has been estimated that the
Qbic hotel will have continuous growth in all respective months that will be assistive in retaining
gains.
Projected Income statement:
Income statement
Particulars
Janu
ary
Febr
uary
Mar
ch
Apri
l May June July
Aug
ust
Sept
emb
er
Octo
ber
Nove
mbe
r
Dece
mbe
r
Sales Revenue
9700
00
1374
000
1675
000
1386
200
1493
500
1665
150
1866
500
2011
200
2224
000
2324
500
2506
500
2581
800
Less: Cost on goods
sold
3500
0
3850
0
4235
0
4658
5
5124
3.5
5636
7.85
6200
4.63
5
6820
5.09
85
7502
5.60
835
8252
8.16
9185
9078
0.98
6103
5
9985
9.08
4713
85
11

Gross profit
9350
00
1335
500
1632
650
1339
615
1442
256.
5
1608
782.
15
1804
495.
365
1942
994.
9015
2148
974.
3916
5
2241
971.
8308
15
2415
719.
0138
965
2481
940.
9152
8615
Operating expenses
Equipments 4500 0 0 7300 0 0 8600 0 9200 9600 0 0
Utensils 230 280 0 0 320 360 0 0 0 0 340 360
Accommodation
facilities 1500 0 2000 0 1500 0 1850 1920 0 0 2500 2800
Advertising 360 360 360 360 360 360 360 360 360 360 360 360
Salaries to workers
4500
0
4500
0
4500
0
4500
0
4500
0
4500
0
4500
0
4500
0
4500
0
4500
0
4500
0
4500
0
Electricity 480 480 480 480 480 480 480 480 480 480 480 480
Telephone [phone] 520 520 520 520 520 520 520
Interest on loan
1200
0
1200
0
1200
0
1200
0
1200
0
1200
0
1200
0
1200
0
1200
0
1200
0
1200
0
1200
0
Total operating
expenses
6459
0
5864
0
6036
0
6566
0
6018
0
5872
0
6881
0
6028
0
6756
0
6796
0
6120
0
6152
0
Net operating income
8704
10
1276
860
1572
290
1273
955
1382
076.
5
1550
062.
15
1735
685.
365
1882
714.
9015
2081
414.
3916
5
2174
011.
8308
15
2354
519.
0138
965
2420
420.
9152
8615
Less: Corporate tax
(30%)
6092
87
8938
02
1100
603
8917
68.5
9674
53.5
5
1085
043.
505
1214
979.
7555
1317
900.
4310
5
1456
990.
0741
55
1521
808.
2815
705
1648
163.
3097
2755
1694
294.
6407
003
Net Profit
2611
23
3830
58
4716
87
3821
86.5
4146
22.9
5
4650
18.6
45
5207
05.6
095
5648
14.4
7045
6244
24.3
1749
5
6522
03.5
4924
45
7063
55.7
0416
895
7261
26.2
7458
5845
12

Interpretation: On the basis of above listed forecasted profit and loss statement which have
presented that there will be effective revenue generation which defines profitability of this
business idea in the entire year for Qbic hotel.
LO.4.
P.5.
It is important for Qbic hotel to adopt an exit strategy so that they can get profits through
their ongoing business. Here are some exit or succession options that can be used by the
organisation: Kalra and Gupta, 2014Liquidation: It refers to selling up of all the assets owned by an
individual in a business. It is among the most common exit strategy followed by small
scale enterprises or sole proprietor's. It is an easy procedure and business is being wound
up quickly as assets are been sold. Drawbacks of liquidation is it generates the lower
return and also creditors are the first person who claims for their share thus reducing the
profit generated (Lee and et. al 2015). Passing of business to family members: It is a safe way to exit from the running
business. Keeping up of company within family will ensure legacy and provides a source
of earning for it future generations. This will provide advantage of keeping track of the
operations and become advisory consultant to business. Limitation of this method is
hiring up of successor can create fights in family, also the hired person may not be
interested in owning a company. The present clients may not approve the management or
changes by hired person. Sell company in the open market: This strategy is used to sell of company or business in
open market with a certain price and hopefully take away their share. The profitable Qbic
hotel will attract many potential buyers and enables in selling off business more quickly.
Owner of company would be benefited by use of these techniques as when the assets are
revalued they will get maximum amount of return. This technique may not work for
companies' who is running in losses and debt burden. Also, it becomes difficult to
evaluate the assets of business properly and thus, owner gets fewer profits than expected
(Cowling, Liu and Ledger, 2012). Selling it to Managers/ Employees: Current employees/managers who wanted to buy the
existing business or who shows knee interest in Qbic hotel. This helps owner to be in the
13

business with it limited share and become an advisor for company. It generates chances
to thrive as employees are familiar with business. Provides more revenue to company,
motivate staff to work harder for succeeding the firm. Also, it brings loyalty within
organisation. Demerit of this option is that employee may not be competent enough to
run organisation effectively (Hawkey, 2017).
 Giving it to Third Party: Company can sell off it business to any third party in the
market. These parties can be in a form of Strategic Buyers or Financial Buyer. A
financial buyer will be interested in high return on investment and look for company
balance sheet. Whereas Strategic one will be any large companies' or remotely located
company who want to expand its product line by acquiring existing business. It will lead
to quick sale and give maximum profits. Drawback of selling business to third party can
harm current employees if the competitors wind up business. Further, if competitor
faking the purchase just to know about customer' details and financial resources of
company (Scarborough, 2016.).
Moreover, a per analysing the best strategies for the development of business operations and
its succession in the open market on which there will be requirement of effective strategic plans.
Thus, on the basis of this QBIC will be suggested to implicate liquidation strategies for the
better growth of business.
CONCLUSION.
Small business enterprise is essential for economic development of country. They help to
generate revenue, increases employment rate of the country. Government takes various
initiatives to support growth of small scale business. It is important for SME to evaluate key
considerations in relation to growth opportunities so that it will help it to expand and flourish it
business in a proper form. To achieve this, it can use Ansoff growth models that will help to
properly evaluate each growth opportunities. Proper consideration of various source of finance
like Investors, Bank Loans, Government grants, etc. should be analysed in detail and should
know about it merits and demerits so that it can utilise accordingly.
14

15