Milton Sandford Wines: Strategic Business and Financial Growth Plan

This assignment presents a comprehensive growth plan for Milton Sandford Wines, a UK-based company, focusing on its expansion into the Indian market. It identifies crucial factors for startup and SME success, including financial requirements and a detailed business plan to achieve competitive advantage. The report includes an analysis of competitive advantage, Porter’s generic strategies, and a PESTLE analysis of India to assess growth opportunities. Ansoff’s growth vector matrix suggests a market development strategy, and the importance of a joint venture is highlighted. Furthermore, it explores potential sources of funds and their implications, a detailed business plan covering various aspects, and an exit strategy. The plan aims to guide Milton Sandford Wines toward a successful and sustainable presence in the Indian market.

Planning for Growth
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Executive Summary
It is very crucial for a business organization to make effective planning and strategies in order to
gain success in the market. This assignment is focused on making an effective planning for
Milton Sandford Wines, which is a UK based company. The growth plan has been developed to
ensure successful expansion of Milton Sandford Wines in Indian market. Through this
assignment, necessary factors that can lead a start-up or SME towards success have been
identified. This assignment includes effective financial requirements along with business plan,
which will help to identify the key aspects for leading Milton Sandford Wines towards success
and to gain competitive advantage in the market.
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Table of Contents
Introduction......................................................................................................................................4
1. Key considerations for Growth options (P1, P2).........................................................................5
2. Sources of Funds and their Implications to the Business (P3)..................................................11
3. Business Plan (P4).....................................................................................................................16
4. Exiting Strategy (P5).................................................................................................................21
Conclusion.....................................................................................................................................22
Reference List................................................................................................................................23
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Introduction
Planning is considered very essential for the growth and development of a company. The higher
authorities of the company mainly plan growth by using the revenue that is generated in the
course of the business. This also helps the companies to ensure that all their departments are
provided with proper fund so that they can function in accordance to the requirements of the
company. The managers of the companies also ensure that their company is being able to accept
all the changes that are currently taking place in the constantly growing market. In this report, a
business plan has been formulated for Milton Sandford Wines, which is a UK based company to
ensure its successful expansion in India. There are various areas that are to be taken into
consideration so that growth planning can be done in an effective manner.
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1. Key considerations for Growth options (P1, P2)
Milton Sandford Wines is manufacturing wines and serving different countries since the year
1990. The importance of competitive advantage has been discussed alongside the analysis of
Porter’s generic Strategy and PESTLE analysis has been done in order to analyze the growth
options.
Competitive Advantage: Most of the companies nowadays look to seek competitive advantage
over the other companies functioning in the same sector. With the help of competitive advantage,
a company can easily outperform its competitors. As a result, they get a competitive advantage in
the market and can develop as a whole. Competitive advantage over other companies can be
gained if the company can manage to have access to various available raw materials and
resources and they have to get it at a cheaper price. This helps to increase the productivity of the
company (Baker and Sinkula, 2015). Therefore, it can be said that it provides the company with
leverage to keep themselves at a higher level than their competitors. Apart from this, the
company is able to succeed on a long term basis (Davcik and Sharma, 2016). Milton Sandford
Wines should therefore take these factors into consideration in order to gain competitive
advantage over its competitors. Porter’s generic strategies and Pestle analysis have been done in
order to order to link the available opportunities with growth of the company. Ansoff’s growth
vector matrix is used to analyse the different growth options.
Apart from these, there are various risks that are associated with the growth of the company.
These risks have been discussed in a detailed manner below:
Increased cost: There are times when the companies try to gain competitive advantage and in
order to achieve this; the prices of their products are considerably very high. They are also not
able to meet with the demands and needs of the customers and therefore, they start losing their
customer base. This has a major impact on the overall operations of the company.
This risk can be mitigated, if the company tries to increase their productivity and manage their
pricing strategy in such a manner that the price suits the needs of the customers. This will help
the company to increase their revenue generation and as a result, they will be able to expand in a
proper manner.
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Effects on the quality of products: Competitive advantage helps the company to gain leverage
over their competitors that is considered to be helpful for the company. However, while doing so
the companies do not considered the quality of their products and services. As a result, the
quality decreases to a great extent and it proves detrimental for the company in the long run.
Customer satisfaction cannot be reached and the company is not able to generate profits.
Mitigation of this risk can be done with the help of training the employees and making them
understand that it is comparatively easy to sell their products to the existing customers but it is
very difficult to develop a completely new customer base. As a result, the company should lay
emphasis on lifting their product quality.
Porter’s Generic Strategy: In order to gain competitive advantage, Porter’s generic strategy has
been analysed in a detailed manner below:
Cost Leadership:
This strategy is mainly used by the companies when they decide to decrease the cost to the
minimum in their sector. This is mainly dependent on the infrastructure of the company. This can
be achieved only if the companies have access to raw materials at a very low price and other
materials in order to produce their products. Therefore, it is important for the companies to
ensure that they have seen all the different sources of cost advantages techniques (Wickeret
al.,2015).
Differentiation:
This type of strategy is used most by the companies when the look forward to ensure that they
have a different type of uniqueness in their products and services that they are offering so that
they can attract the attention of the customers in order to develop a strong customer base. The
attributes that are chosen by the producers are considered to be very important aspects of the
products and customers value them a lot (Ouma and Oloko, 2015).
Cost focus:
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Cost focus is used by the company when they mainly focus on lowering the cost of their services
and products. Therefore, the companies can understand the behaviour of the customers with the
help of this strategy and as a result, the productivity of the company is increased.
Differentiation Focus:
Differentiation focus is applicable to the companies that look to focus on a particular segment of
the company and ensures that they are able to increase the uniqueness of the products
manufactured in the company.
Considering the classic wine bottles, the company can bring changes in the packaging and
bottling method to attract more customers. Glow-in-the dark bottles can be considered for a new
packaging in case of Milton Sandford Wines. This innovation in the packaging would provide a
new outlook to the customers.
The company, Milton Sandford Wines is looking to expand in India and therefore, the PESTLE
analysis of India has been done below in order to understand the different areas of concern in
India.
Political Analysis:
India being the largest democracy in the world is suitable for Milton Sandford Wines to expand.
Besides this, there are various political factors that have an impact on the business of the
company. Political policies and interests of the politicians also have an impact on the company in
a huge way. The different states of India have to pay taxes to the government, which is 25%.
This might affect the company in a huge manner.
Economic Analysis:
India has a constantly developing gross domestic product (GDP) that is 2.26 lakh crore USD;
that will prove to be beneficial for the growth of the company. Another positive economical
factor is that India has cheap availability of labour and therefore, the company will not have an
issue in employing people at low cost and the availability of skilled workforce is also used by the
company (Policy, 2016).
Social Analysis:
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Nowadays the social and cultural lifestyles of the Indian citizens are quickly changing. There are
various cultural trends that are to be followed by the company in order to develop in India.
Customers prefer both domestic and international wines and therefore, the company should focus
on developing their products to suit the needs of the consumers. People also prefer consuming
grape wine therefore, it is necessary for the company to focus on manufacturing grape wines.
Technological Analysis:
India has made tremendous advancement in the field of technology and the technological sector
in the country is constantly growing (Abbott, 2015). People of the country have easy access to
technologies and therefore, it is easy for the companies take the help of technologies and
promote their products. Since, India has a lot of wine companies, Milton Sandford Wines will
not have to worry about different technologies within the country.
Legal Analysis:
The country is developing various policies and legislations that are considered to be helpful for
the company in terms of hiring cheap and skilled workforce. Food Safety Modernization Act of
2010 is considered to be very helpful for the company in terms of their business operations.
Contract Labour Act of 1970 is helpful for the labours of the company.
Environmental Analysis:
The company might be subjected to various environmental factors that could have a positive or
negative impact on the company. The climate of India is constantly changing and it could affect
the growth of grapes, which could affect the company. There are various geographical factors
that could also affect the company in a huge manner.
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Ansoff’s Growth Vector Matrix:
Figure 1: Ansoff’s growth vector matrix
(Source: dos Santos and Fukushima, 2017)
Ansoff’s growth vector matrix can also be used by the company in order to develop in the Indian
market.
Market Penetration: With the help of market penetration, the company looks to develop their
already existing products and services and sell them to their customers. The market share of the
company is also increased in market penetration. The company decreases the prices and looks to
sell their products at cheaper rates (Martinet, 2016).
Market Development: This strategy is followed by the company in order to expand and develop
into a completely new market located in a different geographical situation. It is usually done by
segmenting the customers. In most of the cases, the buyers are highly profitable and the newly
entered market is not completely different from the previous one.
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Product Development: This is done by the companies when they look to develop a completely
new product and sell them in the old market and to the existing customers. This required the
company to invest in the research and development department (Loredana, 2016).
Diversification: When the company aims at growing their shares in the market by offering new
products to the customers, then diversification takes place. The strategy is very risky as both the
product as well as the market needs to be developed.
According to Ansoff’s growth vector matrix, the strategy that will be followed by Milton
Sandford Wines is market development. Since they are looking to develop their company in
India, they have to develop their market in India. This will help them to build a strong customer
base and as a result of this, the company will be able to carry out their business in an appropriate
manner.
Besides this, all the other strategies cannot be used by the company. Since they are not looking to
develop any new product in the Indian market, therefore, product development cannot be used.
They do not have an existing Indian market that they can penetrate so market penetration cannot
be applied. They are also not looking to develop any of their old products and this makes
diversification invalid for the company.
Joint Venture:
Milton Sandford Wines should make use of joint venture collaboration with another wine
company of India in order to conduct their business in a proper manner. This will also help the
company to develop in the Indian market (Connellyet al.,2018).
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2. Sources of Funds and their Implications to the Business (P3)
It is very crucial for a start-up or small enterprise to arrange proper funding in order to gain
competitive advantage in the market. Therefore, every SMEs should make proper planning and
strategies to find their potential sources of funding in an effective manner.
“Investment decision-making” can be considered as the process of taking effective decisions for
business growth. In order to gain success into the market, it is very crucial for a business
organization to increase its funding in an effective manner, as it will lead them to expand their
business more (Levy, 2015). On the other hand, with proper funding, it will be easier for an
organization to manage and overcome all the potential issues (relate to financial problems) in an
effective manner.
With the help of proper funding, an organization can increase its market share effectively. As
Milton Sandford Wines is a start-up SME in Reading of wine selling, therefore, it is very crucial
for the company to gain and make a proper funding. From the global statistics of wine
consumption in UK, it has been identified that most of the people (91.8%) of UK consume wine
on their daily basis (e.g. social party, family time, with friends and other occasions). Therefore, it
gives a wide opportunity to Milton Sandford Wines to expand their business more in an effective
manner, as the demand of wine is very high (Kauffman et al., 2015). In order to make investment
for their business, it is very important to take effective decisions for finding appropriate sources,
as it will lead them to enhance their business in an effective manner.
It is very crucial for an organization before select appropriate funding method to obtain, which
scheme will be most feasible for their fund increasing. Payback period and Net present value
calculation will be the two best fund increasing scheme for Milton Sandford Wines, which can
be described as follows-
Payback period: In capital budgeting, payback period can be taken into account as the required
times for recouping the funds used in investment. In general, payback period is a tool, which will
help Milton Sandford Wines to identify the proper time of recover their invested money
effectively.
Payback period = (p - n) / p + ny
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= 1 + ny– n / p, where, unit of payback period will be calculated in years
In this scenario, p = value of cash flow
ny = number of years after initial investment
n = value of cumulative cash flow
For example, if Milton Sandford Wines spend $15,000,00 for its initial investment and gains a
profit of $1,50,000, $1,50,000, $2,00,000, $6,00,000 and $9,00,000, therefore, it takes 5 years of
payback duration to recover the investment in an effective manner.
Number of Years Cash Flow Invested cash (net)
0 -$$15,00,000
1 +$1,50,000 -$13,50,000
2 +$1,50,000 -$12,00,000
3 +$2,00,000 -$10,00,000
4 +$6,00,000 -$4,00,000
5 +$9,00,000 0
Table 1: Payback period calculation
(Source: Created by the learner)
Net present value calculation: NPV (Net Present Value) can be considered as a tool, which is
used for calculating the gained profit from a business. Therefore, it will be very useful for Milton
Sandford Wines to identify their profit value from the market. This value can be calculated by
subtracting PV (Present Value) of the cash outflows (consisting of initial cost) from the PV of
cash inflows over the payback period.
For example,
if Initial Investment of Milton Sandford Wines = $250,000
Net Cash Inflow / Period = $45,000
Periods = 10
Discount Rate / Period = 10% ÷ 10 = 1%
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