Business Growth Strategies for SMEs: A Case Study of Pharmacy2u

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Planning for Growth
1

Contents
Introduction................................................................................................................................................3
Part1. Investing in the Future.....................................................................................................................4
LO1 Analyze the key considerations SMEs should consider when evaluating growth opportunities...4
LO2. Assess the various methods through which organizations access funding and when to use
different types of funding.......................................................................................................................7
LO3. Develop a business plan (including financials) and communicate how you intend scaling up a
business...................................................................................................................................................9
Part2. Developing an Exit Plan.................................................................................................................13
LO4. Assess the various ways a small business owner can exit the business and the implications of
each option...........................................................................................................................................13
Conclusion.................................................................................................................................................17
Reference..................................................................................................................................................18
2

Introduction
This assignment is developed on the topic planning for growth which aims to provide a
description of small and medium enterprises (SMEs). This assignment includes an analyze of the
key consideration in reference with evaluating growth opportunities that SMEs considers along
with the explanation of the competitive advantage for business and analyze of the opportunities
available for the business for growth. The discussion of the various methods through which
business organizations access funds along with the evaluation of the options for growth with the
application of Anoff’s growth vector matrix and assessment of the risk are also included in the
assignment. Moreover a business plan with the inclusion of appropriate financials in reference
with a SME and exit plan are also discussed and described in the assignment. This assignment
basically aims to provides a discussion of the importance of planning for growth for the small
and medium enterprises growth.
3

Part1. Investing in the Future
LO1 Analyze the key considerations SMEs should consider
when evaluating growth opportunities.
The key consideration of SMEs includes the consideration of various factors that encourages and
support small and medium enterprises while evaluating growth opportunities such as the
consideration of competitive advantage, analysis of opportunities for business growth and
evaluation of growth options with the application of Anoff’s growth vector matrix (Martínez-
Sola, et. al., 2018). The company Pharmacy2u has also considered certain factors when
evaluating growth for opportunities and the first factor is competitive advantage.
Competitive Advantage
Competitive advantage refers to the advantage of a company over their competitors, generate
values for company and attributes that allows an organization to outperform its competitors.
With competitive advantage, Pharmacy2u gets the access to natural resources restricted to
competitors, highly skilled labor, unique geographic location and access to new or proprietary
technology. For constructing competitive advantage, Pharmacy2u is required to consider the
aspects such as:
Benefit: Pharmacy2u should be clear about the benefits offered by their products and services to
the customers and the benefits must offer real value and support to generate interest (Simmons,
et. al., 2014).
Target market: Pharmacy2u should have knowledge of the people who purchase their products
and services and about the target market in order to increase its share in market.
Competitors: Pharmacy2u also need to identify its competitors while analyzing the growth
opportunities as in order to effectively compete with competitors and maintaining share in the
competitive market.
These three components are important to construct a competitive advantage as Pharmacy2u must
be able to state the benefits it offers to the target market in the ways that other competitors do not
offer.
4

Moreover the competitive advantage of Pharmacy2u is described with the basic strategies of
competitive advantage which is also known as Porter’s Generic strategies and the strategies
include the following:
 Cost-Leadership Strategy: Pharmacy2u under the cost leadership strategy tends to
become a low-cost producer in the industry of Healthcare as this strategy enables
Pharmacy2u to exploits and access all sources of cost advantage through lowering the
cost of its products and services in the competitive market. This strategy is stated as a
competitive advantage as it helps Pharmacy2u to easily deal with the competition in the
heath industry and through this strategy Pharmacy2u would also be able to accomplish its
business objectives, seek growth opportunities and to sustain a leadership in the
competitive market (Altinay, et. al., 2016).
 Differentiation Strategy: The differentiation strategy is referred as competitive
advantage for Pharmacy2u as under this strategy Pharmacy2u gets the opportunity to
develop a unique position and image in the competitive market through offering different
services and products with command in prices on their products and services.
 Focus Strategy: Under the focus strategy, Pharmacy2u seeks competitive advantage
through targeting few markets through focusing the needs of the customers and
improving the company’s product and services.
The competitive advantage is important for the company to consider while evaluating growth
opportunities and through this Pharmacy2u also able to distinguish its company from
competitors, seek higher prices, more customers and brand loyalty which supports the company
for exploring growth opportunities (Nordqvist, et. al., 2013).
Opportunities Available to the Business for Growth
Pharmacy2u also seeks different opportunities in order to grow its business in the competitive
market. For the growth of the business of Pharmacy2u certain opportunities are also available as
stated below:
 Expanding Business through Online: Pharmacy2u has great opportunities to grow its
business through online as Pharmacy2u already has significant excess to the online
5

marketing platform. Moreover online platform helps Pharmacy2u to gain access to more
customers and also seeks the opportunity to expand its customer base. Through
expanding business through business, Pharmacy2u also able to assist awareness of its
business details and the products and services it offers to the people and to broaden the
client potentials.
 Reviewing Financial Performance and Procedures: The process of reviewing financial
performance and procedures is regarded as a opportunities for the business growth of
Pharmacy2u as this process help to identify the areas that need improvement in the
company and it improves the finance and performance of the company which further
supports to evaluate growth in business in the competitive market (Sen. et. al., 2016)
 Reviewing Marketing Strategy and Business Plan: The reviewing marketing strategy
and business plan also stated as an opportunity for business growth as it as through this
process Pharmacy2u seeks clear understanding of market trend and also implement
practices to help business grow. The marketing strategy of Pharmacy2u also reflects the
research and implication of procedures that associated with the result to link with
business growth.
Growth Options
Pharmacy2u also seeks growth options in order to grow its business in the competitive market
and the main routes of business growth is associated with Anoff’s growth vectors as this
provides the growth option with the analysis of the potential of Pharmacy2u products and
services in the competitive markets as stated below:
 Market Penetration: Under market penetration, Pharacy2u could seek growth
opportunities in the existing market through improving its existing products and services
and this strategy is also stated as the least risky strategy for business growth. This
strategy basically aims to help business organization in maintaining the share in the
competitive market (Koryak, et. al., 2015).
 Market Development: The market development strategy supports the business
organization to enter in new market with existing products and services. Pharmacy2u
under the market development strategy seeks to develop itself in the new competitive
6

market through introducing its existing products and services and this strategy includes
typical development strategy which consist risk from the existing competition in the new
market.
 Product Development: The product development strategy generally aims to strengthen
the company’s base in the existing market along with widening the base of customers.
Pharmacy2u under this strategy requires to develop new product in order to introduce in
the existing market through targeting new and previous customers. Moreover this strategy
consist certain risk while introducing new product in the existing market (Ingley, et. Al.,
2017).
 Diversification: The diversification strategy is regarded as the most risky strategy for
Pharmacy2u as under this strategy Pharmacy2u is required to develop its business in new
market along with new products and services. This strategy consist risk related with the
growth and success of the new products of company in new market because of customers
preference and existing competition in the new market.
LO2. Assess the various methods through which organizations
access funding and when to use different types of funding.
The sources of the finance for growth plays an important role in the business organizations as
these sources affects the performance and growth of business organizations in the competitive
market. Pharmacy2u seeks funding from the potential finance sources and the funding sources
are given below:
 Angel Investors: The angel investors refer to the those who has a background in finance
and has funds to invest in business in return of certain share in the business company.
Moreover under this source of investors usually concerns with taking more interest in the
experience in the business through using their own experience to enhance the success of
their investment (D'Espallier, et. al., 2015). The benefit of this source of finance is that it
is less risky than debt financing source and it also consist a drawback that under this
7

source is that the owner of the organization would loss it full control over the business as
the angel investor also involve in the business of the organization.
 Commercial Finance: The commercial finance is also an effective source for business
organization as this source provides finance for long term in exchange of certain security
and this source of finance consist cash flow and asset based lending to the business
organization in order to grow the business. This source also leads to benefit of providing
loan at very low interest rate of all the other loan options and this source provides loan
for long term. But this finance source also consist a drawback as this source requires
excellent business credit and its application process it complicated as it require a detailed
finance report of the company’s business (Onyonyi, 2018).
 Venture Capitalist: The venture capitalist source refers to that finance source which
provides capital to the SMEs for long-term and its generally comes from investors,
investment banks and other financial institution. This source though requires to submit a
business plan for investment from the investors. The major benefit of this source is that it
provides business expertise and valuable guidance and consultation to the business
organization and the drawback of this source is that the owner loss their control over the
company’s business as the decision and views of the venture capitalist partners and
investors.
The best and most suitable source of finance for Pharmacy2u is venture capitalist as this source
is based on technology driven, communications and biotechnology. This source is stated as most
appropriate for Pharmacy2u as its business is dependent on online technology and the venture
capitalist source is basically based on technology driven business and this source enhance the
ability for company’s expansion along with less risk associated with the investors (Loredana,
2016). This source also leads to job creation, measures of innovation and efficient knowledge of
the economy to Pharmacy2u for effective growth in business. Moreover this source provides
necessary capital to the company in order to achieve rapid growth along with efficient experience
the venture capitalist investors provide guidance and consultations to the business organization
and effective connection and networks with other industries for the growth of the business.
8

LO3. Develop a business plan (including financials) and
communicate how you intend scaling up a business.
Business plan generally refers to the written description of company’s business future with a
document which represents the plans that a business organizations aims to carry out in the
business of the company to enhance its business growth. Business is usually known as written
documentation which highlights the business goals, budget, timeframe and methods to achieve
the goals. Pharmacy2u while establishing its business plan is required to provide a specific detail
of the strategic objectives of the business plan and the strategic objectives includes the following
aspects:
Vision: The vision aspect of the strategic objectives refers to the blueprint of the future position
and aspiration for business of Pharmacy2u. Vision is necessary for business plan as it state the
future of the company along with the company’s dream. The vision of Pharmacy2u of being UK
leading NHS online pharmacy and providing confidential doctors services to the patients
(Staniewski, et. al., 2016).
Mission: Mission is included in the strategic objectives of business plan as the mission states the
goal and the ways to achieve goals and objectives. Pharmacy2u under this objective states its
goal and the ways that Pharmacy2u would follow to achieve those goals through identifying
opportunities that Pharmacy2u could achieve through its abilities.
Adapting Customers Feedback: Adapting the feedback of the customer is an important aspect
of the strategic objectives as Pharmacy2u through seeking and adapting the feedback of
customers would be able to improve its business process and implement effective and more
efficient methods and features in the business plan in order to improve the business operation,
products and service on accordance with the preference of customers.
Competition Study: Another aspect of strategic objective that Pharmacy2u is required to
involve in the business plan is the study of the competition in the health industry as through the
study of the competition Pharmacy2u would be able to effectively compete with the competitors
in the market and maintain its share in the market (Ahmedova, 2015).
Aside from the strategic objectives the business plan involves other components such as
executive summary of the Pharmacy2u business, company description, market analysis of the
9

company, organization and management structure, service and products offered by the business
organization, marketing and sales, organization funding process, financial projection and
appendix of the overall organization business process.
The most important component of business plan is the description of the finance of the company
through its cash budget for the future year. The cost budget of Pharmacy2u for the future year
2020 is stated below:
Particul
ars
Jan
uar
y
Feb
rua
ry
Ma
rch
Apr
il
Ma
y
Jun
e
Jul
y
Au
gus
t
Sep
tem
ber
Oct
obe
r
Nov
em
ber
Dec
em
ber
Tot
al
Openin
g
Balance
1,
200
,00
0
1,
670
,00
0
1,
600,
000
1,
230,
000
(80
0,00
0)
890,
000
880,
000
1,
006,
000
880,
000
670,
000
(32
0,00
0)
570,
000
9
,304
,000
Add:
Cash
Sales
600
,00
0
750
,00
0
650,
000
810,
000
300,
000
650,
000
800,
000
640,
000
550,
000
700,
000
400,
000
840,
000
7
,600
,000
Receipt
s from
Custom
ers
300
,00
0
650
,00
0
300,
000
310,
000
600,
000
850,
000
225,
000
735,
000
400,
000
200,
000
60,0
00
230,
000
4
,850
,000
10

Issue of
Shares
400
,00
0 - - - - -
300,
000 - - - - -
800,
000
Loan
Taken
300
,00
0 - - -
2,
000,
000 - - - - -
1,
000,
000 -
3
,300
,000
Sub-
Total
2,
600
,00
0
2,
980
,00
0
2,
440,
000
2,
630,
000
2,
090,
000
2,
480,
000
2,
215,
000
2,
380,
000
1,
840,
000
1,
590,
000
1,
330,
000
1,
570,
000
25
,855
,000
Less:
Cash
purchas
es
300
,00
0
420
,00
0
430,
000
650,
000
240,
000
600,
000
720,
000
540,
000
350,
000
380,
000
300,
000
780,
000
7
,000
,000
Paymen
t to
Supplie
rs
260
,00
0
700
,00
0
230,
000
230,
000
480,
000
600,
000
100,
000
660,
000
310,
000
140,
000
40,0
00
100,
000
2
,960
,000
Rents
300
,00
0
200
,00
0
500,
000
300,
000
300,
000
300,
000
300,
000
200,
000
400,
000
500,
000
400,
000
300,
000
3
,600
,000
11

Interest
Expense
s
70,
000
90,
000
60,0
00
60,0
00
90,0
00
90,0
00
90,0
00
90,0
00
90,0
00
90,0
00
120,
000
120,
000
1
,020
,000
Purchas
e of
Asset - - -
2,
100,
000 - - - - -
700,
000 - -
2
,700
,000
-
Closing
Balance
1,
680
,00
0
1,
400
,00
0
1,
340,
000
(81
0,00
0)
980,
000
890,
000
1,
005,
000
890,
000
690,
000
(22
0,00
0)
470,
000
270,
000
8
,575
,000
12