Sollatek's Expansion: Analyzing Growth Strategies and Funding Options

This report provides a comprehensive analysis of Sollatek's business growth strategies, focusing on its plans to open a new factory outlet and expand its market share. It begins by exploring various growth strategies, including Porter's generic model (cost leadership, differentiation, and cost focus)...Read More

Planning For Growth

INTRODUCTION
Planning for growth is known as the strategic tool of business which is used for analysing
and evaluating the business growth. It is helpful for the company in order to plan and expand the
business properly within market. It enables business to prepare plans and help in expanding the
business effectively. The company considered in this report is Sollatek company. This is a
manufacturing company that provides voltage protection products, telecom power solutions,
electronic refrigerator controllers, solar products etc. These are used by customers for friendly
use. This company is planning for opening a factory outlet in another city for increasing the
amount of products it is producing and making them reach potential customers (Aganbegyan,
ed., 2019). The following report discusses about the different ways in which an organisation can
grow and develop. There is explanation about the ways by which funding can be get for
expanding the business.
TASK 1
P1
It is essential for the business to analyse opportunities which are present within market
for expansion. Main objective of expanding the business is increasing the amount of money and
revenue that a company is generating. It is helpful for enhancing the competitive advantage
within market. There are several strategies that can be used by sollatek for expanding their
business –
Porter's generic model
 Cost leadership- as per this strategy in a business can provide products at lower prices to
customers. Respiratory gradually help in increasing the sales of the company and also
earning of high profits. 10 approaches used by the company for supplying the power
control, temperature control, energy saving as well as solar energy. These products of the
company can be provided at cost efficient rates.
Differentiation – this is our strategy which is used for increasing the sales of the company by
analysing the strategies of rivals (Austin, 2016). Sollatek can use this approach for providing the
products and increasing customer satisfaction.

 Cost focus - this is this strategy used for or offering the products with the lowest price for
attracting customers. Sollatek misusing this for offering the energy saving products today
target customers and grabbing the market share.
It is analysed from the above mentioned strategies that the company can adopt cost
differentiation for achieving profits and high revenue within market.
PESTLE analysis:
This is strategic tool useful for understanding the macro environmental factors that affect
the business performance (Capello, and Nijkamp, eds., 2019). This helps in knowing what are
the strategies that can be adopted by the company for managing various business tasks and
operations. Some of the factors are described below –
Political factors: These are the factors associated with regulations as well as rules that
are given by government of different countries. It is important for companies to follow all the
regulations for maintaining peace while working in business environment. In context of Sollatek,
it is concluded that business of this company in operated in UK and there are opportunities with
the company to expand in UK market. This is helpful for the company if it is analysing different
regulations like tax policies, tariffs of trade etc. while doing business in UK.
Economic factors: These factors are associated with the economical conditions of the
nation such as purchasing power of customer, international exchange rate fluctuation, GDP rates,
rate of unemployment etc (Davies, 2017). UK is having stabilised economic condition so that it
has high purchasing power of population that means tendency to but quality products is higher
over there which are offered by Sollatek (Davies, 2017). This assist the company in enhancing
their sale and profit as well.
Social factors: These are known as the factors related to the culture, belief, values of the
customers. In context of Sollatek, it is concluded that they are offering products which are
according to their beliefs and cultures. These are helpful for managing the work effectively.
Technological factors: Technological factors are those which are associated with the
latest technology adopted within company and making innovative and new products. It is
important for the company to manage the processes it is using for providing customers a good
experience.

Legal factors: These factors are associated with all that legislative laws which are
existing and enforced on a country such as employment laws, contract law etc. UK is having
different laws which are to be complied strictly by all the business enterprises so that to be in the
legal frame of UK of business. Sollatek is required to follow all the legislative laws in order to
expansion of their business legally so that to attract customer and enhance sale of the company.
Environmental factors: These includes characteristics of a nation such as pollution,
water availability, climate etc (Fox, and Pearce, 2018). It is essential for Sollatek to follow all
the environmental factors before doing business.
P2
An Ansoff Matrix is defined as the strategy used for analysing the way in which products
can expand within market. This matrix is mentioned below -

Market penetration: According to this strategy, business are able to plan and grow within
market. Those organisations adopt this strategy which are aware about the demands and needs of
products. In this strategy, existing product is introduced in the existing market by innovating the
new product. In context of Sollatek, solar products of this company can be innovated and
launched in market.
Market development: Market development is defined as the strategy that is used for entering
the new market by launching the existing product (Gallent, Mace, and Tewdwr-Jones, 2017).
This strategy is used when business is started at global level. In context of Sollatek, it is
concluded that this strategy is used for doing business internationally. There is opportunity with
Sollatek to increases the number of potential customer by utilising the resources properly.
Product development: According to the product development strategy of Ansoff matrix,
business introduces innovative and new product or service within market. This is helpful in
managing the sales of the company. In order to expand business in international market,
there is need of providing products within market. Sollatek is an organisation which can
innovate it’s products and sell them within market. This helps in building good brand
image and reputation.

Product diversification: In this strategy, the businesses are planning to launch a new product or
service within market. This is helpful in maximising profits and earning money. Sollatek can use
this strategy for increasing the number of potential customers. This will result in increased
profits earned by the company (Hawkey, 2017). This will also helpful in managing the profits of
the company and increasing the number of potential customers.
From the aforementioned analysis it is observed that Sollatek may adopt market
development strategy so as to enhance their sales and consumer convenience.
TASK 2
P3
Doing business is not an easy task and there is requirement of lot of efforts and hard work
for attaining success in market. There is need of funds and money for doing various operations of
the company. In order to do well in market, there is need of managing the work of new business
by having enough funds. There are different sources of funds mentioned below -
Internal sources of finance:
There is opportunity with the business to have funds from internal sources of the
company. Sollatek can take funds from various internal sources of finance like sale of products,
sale of fixed asset, reinvesting earned profits, retained earning etc.
Advantages Disadvantages
 These type of source of funding are
more efficient.
Sollatek can be able to manage and maintain
effective control over the planning of new
business (Helin, and Jabri, 2016).
 The main disadvantage of using this
fund is that operational budget will be
affected.
 There can be chances of bankruptcy.
External sources of finance:
These are defined as the source of funding like debentures, credit loans, lease financing
of deposits of public etc.
Advantages Disadvantage
This is helpful in managing various ways of This source of funding is more expensive as it

grabbing funds for business and growth of
business is also increased.
includes high interest rate and lesser control
over finance.
Sollatek company is going to expand it’s market share in UK by opening a new factory
outlet. The best way to have funds for doing business is external source of finance. Some of the
external sources are mentioned below -
Bank loan: Sollatek can take money i.e. loan from bank and repay it with interest rate
after the fixed time spam. This is one of the best option for new businesses to expand their
market share (Hick, 2016). As soon as the company earns profits, it will repay the amount back
to bank on regular basis.
Advantages Disadvantage
 This is helpful in growth of business.
 The vase in which there is no cash left
with the market, bank loans help
companies to do business.
 This enhances the burden on company
because if it fails in doing successful
business, then it is difficult to repay the
money back to bank.
 Banks have rigid rules on system of
repayments such as interest will be
charged irrespective of the usage of
funds.
Bank overdraft: This is defined as the service provided by banks when payments of
banks is done by business by exceeding cash within bank account.
Some advantages and disadvantages of bank overdraft is as under:
Advantages Disadvantages
 It is a flexible method for varying the
in order to vary the limit of overdraft.
 Paper work is less and business does
not has to put more efforts.
 There is requirement of recovering high
interest over the variation within limits.
 There is need of immediate funds and it
is challenge for acquiring funds from

the debtors.
From the above discussion, it is analysed that bank loan is the most suitable source of
funds acquiring for Sollatek in order to expand their business.
TASK 3
P4.
A business plan is defined as document which includes the description of aims and
objectives of the business (Kim, and Wagman, 2016). There is development of business plan in
order to know what are the exact needs and demands of business planning for expanding profits
of business. There is need of attaining organisational goals and objectives in given time for
achieving success in market. The business plan will include information about the financial
forecasting and strategies of the company. The business plan for Sollatek company is mentioned
below –
Executive summary: Sollatek is an electronic and solar product manufacturing company
that is situated in Slough, UK. This involves the manufacturing of quality products to clients and
customers. There is planning for this company in orderto expand new factory outlet, there is need
of providing quality products to the customers.
Vision: The company is willing to enhance their customer base and customer
convenience in order to usage of their product.
Mission: Mission of Sollatek is to establish factory outlets in UK in order to increase
customer accessibility over their products.
Goals: The company is aim to enhance their sale by giving quality products so the
customers that may result into enhancement in customer value and brand image.
Objectives: The company is planning to increase their customer base by 15% and sale by
10% as by opening new outlets by the year 2022.
STP framework: This is a model used for reaching the potential customers. There is
evaluation of segmentation of potential clients, having potential target market and positioning of
product in right manner within market. These steps are mentioned below –
Segmentation: This strategy includes bifurcating whole market into small segments and
this includes customers who have similar characteristics and needs. Sollatek is an organisation

which segments market on the basis of behavioural attributes and geographic areas
Targeting: The target customers of this company are people reciting in local area and
this company will focus on the development of joint ventures with various other building
construction companies (Kustosz, Müller, and Wendler, 2016).
Positioning: This company has the idea for positioning products in such a manner that
opening of the new factory will help to enhance company’s profits. This enables company to
supply products in effective manner.
Strength of the business:
 The strength of this company is that this company has monopolistic production of hand
dryers and there is need of putting high efforts for innovating and developing products.
 The hand dryers of this company are save and they save electricity. It is good marketing
strategy for attracting more number of customers.
Resource allocation: This is an essential activity to allot resources of company to each and
every activity in order to get growth in desired manner.
Total estimated budget: There is need of development of budget which is helpful in
managing the business process and activities of new factory outlet.
Particular 31/12/20 ($) 31/12/21 ($) 31/12/22 ($)
Implementing technology cost 12000 12000 9000
Promotional expense 11000 10000 8000
Installation of machines 25000 13000 6200
Shop expense 9000 7000 9000
Training charges 8800 9700 6600
Total Cost 65800 42700 38800
Cash flow statement: This is a statement used by the managers for estimating the cash
used in various processes of the business. This examines position of liquidity of business. There
is need of cash outflow that is paid by the form of investment as well as paying off the liabilities.

It is analysed from the given cash flow statement that this company has taken funds from
different areas which have to be repaid (Pizzi, and Mittal, 2017). The cash flow this firm is
having includes $7700, $200 and $1300 for years 2021, 2022 and 2023 which demonstrates the
cash availability.
Monitoring and controlling: It is important for the company to monitor and have
control over the various activities of business in order to maintain the successful working of the
company. Expansion of business is important and this includes utilising the resources effectively
and reducing the amount of money.
TASK 4
P5
Succession planning is defined as a strategy that enables a performing leadership role in
the company after the termination of old managers and leaders. The different type of succession
are given below
Merger - this is known as the arrangement in which there are two or more companies combine
and work together as a new company (Reddy, Xie, and Huang, 2016). Profit and loss both are
shared among both the parties equally.
Advantages Disadvantage
 The new company will have benefits
and profits from the functioning of both
companies.
 There is new management formed for
the companies and this is helpful for
developing new policies and strategies
for the new company.
 There is attainment of economies to
scale that is efficient for the company.
 There is need of putting more efforts in
the functioning of company as it is
needed for running business that is
formed after merging the businesses.
 There is possibility of the new company
in grabbing market share and creating
monopoly situation in market.
 As this company is working at large
scale, the number of employees
working in the company are more and
hence there is need of managing them
effectively.

Acquisition: this is known as businesses purchased by some another company and this is
done by acquiring shares of that company. There is need of attainment of more than 50% of
share for achieving ownership of seller company.
Advantages Disadvantage
 In this case, price of share of new
acquisition company increases.
 Experts of new acquisition company
can easily manage the work.
 There is need of managing the work of
the companies acquired in effective
manner.
 Conflicts and fights are more as there
are two management and administration
 Suppliers may increase price because of
knowing the fact that there are two
companies that ae taking decisions and
paying.
 The employees of seller company may
resist strategies of purchasing company.
In context of Sollatek, they can use the acquisition strategy for expanding their business. By
adopting this, the company can have access to the new market. Here, they can utilise the
resources properly and satisfy the needs and demands of customers effectively (Seidman, 2016).
This will help in increasing the brand value of Sollatek as well as increment in market share of
the company.
Exit strategies:
Selling in open market: This is an exit strategy and used by small businesses, under this
strategy the seller of the business plans to sell their business in an open market where large
number of buyers are available, and it is a biding process so the company which will pay high
money to the seller company, the business will be sold to that buyer.
Advantages Disadvantage
 This provides exposure to several
buyers.
 This is an easy process and there is no
 This process takes time.
 Sometimes, this method is not able to
have enough money for value of the

requirement of putting more efforts for
success of company.
company.
CONCLUSION
From the above discussion, it is analysed that any company needs a proper planning for
successful growth and development. There is need for making the proper planning so that
business can be managed effectively. There are various models which helps in analysing the
possible opportunities in market such as Porter's generic model, Ansoff growth matrix etc. These
models are used for analysing the demands and needs of business for increasing the funds. There
is development of business plan which is used for analysing plans for knowing form of budget,
target market and other strategies that can be used by business. At the last of this report, there is
monitoring and evaluation of various strategies needed by business for expansion.

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