Tiles and Stones Depot: Evaluating Growth Opportunities and Planning

This report provides a comprehensive analysis of growth opportunities for Tiles and Stones Depot, a UK-based tile production and trading firm. It begins with an introduction outlining the company's goals and the purpose of the study, which is to identify suitable growth strategies and financial planning. The report then delves into key considerations for evaluating growth, including Porter's competitive strategies (cost leadership, differentiation, focus) and PESTLE analysis (political, economic, social, technological, legal, environmental) to assess external factors impacting growth. The Ansoff growth vector matrix is used to evaluate growth opportunities, with a focus on market penetration. The report also explores various funding sources available to the business, detailing their benefits and drawbacks. Finally, the report includes a business plan for growth, incorporating financial information and strategic objectives, and discusses potential exit options for small businesses. The report aims to provide practical insights into implementing growth strategies for the company.

Planning for Growth

TABLE OF CONTENTS
1.0 INTRODUCTION.....................................................................................................................1
2.0 EXECUTIVE SUMMARY.......................................................................................................1
3.0 KEY CONSIDERATIONS FOR EVALUATING GROWTH OPPORTUNITIES AND
JUSTIFYING THEM IN ORGANIZATIONAL CONTEXT.........................................................1
3.1 Porter's competitive strategies..........................................................................................2
3.2 P.E.S.T.L.E. analysis for achieving growth.....................................................................2
Evaluating growth opportunities by using Ansoff's growth vector matrix-...........................3
4.0 SOURCES OF FUNDS AVAILABLE TO BUSINESS , BENEFITS AND DRAWBACKS. 5
4.1 Personal Investment..........................................................................................................5
4.2 Banks and Financial Institutions......................................................................................6
4.3 Venture Capitalists...........................................................................................................6
4.4 Angel Investors.................................................................................................................7
Business plan for growth including financial information and strategic objectives for scaling
up a business...........................................................................................................................7
Exit option for small business and positive and negative aspect of each option..................10
CONCLUSION..............................................................................................................................12
RECOMMENDATIONS...............................................................................................................12
REFERENCES..............................................................................................................................13

1.0 INTRODUCTION
Planning for growth is an economic activity that is adopted by businesses f\of all shape and
size to keep a track of their organic growth and revenue. After certain trigger events, every
business prepares a growth plan. This helps them to prioritize their resources and take corrective
actions accordingly. Alignment of growth plan with the present organizational structure will
ensure correct implementation and the firm will grow by leaps and bounds. Companies aim to
grow well in the market and for that they have to make effective strategies that may support them
in gaining success in market. Growth planning must be done by considering actual position of
enterprise. Present study is based on Tiles and Stones Depot is a United Kingdom based firm that
mainly deals with production and trading of tiles. Goal of company is to design good quality
products and deliver excellence services to end users. It has all range of products and also Onyx
and Schluter are provided to consumers on special order. It is a small scale enterprise but hold
enough potential for growth.
Purpose of this study is to identify growth opportunities for small business and find suitable
strategy that are helpful for the development of business unit. In this report evaluation of growth
opportunities of Tiles and Stones Depot is done. furthermore, potential sources for finance are
discussed in this report. and lastly prepare a business plan, so that the company can achieve its
organizational goals efficiently and effectively. Basically, the report has emphasised on practical
aspect of learning and implementing growth opportunities.
2.0 EXECUTIVE SUMMARY
Growth planning plays significant role in success of small companies. Report discusses
about various consideration aspects economic element, technological aspect that may affect
growth of the firm. Furthermore, study highlights funding sources for Tiles and Stones Depot
company. It produces business plan which may help the small business growing well in market.
3.0 KEY CONSIDERATIONS FOR EVALUATING GROWTH
OPPORTUNITIES AND JUSTIFYING THEM IN ORGANIZATIONAL
CONTEXT
The ultimate goal for every organization is to achieve growth. Be it small, medium, large
scale company, everyone wants to grow profitably. Growth in business is a complex process but
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it can be achieved by proper planning and controlling, Some key considerations for evaluating
growth opportunities are-
3.1 Porter's competitive strategies
 Cost leadership- If a small or medium scale enterprise wants to achieve competitive
leadership then it is mandatory for the organization to indulge in low cost production. It
can be done through achieving economies of scale, use of better technology, bulk
purchasing and exploiting all other potential sources of cost advantage. Tiles and Stone
depot enterprise has mastered the technique of cost leadership and this is helping them in
transforming into large scale organization. Tiles and Stone Depot Company has to
consider cost factor while evaluating growth opportunities. This element will help
companies in sustaining in new market significantly.
 Differentiation- Differentiation strategy basically aims towards a firm adopting some
unique technique that will help them in achieving competitive advantage. Tiles and Stone
Depot adopted some unique technique which is of importance to the consumers and it
helped the company in achieving growth. Tiles and Stone Depot Company should
considered differentiate aspect, as it has to offer unique products and services so that firm
can satisfy needs of mass audience and can gain attention of people. This would be better
in gaining more opportunities in international market.
 Focus- Focus strategy is a wide term and it is divided into two aspects-
Cost focus- In cost focus, Tiles and Stone Depot aimed towards achieving cost advantage for its
target customers. It should consider cost aspect to gain advantage in Newmarket and making
consumers loyal towards the brand.
Differentiation focus- In differentiation focus, a firm seeks to differentiate in its target
customers.
3.2 P.E.S.T.L.E. analysis for achieving growth
 Political factors- The government policies have always impacted small and medium scale
firms. The impact can either be direct or indirect. Taxation policy, subsidies, rules &
regulations and export-import duty are some factors that have deeply impacted small and
medium scale businesses. Tiles and Stone Depot Company should consider political
conditions while evaluating growth opportunity in new market. This would be helpful in
making correct strategy to minimise risk of failure into new market.
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 Economic factors- Economic factors can help a business to expand and achieve
competitive advantage. If the unemployment rate, inflation rate and trade tariffs are
minimum then it can help them in achieving competitive advantage (Li and McCalley,
2017.). Tiles and Stone Depot Company should consider economic factor that would
help in making correct pricing and investment decision so that firm can gain more benefit
or opportunities in global market.
The growth of small scale business like Tiles and Stone Depot also depends on economic boom
and depression. During the boom period, business while thrive but the depression period will act
as a road block in the growth of the business.
 Social factors- Social factors like demographic level, literacy rate, religious beliefs,
lifestyle, family size, purchasing habits, health consciousness and sex distribution are
some factors that have a deep impact on Tiles and Stones Depot. Taste of people, their
income sources, ability to buy items, culture that all aspects must be considered to
evaluate growth opportunity in New market. This will help in implementing correct
strategies through which firm can influence behaviour of society members.
 Technological factors- Since, Tiles and Stone depot is small scale manufacturing firm, it
is important to realize the impact of technology on firm's operations. The use of latest and
modern technology will help the enterprise in achieving economies of scale. Low cost
production will also give them competitive advantage. Thus, using latest and modern
technology can definitely help a small scale enterprise to grow profitably.
 Environmental factors- It doesn't matter if a company is small, big or medium because
each one of them is impacted by environmental factors. The geographical location,
weather and climate, energy consumption are some environmental factors that impact the
business. Environmental factors are also known as ecological factors. Stone Depot and
other manufacturing companies needs to minimize discharging of wastes into water
bodies, ground or in the atmosphere because it is their social obligation to keep the
environment clean. They can instead recycle these waste resources or dump them under
the ground. Analysing the environmental factors in advance and taking necessary actions
at the time can help a company to grow.
 Legal factors- The government expects every business to operate within certain legal
policies and frameworks. If the business fails to abide by these rules, then may have to
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face legal actions and penalties. Laws like employment law, consumer protection act,
health and safety law etc. are to be followed compulsorily by small, medium and large
scale enterprises if they want to survive and grow in the market. This legal regulations
must be considered by Tiles and Stone Depot Company while evaluating growth
opportunities. It will support business in minimising legal consequences and improving
efficiency level of operations. That would help in gaining more growth opportunities in
market.
Evaluating growth opportunities by using Ansoff's growth vector matrix-
Ansoff growth matrix is a strategic technique that helps business to grow exponentially by using
simple strategies. Ansoff has distinguished growth in four directions that are-
 Market Penetration- Market penetration means selling of existing goods in existing
market. This is done with the consideration to either increase market share by
winning competitors' customers as well or by selling more goods to existing
customers. Market penetration is the perfect strategy for small scale companies like
Tiles and Stone Depot that want to grow and evolve but do not wish to take high
risks. This strategy provides additional benefit of achieving economies of scale by
large scale production. Along with growth and profitability, market penetration will
help the enterprise to achieve competitive advantage.
 Market development- Market development growth strategy simply means selling of
existing product in the new market (Gouin, Herault and Raison, 2018). In this
strategy the company aims towards entering a new market. Although it has some risk
associated with it but once the company successfully enters, then the growth level is
unmatchable. This is generally suitable for big companies as they hold the potential to
counter the competitors (Karimi and Ebrahimi, 2015). Some companies also adopt
techniques of merger, acquisition, joint venture that help them in smooth entrance.
But its not as easy as it seems because there are multiple adjustments and
compromises that are too be made by the company. Market development strategy is
not suitable for small and medium scale firms like Tiles and Stones Depot because
they do not have enough resources to enter into a new territory.
 Product development- As the name suggests, product development is concerned with
development or introduction of new product into the market. The company can either
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completely manufacture a new product all together or it can innovate an old product
and then introduce it into the market. But in order to do this it is essential for a
company to analyse and identify the needs and wants of consumer and for this
purpose market survey is required. It might be feasible for Tiles and Stone Depot as
they can do some creativity with their respective product and then sell it into the
market. Some popular innovations that have been massive success are introduction of
coloured TV in place of black and white and introduction of touch screen phones in
place of keypad phones.
 Diversification- In a way, diversification is a combination of market development and
product development as it aims towards introduction of new product into new market.
It seems appealing but this strategy has the highest ratio of failure because of the risk
associated with it. The company also requires huge funds for research and
development, analysing the new market and identifying the needs and wants of
consumers. This strategy is not suitable for small and medium scale enterprises like
Tiles and Stone Depot, but highly recommended for Multi national companies with a
suitable portfolio. Companies that strike the right chord at the time of diversification
achieve huge growth and success.
Ansoff's model is highly diverse and has often proved its feasibility for small, medium and large
scale enterprises. It is a tool of core business strategy and it is often used to determine growth
potential of business. Ansoff's model has made it clear for every company that it needs to grow
otherwise their resource won't generate enough returns. The major merit of this growth matrix is
that it can be applied at the time of depression and boom both.
From the above analysis it has been found that the best strategy for Tiles and Stone Depot is
market penetration because it is least risky among the four and it provides maximum opportunity
for growth to the small scale and medium scale companies.
4.0 SOURCES OF FUNDS AVAILABLE TO BUSINESS , BENEFITS AND
DRAWBACKS
4.1 Personal Investment
The first and foremost source of fund for any business is the owner of the company. The
owner taking the initiative to start a business may be having enough funds or personal financing
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sources to start-up the business. This shows the bankers and investors that the owner is having
long term commitment to its project and will make efforts for the growth of the business.
Advantages
• owner's always have the planning in their mind and knowledge of the funds available to
run their business.
• Self Financing will give Tile and Stone Depot much control over its business than any
other financing source.
• Depot will retain full ownership of business, meaning no liability to pay back to any
outsider which will help in retaining its full profits.
Disadvantages
• Using personal souring can lead to strains over family of the Stone Depot owner and
their personal life.
• Business failure can lead to loss of personal assets like home, property etc.
• outside funding sources even provide investors and capitalists to the business, where in
personal sourcing Stone Depot will have to create its own contacts.
4.2 Banks and Financial Institutions
Funding through banks and financial institutions is the most commonly used funding
source. Stone Depot being a small and mid-sized firm can avail the funds under various
repayment schemes. Banks offers funds based on sound record and effective plan that can meet
the minimum return requirements.
Advantages
• Loans can be availed as per requirement of Stone Depot they have flexibility of
modification and can rescheduled when required.
• Loans can provide Stone Depot repayment holiday for certain period where the company
have to pay only interest for certain period of time.
• Stone Depot will not be required to pay share of profits as the company will be paying
interest for the loan.
• Company will have complete control over its business and will not have lenders
interference in its working (Demir, Wennberg and McKelvie, 2017).
Disadvantages
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• Loans are given with huge terms and conditions to follow like, timely report submission
describing its growth.
• Monthly repayments can cause cash-flow problems for the company ,Stone Depot will be
required to pay interest even on unused funds.
• Loans are mostly hypotheticated against assets of the company.
4.3 Venture Capitalists
For venture capital, Stone Depot will be requiring technology, high growth potential for
its funding. Equity position is held by venture capitalists for carrying out promising plus high
risk projects. Venture capitalists requires good returns on their investments, specially when the
Stone Depot starts to sell its shares.
Advantages
• VC provide the Stone Depot with the necessary guidance as they are investing in number
of companies they have attained experisein the field of the business.
• VC help Stone Depot in establishing connections with additional resources for the growth
of the business and the company do not have to waste time in establishing new connections.
• VC's important advantage is that the company do not have to repay in case of failure of
the business, unlike loan borrowings.
Disadvantages
• Disadvantage of VC is , the company may loss its control , they may drive the business
according to their perspective for protecting their investment.
• VC do not release all the upfront , it may lead to postponement of some of the major
projects.
4.4 Angel Investors
Angel investors are generally rich individuals or retired executive of companies investing
in small companies. They provide Stone Depot with the their networks and experience and even
management knowledge to the business as they have been leaders of their field.
Advantages
• Biggest advantage from this source is that the finacing is less risk sensitive as compared
to debt financing. Stone Depot may not have to repay the capital in case of business failure .
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Angel investors are experts and can provide business long-term objective with more successful
plans and framework.
Disadvantages
• Angel investors are hard to find and contact. Angel investors also want the business to be
driven according to their perspective which might not match with the established objective of the
business. Angel investors will have a share of profits in Stone Depot (Colpan and Jones, 2016).
Bank can be considered as most suitable source of finance for Tiles and Stone Depot
company, if company is taking loan from financial institute then it will not have to share its
ownership with any other third person. Hence owner will be able to make own decision without
interference of any other person. In addition, by taking loan long term need of finance can be
fulfilled by the Tiles and Stone Depot Company Hence, it is best way to get fund and meet
financial need of business.
Business plan for growth including financial information and strategic objectives for scaling up a
business.
Executive Summary
Tile and Stone Depot is planning for its Expansion and growth because of its excellent
performance over the last 5 years. The company is excelling in tiles and ceramics and planning
to setup new plants across the nation and cross nations seeing its increasing demand. The
company is planning to invite new funding sources like VC, Angel investors or through Banks or
Financial Institutions and like sources for expansion and to increase its market share.
Tile and Stone Depot
93, Farnham Road
Slough Berkshire SL1 4UN
United Kingdom
Manufacturers of Brick Tile and Construction
Products- bathroom furniture, adhesives synthetic, valves, ceramic flooring tiles
Vision
Vision is recognitions as most admired and innovative organisation and becoming
manufacturers of the world-level ceramic tiles around globe.
Mission
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◦ Becoming a market leader in the ceramic industry.
◦ Setting an example in the field of technological advancement.
◦ Providing superior quality products at attainable prices.
◦ Becoming the most innovative ceramic and tile industry
◦ Creation of productive, safe , rewarding plus empowering work environment.
Objective
1.To expand the company's growth by 20% till the end of year 2020
2.To increase the profitability of the firm by 30% till the end of year 2021.
SWOT Analysis
Strengths
• Most innovative industry in the tiles and ceramic field.
• Large variety of products with different design and colour under one roof which is not
provided by other competitors.
• Online Marketing help the customer to choose their design from their convenient places
and even specific designed tiles are produced as per customer requirement.
• The most advanced technology which increases the production as well as products are
available within short span of time.
• Technological advancement has reduced the manual work leading it to become more
cost-efficient.
Weaknesses
• The company do not have brand awareness in most of the regions and has limited
geographical presence.
• Being an emerging entity the company is not gained public reliance.
• Poor operational performance in some specific units.
Opportunities
• Strategic alliances with well established an reputed brands will provide Stone Depot with
an excellent opportunities for its growth plan and for providing more products along with new
customer base.
• Joint ventures with local markets will provide the stability to underperforming units and
with knowledge to improve their performance.
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• Online Shopping will provide Stone Depot with new customer base by providing home
shipping services.
• Leveraging its distribution network worldwide can help in expanding to other parts of
world.
• Emerging markets in various regions near the suppliers can prove to be profitable and
help in reducing its transportation costs (Colpan and Jones, 2016).
• New production technology will be available with government grants and subsidy.
Threats
 Stone Depot is having strong competition in most of the most countries from national
players.
 Pricing challenges will also be faced by the company as regional players will be able to
provide products at much cheaper prices for gaining market shares.
 Increasing trade barriers and tariff rates will make the products costlier than the regional
competitors bringing Stone Depot's existence into danger.
Market analyses
Pest analyses is the method that is used to analyses market condition.
 Political factor: Stability in political conditions can help Tile and Stone Depot company
in running operations smoothly in new market. If Tile and Stone Depot enter into new
market, then it may get benefit in this market.
 Economic factor: Financial condition of market is stable; value of currency is high hence
enterprise will be able to enhance its sales by successfully entering into market.
 Social condition: Firm always have to consider taste of consumers and have to run
operations by considering cultural aspects of that country. This will aid in gaining more
opportunities in this market.
 Technological factor: use of advance technologies will help Tile and Stone Depot in
gaining success and controlling over wastage as well. Use of internet and social sites will
support in making direct contact with mass audience and raising sales of organisation to
great extent.
Management structure
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