Trading Scent Limited Business Growth Plan: A Comprehensive Analysis

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PLANNING FOR GROWTH – TRADING SCENT LIMITED
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PLANNING FOR GROWTHN – TRADING SCENT LIMITED
Table of Contents
Introduction......................................................................................................................................3
LO1: Analyzing key considerations SME’s should consider when evaluating growth
opportunities....................................................................................................................................3
Analyzing and justification of key considerations in organisational context..............................3
LO2: Assessing various methods through which organisations access funding and when to use
those funding...................................................................................................................................7
Evaluate the opportunities for growth applying Ansoff’s growth vector matrix.........................7
Assessing potential fund sources available to business and discussing benefits and drawbacks
of such source..............................................................................................................................9
LO3: Communication for business growth and developing business plan....................................11
Business plan designing with strategic and financial goals.......................................................11
Operational Information............................................................................................................12
Financial Information................................................................................................................13
Communicating the plan for the business..................................................................................14
LO4: Procedure of exiting business and proposition of the option...............................................14
Analysing the benefits and drawbacks of exit options of business...........................................15
Conclusion.....................................................................................................................................16
References......................................................................................................................................17
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PLANNING FOR GROWTHN – TRADING SCENT LIMITED
Introduction
The small sector industries have been facing a significant growth in the UK market in the recent
time. The small-scale businesses have been generously contributing towards the GDP of the
United Kingdom and the government is making continuous efforts to develop the sector
(Hopkins, et al., 2017). The subsequent project will contain analysis of a SME called Trading
Scents Limited. The company is a small-scale business that deals with wholesale perfume
distribution. The company is situated in West Byfleet, Surrey, England. The British company
rose into significance after their rapid revenue generation from 2017. The project will carry out
an analysis of the key considerations of SMEs and ways in which the organisation can assess
funding. A business plan based on the topic will also be developed in the project.
LO1: Analyzing key considerations SME’s should consider when evaluating growth
opportunities
According to Loader (2015), the most important factor for the growth of any SME is the
evaluation of the business opportunities for gaining a competitive advantage. The Porter’s
generic model is another important tool for evaluating the opportunities and threats of the
business. The SMEs must consider these aspects as it helps them to gain knowledge about the
strengths of the business and the prevailing market opportunities of the industry (Morgeson, et
al., 2019). These tools help the companies to get a competitive advantage in the market. It is very
important for the SMEs to prevail in the market and utilizing these factors helps them to enhance
their efficiency and sustainability.
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Analyzing and justification of key considerations in organisational context
It is very important for the SMEs to exist in a market that consist of many giant companies to
deal with. A SME like the Trading Scent Limited must be fully aware of the external and internal
business environment of the company. It is very important to evaluate the business environment,
as it will help the company to get knowledge about the prevailing opportunities and threats in the
market (Ayuso and Navarrete‐Báez, 2018). The company can take a good advantage of it to get a
competitive edge. There are several tools to measure the business growth and opportunity. Some
of the most prominent tools are SWOT, PESTEL, scenario planning and Porter’s Five Forces
framework.
SWOT analysis is one of the most popular strategic analysis models. This model helps a firm to
analyse the strengths, weaknesses, opportunities and threats that the business possesses. It is a
very helpful model that enables a business to evaluate and analyse the various aspects of the
business environment (Bell, et al., 2018). The firm can take the help of the analysis and try to
improve the weaknesses of the firm, can make an efficient use and take advantage of the
strengths, can try to take hold of the opportunities and offset the threats. Since the Trading Scent
Limited is a SME, they use SWOT to evaluate the strengths, weaknesses, opportunities and
threats that the company possesses and try to act accordingly.
Figure 1: SWOT Analysis
(Source: Ayuso and Navarrete‐Báez, 2018)
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PLANNING FOR GROWTHN – TRADING SCENT LIMITED
The external business environment is not under the control of the firm. These factors are changed
by the external factors that cannot be prevented by a firm. In order to survive and prosper from
the situation, the firm must adjust and adapt to the changing external situation. In order to
analyse the external influences, the PESTEL model is taken into consideration. It is one of the
best methods to analyse and evaluate the external business factors. The analysis aids the firm to
identify the various external factors like political, economical, social, technological, ecological
and legal factors. The political factors are the political influences that prevail in the environment,
which may be a factor, that influence the business. Economic factors are also an important aspect
that helps a firm to evaluate the economic condition influencing the business. Social factors are
the changes in the social economy that influence the business processes. Technology is an aspect
that changes from time to time and a firm must be equipped with all the updated technology of
the market, hence the technological aspect is highly important for a business. Ecological factors
also help the business to adapt to eco-friendly ways of production. The legal changes must also
be analysed in order to know about the legal condition of specific departments of the business to
be away from any legal conflict. The company of Trading Scent utilizes the PESTEL model to
analyse and evaluate the external influences that help them to adapt to the changing business
environment (Hsu, et al., 2017).
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PLANNING FOR GROWTHN – TRADING SCENT LIMITED
Figure 2: PESTEL Analysis
(Source: Sousa and Tan, 2015)
The scenario analysis is another essential tool of systematic analysis of business. It is also known
as scenario thinking or scenario planning, is a strategic planning method that is used by
organisations to make flexible long-term plan (Page, et al., 2017). This method is undertaken by
Trading Scent Limited in order to evaluate the prevailing competition in the market that helps
them to get a competitive edge.
Figure 3: Scenario Analysis Process
(Source: Page, et al., 2017)
The Porter’s Model is another method of analysing the business environment that helps the
businesses to evaluate and analyse the competitive market (Denton and Maatgi, 2016). The scope
of a business is evaluated and analysed to gain a competitive advantage. The Trading Scent
Limited uses the Porter’s Model to analyse the company’s Cost leadership, cost focus,
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differentiation leadership and differentiation focus. This helps them to gain a sustainable
competitive edge.
Figure 4: Porter’s five forces
(Source: Bruton, et al., 2015)
LO2: Assessing various methods through which organisations access funding and when to
use those funding
As opined by Morrison, et al., (2019), in order to operate, a business must have a continuous
source of funding that will balance the inflow and outflow of capital. Finance is the lifeblood of
any organisation and it is generally not possible to invest all the required funds by the
entrepreneur himself. The company must have a number of source from which funds can be
utilised from time to time. These sources help the business to get a continuous source of fund
from time to time.
Evaluate the opportunities for growth applying Ansoff’s growth vector matrix
Trading Scent Limited is trading in the market of the UK and it is trying to adopt the digital
technology for the betterment for their business in the concerned market of the UK. However,
they are eying at the business growth and thus collaborating with the foreign companies can be
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profitable for them. Thus, the new enterprise challenges may come in the way of their business.
The risks thus, have been classified through the implementation of the Ansoff’s growth vector
matrix.
Figure 5: Ansoff’s growth vector matrix
(Source: Schawel and Billing, 2018)
The market penetration:
The marketplace penetration approach that is being practiced by the mentioned organisation is
consisted of the promotional methods as one of the tools to enter the new market. Moreover, the
lesser risk would be accumulated by the organisation by investing in this method. Apart from
that, the pricing approach of the products would be developed and the market share in the
concerned market can be focused on. The customers would also be attracted towards the
products.
Improvement of the market
One of the significant marketplace developments of techniques for the mentioned company
would be the marketing and the advertisement campaigns that has been developed in order to
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establish the company in the concerned market. On the other hand, the organisation must
enhance their product development technique, so that the competitive advantage can be achieved
by the organisation (Schawel and Billing, 2018). The market competition would also be
developed by the organisation by implementing and monitoring the activities that are related to
the market enhancement of the mentioned company. As the company belongs to the small-scale
industry, they have to face competition with the other companies that are already established in
the market.
Diversification
The diversification strategy of the company is being developed according to the fact that the
strategy is aiming to explore the new market and the new territories of the market.
Diversification would be one of the powerful methods that help the organisation penetrating in
the new market. The company has developed different ranges of products for their different
segment of target customers, so that the diversification strategy for the company can be
developed (Dawes, 2018). At the same time, the diversification strategy would also help to
market development and it is often seen that the diversification strategy would help the
organisation to consider a generous share of the concerned market.
Product improvement
The product improvement is another major component that is needed to be taken into
consideration while developing and exploring the new market for the organisation. It has been
seen that the existed product range of the organisation is needed to be develop for attracting the
new customers towards their products and the services (Gurcaylilar-Yenidogan and Aksoy,
2018). The manufacturing techniques are being used by the organisations in order to enhance the
development of the products and the services. At the same time, they are also using better
packaging of their products.
Assessing potential fund sources available to business and discussing benefits and
drawbacks of such source
The Trading Scent Limited is a perfume distributor that needs constant source of funding in
order to continue their business with minimal hindrance. There are varieties of impending
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sources obtainable such as bank loan, peer to peer lending, crowd funding, angel investors,
government findings and business incubators.
Banks are one of the most prominent sources of funding that the organisations get benefitted
with. The international and domestic banks situated in the market generally provide loans to the
businesses for various purposes. Banks provide loans as initial capital that helps a business to
start (Hopkin, 2018). The Trading Scent Company generally takes loans from the bank to meet
various operational costs that help them to perform the activities with less hindrance. On the
contrary, banks generally demand a high interest rate and if unable to pay, they realize the
principal amount from the mortgaged asset. The company is facing a lot of trouble in paying the
interest to the banks due to which they are forced to take another loan. The company was slightly
getting into the debt trap and had to incorporate a different source of funding.
The Trading Scent Limited is now opting for peer to peer lending, where some of the family
members or peers of the directors invest their money on the business in return of a small amount
of interest or a part ownership in the company. Crowd funding is another source that the
company is taking into consideration. In these types of funds, a small amount of fund is collected
from numerous willing investors that want to invest small funds in the business. The direct
connection of the lender and borrower prevents confusion in the company. However, there are
some drawbacks of such modes of funding. The numbers of lenders decrease in number as there
are less number of willing investors in the market. This has led to many disadvantages to the
company due to which the company decided to diversify their source of funding (Bruton, et al.,
2015).
The angel investors and venture capitalists are other eminent sources of funding that has helped
many SMEs in UK like the Trading Scent Limited. The main advantages of taking the help of
such investors are that they invest funds in the company for the initial stage and for the daily
operations in return of part ownership in the business (Lund and Persson, 2016). Such investors
are willing to take no interest in return that reduces the liability of the business. These investors
sell their shares to the business itself after they think it is profitable for them. In this way, the
company gets back their shares. The angel investors and venture capitalists generally provide
funds initially or at the time of crisis. These investors are not always willing to fund the business
that creates a lot of trouble for the company.
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Government of the United Kingdom also helps SMEs like Trading Scents Limited in funding
their business for their development. The British government has been making significant efforts
to promote SMEs in the economy as they have a significant contribution towards the GDP of the
country. Government often lends funds to Trading Scent in return of low interest rate that has
been prominently beneficial for the company. The most common drawback of government
funding is that they take a long time to sanction the funds to the company. They also carry out a
stringent method of checking that can be tiresome for the company.
Business incubators are another source of funding which Trading Scent Company has been lately
taking into consideration. These sources help the business in providing various supports to obtain
capital from external sources. They work as consultants and provide valuable information about
sources that are willing to invest in the business. The incubators also provide funds for
equipments and other overhead liabilities that ease the operational cost of the company (Burns
and Dewhurst, 2016). There are also some of the disadvantages of such type of funding source.
The application process of such funding is often rigorous and competitive. Trading Scent
Limited has lost a lot of time in the procedure of delivering detailed application to such sources.
LO3: Communication for business growth and developing business plan
Trading Scents Limited is one of the top suppliers and chief sellers in the perfume industry. It
has a unique business plan for promotion and growth of the organisation and developed
strategies to combat tactfully in competition with its rivals in the industry.
Business plan designing with strategic and financial goals
Goal of the plan
The company is aiming to target the domestic as well the international market for its growth and
development. It is reducing the price of the products offered by the company as compared to its
competitors to attract new customers (Watson et al., 2016). Their main aim is to satisfy customer
demand and needs. Various new models and varieties of products are introduced for meeting the
changing tastes and preferences of the consumers. They are using machineries and models of
advanced technology to grab the markets of London, Manchester and its nearby areas by their
improved and high quality products. Online platforms are also being used as a weapon to target
the customers and to increase market share of the company (Roberts and Berry, 2017)
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New strategies
The new purposes proposed by the company will help them in their growth and development to
sustain in the market:
1. To offer discounts and lucrative price offers to its customers by means of promotion and
distribution of its products.
2. To offer samples of the products free of cost to its consumers so that they can check
before purchasing, this creates a good impact in the minds of the buyers.
3. To explore the domestic markets of UK as well the international markets.
4. To acquire any company having the same features as theirs and increase their line of
business
5. To exploit new resources available and provide diversified products to customers for
increasing the sales (Taylor and Murphy, 2017).
Operational Information
Trading Scents Limited has decided various operational strategies for its growth and
development and expansion of the business. These are as follows:
Implementing new strategies
As opined by Taylor and Murphy, (2017), Trading Scents Limited is a leading company in the
production of scented perfumes. They are investing a huge sum in technology development to
produce new products for their customers. The products produced with advanced technology will
not only target the middle class consumers but also niche consumers. They are planning to keep
the prices of the advanced products high in order to grab up higher revenue from the market.
According to Scarborough (2016), not only the essence and smell of the perfume, but by using
technology they are planning to develop innovative scent bottles and make designs on that will
attract consumers at large. The products produced by them previously attracted middle aged and
youths but now they are planning to use natural components in the production of their products
to attract even the aged consumers. Many consumers are eco friendly, which will make them
inclined to grab their products.
Expanding its business
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