Business Growth Strategies: A Report on Vectair Holdings' Expansion

This report provides a comprehensive analysis of growth opportunities for Vectair Holdings, a small business in the retail sector specializing in hygiene products. It begins with a PESTLE analysis of the external environment, examining political, economic, social, technological, environmental, and legal factors impacting the business. The report then delves into Porter's Generic Strategies, particularly cost leadership, and Ansoff's Growth Vector Matrix, exploring market penetration, market development, and product development strategies. Furthermore, the report evaluates various funding sources available to businesses, including bank loans, crowdfunding, and peer-to-peer lending, outlining their respective advantages and disadvantages. Through this detailed examination, the report aims to equip Vectair Holdings with the knowledge and strategies necessary to plan and achieve sustainable growth in a competitive market, offering valuable insights for any SME looking to expand its operations.

UNIT 42 Planning for Growth

INTRODUCTION
To plan and track organic growth of any business in strategic manner is known as
Planning for growth for that particular business. Retail Sector is one of the most important
sectors of an economy as it provides people with simple access to food, groceries, hygiene
products, etc. This sector could also get affected by some factors which are present in the
external environment of a business and a Pestle analysis on these factors can provide new comers
of small businesses with information about environment before setting up their businesses. This
present report represents a deep study of growth opportunities for SMEs. This file includes, types
of funding with their benefits and drawbacks, business plan to conduct day to day activities in
order to attain growth and succession or exit options available to businesses are also highlighted.
Whole research is conducted on the basis of Vectair Holdings a small business which deals in
hygiene products in retail sector. From this project file Vectair Holding could easily plan for its
growth in such a competitive market.
P1. Analysing key considerations for evaluating growth opportunities
In order to find out growth opportunities, analysis is to be done of external environment
of a business. Following is the Pestle analysis of Retail Industry, Vectair Holdings which
manufactures and supplies hygiene products:
Political Factors: These factors mainly affect the products which are been supplied or
manufactured by Vectair, it also effects the conditions of operating such units (Hulbert, Gilmore
and Carson, 2013). Every country has different rule and regulations governed under certain laws
which accepts different kinds of products in stores. That is why it became necessary to learn and
understand about the products which are accepted under company's law. For example; The
products which are accepted by law could be brought in market by company in order to foster
growth prospectus by competing against rivals.
Economic Factors: Companies manufacturing hygiene products could be affected by
economic growth, as GDP rise of company's economy helps in encouraging large number of
customers in buying products from those retail stores. As potential profits exist here, many
investors are attracted towards it. As a benefit to this new product should be launched by
company like steam hand cleaner to encourage spending habits of customers.
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Social Factors: These factors mainly put impact due to customers’ demand for shopping
in bulk, as this has replaced branches and chain stores with several types of stock and
commodities under one roof under retail sector. Research process has to be conducted nowadays
to find out consumers’ preference and tastes in order to facilitate them. For instance, as company
has strong financial position business entity by developing new products can fulfil the unique
demand of customer which will assist an enterprise in fostering growth. This strategy will help
firm in increasing the demand for products.
Technological Factors: New technological services should be provided by retail store
holders in their systems to customers. This could be achieved by updating machines to the latest
technology with free Wi-Fi services to their customers. Vectair Holding should launch hygiene
products with the latest technologies which can help them in surviving in the market and grow
without any hindrance.
Environmental Factors: Retail Sector is affected by these factors as most of them deals
with selling food products. Selling fatty products resulted in fat tax implemented by government.
In case of Vectair Holding it is not applicable as this company deals with hygiene products
which are environment friendly and do not contain any type of food products which can enhance
growth opportunities for business.
Legal Factors: Legal and legislative conditions are to be met by any retail store in order
to set up new store in retail sector. Taxation and laws to govern relationships of suppliers and
distributors are also included in retail sector. With the production of new production for growth
company should also consider legal factors in order to prevent any type of legal proceeding
against company.
Porter's Generic Strategies describes how a retail sector companies like Vectair Holdings,
get competitive advantage, and this advantage could result in future growth opportunities for the
company in its chosen market segment (Hessels and Parker, 2013). This could be explained
briefly through following points:
Cost Leadership: This involves winning of company's market share by getting cost-conscious
or price-sensible consumers attention. This could be achieved only by setting lowest prices in
targeted market segment to value ratio. For implementing this a firm must provide their products
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at lower price than its competitors. There are basically 3 approaches in this strategy which are as
follows:
 The first is to achieve high asset utilization.
 Second is to achieve the lowest cost for both direct or indirect operations.
 Third is to take command on operational management to ensure implementation of lower
prices.
Strategy for Differentiation: This Strategy states that products need to be differentiated
in order to compete against rivals successfully. Further, this could be considering appropriate
only where the targeted customer segment is not focusing on price of the product. Differentiation
leads to increased in their earnings. These type of strategies are not suitable for small companies.
This includes two types of model which are:
 Shareholder Value model.
 Unlimited Resources model.
Focus Strategies: These strategies are meant for small companies who wants to avoid
competition with a big one (Tansey, Spillane and Meng, 2014). This enables company to focus
on few targets in the market with specialised needs.
Above information is presented on the basis of retail sector in context of Vectair
Holdings which deals in hygiene products. It is suggested to Vectair Holding to adopt cost
leadership strategy through which company would be able to compete against competitors in the
market. According to this strategy, it is recommended that company should set the lowest price
of the products to win market share in the targeted market segment. Company should also follow
all three strategies to implement it successfully i.e. cost, differentiation and focus strategies.
P2. Evaluation of growth opportunities
Growth opportunities could be explained through Ansoff's Growth Vector matrix for
Vectair Holdings. Ansoff's Matrix is a strategical way of planning which helps an organization to
increase their growth in market. This tool provides us with four options i.e. Market Penetration,
Market, Product Development and Diversification. But in terms of small businesses only three
are being considered, means diversification is eliminated.
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Market Penetration: This strategy by Ansoff suggest and encourage small business
holders to promote their present products in existing markets of an economy (Shaw, 2012). On
the basis of this strategy Vectair Holdings should increase their market share of existing products
in current market segments in order to meet the competition with competitors in the market. This
market strategy could be implemented by decreasing in cost and improving their promotional
activities related to their products. After implementing this strategy, company tends to seek
enhance and improved gross sale for their merchandise in existing markets.
Market Development: This type of strategies encourages firms to enter into new
markets for diversification of merchandise and business growth with existing range of products.
By investing in different consumer segments and entering into foreign markets this could be
achieved easily. Vectair Holdings can use this strategy to diversify their hygiene products into
new markets in order to grow their own business. This could only be implemented if company is
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Illustration 1: Ansoff's Matrix.
Source: (Ansoff Groeth Matrix, 2010)

using unique products, technology, economies of scales are benefited, buyers are profitable. By
entering into new market organization can gain better opportunities for business to grow itself
with increasing competition and by entering into international markets company can merge itself
with other leading companies to set their base of launching new products into these markets.
Implementation of this strategy could result in growth of company around the globe.
Product Development: This strategy encourages and guides an entrepreneur or firm to
develop new products in the existing markets for consumers in order to diversify its range of
products. It gives a boost to growth prospectus of an organization. Additional research should be
carried out to introduce new products in the market by Vectair Holdings or any other retail
sectors. Development schemes should be established to manufacture additional products and
giving permission to produce someone else's product, etc. This could help in increasing market
growth rate. To compete against competitors in the market new products as well as new
technologies should be brought into market.
These all market strategies by Ansoff could be helpful for Vectair Holdings and can be
used by them to evaluate growth opportunities (Fortenberry, 2013). It would be beneficial for the
company to develop new products to attract new customers in their stores and can further update
their existing technologies to the latest one.
P3. Sources of funding available to businesses
Arranging sources of finance could be a quite difficult task for any business. There are two
types of funding that a small business holder could opt for; internal and external. Internal sources
are those sources of finance which are arranged from the internal environment of any business,
whereas external sources are those which are arranged from external environment of business.
1. Bank Loan: It is an amount of money which is borrowed from bank for a fixed time
period bounded by an agreed repayment schedule. Amount repayable would be decided
on the basis of size and duration of loan inclusive of interest which is charged at fixed
rate. Following are some of its advantages and disadvantages:
Advantages:
 This type of borrowings is suitable for both medium and long term needs.
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 Amount of loan, its interest rate, repayment schedules, etc. could be trimmed according
to the business conditions which includes both cash flow and income generation.
 There may be availability of repayment of holidays.
 Generally, these type of borrowing includes low rates of interests.
 Timely repayments can result in increased credit score of the company.
Disadvantages:
 Absence of flexibility.
 it is not guaranteed that bank will issue entire requested amount depend upon the
financial situation of business.
 In case of failure in repayment of loan, the lender may take action to seize the security
that was provided by business at the time of loan.
 Needs lot of time to monitor and maintain financial accounts of business.
2. Crowd Funding: It is a way of funding a business in which financing is done by
requesting donations from the public (Storey, 2016). This takes place through official
crowdfunding websites. To get access to crowdfunding, a public company should
successfully apply for it. Following are some advantages and disadvantages of
crowdfunding:
Advantages:
 It is based on customers who have faith in company's product.
 It could be taken as opportunity to interact with customers, who are company's investors
as well.
 Feedback can also be taken from customers through this.
 Low commitment and less risk involved.
Disadvantages:
 There is no guarantee of reaching set funding goals on time.
 There should be a need to encourage people to fund it.
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 Providing rewards to backers.
 Need to compete with other businesses to seek crowdfunding for their ideas and products.
3. Peer to Peer Lending: P2P lending is method of financing through which individuals
can borrow or lend funds without any involvement of financial institutions as an
intermediary. This method removes the role of middleman from the process but involves
lot of time and efforts. It could be concluded that funds can be borrowed from individuals
or businesses through online services that match lenders with borrowers’. Following are
some of its advantages and disadvantages:
Advantages:
 It is beneficial as it provides an entrepreneur with lending who needs less than £35,000.
 It provides entrepreneurs with alternatives who cannot qualify for bank financing.
 Have affordable interest rates.
 Do not include tie up of any type of collateral directly.
Disadvantages:
 Peer to peer lending may not work with an entrepreneur having bad credit score.
 There are chances of declination of loan by investors.
4. Angel Investor: These are those people or group who likes to spend money in businesses
like, start-up or small businesses (Collis and Hussey, 2013). These investors give private
equity for growth of these businesses. Following are some advantages and disadvantages
of angel investors:
Advantages:
 They are free to make finance decisions quickly.
 There is no need for any personal asset in the form of collateral.
 Disciplined due to involvement of outside scrutiny.
 No interests.
Disadvantages:
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 Not an appropriate option for investments that are below £10,000 or more than
£5,00,000.
 It is time consuming as this needs lot of time to find an angel investor.
5. Venture Capital: These helps in providing finance to start-up companies and small
businesses that has high potential of long term growth. It includes high rates of interests
in order to compensate the investor from risk. Following are few advantages and
disadvantages of venture capital:
Advantages:
 It could provide a newly established business with counselling and adviser.
 This can enhance faster growth and greater success.
Disadvantages:
 Business owner can lose management control over business as venture capitalists share
some percentage of total capital.
By doing assessment, it has identified that Vectair Holdings Ltd can generate funds by taking
into account sources such as bank loan and angel investors. Both such sources are highly
effectual which in turn enables business entity in meeting monetary requirements to a great
extent. Along with this, bank loan source provides with several benefits in terms of tax
exemption, easy instalment payment system etc. Further, venture capitalist source enables firm to
get both financial and non-financial assistance. Thus, by accessing both such sources
entrepreneur wold become able to capitalize market opportunities.
P4. Business Plan
Overview of Business Plan
Vectair Holdings is a company which deals in hygiene products and manufactures the
same in UK (Levy, Weitz and Grewal, 2012). It is planning to introduce new steam hand cleaner
which contains fragrance in it.
Aim: To introduce hygienic steam hand cleaner in market.
Objectives
 To increase sales of product by 10 per cent within 4 months.
 To enhance customer base for steam hand cleaner by 15% at the end of third quarter.
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 To design efficient distributive channels in order to facilitate sales and maximize
profitability.
Marketing Strategies
For promoting the product, company will advertise its products on televisions and radio.
Moreover, to promote products on social platforms it will need to use social media techniques.
Penetrative strategy would be used by company for pricing the product as it would help to
approach youth segment who are more health conscious, modern and buys those products which
are affordable.
STP approach
 Segmentation: Entrepreneur will segment its customer base on the basis of income. In
other words, owner of Vectair holdings will target middle and upper income class group
who prefer to spend money in the luxurious products or services.
 Targeting: Concentrated targeting strategy will be undertaken by the researcher for the
attainment of success. On the basis of such strategic framework specific marketing mix
will be prepared for the target segment.
 Positioning: Business entity of Vectair Holdings ltd will position services on the basis of
hygiene, sustainable and cost effectiveness. This in turn helps in attracting large number
of customers and building prominent image in the mind of customers.
Marketing Mix
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Marketing mix is a tool which helps in putting their products at right position and price
for their customers to get maximum benefits (Burns and Dewhurst, 2016). Following is the
marketing mix of 7P's: Product: It is an item produced to satisfy or facilitate the need of a certain group of
peoples. Vectair Holdings is going to launch new product i.e. steam hand cleaner. Price: It is the amount which is payable by a customer to enjoy it. Penetrating pricing
strategy would be used by company in order to be price effective.
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Illustration 2: Marketing Mix of 7P's
Source: (The Marketing Mix 4P’s and 7P’s Explained, 2018)

 Place: Distribution of the product should be done at place which is accessible to potential
buyers. Vectair Holdings would be selling their new products from their retail stores
situated in targeted market segments. Promotion: It is very important to promote any product as it can boost brand recognition
and sales. Company is planning to promote their new product on television or radios or
on social media platforms. People: Deep research is important to find out whether there are enough people or not in
targeted market. Research would be done by company to know exact demand of products
by customers in the market. Process: It should be assured that well-tailored process is in place to minimize costs.
Cost would be controlled by adopting different cost effective strategies to implement
process of manufacturing in a cost effective manner. Physical Evidence: There should be physical evidence that the service was delivered.
Proper processes would be followed to evidence delivery of services such as taxable bill.
Vectair Holdings could make use of above mentioned marketing mix in order to publish
and introduce new product into the targeted market segment.
Investment Securing
For introducing new products funding should be considered to be an important aspect as
it is requiring financial support that is raised through various sources of finance. The funds
would be raised from bank as loan because the provided interest rate is very low.
Competitor Analysis
Clean boss, voith, intehasa are some competitors which are regarded as a strong retail
firms dealing in hygiene products and have strong customer base with high shares in markets.
They follow both penetrating and skimming pricing strategies that leads to target consumers of
every section.
Financial analysis: In the context of new product such as steam hand cleaner business
entity has fulfilled financial needs and requirements from three sources. This in turn includes
bank loan, venture capitalist and personal savings.
Sources Amount (in £)
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