Planning plays a vital role in the way to guide, growth, and navigate business expansion into new markets. While planning for growth, managers are required to assess all those internal and external factors which can affect the company's position in the future. Future market growth depends upon these key indicators, i.e. turnover, profits, sales, staff members, etc. Along with this, the initial stage to grow a business to give strength to its existing performance, to devise a successful growth strategy management needs to exactly know where they are and where they want to go (Barbour and Deakin, 2012). The present assignment is based upon Fordway Solutions Ltd., which provides IT infrastructure services. Fordway works with UK-based medium to large enterprises across all market sectors with complex IT requirements, who desire change and want reliability along with security. Apart from this, the report is going to be described an evaluation of growth opportunities through competitive and external market analysis. Managers can demonstrate future growth and opportunities through certain tools and techniques. There will be a discussion upon numerous sources of funds available for business enterprises. Furthermore, a business plan will be developed to provide an effective strategy to companies as they can grow and diversify in a large market context.
P1 Major considerations for evaluating the opportunities of growth
In this over dynamic business environment, every firm want to obtain high competitive advantage and remain successful for long run. An assessment of potentials and pitfalls inherent within business in order to make an informed decision and increase chances of success. Managers are required to identify growth opportunities at marketplace by using various tactics and tools. Although, market growth and profitability is unsure because technological advances shorten the life cycle of products (Beatley, 2014). In this relation, managers are required to define a well structure framework so as to assess future market possibilities of growth. Therefore, implementation of an adequate growth strategy is liable to ensure that business is properly structured and there is optimal utilisation of available resources. Following is discussed two tactics through which firms can identify growth opportunities in target market -
It is one of the crucial part of business planning, by doing this, firms can establish what makes their product more unique. In order to analyse competitive position, sited firm has adopted Porter's generic strategy to evaluate external rivals as well as core competencies, skills, resources and capabilities of employees; it leads to demonstration how employees are capable to attain market growth opportunities. Management is required to evaluate their competitors and place them in strategic groups according to priorities. Competitive analysis is a description of all rivals and how business will compete with them. It involves assessment of firm's strength and weaknesses as per market competition and formulate strategies to gain cutting edge. In this competitive era, business models are getting change and new competitions appear from external markets. This constant instability forces businesses to seek new market opportunities.
Porter's Generic Model:
Therefore, Fordway Solutions Ltd., has adopted Porters' generic model which helps to determine whether a firm's profitability is above or below the industry average, which was founded in 1980. The model define that how organisations can pursue defensible edge over market scope. It reflect the choices made regarding growth opportunities.
The strategy is based upon raising profits by cutting prices while charging average price of industry. Many companies acquire cost leadership strategy with an aim of increasing their market share by lowering prices and are still making reasonable profit margins on each sale. It involve being a leader in terms of costs and sustain competitive edge for long run.
It encompasses making products and services unique and differentiate from others rivals which enabling them to attract more and more customers. Differentiation leadership relies upon improving features, functionality, brand image and durability which customers' value (Chen and et. al., 2014).
Business associations acquire this strategy to concentrate on niche markets as well as understanding the market dynamics; it leads them effectively fulfilling customers' needs in best possible manner. In this section, firm will provide low cost products to a niche market or small group of people. It helps in attaining other customers from external market because they can purchase products at low rates.
In this segment, firm's aim to make their products more innovative in nature and produce for a small number of customers. It means unique products will be produce for only special buyers of market segmentation. There are several small businesses acquiring this strategy in niche markets and attain high profit margins.
Above mentioned all those strategies, Fordway Solutions Ltd., acquire Cost and differentiation focus strategy in order to develop low price as well as well specified IT services for target market. Companies who acquire focus strategy enable to access to the capital needed to invest in technology that will bring costs down.
External market analysis
In external environment, there are certain components which can affect business activities and operations in direct and indirect manner. Although, the analysis aims to identify all negative forces to create and execute imperative decisions which ensure future business growth and success. External analysis can be done through PEST analysis of the company thus to demonstrate those factors and develop business growth strategies.
there are certain factors, such as government laws and legislations, tariff rates, tax and duties etc. affect any business association. UK government is supportive in growth of IT services as it is investing more and more in development of IT companies and providing job to people. Companies are required to follow Information technology act, 2000.
It encompasses with global crisis, raising working pay, competition with other IT giants etc. that highly affects Fordway Solutions Ltd.
In UK, recession was crucial factor which affect global economy and cut down so many jobs, in IT sector as well (Eddleston and et. al. , 2013).
It refer language barriers, employees rights, race nationality etc. In IT sectors people works from diverse background which supports to gain better IT knowledge. Beside this, IT firms are also participating in fulfilling their social responsibilities towards local communications, i.e. providing jobs.
As an economically developed nation, UK has good access to acquire new and innovative technologies. It helps companies to expand their operational areas at global level. Fordway Solutions Ltd., can develop its own websites and introduce a mobile application so as to attain and retain more clients.
P2 Growth opportunity by implementing Ansoff's matrix
Identification of future opportunities requires for management to understand business direction, strategies, knowledge of adequate resources, strength and capabilities of firms. It is essential for managers to define those areas where they can expand their business and sustain high growth opportunities. In context of small business organisation, they always tend to enter into markets to grab better future opportunities (MacLeod, 2013). Therefore, Ansoff Matrix is one of the best growth strategy which focus on firm's present and potential products as well as customers. The market/product grid also enlighten the risk using a particular growth strategy which may expose firm to move from one section of the matrix to another. By applying ways to grow via existing and new products of Fordway Solutions Ltd. and in existing and new markets there are four possible combinations. Below is given brief description of all quadrants of Ansoff Matrix -
- Market penetration – In this strategy, firm seeks to attain growth with existing products of Fordway Solutions Ltd. in its existing market segments having an objective to extend market share. Although market penetration is treated as less risky strategy as it leverage company's available resources and capabilities.
- Market development – In this, companies seek growth by selling its available goods into new markets. Market development options pursuit in new geographical region. Development of new markets for any product may lead good opportunities, if company's have strong core competencies; it means firm should be able to deal with target market in an adequate manner.
- Product development – Here, Fordway Solutions Ltd's develop new and innovative goods to sell in existing markets. Product development strategy can be appropriate as if its strength are linked with customers' needs. This tactic may provide new growth opportunities to company as if their new product will be able to meet buyers' needs and wants (Moseley, 2013). For example - in a service industry, managers can reduce their time to market, or improve customer service or quality.
- Diversification – As per this, firm can grow through diversifying its business into new market with new products and services. Although, diversification is quite risky strategy as it requires both market and product development which might is outside the core competencies of the firm. In addition, companies also do not have any idea about new market and preferences of its customers. For example – Fordway Solutions Ltd. can enter into a new geographical area by offering new technologies to it.
As these above mentioned strategies, Fordway Solutions Ltd. choose product development and diversification strategy. As in product development, it would be able to extend product by applying various variants or repackage existing products. As an IT company, technologies are changing at fast pace so that firm can implement them in its existing products and gain high competitive edge (Schetke, Haase and Kötter, 2012). On the other hand, in diversification Fordway Solutions Ltd. can expand its business in new regions of UK.
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P3 Potential sources of funds available for enterprise
Every business association require sufficient availability of finance to meet deadlines of payrolls, expanding functional area and acquired equipment. In this relation, managers found out various sources where they can generate funds, although time frame will dictate which one source is suitable or best for funding. Selection of appropriate source of right source or right mix of finance is mainly key challenging role for managers; this procedure include in-depth evaluation of all sources of funds (Todes, 2012). Management of Fordway Solutions Ltd. demonstrate various sources of finance thus to strengthen its operations and increase market areas as well. Thus, below is defined various sources of finance which are stated as under -
It is an amount i.e. borrowed by an individual or organisation from banks for a certain time period in agreed repayment document. Although, repayment amount relies upon size, duration and nature of the loan as well as the rate of interest. In UK, banks are ready to give credit to small businesses on the basis of an adequate return of their investment.
- Advantages – Bank loans cannot be repayable on demand as available time duration for loans which are three to ten years. It can be tied for lifetime of assets to which people borrowed the money to pay. In addition, the interest is payable as tax deductible expenses.
- Disadvantages – Loans for long term require high amount of interest rates and specific terms and conditions to which managers have to follow i.e. provision of company's information quartet. Loans are not flexible in nature.
It is significant source of finance to start up a new business. Venture capital is a money which is rendered by investors to small business which have efficient potentials and high growth opportunities. In this, investments are made through equity capital and sometime capitalists also participate in firm's management.
- Advantages – Venture capitalists are professionals in nature as they are enabled to provide proper guidance and consultation to small entities in respects of taking business decisions and setting goals as well. As these people are connected with business community which provide tremendous benefits to company.
- Disadvantages – As VC members wants to be involved in business, it reduces control of management. It is uncertain and risky form of finance and benefits can be gained only for long run.
Peer to peer lending
It is a hybrid form of investing and saving which will offer higher returns instead of traditional methods. Peer to peer lending is a concept of lending money from family friends and then expand it on industrial scale (Schetke, Haase and Kötter, 2012). There are several P2P websites which unite lenders with borrowers thus to gain mutual benefits.
- Advantages – P2P can give access to gain significantly higher returns rather than getting with high street savings. It is a platform of deploying capital across multiple loans which enables to manage better exposure to risk.
- Disadvantages – Probably, there is risk of loss because interest is not fixed and not available for high investments. Credit scores below the cut-off are not approved; borrowers with bad credit may out of luck.
These are mentioned various sources of funding in which Fordway Solutions Ltd can acquire Bank loan method its formal and legal source to take funds and expand business in larger market areas. Interest rates are fixed thus people get know when and how much they will have to repayable. Are you worried about assignment help with quality content please contact our experts?
P4 Design a business plan for growth
In this dynamic era, need of an adequate business plan is increasing because every firm wants to ensure their growth and success at marketplace. A business plan provide guidance in developing business strategies and policies to attain firm's goals and objectives. It acts as decision making tool for companies as the content involves in this plan enables to identify various forces which can affect business and also provide direction to employees i.e. how to overcome with those internal and external forces.
Following is discussed business plan of Fordway Solutions Ltd. -
Overview of the company
Fordway Solutions Ltd is an IT infrastructure service providing company having experience of 25 years. It helps leading associations over all sectors thus to implement best in their IT department. The firm uses best practices, technologies and security standards to design a tailored solution for various solution; although their solutions are cost effective, secure and robust (Todes, 2012). Fordway succeed through the skills, integrity and hard work of staff members. Managing director of Fordway said that their company works with a wide range of technology partners i.e. from market leaders to innovative technology companies in order to determine imperative solutions of IT based problems find; it enables the firm to maintain a truly independent approach.
Products and services of the company
The company offers application and data classification, design and planning, testing, IT governance, service delivery, infrastructure and data security, data analysis, change management and many more (Valler, Phelps and Wood, 2012). Apart from this, Fordway Solution Ltd also provide both cloud and managed services from two UK data centres across the public and private sectors. All our cloud services are available through the Government’s G-Cloud framework. The business organisation renders its service within the United Kingdom. Get the best essay writing service for students.
Mission and vision
The vision statement of Fordway Solutions Ltd is to become one of the most trusted and independent IT service as well as cloud computing provider company in UK market.
Apart from this, the mission statement of the company is to manage and mitigate risks which occurs in IT sector cloud integration reliable on problems and fit of delivering IT services to their clients.
Although core values of Fordway is based upon teamwork, adopting changes and finish with great results; all these aspects will be assistive in attaining vision and mission of the company in a certain time period.
Situational market analysis
After assessing mission and vision statement of their business, managers of Fordway Solutions Ltd are required to conduct an assessment to analyse internal and external market situation. It help company in identifying all those elements which can affect working practices and operations in positive and negative manner. For this, firm has determined its own strength and opportunities, which are described as below -
Identification of target market
afterwards, there is needed to determine target market of the company in which it will serve. Although skills and expertise of Fordway are applicable to any industry, but its customers are defined by the size, complexity and viability of their IT operations in industry. The niche market of organisation targetted medium to large business enterprises. In order to serve them effectively, the company has an adequate IT strategy so as to fulfil long term IT requirements of organisations.Allocation of resources – Business plan can be succeed if managers ensure about proper allocation of all necessary resources (Ward, 2016). There are various resources i.e. human, financial and technical which helps managers to accomplish all tasks and activities in systematic manner. For example – sufficient availability of human resources help Fordway Solution Ltd to do all working activities effectively.Implementation of the plan – In this phase, execution of prepared plan is done within workplace so that employees can work accordingly. Before implementation, management should consult overall plan with staff members to get necessary modifications. After this, finally plan is ready to implement and employees are ordered to work accordingly.TASK 4P5 Assess succession or exit options for small enterprise with its advantages and disadvantagesThe prime motive of every business association is to gain high profit margins and competitive position at marketplace. But due to some external forces and further reasons, this objective cannot be achieved; it reduces company's credibility and viability at marketplace. The decision of business existence is taken by entrepreneurs when there is nothing to do with the company and it is facing financial losses since many years (Wu, 2015). Business owners of Fordway Solution Ltd also exit their business when they have null assets to sell and pay creditors. On the other hand, business exit also include a planned exit, retirement, health problems, change of interests, an unexpected offer, a new venture, needing to raise money, wanting to spend more time with family or take care of a loved one.Options of business extension from market are stated as under -Liquidation – It implies to quit a business or shut it down. Although, everyone does not plan to liquidate their business. There are some situations occur which may force entrepreneurs to close business doors (Goodfellow, 2013). In this process, all assets get sold to repay creditors and overcome from financial losses.
- Advantages – It involves no negotiations and there is no worried about transfer of control. Liquidation is an easiest form to wound up a business as soon as possible and helps companies to overcome with financial issues.
- Disadvantages – It provides lowest return to entrepreneurs while selling all assets. People can get money only from disposal of fixed assets, i.e. lands, plan, machinery etc. Creditors are also liable to claim on sale of assets as they have invested money in business (Lewis, 2013).
Sale business in open market – It is also called as initial public offerings which helps entrepreneurs to sell their business in open markets or public. Facility of selling business over market depends upon certain conditions which are in favour of business. Sometimes, even if a business is booming but related industry may not appeal then buyers will not interested to purchase that kind of business.Advantages -
- A successful business enable to attracts so many buyers.
- Business owners can get higher returns on sales of assets.