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Sources of Funding for Langland Advertising & Design Ltd

University: UKCBC College

  • Unit No: 42
  • Level: Undergraduate/College
  • Pages 12 / Words 3000
  • Paper Type: Assignment
  • Course Code: J/508/0601
  • Downloads: 2
Question :

The business organization always tries to achieve growth and success in the market for which an effective plan is formulated. It requires an understanding of opportunities in the market which can affect the growth of an organization. Langland Advertising & Design Ltd is an organization that deals in providing advertising services to the healthcare sector in the UK. It operates its business at the small-scale level. You are asked as a Junior Manager in SME to demonstrate a basic understanding of market opportunities with a better action plan. To achieve passing criteria, the following Learning Outcome should be followed:

  • Determine key considerations that SMEs must consider while briefly analyzing growth opportunities.
  • Evaluate the methods through which SME can easily access funds and how it allocates different kinds of funds.
  • LO3 Develop a business plan (including financials) and communicate how you intend to scale up a business. Prepare a business plan containing different aspects needed to execute properly along with the communication plan for scaling up a business.
  • Determine the various ways SMEs can easily succeed or exit from the market along with the evaluation of each option.
Answer :
Organization Selected : Langland Advertising & Design Ltd

INTRODUCTION

Planning is the strategic activity which supports business owner to evaluate and plan growth opportunity in terms of market expansion and increased revenue (Barbour and Deakin, 2012). Every organisation is started with the purpose of business development and growth in profitability. This given report is based on Langland Advertising & Design Ltd, which provides advertisement services to healthcare sector in United Kingdom. This company is small in size and belongs to service sector. In this report, various sources of funding are evaluated for Langland Advertising & Design Ltd with their merits and demerits. Also, successful business plan is formulated to growth which involves financial information, vision and mission of this company and its strategic objectives as well which help in attaining growth. In addition to this, various exit and succession options are discussed for Langland Advertising & Design Ltd.

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TASK 1

P1 Evaluate key considerations for evaluating growth opportunities

Planning is essential for every business as helps the business owner in developing their business and increase profitability. It is the responsibility of business manager to formulate effective planning which sets the goals and objective for employees that are required to be fulfilled by them . Langland Advertising & Design Ltd is a small company which provides its services in healthcare. This company organises various campaigns and digital technology to serve their customer in effective manner. By using advance and modern technology, its easier for them to interact more with number of people and enhances the profit of their customers. Growth opportunity of Langland Advertising & Design Ltd can be evaluated by analysing internal and external analysis and these are described as below:

Competitive analysis:

This analysis is based on identifying and evaluating the strategies of the competitors. In addition to this, products and services are analysed with their strengths and weakness to find out the uniqueness of competitors (Beatley, 2014). In relation to Langland Advertising & Design Ltd, its manager have to evaluate external market and find out the strategies opted by competitors for attracting large number of customers It also helps the Langland Advertising & Design Ltd to modify their existing services in order to make them unique and compete with their competitors. Resources, capabilities and core competencies of this firm which helps them in competing its customers are described as below:

Resources

This firm owns skilled employees with high experience that is beneficial for the company as they uses innovative ideas in order to increase customer satisfaction.

Capabilities

This firm is expertise in providing the healthcare advertisement on TV to radio, print media and social media which helps them in interacting with targeted audience.

Core competences

Langland Advertising & Design Ltd is providing its services at reasonable prices with quality which helps them in competing its competitors and attracts more number of customers (Chapin, 2012).

Porters generic strategies

In this, strategies are formulated to evaluate the actual position of firm in which it is determined that whether it earns profit or suffering from loss. It also describes how firm can utilize competitive advantages to enhance their profitability ratio. In context to Langland Advertising & Design Ltd, this company should use these strategies for the growth of company. Porters generic involves various type of strategies and these are evaluated as below:

Cost Leadership

This strategy emphasis on offering low cost products to its customer in order to increase the number of users. Langland Advertising & Design Ltd should offer low cost services to its customers as compared to the competitors. This strategies will help the company in strengthening their command over the marketplace and attract more number of customer which will result in increasing overall profit margin for firm.

Differentiation

In this strategy, organisation focuses on making their product unique to provide quality and differentiated service to its customers. These kind of strategies are usually being adopted by big companies only and small companies doesn't prefer to use it. In context to Langland Advertising & Design Ltd, this company can use unique promotional activities to connect more number of people (Denton, Forsyth and MacLennan, 2017)

Focus

Under this, major target of the firm is on new segment of customer. This strategy is developed to understand dynamic nature of the market and improve their products according to need of customers of targeted segment. In context to Langland Advertising & Design Ltd, this firm should concentrate on targeted customer who are expecting something new every time and provide them services according to their expectation.

From the above mentioned strategies, Langland Advertising & Design Ltd have used cost leadership as it is a small firm and can grab maximum number of customer with low cost services with quality work.

External analysis

It is essential for every organisation to analyze the external environment of the business as it helps in identifying certain factors which may impact the business in positive as well as negative manner. In context to Langland Advertising & Design Ltd, PESTLE analysis is done to evaluate the affect of external factors on business. These factors are described as below:

Political

In this, change in the political condition of UK can impact Langland Advertising & Design Ltd. This firm can be affected by changes in tax polices of UK which may increasing the costing of its products (Eddleston and et. al., 2013).

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Economical

It involves economical factors like inflation rate, economic growth pattern, recession etc. In relation to Langland Advertising & Design Ltd, recession have impacted negatively on this firm as due to recession large companies have opted cost cutting and reduced their spending on advertisement. It also creates growth opportunity for this firm as it can offer low cost advertisement services to other companies for increasing their number of customers. This will directly enhance growth of the company at market place.

Social

Langland Advertising & Design Ltd can be influenced by the social factors as buying pattern of the customers is dynamic. Here, majority of UK citizens are using social media and its beneficial for this firm to promote products of its customer with massive population.

Technological

It involves usage of modern and advance technology. Langland Advertising & Design Ltd can use technology to reach the audience in massive form and it also aware their clients towards services and products. It is termed as opportunity for this firm to use television as the mode of technology to connect targeted audience.

Legal

These factors involves consumer laws, labour laws and other ethical laws which are required to be fulfilled by every organisation. Here, Langland Advertising & Design Ltd Can take it as an opportunity by following all the consumer as well as labour laws. This will employee to work effectively with this firm that will increase profitability (Galland, 2012).

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Environmental

Langland Advertising & Design Ltd is using social media for their advertisement and can be affected by the bad whether condition as it internet is less accessible in such climate. And this firm will not be able to connect to targeted people.

P2 Evaluate the opportunities for growth applying Ansoff’s growth vector matrix

Ansoff matrix refers to the strategic planning which are designed to identify availability of opportunities in the market place. It also helps the business organisation to set their mission for organisation and formulate various strategies to grow their business and increase profitability (Grover, Bokalo and Greenway, 2014). In context to Langland Advertising & Design Ltd, this firm can opt four different strategies which can enhance their growth. These strategies are evaluated as below:

Market penetration

In this strategy, firm concentrates on increasing the sales of existing product in already existing market. Langland Advertising & Design Ltd should use this strategy for the growth of the company. Here, this company is focusing on increasing their number of customers within UK as its easier to grab attention of targeted customer in same area which enhances market share. For this, manager of this firm have to find new customer within existing marketplace.

Product development

This strategy emphasize on introducing new product and services in the exiting market. In relation with Langland Advertising & Design Ltd, this firm should add new promotional activities in their portfolio to attract the customers. For using this strategy as opportunity, this firm can invest on research and development department to identify the requirement and needs of the market and launch new patterns of advertisement in order to grab customers attention (Hollenbeck, Noe and Gerhart, 2018).

Market development

Under this strategy, main focus of firm is on finding new market or area for existing product. Here in relation with Langland Advertising & Design Ltd, manager of this firm should target new area with motive of expanding business. It is beneficial for the firm to introduce existing products in nearby city and countries of UK. Its easier for the company to attract new customer with familiar product and which will helps in its growth.

Diversification

This strategy emphasize on introducing new product in new market. However, it is considered as most riskier strategies for small business. In context to Langland Advertising & Design Ltd, this strategy is not beneficial for the firm as it involves huge amount of investment which is not possible for small advertisement company (Levy, 2016).

From the above mentioned strategies of business growth Langland Advertising & Design Ltd should use market penetration and market development as the opportunity for growth. As market development will help the firm in expanding their business in nearby cities and countries. Whereas, market penetration will support the business growth by targeting new customers in existing market place with same offering services. It will increase sales of the firm and increase revenue of the firm.

TASK 2

P3 Evaluate potential sources of funding available for organisation

Every business requires proper funding to implement planned strategy for effective growth. It is essential for each firm to identify suitable funding option with less interest rate and consumes less time. In context to Langland Advertising & Design Ltd, it is necessary for the business manager to evaluate every all the potential sources of funding which are available for the firm and choose most effective one (Lewis, 2013). All the sources of funding are evaluated as below:

Bank loan:

Banks provides financial support to the small firm by issuing them loan on specific interest rate for particular time period. In context to Langland Advertising & Design Ltd can use this option of funding as it is considered as most secured and easy method of raising fund.

Advantage-

Bank loan is beneficial for this company as its owner can whole amount at the time of down period of business. If Langland Advertising & Design Ltd will not able to survive in market place, it can use bankruptcy in order to protect their personal asset.

Disadvantage-

It is compulsory fo9r the company to pay instalment on time in all the situation and if it is not done on the given time bank might charge extra interest on it.

Personal investment:

In this, owner uses his personal saving or assets for business. Owner of Langland Advertising & Design Ltd can use his own property for its office it save it cost of rent.

Advantage-

Personal investment does not involve any documentation which saves the time. In addition to this, owner is not required to pay interest for this (MacLeod, 2013).

Disadvantage-

It is riskier as if business will not provide positive result invested money might not return. This also avoids the valuable advices of other investors who invest in the company and also participate in decision making process.

Friends and families:

It is easier for small business to take financial supports from friends and families. As they its easier to connect to them and they helps for the mutual relation. Langland Advertising & Design Ltd can use this source as it does not involve any security or legal documentation.

Advantage-

Interest rate are quiet nominal. It is beneficial for Langland Advertising & Design Ltd as in case owner fails to pay interest or instalment on time there is no need to pay extra interest to friends and family.

Disadvantage-

In case, if borrowed amount is not returned on time then it may affect the relationship with friends and family (Mahmoudi and et. al., 2013).

Crowd funding:

This is technique by which large number of people contribute small amount which is spend in companies for gaining return. For this, internet is medium which is used by them to communicate and make plan in respect to investment.

Advantage-

It is fast funding technique which helps business person to raise funds by using online platform. Along this, it is cheap method which didn't require any collateral security from executive.

Disadvantage-

This tool have demerit which are related with permission of whole group for spending money in particular firm. For this, business person require to conduct planning for convincing people to invest funds.

From the above mentioned sources of funding this firm should opt bank loan for raising financial fund of business. Bank loan are most convenient option for this organisation as it will provides collective fund to the business which can be used by the owner in any manner at any time. Langland Advertising & Design Ltd can use this fund in opting advance technology in their promotional events. And if in case this firm will not be able to survive in advertising industry, they can declare bankruptcy which will save their personal asset.

TASK 3

P4 Business plan for success

Business planning is considered as the helping and supportive tool for the manager it improves work proficiency or employees, design expectation of the company with its investors which works as guidelines for whole organisation. It is necessary for every organisation to make effective business plan for growth purpose (Mason, 2015). It is the responsibility of manager of Langland Advertising & Design Ltd to formulate proper business plan by evaluating internal and external environment which helps in identifying the available opportunities. Business plan of Langland Advertising & Design Ltd involves various stages which are evaluated as below:

Overview of the company:

Langland Advertising & Design Ltd is advertising company which avails its services in United Kingdom. This firm was constituted in 1991 and provides its services to the customers according to their requirement.

Products and services:

Mainly this company deals in offering several types of advertisement services to its customers like promotional events, social media promotions, newspaper ads, radio, television, Leaflets, magazines etc. Langland Advertising & Design Ltd uses latest technology to make their advertisement effective which conveys the information of the company to maximum number of population (Mitchelmore and Rowley, 2013).

Mission and vision:

Mission and vision Langland Advertising & Design Ltd is to create their popularise its unique and effective services worldwide. This will increase their number of customers and improve their profit ratio. It owner also concentrates on maximising its branch office in whole UK and become leading advertisement company of healthcare sector.

Strategic Objectives:

For expansion of business, Langland Advertising & Design Ltd has to develop specific goals and objectives. It helps managers to see what approaches they have to adopt to attain such target. At present, this company wants to enhance overall sales to 5% to 8% in upcoming year.

Situational market analysis:

In this, business manager of Langland Advertising & Design Ltd evaluates external and internal environment to find out availability of opportunities which are beneficial for the company. This analysis is helpful for small businesses by identifying strengths and opportunity of this company and these are described as below:

Strengths

Opportunities

  • This recruits experienced staff which are expertise in their job role. It is beneficiary for Langland Advertising & Design Ltd as it results in increase of experienced customers.
  • Langland Advertising & Design Ltd provides its services in healthcare sector this maintain the good track record of the firm (Moseley, 2013)
  • Langland Advertising & Design Ltd should offer its services to all sectors instead of healthcare. It will increase its number of customers.
  • This firm should expand its services in large organisation which gives long term advertisement contracts.

Threats

Weaknesses

  • As this company deals at small scale therefore, major threat is lack of adequate amount of finance.
  • Presence of large number of competitors and threat of new entry also refers as barrier for profitability of this firm.
  • Major weakness of Langland Advertising & Design Ltd is its poor financial condition. So, it needs to conduct proper market research through which sources for arrangement of finance can be identified.
  • Another weak point of this firm is its less skilled workers. Therefore, managers are required to give proper training to existing employees rather than to recruit new one.

Financial Information:

It includes two major parts that are- formulation of budget and cash flow statement.

Formulation of budget:

In this stage, manager of the company is required evaluate strengths and opportunities which helps him in formulating budget of the company. This budget involves approximate figure of advertisement cost, operational costing and other expenses of daily based activities (Pred, 2017). Budget of Langland Advertising & Design Ltd is described below:

Particulars

Amount

Marketing activities

Direct selling

50000

Advertising

45000

Sales promotion

5000

Total

100000

Interpretation:

From the above mentioned cash flow it is assumed that this firm have satisfactory financial fund which can be utilised for paying debts and liabilities. Langland Advertising & Design Ltd is required to pay taxes each year. At the end of 2015, 2016, 2017 cash in hand was $102203, $200354, $238503 respectively. Average income of past three is $72001.

Identification of target market:

After formulating budget next stage of effective business plan is to target analyse external market to identify specific customers which can be approached directly and can provide benefit to the firm. Langland Advertising & Design Ltd have targeted large and financially strong organisations which uses advertisement for long term process. These organisation are beneficial for this company as it will provide regular business to this company.

Allocation of resources:

Manager of Langland Advertising & Design Ltd is required to fulfil to recruit experienced candidates from the same field who can use their experience in firms operational activities. Apart from hiring it is also necessary to monitor employees performance for effective result.

Implementation of plan:

Proper execution of all the steps discussed above is mandatory to achieve desired result and growth. For this owner of Langland Advertising & Design Ltd analyses that all the employees should follow instruction of their respective manager and cahieve targeted goals and objectives (Schetke, Haase and Kötter, 2012).

TASK 4

P5 Assess exit or succession options for small business

When a company seek to expand its business in other locations then it will lead to gain result either in positive or negative manner. Therefore, to obtain positive outcome, it is necessary for managers of Langland Advertising & Design Limited to introduce effective techniques of management. This would help them in improving position as well as image of business at marketplace so that higher sustainability can be gained. In addition to this, they need to evaluate cause which acts as barrier in expansion of business successfully. Entrepreneur of this firm also need to introduce latest technologies in business so that necessary modification can be created (Todes, 2012).

Various ways to exit business:

As there are many possibilities in business which shows that cost of production cannot cover expenses. Thus, it is necessary for managers to gain appropriate knowledge and skills related to opt best ways for exit business as shown below:-

Advantages

Disadvantages

Liquidation

As per this legal law, in order to build effective reputation of business in minds of customers, this firm needs to pay debts on time in proper manner. It will help in preventing business from adverse affect of sales performance. For this process, employers are required to make proper planning which includes entire activities and funding options.

It will take much time as well as require huge amount of investment. Other than this, many legal formalities are needed to be done by business employers.

Sell of business in open market

  • This type of technique not much affected reputation of a company. It is required by employers under this method to create some modifications in policies and system so that efficiencies of business can be enhanced (Ward, 2016).

In front of third party, status of business related to financial position might be exposed. It will impact on image of business which reduces its value at marketplace.

Sell business to manager and/ or employees

It is effective technique as manager and employees are people which have knowledge about business. Thus, they are able to carry forward firm easily.

This tool have certain demerit which are related with market image of company that affect on manager and employees decision to purchase it.

For Langland Advertising & Design Ltd, liquidation is appropriate technique which helps business person to exit from market. This is legal process by which debts of company are paid to sustain firm's image from declining.

Ways to provide succession of business

Advantages

Disadvantages

Use of expertise knowledge

In designing system, experts helps business employers in proper manner as per condition of marketplace.

Invite expert team in business, might be costly. It also arise chances of conflict among management and them due to different perceptions.

Internet sources

It is considered as the fastest method that helps entrepreneur to get right information related to market changes.

It may impact on management function (Ziari and et. al., 2012).

Merger and acquisition:

Through merger and acquisitions with large organisations, this firm gets benefits to improve performance of business (Valler, Phelps and Wood, 2012).

Advantages:

It will help in improving economical condition of business as well.

Disadvantages:

It may impact on performance of employees.

CONCLUSION

From the above report it can be concluded that, it is pretty much required for small business organisations to adopt strategies so that they can easily gain competitive advantages. On the other hand, planning can be helpful for business firms to reach to specific goals and objectives and through this hard competition can be given to them. With the help of Ansoff matrix, organisation can easily grab a good position in short period of time in external market.

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