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Techniques For Identifying Opportunities For Growth: Oak Cash and Carry

University: UKCBC College

  • Unit No: 42
  • Level: Undergraduate/College
  • Pages 12 / Words 3000
  • Paper Type: Assignment
  • Course Code: J/508/0601
  • Downloads: 5
Question :

Planning is an essential function performed by the management with a motive of accomplishing business goals and objectives. It can be done by conducting market research. Oak Cash and Carry is a small-medium organization in the UK that is engaged in offering grocery products. It works as a wholesaler and provides a wide range of products. To develop further, you are asked to determine the opportunities through which an organization can grow its business into the market.

  • Determine key aspects SME should consider while analyzing growth opportunities.
  • Assess various ways where an organization can easily raise for its growth and development.
  • Produce a business plan including financial projection and also ways through which you can intend scaling up a business.
  • Examine the routes or ways through which SME can exit or succeed into market.
Answer :
Organization Selected : Oak Cash and Carry

INTRODUCTION

Every organisation wants to grow its business to move forward from current position. Growth brings huge changes in the business environment. To develop business, many strategies and policies needs to be adopted by the companies. Planning for growth is a strategic activity which is done to increase the revenue of the respective company (Chen and et .al 2014). This section talks about SME Oak cash and carry Ltd who deal in grocery products and now wants to grow its business. The company work as wholesaler and provide variety of products to its consumers. Company consumers are retailers,caterers,offices and local businesses. it a private limited company at Banbury, UK.

This report states how small and medium enterprise develop and grow. It informs about techniques for identifying opportunities for growth which is done through collaboration. It assist in knowing various source of finance with merits and demerits to apply on a business. Along with this, it will also communicate about exit or succession options for SME businesses.

TASK 1

P1 Analyse consideration for evaluating growth opportunities with organisational context.

Planning is very important for a business person as it lead to reach desirable outcome. Growth in the business can be possible by fulfilling consumer demand and their needs. Through this phase company make effort to understand about environment both internal and external. Pestle is one of the tool through which grocery business able to analyse external factors which affect the business (Blackburn, Hart and Wainwright 2013). It also discuss porter generic model which identify business opportunities through which business expand.

Competitive advantage: Competitive advantage is a benefit which business hold over its rivalries. This advantage can be in the form of customer preference and advantage sale. For example- competitive advantage for oak cash and carry is providing good quality product at low rate. This advantage help business to move forward from its competitor which will eventually increase revenue of the company.

Porter generic model

It assist in describing how an arrangement carry competitive edge over its chosen market and also support in deciding competitive strategies of a business concern. Generic strategies are applied to all product and services and all sizes in the industries. Michael Porter in 1985 in his book explained competitive advantage (Allmendinger and Haughton 2013). The Generic strategies includes Cost leadership,differentiation,cost focus and differentiation focus.

Cost leadership: In cost leadership, a firm set their product with low cost. The cost advantage is depend or based on the structure of the business. Cost can be reduced by using high technology,low cost raw materials. Oak cash and carry use the cost advantage over its rival business. By using this model, business would be able to survive for a longer period of time as it will offer low price product to the client.

Differentiation:In this strategy, firm uses unique or different feature which separate them from its rival. Through this model Oak cash and carry can attract more customer because of its different variety of product. In this, feature are differentiated on the basis requirement of consumer. Under this, company can charge premium price with the customer as they are offering uniqueness.

Focus: Under this strategy, firm focuses on only thing for which they make all efforts to achieve it. The company focus on the thing which their competitor is less attracted. Oak cash and carry not use only one market segment because organisation have to serve a various small market (Kumar 2016).

  • Cost focus: In cost focus, firm search a cost advantage for its target. In this services are provided on the basis of different cost behaviour this assist grocery firm to promote goods in the tiny budget which increase the sales of particular region..
  • Differentiation focus: In differentiation focus firm search a distinction in the product for the target. In this exploitation is done on the basis of special need of customer .grocery firm provide the product to the target customer only.

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Pestle analysis

Every organisation get affect from its internal and external environment. Internal environment are in control of the business while external environment modify the business according to the prevailing situation present in the business environment. The factors included in this are as follows.

Political factors: Government policies and rules have a great impact on the business. These factors include tax policies,labour law, foreign trade policy and monetary policies. For ex., Political situation in UK is stable so, frequent changes are not happen in their policies which provides opportunity to organisation that to provide products in large amount with high profit margin to earn more profits (Wey2015) .

Economical factors: These factors affect the business growth and survival. It includes unemployment rate,inflation rate and foreign trade. For example flow of cash was in an economy which provides the opportunity to the small organisation like OAK cash and Carry to raise more amount of funds to improve the quality of products and attain competitiveness in their business operations.

Social factors: Social factors affect demand of the commodity in the country. These factors include lifestyle trends,ethical issues,culture attitude and beliefs,demographic etc. High level of education is persist in society which provides opportunity to the organisation is to launch their mobile application to spread their reach to large level.

Technological factors: Techniques bring many changes in the economy and its businesses. Oak cash and carry Ltd need to use new techniques in the form of new machines so that it can produce the product differently from its competitor. They should use new technology for production,distribution and manufacturing.

Legal factors: Every country has its own rules and regulation which every business and individual have to follow who are entering in some other nation. This include data protection act,health and safety act,consumer protection act and employment law. By following different law the grocery firm able to generate trust of their employees which increase their performance in the business (Crow 2011).

Environmental factors: Now a days people are attracted to the companies which fulfil all environment law and protect society. It includes climate change, recycling procedures,waste disposal and so on .Oak cash and carry Ltd should provide their contribution towards protection of environment. This can be done by proper disposal of garbage and waste material. This will increase the popularity,demand and sale of the product.\

P2 Opportunities for growth by applying Ansoff's growth vector matrix.

Oak cash and carry Ltd is a grocery wholesaler shop which is located at Banbury, UK. It has very few employees. Business have the big opportunity to expand for fulfilling consumer demand. Company can grow its business by locating their stores at a place where customer can get in touch with them. Small businesses can easily enhance their current position by using modern techniques. The company want to increase their customer but by providing qualitative products and services (Zhang and et .al 2013). To develop and grow, they can use various model and approaches according to their business situation and structure. Here is a presentation of Ansoff's model which help in exploiting opportunities are discussed as follows-

Ansoff's matrix

Ansoff's growth matrix is developed by Igor ans-off who belongs to Russian America. It help authority in expanding their business. It is also known as product/market expansion grid which display four strategies which business can use to grow. An business growth depends upon the market new or same product in new market or existing market. This help firm to establish its growth strategies and policies.

Market penetration is located in the lower left quadrant which is less risky. In this, sales is increased with existing product and services in existing market. It has few ways through which objectives of the organisation are achieved by increasing the use of product through adding some additional feature, increase market share of existing commodity by performing promotion,advertising etc.,restructuring of mature market. Oak cash and carry should use their fund in additional research and promotion to remain and develop the product in same market. The respective company can grow its product by fulfilling additional needs of its customer.

Market development is located in the upper left quadrant in which existing product and service is being launched to new market for increasing sale. Respective organisation attract more customer by using different packaging and distribution channels, new geographical area or the new country, low or different pricing strategies(Porter 2012). This strategy is more dangerous as compared to market penetration because of entering in new market. Oak cash and carry pvt Ltd can enter into new region with their existing product by adding new features so that it can be used for additional purpose.

Product developments located in the lower right quadrant in which brand new product and services is launched in existing Market. New product is launched to existing market to expand the customer or attracting rival customer. When product need differentiation then this technique is adopted because at that market, people are already aware about the product. Oak cash and carry pvt Ltd can use this method or model when they modify the product to gather more client in existing market. If any business want to grow and survive they need to make changes in the existing product to remain in active market(Leigh and Blakely 2016).

Diversification is located in the upper right quadrant which is riskiest among all as it launching new product and services in the entirely new market. It involve huge risk as the business has no knowledge about the taste and preference of customer of that region. It should be only adopted when the business have proper idea of risk and gain involved in it. Correct analysis able to give long term benefit to the business. Oak cash and carry pvt Ltd can increase their sale and revenue by entering in new market with new product. Business can get benefit after understanding risk and reward.

TASK 2

P3 Sources of fund available to business and their benefits and drawbacks.

Fund is necessary for every business whether it is established on small scale or large scale. Oak cash and carry pvt Ltd can use various source which are equity, bank loan, overdraft,peer to peer lending debentures, retain earnings, venture funding and so on for the development and success of the business. Sources of finance are refer as mediator through which business can raise money for business activities. With skills and policies,amount is the another thing which passes firm from difficult position. Oak cash and carry pvt Ltd can use any of below source for fund-

Bank loans it is most important source of finance which was in reach of the large number of people in the society. It is easiest source of the fund. It is the credit which was given by the bank by discussing repayment time. Maturity or payback amount depends upon the amount and time duration and interest of the loan. Bank always provide loan to booming enterprise as compare to new start ups. On the ground of past credit score and balance sheet business get the amount as it tell the capacity to repay.

Advantages:

Interest paid on a loan is a tax deductible. Business is provided for a long period which ranges from four to ten years. In this interest is decided earlier before providing the amount to the customer so that borrower can estimate total repayment amount and make arrangement for that.

Disadvantages:

When business pay amount earlier than they does not get much benefit, as have to pay prepayment penalty. To every person bank does not provide loan,they provide cash to the few persons only on the basis of past history (Yu Wang,2011).

Crowdfunding is relevant for all type of enterprises whether small,medium or large enterprise. In this fund are organized from large number of persons in the form of small amount. This method become popular from abroad by the way of social media. Oak cash and carry pvt Ltd can use this method for expansion and growth.

Advantages:

It is the fastest way through which funds raised without any fees. By sharing idea of business people able to get proper guidance and views of experts to improve. Through this public reaction regarding the product can be known.

Disadvantages:

If person does not protect his idea with copyright than person from crowdfunding site can steal it. Business if unable to reach set target of fund than they have to return it to the investor without getting anything.

Peer To Peer Lending is a lending in which borrower acquire the fund without any official financial institution as an mediator. Loan is provided to the person which is completed unrelated to us through online site. Lending is done without taking person personal property or business property as a security.

Advantages

Person who want to avoid high interest rate or the bank rejected them due to poor credit history can use this way of lending. No prepayment penalty is charged from the receiver at paying before due date which was present in other source of funds.

Disadvantages

It does not provide the large amount to the customer or borrower. For borrowing from there person need to have good score otherwise they have to pay big amount as a interest.

Venture Finance: Under this money is provided to the business which have strong potential of growth and profitability. It also provide assistance in the managerial activities of the business. They invest money in the form of equity Capital. When some outside person buys a share of the organisation and become its part than it becomes venture investment.

Advantages

Through this source large amount of fund is bring to the business in the form of equity capital. The capitalist provide help to the business in the form of management and information guidance to make business successful.

Disadvantages

Due to investing fund in the form of equity capital,lender become part of the business and affect the decision of the owner.

The above mentioned sources of funding can be utilise by given organisation to raise an appropriate amount of funds to gain for conducting operational activities in proper way which facilitates to complete desired projects successfully. In case of Oak Cash and Carry Ltd, they can prefer bank loan in comparison to others in order to gain desired amount of funds. Thus, this method is helpful because payment can be done in number of instalments and rate of interest is also reasonable.

TASK 3

P4 Business plan for growth

Business plan is a statement of business objectives and mission which aim to reach them. It is formal document which tell business about future activities what and how will they perform. Business plan is prepared to remind the goals and priorities of the business. Through this firm get direction,and know about the objectives and provide a strategies which help to achieve and overcome the problem.

Overview:- Oak cash and carry it a private limited company of Banbury, UK. The company deals in grocery product at a affordable price. Company clients are generally retailers,caterers,offices and local businesses. It was formed on 30 September 2011.

Vision: To enrich and pleasure the world through their food and brand name.

Mission: Company mission is to offer wide range of products to large number of customer's.

Objectives: The company want to provide qualitative product to the consumer at low price.

Segmentation – This can be scribed as to make segments of population associated with brand to fulfil their different desires through providing an appropriate product. In context of given company, they are required to make an accurate segmentation of customers to determine their actual needs so that they can complete the same properly by achieving client satisfaction successfully.

Positioning – This include to maintain strong position of brand in competition of market among different competitive firms which facilitates to grab more profit share properly. The given enterprise should analyse strategies of competitors and apply more efficient techniques to improve position of company more stable along with gaining better profits.

Targetting – This can be explained as to make target including those customers who are actually responsible for profitability of brand. It is necessary to focus on particular group of population who mostly prefer top purchase products or services of given company.

SWOT Analysis

Strength

Weakness

Oak cash and carry provide the products at affordable prices which their competitors are not providing this create competitive edge over its challenger and more consumer get attracted.

The respective company have unorganized infrastructure at business premises which make stores overcrowded and make problem for client to choose right product. business is not involved in advertising activity due to which they are lesser known by customer and retailer.

Opportunity

Threat

The concerned company should locate their stores at the places where client can easily reached. Online marketing method can be used to reach large number of people as it cost very small amount.

Oak cash and carry have the biggest threat from rising new businesses as they make all efforts to provide product at low rate which is not possible for the respective company as they already offering commodity at discount rate.

TASK 4

P5 Exit or succession plan a small business use.

There are various methods which small business or enterprise can use to get success for which they can use exit or succession plan.

Liquidation is a situation which occurs when company become insolvent and unable to fulfil his obligations and duties. In this situation business come to an end and the asset is distributed to the creditors or shareholders on the basis of their priority in the business. The company adopt this technique when they have more benefit from selling in place of continuing it.

Advantages:The staff has the right to get the pay from the employer whether liquidation is compulsory or voluntary. This pay is in the form of wages arrears, redundancy pay and so on. Due to this company get free from all earlier debts which make them stress free (Gunder and Hillier 2016)).

Disadvantage: This create a problem for the employees who are working in the organisation as they become jobless which can't be recover from paying some amount. Generally,nothing was remained to the company as everything as payee off to the creditors for paying their debt.

Merger and acquisition: In merger two companies joint together and become one company to get the benefit of the opportunities prevailing in the market. Acquisition is a situation in which company acquire other company to increase their business market share. Both merger and acquisition aim is to increase the wealth, profitability and the success. It is done by selling shares, exchanging skills and techniques and also through purchasing asset.

Advantages:

Due to this organisation have the big control over the market as they are part of M&A. Risk at various activities get decrease because of the presence of large number of technologies. This situation help business to get success and earn more profit. Oak cash and carry pvt Ltd can buy small company to become big wholesaler company.

Disadvantage:

Both the process should be completed on time otherwise it increase the cost of the company. If Oak cash and carry do merger and acquisition and not able to perform on time it will charge high cost and create burden on the business. Due to this sometimes business have the duplication of the activities.

Sell to a Friendly individual: It is a great way of making cash out because you can pay off investors, pay yourself. But while selling your business to anyone, it should be taken care that he should have enough skills and interests, importantly.

Advantages:

  • person and you know each other, so no confusion creates.
  • Buyer always know that the business is most important to you.

Disadvantages:

  • the person who is undertaking your business whom you trust completely, you open up all facts and money in front of him.

Sell the business in the open market: Most popular strategy used by the persons when they wish to retire, fixes certain amount for sale of business.

Advantages:

  • If business is profitable then buyer gets attracted towards it, quickly.
  • Assets and goodwill can be easily incorporated, by getting higher returns.

Disadvantages:

  • If business is marginally profitable, then it will be difficult to sale
  • businesses can be undervalued than expected.
  • Finding buyer in open market can be a difficult task.

The most preferable method for Oak cash and carry is “Sell business in Open Market” as it provide number of alternative choices fro the same. It provide an opportunity to select the best one buyer to earn more profits in terms of gaining better amount for business.

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CONCLUSION

From the above discussion to this report,it is concluded that planning for growth help the business in achieving success and goals. Growth is a opportunity which business gets from the favourable external environment. Oak cash and carry do planning with various model, to grow their business. For this they require funds to fulfil their needs,which they gather from bank and other financial institution. These fund help them to implement the plans and sustain for a larger period of time. To enhance concern operation the grocery business can collaborate with other enterprise of the same field which help to remain in market for longer duration.

REFERENCES

Books and Journals

Chen, B., and et .al , 2014. Robust optimization for transmission expansion planning: Minimax cost vs. minimax regret. IEEE Transactions on Power Systems,29(6), pp.3069-3077.

Blackburn, R.A., Hart, M. and Wainwright, T., 2013. Small business performance: business, strategy and owner-manager characteristics. Journal of small business and enterprise development,20(1), pp.8-27.

Allmendinger, P. and Haughton, G., 2013. The evolution and trajectories of English spatial governance:‘Neoliberal’ episodes in planning. Planning Practice & Research,28(1), pp.6-26.

Kumar, D., 2016.Enterprise growth strategy: vision, planning and execution. Routledge.

Planning Commission, 2011. Mid-term appraisal: eleventh five year plan 2007-2012.OUP Catalogue.

Wey, W.M., 2015. Smart growth and transit-oriented development planning in site selection for a new metro transit station in Taipei, Taiwan. Habitat International,47, pp.158-168.

Crow, L.H., 2011, January. Planning a reliability growth program utilizing historical data. In Reliability and Maintainability Symposium (RAMS), 2011 Proceedings-Annual(pp. 1-6). IEEE.

Zhang, J.,and et.al., 2013. Planning for distributed wind generation under active management mode. International Journal of Electrical Power & Energy Systems,47, pp.140-146.

Porter, D.R., 2012.Managing growth in America's communities. Island Press.

Leigh, N.G. and Blakely, E.J., 2016.Planning local economic development: Theory and practice. SAGE publications.

Yu, K., Wang, S. and Li, D., 2011. The negative approach to urban growth planning of Beijing, China.Journal of environmental planning and management,54(9), pp.1209-1236.

Gunder, M. and Hillier, J., 2016.Planning in ten words or less: A Lacanian entanglement with spatial planning. Routledge.

Online

What Is a BCG Matrix. 2017. [Online]. Available through: <https://www.businessnewsdaily.com/5693-bcg-matrix.html>

Ansoff Matrix. 2018. [Online]. Available through: <https://www.smartdraw.com/ansoff-matrix/>

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