Planning for growth is the responsibility of management by using appropriate skills and knowledge. The aim of this unit is to assist students to learn about different techniques used to identify opportunities for growth, and appreciate each options for gaining profitable outcomes. You are asked to prepare a report containing accurate strategy plan for an organisation.
- Determine the key considerations SMEs must consider when analysing opportunities for achieving growth.
- Identify the different ways of sourcing funds and its optimum utilisation to achieve profitable return.
- Produce a business plan including financials and how it supports SME in growing its business.
- Evaluate ways SME can exit business and merits and drawbacks of each option.
Planning for growth is very important for every company. Through this, firm can create various strategies so that they can easily expand their operations (Barbour and Deakin, 2012). Company has to create various plans so that all actions and tasks can run successfully. It also help the employees to follow all strategies and plans created by managers. Thus they can complete all activities in proper time. Hence firm can run smoothly and successfully. Assignment describes about Ford way solutions which is IT company. It was established in U.K. Report explains about key considerations SME's can consider in monitoring growth opportunities. It also describes about various methods through which company access funds and different types of funding. It also explains about developing a business plan and communicating the methods through which company can improve their operations. It also describes about the assessing various ways a small business owner can exit and their implications of each option.
P.1 Evaluate key considerations SME'S can consider in growth opportunities
Company can consider various points and thus, they can easily give strong competition to other firms. This helps the company to maintain good recognition in minds of all people. Various considerations considered by Ford way solutions are:
Resources: It is crucial that company scan entire superior quality of materials used in creating phones and laptops etc. Through this, they can create good quality of products and they can satisfy all users. Hence, as a result, they can easily expand their operations. Company can give suggestions related to IT problems to all people.
Capabilities: In Telecom sector, there is huge competition. So, they have to create effective and efficient products to easily maintain competitive edge in relation to companies. For example, they can use good quality of material and have capability to create superior quality of products. Hence they can easily satisfy all users.
Core competencies: Core competencies are unique selling proposition through which company can enhance their sales and market share. For example Ford way solutions have a core competency that they can create superior quality of products at lesser costs. So they can easily maintain unique position in minds of all users (Brinckmann, Grichnik and Kapsa, 2010).
Porter's generic strategy model: It is the model through which company can easily give competition to other companies. Thus firm can easily maintain good image in minds of all users and can enhance the market share.
Porter's generic strategy model is described below:
Cost leadership: Main objective is to reduce the costs of all products and services. So they can directly increase the efficiency of all operations and processes (Burton, 2010). For example, company can easily increase the revenues by reducing the costs of all raw materials, processes and other operations which are performed by the company. So company can install computers and can solve problems related to IT of its clients.
Differentiation: Company make different products and items. For example, firm make different products and they can easily satisfy all users. They can create different software's and can install in computer and they can also sell laptops to all users. This helps the company in expanding their operations.
Cost focus: It is an effective and efficient technique through which company can increase their revenues. This also helps the company to increase their market share. For example company can easily provide superior quality of products to all users and they can easily increase the satisfaction level of all users.
Differentiation focus: According to this strategy management has to focus on the targeted customers. As a result they can easily company can easily reach to the targetted customers. For example Southern business technologies is targeted to all sections of population. Hence it has to create effective strategies to reach to all people.
Political factors: Govt. create various rules and regulations so that company can follow it and they can operate all activities in proper manner. For example Govt. has formulates various rules such as they had banned some software which is used by company. This results in reducing the profits and market share of firm.
Economic Factor: If there is situation of inflation then company has to sell products at a lower rate. If firm do not sell products at cheaper price then it cannot survive in the market. Thus economic conditions affect the company in a drastic manner. If there is deflation then company has to sell software's at higher rate so that they can deal with the situation.
Social Factor: People are demanding different computers and laptops from company. So firm can easily sell many laptops and computers to different individuals. Hence, company has to fulfil the demand and requirements of people by delivering fast services. to easily satisfy all people. They can also create advanced level of machines and technologies such as Laptops so that it can easily satisfy all customers (Christofakis and Papadaskalopoulos, 2011). Hence, they can easily earn more revenues and they can easily increase their market share.
Technological: There is advanced technologies in market such as computers and laptops. So, company can use advanced technologies such as use of superior quality of laptops and computers. Through this, organisation can perform their operations in an effective manner. Hence, they can easily earn more revenues and they can enhance their market share. This also helps the company to expand their operations in many countries.
Environmental Factor: Company can create efficient products so that there is no wastage of all resources. Company can create good quality of computer and laptops so that they can sell to all users. Through this, they can easily maintain good image in society. So they cam easily expand their operations. Hence they can easily enhance their reputation. They can also reuse and recycle the materials so that they can easily protect the environment.
Legal environment: Govt. has created various legal rules and regulations that are mandatory for organisation to comply. Hence, firm has to follow the legislations so that it can easily survive in the market. This also helps the company to earn more revenues. So, the company can easily increase the market share. Hence they can diversify their activities. This also helps the firm to expand their operations.
Justification of growth of Ford way solutions:
Company has to evaluate their growth need and requirement so that it can fulfil the demand of all people. The have to follow the rules and legislations so that they can easily survive in the market. Hence, they can easily run their activities and operations in an effective and efficient manner. Through this, they can easily maintain unique and good image in market. So, they can easily expand and diversify their activities in effective and efficient manner.
P.2 Evaluate opportunities of growth by applying Ansoff's matrix
Many changes are there in the company. For example many companies are using advanced techniques such as I pads and superior quality of laptops. So it is the role and responsibility of managers to increase the market share of firm (Eddleston, And et. al., 2013). Hence they can easily increase the market share and earn more revenues by creating superior quality of products along with delivering good quality of products. So as a result, they can easily sell many products such as computer and laptops and thus they can expand their operations in minimum time. So they can easily increase their revenues. Through this company can use Ansoff's matrix in this context so that in order to enhance their market share (Grover, Bokalo and Greenway, 2014). Ans off's matrix of Ford way solutions technologies is discussed here:
Ansoff's matrix is a technique that help managers and executives create various plans regarding development of company. It helps the company in their growth. It was created by H. Ignor Ansoff in 1957. Through this, matrix risks can be reduced and all decisions can effectively be taken by the manager. There are four components which are described below (Porter's Model of Generic Strategies for Competitive Advantage, 2018) :
Market development: It is an effective method to sell the existing products of the company. As internet is used by all people and T.V. Is also watched by all individual so it is easy for company to sell these products. People also use mobile phones and company can also sell this existing products such as laptops and computers and can increase their sales and they can generate more revenues. Hence they can easily expand their operations.
Diversification: It is the step in which company can target new target segment. In this manner, as a result they can easily increase their market share. For example company can easily sell new and different products in new market segment. So they can sell mobiles at new segment and can earn more revenues. Hence they can easily increase the market share and can expand their operations in minimum time.
Market penetration: In this company can sell existing products in existing market. They can easily sell various products and they can increase their sales. So they can easily increase the market share and can enhance their revenues. For example Fordway solutions can easily sell existing products such as laptops, mobiles and T.V. to existing market. In this way, they can easily earn more profits and they can easily expand the and diversify their operations. Hence they can easily expand their activities and So, they can create good and unique position in minds of all people.
Product development: Company can add extra features and attributes to computer and Laptop. For example company can easily sell new product in market and then it launches in existing market. They can sell new and advanced techniques mobiles so that they can easily increase their operations in minimum time. Hence they can easily increase their revenues and can maintain good position in minds of all users. They can easily enhance their market share and creates positive image in minds of all people and in industry (Hough, and et. al., 2010).
From the above points company can easily increase the market share by using any of the above option of Ansoff matrix. There is creation of effective and efficient policies by the company so that they can easily operate all functions and activities in proper manner (Keough, 2015). Through using of this matrix they can easily operate their activities and operations. Hence all activities can be managed by the management in proper manner. They can also use many promotional techniques so that they can easily promote various products and services so that they can enhance their image. They can easily increase their revenues and can enhance market share. Hence they can maintain good and unique position in minds of all people.
There are many advantages and disadvantages of using this matrix. Advantages for company is described below:
- It helps the manager to think of many expected risks so that they can manage the organization in an effective and efficient manner. So firm can run in proper direction.
- It helps in setting the aim and objectives. In this manner they can easily operate all their activities and operation in an effective and efficient manner.
- Through using of the Ansoff's matrix various alternatives are given to staff members.
- It can also be presented to many stakeholders and firm can easily satisfy all users.
- It can predict the risks and company can create plans to reduce it so that all operations can run successfully.
- Through using of Ansoff's matrix company, cannot present the market development and many diversification strategies.
- They do not consider the tasks related to external competitors. They have to create effective policies (Li, Mobin and Keyser, 2016).
- They cannot predict the accurate predictions and hence company cannot determine the correct plans and policies related to future (MacLeod, 2013).
- There are various conflicting objectives of many stakeholders and they cannot satisfy all requirements of all users. Hence they cannot easily maintain good and unique position in minds of all users.
Hence company can take advantage of this situation and so they can easily maintain good and unique position in the market and in minds of all users. In this manner, company can use this matrix and can easily increase their operations in many countries in minimum time. So they can easily enhance their reputation in industry.
Company can choose diversification strategy so that they can easily increase their activities and operations in many countries.
P.3 Evaluate potential sources of funding and benefits and limitations
Company has to receive various funds from different sources so that they can easily operate all activities in effective and efficient manner. Through this they can receive funds and can operate all activities and operations in an effective and efficient manner. In this way firm can select many resources and hence they can easily receive funds from any source. They can easily earn more revenues and they can easily increase their market share. They can also enhance their image and reputation in the market. Hence there are various sources who can give various funds to company so that they can manage all their activities in an effective manner. Various sources of funds used by Ford way solutions are:
Bank loan: It is the loan which is provided to all users. Borrower can pay fixed interest and customers have to pay extra interest with principle and they can easily manage their activities. Company can receive funds from many financial institutions and so they can operate all activities in an effective and efficient manner.
- Interest paid is tax deductible expense under the Schedule C. This is the biggest advantage fir the company (Mitchelmore and Rowley, 2013).
- Interest paid is a cheapest source as compared to other sources. Firm can easily operate all their activities and tasks in an effective and efficient manner.
- It requires customers to mortgage some property or any other collateral security. So they can easily manage all activities and tasks in an effective and efficient manner. Through this they can easily increase their market share (Moseley, 2013).
- It involves periodic payment by all users. Hence if they fails to make the payment and borrower has to face the penalty and they have to pay the amount to the financial institutions.
Crown funding: It is another effective source of funding . It means that funds can be received from audience. It can be done through presenting the ideas and company products on online applications. If audience is interested, then they give the idea to the company.
Advantages are described below:
- An effective Crown funding can attract many people and in this way, large audience gets funds from this source and can manage all activities and operations in proper manner.
- They can increase their business through online application in Internet.
Disadvantages are described below:
- Idea can be stolen by another company and they can copy the same idea.
- It is a lengthy process as it involves complicated procedures and techniques. So it takes more time to receive funds from this source.
Peer to peer funding: This is a unique and distinct type of funding method. Investors and borrowers can exchange funds from each other. Through this company can generate more revenues.
Advantages are described below:
- It is an easy and oversimple and effective process.
- They can easily take loans and can fulfil all their needs and wants (Pallagst,2010).
- They get fixed rate of interest and do the monthly payments with no extra hidden fees.
- It is not given for larger amount it is difficult for company to borrow for larger amount.
Angel investors: They are the sources through which company can take funds(Todes, 2012). Funds are given to entrepreneurs and so they can easily operate all their activities and operations in an effective and efficient manner.
- They can easily take funds in big amount. In this manner, company can easily manage all activities and operations in an effective and proper manner.
- There is no need of any collateral security. Any company can easily receive loan from this source.
- Company has to give share to the company before receiving funds from the company.
- It has less structured and proper support and this is not a suitable source of finance.
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P.4 Business plan for growth of business
Business plan is the plan in which company creates various plans and policies related to business. Company has to create effective and efficient plans so that they can easily run their activities and operations in effective and efficient manner. Hence company have to make changes in their products and services so that they can easily provide superior services to all people. Through this they can easily maintain good and unique position in minds of all users (Valler, Phelps and Wood, 2012).
Business plan to launch distinct mobile phone by Ford way solutions is described below:
Vision: Company's main mission is to enhance the customer satisfaction.
Mission: Their main mission is to increase the profits and to increase the market share. So they can easily expand their operations.
Strategic objectives: It is crucial that company creates various strategic objectives so that company can easily accomplish them. It includes increasing sales to 80% in 2 months. For this they have to enhance the satisfaction of all people. Company have to create superior products and delivers effective services to all users so that they can easily maintain good and unique position in minds of all people and in industry. With the launching of Mobile phones company have some objectives toward the success of product. Their main objective is to increase the sale up to 80% within the period of two months. Company target customers from all the section of society which provide a broader market share and achievement of customer satisfaction help in increasing profitability of an organisation. SMART objective of a company is to achieve their sale target in two month with maximum customer satisfaction.
Financial information:- Finance is an essential part of an organisation for effective execution of its operations. Company require huge fund for financing the launching of its new product in market and for performing various promotional activities. For this it is very necessary for Ford way solutions to analyse various sources available to company for raising fund in order to financing their operations. There are chance that company have to improve business operations by changing their working styles which help in minimizing the defect that may incurred cost for the organisation. Company should invest more on promotional activities like advertisement for enhancing their marketing operations and to promote their products. It can use various channels of advertisements like television, online sources, banners, magazines, newspapers etc., according to the financial position of the company. Cost forecasted by Ford way solutions are described below:
Total forecasted budget
|Particular||31/12/15 ($)||31/12/16 ($)||31/12/17 ($)|
|Machine Maintenance cost||<>1000||900||850|
From the above explained budget of Ford way solutions, manufacturing cost must be considered by manager while deciding the price of Laptops to attain revenue which can cover this cost. It is very essential for a manger to estimate the cost incurred during the maintenances of product and machineries as well as the promotional and advertisement expenses for identifying the fund required by the company with the help of budget. There are some changes which are required to be considered by firm which assist in the promotional efforts that can help in increasing the brand and product awareness among people. Electrical billboards are very essential for publicity of laptops and computers as they attract the attention of people towards the product and features and benefit it offer to customers. In year 2015 there is more expenses incurred as compares to year of 2016, 2017.
Cash flow statement is a financial statement which help in estimating the aggregate data related to the cash inflow that a company receive from its activities along with all cast outflows that an organisation pay for financing its business operations. This statement includes description about investing, operating and financial statement. Investment activities are related to the fund invested by the company where operating expenses related to capital used to finance the day to day business operations. On the other hand, financing activities provide information about fund raising. Aggregate income earned from last three years estimation is 72001.
P5 Succession and exit plan for small business with its advantages and disadvantage
Expanding business is not a simple task, there must be various changes in business performance and operations. Therefore, it is very essential to know different aspects by assessment and analysis of internal and external forces of change that can be made in an organisation. It is important that company formulate strategies related to expansion as well as form strategy of exit plan (Wu, 2015). There are different policies is necessary for growth and development of business. There must be effective and appropriate plan that is related to exit or succession plan. This impacts on enterprise in a positive manner. It is significant to adopt major changes that assist in accept changes according to market trends.
Ways of exit options are as follows:
Winding up: It is the one of the way of exit their business with intervention of legal bodies. Under this method, manager sell their assets to pay off all his liabilities. It is very essential for making various changes in business functioning and this is very effective for evaluating market. When company is not financially strong than it affects the business performance and top level management decide to wind up.
Benefits: The advantage of this method is there is intervention of legal structure so there are very less chance of fraud. Another benefit of winding up is by selling assets, they pay off their all liabilities and rest of the amount is paid to promoters and directors.
Disadvantage: The major limitation of this method is it is very time consuming process so manager of the company to make proper plan related to this. Another drawback of winding up is goodwill or image of the company decreased due to the closure of business.
Selling: It is the another method of exit which means selling the running business to the third party and take the amount against it. When manager required money and not able to perform their functioning in a effective manner than manager decide to sell their company to other party.
Benefits: Advantage of selling method is it is not time consuming process as compared to other exit options. Another benefit of selling business is there is no effect on goodwill and on its business image (Ziari, And et. al., 2012..
Disadvantage: Drawback of this method is cost of the asset are less than the actual cost.
Merger and acquisition: This is considered to be as best method of exit option as there is combination of two or company that is helpful in performing business in appropriate manner. Acquisition means taking over the other business.
Benefits: The major advantage of merger and acquisition is there is increase in productivity and also improve the brand image. Another benefit of this method is company produces quality products.
Disadvantage: The drawback of merger and acquisition is there may be chances of conflicts and disputes between the managers of the both companies. Another limitation of this method is distribution of profit sharing ratio and financial information or data does not have any confidentiality.
It can be concluded from above report that planning for growth is essential for company. Through this company can create various plans and effective strategies. Various considerations are there which is considered by company to evaluate growth opportunities. Company can monitor methods through which firm can receive funds and the advantages and disadvantage of source of funds. A business plan is being developed by organisation so that it can communicate the methods to increase the business operations. Various ways small business can exit or succession of business and implications of ea