This sample will let you know about:
- What is differential leadership?
- Discuss potential sources of funding?
Planning for the growth is strategic activity of the business in which the management of the organisations plans for the organic growth. For this they need to consider the effective use of the resources which helps the organisation in taking competitive advantage (Price, 2018). While planning for the growth the management need to identify the opportunities prevailing in the market and strategies which they can adopt to grab such opportunities.
The organisation which is taken for report is Ella's kitchen, which is a small enterprise that manufactures organic baby and toddlers food. They have been operating in many countries other than UK such as China, Finland, Norway, Netherlands, US etc. In this report, various sources of funds are identified with the help of which they can gather the funds. Along with this external and internal market will be analysed and on the basis of which various strategies will be determined. Further a succession plan will be formulated for the organisation.
Key consideration for evaluation of growth opportunities
The businesses need to identify various opportunities that helps them to plan for their actions and to formulate various strategies. For this the organisation need to analyse the internal situation in which the resources, capabilities and core competencies are taken into consideration. While considering the external environment the organisations have to focus upon various macro economic factors which cannot be controlled by them. For evaluating the opportunities for Ella's Kitchen the strategies need to be analysed that can be done with the help of Porter's Generic model (Leick, 2018).
Porter's generic strategies facilitates the organisation in determining the suitable strategy which can helps them in taking sustainable competitive advantage. An organisation can take such advantage either by way of lower cost or by offering differentiated products. Some of the strategy are given below:
- Cost Leadership: This is a strategy in which the organisation aims to enhance their market share by providing low cost products to the customers. It can be done by improving the economies of scale, improving the technology and many more as with this the per unit can be reduced. Ella's Kitchen can adopt this strategy as the product that they offer are essential and by providing them at lower cost will enable them to expand their market share.
- Differentiation Leadership: This strategy aims to provide unique products to the customers by introducing differentiated attributes to the products. With this Ella's Kitchen can create unique position in the market that will facilitate them in meeting the specific needs of the customers. In this higher prices can be charged from the customers on the grounds of uniqueness.
- Focus: With the focus strategy, a narrow segment is targeted by the organisation. Such strategy can be adopted either by considering cost or differentiation. Cost focus strategy seeks to take lower cost advantage in smaller market which will be acceptable to most of the targeted customers. While with differentiation focus strategy specific need of the customers can be satisfied but for this higher prices can be charged from the customers. Ella's Kitchen can adopt both such strategy in case they target niche market (Kim, 2019).
On the basis of above analysis it is identified that Ella's Kitchen must focus upon differentiation focus strategy as it will help them in satisfying the customers effectively by providing the superior quality products.
In addition to this organisation need to analyse the external market as that will enable them to identify various opportunities and threats that can have impact on the organisation. This can be done with the help PESTLE analysis:
- Political: This factors reflects the extend to which the government can intervene in the operations of the organisation. In UK the situation is of political stability which has positive impact on the organisation as their will not be any frequent changes in the policies. For Ella's Kitchen it is an opportunity as with this they can easily expand their business.
- Economic: Economic factors includes the purchasing power, unemployment rate, GDP rate etc. that has direct impact on the profitability of the organisation. The income of the people in UK is high which is why they can afford goods easily which are of higher prices but of better quality. So for Ella's Kitchen this is an opportunity to plan for the growth.
- Social: Social factors includes the demographic factors of the target market, their taste and preference, perception etc. and all such factors has impact on the buying behaviour of the customers. The people in UK have higher standard of living which is an opportunities for Ella's Kitchen to expand as the customer can easily be attracted towards their products because they are conscious about their children health.
- Technological: The technology plays a crucial role in making the organisation successful. With the frequent advancement in the technology the requirement for the organisation is increasing and this can increase the cost of Ella's Kitchen. But due to new technology innovative and quality products can be provided by them that can facilitate them in enhancing their market share (Kemp, 2018).
- Legal: Such factors are associated with implication of various laws that an organisation has to comply with. The conditions of labour law need to be complied by Ella's Kitchen as this will help them in making the labour motivated and satisfied. Also it will enable them to improve their brand image and reduce the chances of any legal proceedings.
- Environmental: This factors includes various rules and regulations imposed with the aim to protect the environment. For this Environment protection act is being enacted with which the companies has to complied with. Ella's Kitchen has adopted various waste management strategies which will help them to reduce the impact of such act.
With the help of analysis of the external factors it is analysed that Ella's Kitchen has opportunity to expand their business as all the factors have favourable impact. Order assignment help from our experts!
Evaluation of growth opportunity with Ansoff's matrix
Ansoff's matrix is a tool which is being used by the organisation for analysing and planning various strategies that can help in achieving growth. This matrix suggest four strategies in which the organisation aims to expand the business in new market or existing market with new product or existing product (Helmold, 2020). It facilitates analysis of the risk which is associated with strategies. The strategies that can be adopted by the Ella's Kitchen are:
- Market Penetration: This is the strategy in which the organisation aims to increase their sales and market share with the existing products within the existing market. It can be done by way of improved promotional strategies, decreasing the prices of the products so that they can attract more of customers. Also it can be by acquiring any competitors in the same market. Ella's Kitchen can adopt this strategy as with this they can increase their market share with lesser investment and minimum risk (Schepker, 2018).
- Product Development: In this strategy, a new product can be developed by the organisation for the existing market. For this extensive research need to be undertaken by the organisation as they have to determine the needs and wants of the customers. Ella's Kitchen can adopt this strategy by providing new product through effective research and development, by strategic partnership with other firms providing similar goods etc. But the requirement of funds in this strategy is quite large. Along with this risk associated with this strategy is also high as the product may not get acceptance by the customers (Candelo, 2019).
- Market development: In this strategy the organisation aims to enter new market with their existing products. This means that the organisation can expand their market into new geographies , regions etc. With this Ella's Kitchen can leverage into new market by adopting new technology where they can cater new customers. The requirement of investment in this is high as for this they need to undertake the research for analysing the new target market, also the risk is quite high.
- Diversification: In this strategy the organisation aims to expand their market share and profitability by way of new market with new products. This is the most risky strategy as the amount of funds invested in this strategy are huge. Such diversification can be related diversification in which similar type of products are offered by the organisation. While it can be unrelated diversification in which there is no similarity among the exiting and the new products. Ella's Kitchen can adopt related diversification as with this they can effectively manage the change because they have knowledge of related products (Tsatsoula, 2018).
On the basis of all the strategy identified, the most appropriate strategy for Ella's Kitchen is product development as with this they can make their customers satisfied with new products as per their needs and wants. Also the requirement of the funds can be managed effectively. With this they can increase their sales by attracting more customers with new and innovative products. Need Assignment Samples?Talk to our Experts!
Potential sources of funding
Investment decision making: It is defined as a type of decisions that is to be taken by investors or the top level managements of company in order to know about the amount of money that is to be deployed in investment opportunities (Brown, 2019). As owner of Ella's Kitchen takes long term decision-making in order to grow which is related to the purchase of assets, shares, bonds, debts etc.
Methods of financial appraisal
These are used for the purpose of value of money over the time and some of the techniques which can be used by Ella's Kitchen in order to make investment are considered as follows:
- Payback period: This method is used in capital budgeting that defines to the requirement of time in order to recover money which expanded in an investment. Within the context of Ella's Kitchen, payback period can be used by the company for specific project in order to repay their initial investment. As it could be based on the life or time of a project that measured in years, months etc.
- Net present value: It is the value of future cash flow either positive or negative over the whole life of an investment which are discounted to the present (Straub, 2018). As Ella's Kitchen analyse NPV as an intrinsic valuation that is used extended over finance in order to determine investment security, business value, cost, new entrepreneurial idea, capital project etc. related to the cash flows.
Sources of finance for growth
Every business requires funds in order to perform day to day operations and earning profits. For the purpose of fulfilling financial requirements several sources are used by the Ella's Kitchen so that they can able to manage their finance and operates business activities efficiently. The sources of funds can be discussed as follows:
- Bank loan: Ella's Kitchen borrowed funds from bank on a security basis that makes a legal agreement in which principle amount will be repaid with the interest money (Branch, 2018).
It is useful for the company's growth and it helps when a person or business needs money urgently so it is most appropriate among all sources.
As in which bank charges some specific amount of interest on a pre decided time period and has strict policies of repayment that leads some burden on borrower.
- Crowd funding: In this, funds are raised in a small amount of money from the big group of persons to finance their businesses (Roussanov, 2018).
It is based on social media marketing so it may help in marketing of Ella's Kitchen and it can assist company to get customers feedbacks on time for brings improvement.
In this, failure risk is major which directly impacts on spoiling Ella's Kitchen reputation. Also, the fear of copied business idea is more.
Evaluate potential sources of funding
From the above sources of finance bank loan can be consider as a most appropriate option for fund generation as it helps in systematic financing and gives a clear picture of repayment along with the interest rates.
Business plan for the growth of the organisation
Business plan is a written document that includes the goals of the business, the methods which will be used by the organisation for achieving such goals. Along with this the time frame is being provided within which the goals need to be achieved. Financial projections are made and on the basis of which funds are arranged by the management. Apart from this various strategies are identified that can help the organisation in achieving the goals (Barrow, 2018).
Executive summary: The Ella's Kitchen is a small business that offers a wide variety of food product for the baby's and toddlers. They sell their products through various supermarkets in various countries. They are planning to expand their business by adding new products to their product line. For this they identified the taste and preference of the customers and needs of the children. On the basis of this they decided to provide candies which are shaped in various letters of alphabets and in numbers. This will make learning for the children attractive. Struggling with dissertation writing, get dissertation writing help from our experts!!
Vision and mission: The vision of the organisation is to offer yummy organic food for the children with better products which will be best and healthy for their tiny tummies. While the mission of the company is to make sure that all of their products are healthy, handy and fun for the children. Also they aim to make the products attractive and innovative.
Goals: With this innovation the goals of Ella's Kitchen is to enhance their sales by creating awareness among the customers for their existing and new products. Further they aims to improve the image of the company.
Objectives: The objectives of the company are to increase the sale by 30% with the launch of the new products within next 6 months. This will help them to enhance their market share by 20% as they will take necessary steps to improve the promotion.
Stakeholder Expectations: For the organisation, it is important to consider the interest of the stakeholders so that sustainable growth can be achieved by Ella's Kitchen. For this the expectations of various stakeholders need to be taken into consideration which is given below:
Customers: The customers are the one whose need is considered while providing the goods and for them Ella’s Kitchen is responsible. For them a wide variety of products are provided which are healthy for the children. With the help of product development strategy their satisfaction level can be improved.
Employees: The employees of the organisation need to be kept motivated which makes an organisation effective. For this various opportunities are identified by the Ella's Kitchen that can lead to development of their employees. Accordingly various trainings are provided by them that can enhance their productivity and efficiency.
Shareholder:The interest of the shareholders must be taken into consideration as they have invested in the company. For them the returns must be increased and with the help of this strategy of product development the profitability can be improved. This will enable them in satisfying them.
STP framework: With the help of STP strategy of marketing the organisation can effectively identify the target market that they have to cater. On the basis of such identified market the products are positioned so that they can be made aware of products and pursued them to purchase the product (Schawel, 2018). Ella's Kitchen can effectively use this strategy for identifying the target market.
- Segmentation: In this the entire market is classified into groups on the basis of common characteristics of the customers. The factors that will be taken into consideration by Ella’s Kitchen include the demographic factors and behavioural factors. They will consider the age of the children and the perception of the parents.
- Targeting: The Ella’s Kitchen will target the children between the age of 2 to 4 and their parents for the new product as this is the age where they learn letters and alphabets.
- Positioning: These new products will be available ion all the supermarkets with which they are in agreement also they will make this product available online through various e-commerce sites.
Marketing Mix: Marketing mix is the framework that helps to decide upon various strategies of the organisation which are related to the product, price, place and promotion. For Ella's Kitchen the product will be the candies which are shaped in letters and numbers. The pricing strategy that can be used by them will be pricing penetration as with this they can increase their revenue and market share. Their products will be made available in all the supermarkets and at all e-commerce platforms. For promoting the products the social media platform will be taken into consideration. Along with this the posters and pamphlets can be distributed which will enable to attract the parents (Atwood, 2020).
Financial projections: For the businesses it is important to consider the requirement of the funds which they have to procure. The strategy of product development requires a large amount of funds that can help Ella’s Kitchen in undertaking all the financial transactions. The projected cash flow for the company is given below:
On the basis of the projected cash flow it can be analysed that the £10,000 will be the required capital for the development of the product. This is because they need to procure a variety of material for manufacturing of the new products. Also it can be analysed that the sales will be of about 2500 units which will be credit based for the first month. It will gradually increase to around 10000 units in the coming months.
Monitoring and controlling: It is important for the organisation to control and monitor the activities which are to be undertaken. This is because it helps them in tracking the performance of the activities. Monitoring can be done by way of Key performance indicator and through internal audits. This will help them to determine the important aspects and such can be managed by effective control and monitors. Such evaluation enables them in achieving the objectives within the time limit and resources.
Exit or succession options for the small business
The businesses required sufficient amount of funds in order to operate them effectively. But many times when organisation fails to arrange the resources and in analysing the market they have to shut down the business and for this succession and exit plan need to be prepared by the organisation. The strategies that can be adopted by Ella's Kitchen are given below:
Liquidation- It is a strategy in which all the assets of the business are sold and the operations are closed. This strategy is suitable for small businesses as they are generally dependent on an individual. When they realise the business is no more profitable they can wind up the operations (Allen, 2018).
- Benefits- This strategy is better and flexible as the goods and assets can easily be sold by the owners and money can be recovered. Due to this they can easily move out of the market.
- Drawbacks- The assets are sold suddenly due to which the return is very low and it has impact on the relationship of the owner with other business partner as their business also get affected due to this.
Merger- This strategy suggests that the similar type of businesses is purchase by the other and this create a win-win situation for both as they can effectively conduct the operations as businesses are similar. Such exit strategy is suitable for businesses as the buyer get an opportunity to invest in well established business while the seller can get value for their business (Adler, 2018).
- Benefits - The benefit of this strategy is that they facilitate the buyer to expand their market share and position with immediate effect by collaborating with their operations. Also it helps the businesses to improve their efficiency as they will have more resources.
- Drawbacks – The outlook of the customers changes for the company once it is being merged with other and this has direct impact on its operations and brand image.
Ella's Kitchen can adopt both the strategy but merger is better exit option as they have been at comparatively large scale due to which they have their brand image. Their business can effectively be acquired by any organisation if they fail to operate effectively as they have strong customers base.
It is concluded from the report that for planning of the business it is important for the organisation to analyse the internal and external environment as they have direct impact on their operations and thus on profitability. For analysing the growth opportunities and strategies PESTLE and Porter’s Generic can effectively be used. Also with the help of Ansoff’s matrix various strategies can be determined that can facilitate the growth of business. Further it is concluded that with business plan objectives can be achieved effectively as all the strategies can be planned and developed before.
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