Planning for Business Growth

TASK 1

Key consideration for evaluation of growth opportunities

All business have to make identification of opportunities which can help a business in planning their actions and formulation of strategies. For their there is a need for organisation to make a internal analysis of situation where there is consideration of resources, core competencies and capabilities. Considering the external environment organisation have to focus on different external environmental factors. Porter's Generic model is the model that is suggested by Deloitte to SMEs, which would help them in gaining opportunities and these are mentioned below:

Porter's Generic Strategies: This model is advised by Deloitte is because, it is very helpful for SMEs to determine most suitable strategy for having a sustainable advantage. Different small and medium level companies can take cost benefits by lowering of cost and offering products. Some of the strategies are discussed below:

• Cost leadership: What Deloitte has suggested is that with the help of this strategy SMEs could effectively enhance their market share by offering low cost products to their customers. This strategy is adopted by enhancing economies of scale technology up-gradations. Through this, SMEs would become able to reduce of per unit cost.
• Differentiation Leadership: This is the strategy which aims to provide unique products to their customer by introducing various differentiation features in their products. It is mentioned by Deloitte is that it is necessary for SMEs to meet specific customer requirements of through offering some different and unique product to their customers then it can help them in increasing price of their product.
• Focus: Another strategy given or suggested by Deloitte which is required to be followed by SMEs as it will enhance or adopt focus on any one strategy that can be cost focus or differentiation focus. Cost focus strategy is focussed on lowering of cost for taking cost advantage by considering sample part of market. On the other hand differentiation focus strategy is focused on specific needs of customers (Tsatsoula, 2018).

Based on above analysis it is said that SMEs required to focus on use of differentiation focus strategy as it consists of unique shape, size and taste of products offered by these organisations as it is also unique in nature as well delivered in the market. This differentiation focus strategy helps them in increasing their prices and this leads to increase in overall profit percentage. Take online assignment help in the UK from expert writers at the best price.

PESTLE Analysis:

PESTLE analysis is a tool which is used by various business organisation in making detailed analysis of various factors present in the external environment. Such analysis is very helpful in developing an understanding of positive and negative impact of these factors further use in planning of strategies for adoption of new business process. This is being considered as one of the crucial model, which is suggested by Deloitte to small scale organisations so that they could analyse the external environment. This model is described underneath:

Political factor: Political factor is related to degree of government intervention present in a economy of a country in which a particular SMEs are functioning. It includes political stability, foreign trade policies, labour laws, trade restrictions etc. these factors impose a impact on how business is done by various organisation and their response to changing legislations of market.

Positive impact: There has been minimum legislation of government on various small and business enterprises as government believes that development of such type of enterprises is very helpful in overall development of the economy. It is suggested by Deloitte that it will help in effective functioning of SMEs without any restrictions & maintenance by government regulations.

Negative impact: changes taking place in UK's economy such as events of BREXIT has a very negative impact on the monetary flow or liquidation with people. This has a negative impact on present level of sales of different business firms that are performing at small or medium level.

Economic factor: Economic factors poses a very significant impact on how organisations performing at small or medium level are functioning and how much profits are they able to make in the prevailing economic conditions. Various economic factors include exchange rates, inflation, disposable income of people, interest rates and many such type of related factors (Straub and Sperling, 2018).

Positive impact: What positive impact that Deloitte has mentioned is that taxation policies in UK where SMEs are having maximum presence is liberal. It has lead to increase in the amount of disposable income with people and target segment if customers. Which further results in increase in spending and enhancement of sales for various organisation.

Negative impact: In case when the economic conditions are not favourable then it leads to increase in interest rate and it results in decrease in purchasing power of people as overall cost of borrowing money increase and people are not able to use for making enough purchases.

Social factor: Social factors included various demographic factors such as taste & preference of customers, changing demands and many such related factors. These posses huge impact on overall sales of a organisation. If it is talked about SMEs then positive and negative impact of such social factor is discussed below:

Positive impact: In UK people have a very high standard of living, this has resulted in a very attractive opportunity for this organisation to attract people by their innovative and differentiated products which are offering taste and healthy nature at same time. It is the responsibility of SMEs to make use of this opportunity in enhancement of their present sales by making use of this differentiation.

Negative impact: The change in lifestyle, taste and preferences of customer affect UK supermarket in negative manner. The increase in population is also one of the reason that decrease sales or profit of the organisation.

Technological factor: The technology plays a very important role for success of any business organisation. With the use of advanced technology the company can launch new or innovative products as per customer needs and wants. Based on the information given by Deloitte, is that there are some positive and negative impact given by technological factor among SMEs which is mentioned below:

Positive Impact: The frequent technological advancement assists SMEs in launching a new or innovative product according to the demand of customer thus it results in increasing market share of different companies dealing at small level.

Negative Impact: Herein, the negative impact of technological advancement is that it can increase the cost of a product which can be considered as a threat for SMEs.

Legal Factor: It is the process in which organisation considers all those significant factor related to law that has to comply with. SMEs focuses on follow labour law that helps the company in increasing motivation and satisfaction level of workers. The positive and negative impact on SMEs are given below:

Positive Impact: The positive impact of following legal procedure is to increase brand image if the organisation. If it is talked about SMEs, then they need to comply labour law that helps in enhancing motivational level of workers. Also it assists in decreasing chances of legal due processes (Schepker,And et. al., 2018).

Negative Impact: Any change in law affect SMEs in a negative manner. Due to alteration in any law and regulation results in change the company policies and procedure that can be considered as a negative impact for the company.

Environmental factor:The rules and regulations followed by company with purpose to protect or defend environment. SMEs would require to adopt the Environment protection act which has to be comply with for protection of environment. Some suggested advantages and disadvantages of environmental factor on SMEs that are given by Deloitte are presented below:

Positive impact: The positive impact of using waste management strategies by SMEs is to protect or defend the environment .

Negative impact: The change in environmental policies and climatic weather that result in company alters their policies, procedure as well as rules and regulation can be considered as the negative factor for SMEs, which is suggested by Deloitte (Schawel,. and Billing, 2018).

Evaluation of growth opportunity with Ansoff's matrix

Ansoff matrix can be used by the company to analyse marketing strategies or objective of business. The growth of business depends on selling of existing product or new product in the existing or new market. This matrix provides a structure that helps senior manager for future growth or success of the company. The strategies that can be followed by Deloitte while consulting with SMEs are mentioned below:

Market penetration: Market penetration signifies the successful selling of goods and services in specific market. It emphasised on selling of existing product compared to target market product of the organisation. It assists the company in increasing sales of company by reducing cost of product in order to attract the customer. In context of Deloitte, the management team emphasised on offering appropriate consultancy services related to needs of their clients that are looking forward to expand their business considering the minimum risk. SME's should use strategies which can cover large market area for there product because if they use these approaches it will control the cost of there product.

Product Development: Product development refers to the alteration of existing product in order to changes in its product design, packaging and labelling as well developing the new product through branding and advertisement. The extended research is essential for identifying wants or needs of the consumer. Suggestion given by Deloitte is that SMEs should focus more on lunching of new product in existing market as it provides a set base for new product and give it competitive advantage in long run (Roussanov and et. al., 2018).

Market Development: Herein, the main focus of organisation is marketing of existing product in the new market. In other words,it can be described as the process in which company can spread out their market into new area or region. Here the Deloitte suggested that the SMEs should focus on the this market as they don't have enough capital investment and profitably and chance failure are higher there.

Diversification:Hereby, the main focus of organisation is to increase its profitability as well as expand its market share by selling new products in new market (Price, and Nelson, , 2018). The amount of investment is quite high which can be considered as a risky strategy for business organisation. There are two type of diversification is taken by company one is related diversification where similar kind of goods provided by the company whereas in unrelated diversification there is a difference between the existing and new products offered by an organisation. According to Deloitte suggestion a SME should not focus on this point as risk associated with this factor is higher and chance of success of new product in new market is very low.

Considering above mentioned strategies, the product development is most suitable strategy for SMEs Product development strategy helps in satisfying their customer by offering them new product according to their wants. In addition to this, the manager focuses on accelerating their sales by providing innovative or new products to customer but they should also focus on risk associated with them. 

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Potential sources of funding

Investment decision making: Herein, the top level management have to decide that what amount of money they have to invest in the organisation in order to grab the opportunities and competitive advantages. It is suggested by Deloitte that SMEs emphasised on taking a decision for future growth of the company which is based on purchase of there goods & services

Methods of financial appraisal :

The method of financial appraisal are adopted by organisation for the purpose of value of money over time as well as various method can be used which are suggested by Deloitte for taking investment decision are mentioned below:

Payback Period: It can be considered as the process in which quantity of time taken to recover the monetary value of an investment. Deloitte suggested that SMEs Payback period should be adopted by organisation for a particular project in order to refund the initial cost of investment as it is measured in terms of months and years (Leick. and Lang, 2018).

Net present value: It is the subtraction of present value of cash outflow from present value of cash inflow over the time interval. According to Deloitte the owner should emphasised on analysing basic data and informations,business value, new ideas and cost that is affiliated to cash flows.

Sources of finance for growth:

All organisation requires fund for executing day to day transaction or operations in order to earn income (Kim, . And et. al., 2019). In discourse to Deloitte, the financial manager is suggesting Small business on managing or performing their day to day operations or business activities in an effective and efficient manner thus it helps in fulfilling their financial obligation in the organisation. The sources of fund which is mentioned below:

Bank loan:It is amount of money that is borrowed by the company from bank or any other financial institution on security basis. It is a legal agreement between the company and bank in which principal amount is repaid with interest rate. As per Deloitte, the manager is making suggestion to borrow money from bank in order to invest in assets for accelerating the profit in return company repaid principal amount with interest rate within a particular time period.

Crowd funding:It is the process of funding in small quantity of money from large number of people or institution via internet to finance their new business venture.

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