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Planning for Growth

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Sample on Planning for Growth

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Introduction

In today's senior, growth is necessary for each and every organisation to sustain in marketplace. It can be possible if a management of a company do effective planning to attain organisation goal and objective (Barbour and Deakin, 2012). When an organisation plan to grow or expand their business in national or international market, they have to plan various things accordingly such as resources, funds, investors, products and so on. A company can plan a growth in any type such as expanding business in national and international market, introducing new technology, design new products and services and many more. An organisation selected for this assignments is Guildford Tyre Company which is a private limited company incorporated on 29 June 1976. There are various type of products and services they are offering such as air conditioning, batteries, brakes, vehicles diagnostics, exhausts, repairing of mechanical, mobile tyre fitting and wheel alignment. Topics covered in this assignment are evaluation of growth opportunities, various methods by which organisation access funds and development of business plan. Along-with this, it include different ways thorough which a small business owner can exit their business.

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TASK 1

P1.Evaluating growth opportunities and considerations within an organisational context

For small business enterprise, it is difficult to grab appropriate marketing and expanding opportunities in effective manner (Brinckmann, Grichnik and Kapsa, 2010). In this case, managements of small business have to develop and design effective business plans and strategy so that they analysis market in effective manner and get benefits and advantages. Guildford Tyre Company is a small scale business with approx 51 to 200 employees. It is necessary for them to plan strategies in effective manner so that they grab market opportunities in effective manner. For organisation growth and success there are certain factors which are explain below:-

Competitive advantages:-

It refers to the situation which allow an organisation or country to produce or manufacture products and services of similar value at a low price in desirable fashion. Guildford Tyre Company is a small scale company and it is duty of their manager to design effective planning strategy so that they gain competitive advantage in effective manner. To get higher competitive advantage, respective company follow some strategies which are explain below:-

Competitive advantage as a foundation of growth

To get competitive advantage as a foundation of growth such as resource, capabilities and core competences Guildford Tyre Company use Porter's Generic strategy model, which is describe below:

For every business it is necessary to evaluate and analysis their market positions and values in an industry. By which they can make changes and innovation easily in their planning and strategies. Guildford Tyre Company use Porter's Generic strategy model to analysis market and values in appropriate manner by using its four generic strategies-

  • Cost leadership- It is one of the most important strategy which help a company to create effective position in target market by offering products at low price (Burton, 2010). Guildford Tyre Company use respective method to analysis market and their target audience through which they able to know requirement and demand of product, where respective company want to expand. In according to this company decide the price of products which can be sale as low price but product and services is of good quality so that they attract customers in new market.
  • Differentiation leadership- In this products and services offer by company is of unique feature which attract audience in huge numbers. When Guildford Tyre Company follow this they design products and services which have unique feature and technology which attract customers in new target market. If respective company do innovation in design of tyres and other products which influence and encourage customers to purchase.
  • Cost focus- In this company target niche marketaudience and offer them products and service at lowest price (Chapin, 2012). In this, company analyse market and demand of customers and then develop products which is low in price but fulfil need and demand of audiences in effective manner. Guildford Tyre Company will conduct market analysis and evaluation and then design their products according to requirement and offer that product at low price. In this they focus on particular market and then design their products accordingly.
  • Differentiation focus- According to this a company design products and services with unique feature and by taking consideration of a particular target market. It means Guildford Tyre Company design products with unique and special feature to attract particular target market audiences. According to this,respective company produce goods according to demand and requirements of their focused target audiences.

By analysing all strategies the Guildford Tyre Company management decide to use or select differentiation focus strategy in which they design products according to demand of their focused target audience of new country in which they are expanding.

Competitive advantage with opportunities for growth

To analysis the external environment and identify opportunities for Guildford Tyre Company use PESTEL analysis (Christofakis and Papadaskalopoulos, 2011). It is use to understand growth of market or decline, business position, potential and description for operations. PESLET in context of respective company is explain below:-

  • Political- When a company want to expand their business in international market they have to evaluate respective company political factors, which includes policies, law, rules and regulation, barriers for new entries and so on. When Guildford Tyre Company plan to expand their business in France they conduct study about it and make plans according to rules and regulations of respective country. This will help them in conducting their business in smooth and appropriate manner. This help respective company in identifying and grab opportunities in effective manner by under taking political evaluation.
  • Economical- It refers to economical factor of a country which a company want to expand it may be in domestic or international. So when Guildford Tyre Company plan to expand their business in Francethey do analysis of respective company economical status by which they able to know purchasing power of the customers. Through which they can design strategies according to economic rate. By this respective company can analysis the economical status of country and its populations and economic condition of France is good which seems as opportunities for them.
  • Social- It refers to the beliefs and values of populations and it include various factors such as population growth, health concern, age distributions and many more (Eddleston And et. al., 2013). When Guildford Tyre Company plan to expand business in respective country they evaluate and analysis the society by which they able to understand about buying trends of respective country. The social factor of France is seem as opportunities for respective company because they audience of France appreciate innovative products.
  • Technological- It refers to the technology advancement of the a company to expand their business in another market. Guildford Tyre Company do research about technology awareness of respective country and plan strategy according to it so that they attract more customers with innovative products and service. The population of France like to use innovative product so it can be opportunities for respective company because they do innovation in their products on regular basis.
  • Environmental- These are those factors which are related to the surrounding such as weather, climate and climate change. These factors mainly affect tourism, farming and insurance industry. Guildford Tyre Company conduct research about environmental factors and plan their product process according to it so that process didn't hamper due to climate change. The environment factors didn't affect manufacturing of tyres on large basis which seems as opportunities of respective company.
  • Legal- This factors include different laws which a company has to follow to conduct its business operations and functions such as discrimination law, consumer law, antitrust law, employment law and health and safety law (Grover, Bokalo and Greenway, 2014). When Guildford Tyre Company plan to expand their business in France they must understand respective company laws so that they conduct their business smoothly and effectively. It can be come up as some barriers because legal factors of respective company change according to time which may affect production process of Guildford Tyre Company.

After evaluation of all the factors Guildford Tyre Company able to know that social and technological factors is more effective and appropriate for them.

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P2.Evaluate the opportunities for growth applying Ansoff's growth vector matrix

Ansoff's growth vector matrix is a tool for strategical planning which provide guideline, through which senior managers and executives design effective strategies for future growth and expansion. It is a mostly used techniques by which a company identify various opportunities to enhance their sales and profit. By it a company can evaluate there present positions of its potential products and market. Guildford Tyre Company conduct evaluation through Ansoff's growth vector matrix through which they able to know their current positions and make strategies according. Description of Ansoff's growth vector matrix in context of respective company is mentioned below:-

  • Market penetration- It refers to the situation when a company want to grow in existing market with existing products and services. It means they want to enhance there current market scenario (Hough and et. al., 2010). This involve increment in company market share in existing segmentation of market. This can be possible when a company enhance their sell of products and services in existing market. It can be done by increasing customers awareness about products, decrease price of products, increase promotional activities and so on. The respective company can select this strategy when they want to enhance their market share in existing marketplace with existing products.
  • Market development- It is a situation when a company want to expand into new market by using existing products and services. This strategy is mostly used and successful because for new market respective product is new and unique. A company can use this strategy successfully by including several factors such as innovate packaging according to culture of country, identify new distribution channel, adopt different pricing policies and so on. This strategy is use by Guildford Tyre Company when they want to expand in new marketplace with existing products and services. This can be possible when a company do different segmentation of customers, target foreign marketplace and many more.
  • Product development- It refers to the strategy when an organisation wants to introduce new product and service in existing marketplace to achieve growth and expansions. This concern about extending the ranges of products and services within present market of company (Keough, 2015). This can be possible when various activities such as invest and conduct research and development, introduce new innovative product, acquisition of rights to manufacture someone else product and service and many more. The Guildford Tyre Company can use this strategy when they want to introduce new product with some innovation in the existing market place.
  • Diversification- It represent the situations when a company want to expand in new market with new products and services (, M. And Keyser2016). It is most risky strategy because here both market and offerings are new, so there is a possibilities that it can be not succeed in marketplace. In this situation has to do appropriate research so that they able to develop appropriate product and strategy. Guildford Tyre Company can select this strategy when they want to target new audiences of new country or marketplace with new products and services. To make this possible they have to do appropriate research and promotional activities so that they attract more audiences for their products.

The Guildford Tyre Company can select market development strategy in which they expand their business in France with their existing products and services.This is appropriate strategy for respective company because it is less risky and successful strategy.

TASK 2

P3.Assess potential sources of funding available to businesses and discuss benefits and drawback of each source

Guildford Tyre Company Ltd. Which provides some services such as brakes, batteries, wheel alignments and so on to their customers. With the purpose to enhance their growth and success into marketplace (MacLeod, 2013). Sources of funds are referred as a means through which company increase their operations and also the long term working capital. For starting any types of businesses, funds are required. It is not possible for every entrepreneur to invest huge amount for entering into market. Therefore, it is needed for them to evaluate overall funding sources by which business can be set up and can grow. Some sources of finances are mentioned below:

Bank loan: This is considered as the common sources of finance that are arranged for SME's. It is the funds that company borrow from bank for definite period of time and also sum fixed interest are charged on it. Guildford Tyre Company can raise funds by taking loan from bank as it is secured and interest that is paid to bank is deductible in tax. This also help them to expand their business successful.

Benefits:

  • It generally have lower rate of interests as compare to another financial sources.
  • Regular repayments of instalments increases the company credit scores.

Drawbacks:

  • Borrower have to pay monthly instalments on time otherwise bank has rights to seize their assets.
  • Many strict legal formalities are need to be fulfil by people for taking bank loan.

Overdraft: This is facilitated when enterprises do their payments from business current account exceeding the available cash balance (Mitchelmore and Rowley, 2013). This allows businesses to acquire funds for short term. For Guildford Tyre Company, it is appropriate as funds can be arranged rapidly and due to its flexible nature required amount can be withdrawn any time.

Benefits:

  • In this interest are charged only on overdrawn amount.
  • It is flexible and can be arrange quickly.

Drawbacks:

  • In this credit scores are damaged.
  • In this bank can ask for the repayments of overdraft amounts anytime.

Crowding: These funds are raised through social media networks and online. In this people ask to invest some amount of money into their business in exchange for some services or equity (Moseley, 2013). With the help of this company can raise capital and invest in their enterprise. For Guildford Tyre Company Ltd. it is not effective source of fund as there is high risk and many legal formalities are involved.

Benefits:

  • Successful crowdfunded projects can acquire good attention on social media, that assists them grow.
  • Pitching business by crowdfunding should be considered as a valuable marketing forms.

Drawbacks:

  • It is considered as cost effective even though this includes many judicial formality and complex process.
  • In this degree of risk is high and uncertain for innovative ideas as it can be stolen in case the firm do not have copyright.

Peer to peer lending: It is considered to be a financial innovation which connects various borrowers those who are searching unsecured loans with investors and are ready to get high returns (Pallagst, 2010). This allows individuals to lend and borrow certain amount of money without any financial institutions. For Guildford Tyre Company Ltd. This source of finance will not good option as it is unsecured and also not much helpful for expanding their business.

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Benefits:

  • In this rates of interests are low as compare to traditional institutions of finance as well as credit cards.
  • In peer to peer funding, not any additional charged is applied on early repayment.

Drawbacks:

  • Person who has not more credit score can not avail these sources of funds.
  • In this tax free interests and large amounts of money are not available.

Angel finances: It is also known as the angel investor who facilitate finances generally for start up businesses (Todes, 2012). This is for those businesses who are seeking for expansion capital. It is appropriate for Guildford Tyre Company Ltd. As it did not ask for collateral as well as security and also less risky.

Benefits:

  • For this source of finance, collateral is not required.
  • In this no monthly repayments and interest should be paid.
  • It is less risky as compared to other debt financing.

Drawbacks:

  • It has more control over the businesses.
  • It takes longer time to find appropriate angel investors.

After evaluating all sources of financing, it is seems that Guildford Tyre Company Ltd. should prefer bank loan as it is secured, its interest rate is low and increases the credit score if monthly repayment is done on time.

TASK 3

P4. Design business plan for growth which include financial information and strategic objectives for scaling up a business

To getting higher and successful, a company is required to develop appropriate goal and objective for their business firm (Valler, Phelps and Wood, 2012). In a business organization, there are several elements of planning process such as designing, monitoring, producing, operating, controlling, implementing and distribution. By conducting these functions, a firm can get competitive advantage easily and along-with this they can enhance their profitability as well. For expansion of business, appropriate business plan is necessary which include information related to organisation, policies, mission and vision and so on. Guildford Tyre Company is a private limited company incorporated on 29 June 1976. There are various type of products and services they are offering such as air conditioning, batteries, brakes and so on. They are going to expand their business in France with products and services which they are offering. Business plan of Guildford Tyre Company is mentioned below:-

Concept of business:-

This refers to the process which include informations related to company, products and service, unique selling options, mission and vision, target area and audiences and so on. It may also involves information related to new products or innovative products. Business concept of Guildford Tyre Company is describe below-

  • Organization's products and services: Guildford Tyre Company is small scale enterprise in Guildford, united kingdom. This company provide products related to vehicles such as air conditioning, batteries, brakes, vehicle diagnostics, exhausts, wheels alignment, mobile tyre fitting and so on. All products are designed on basis of consumers demand and needs. The target audience of respective company are other auto-mobile companies who manufacture their car products.
  • Mission and Vision of firm: Guildford Tyre Company provide products related to vehicles and other things according to customers need. Mission of respective company is develop and maintain market image by providing quality products and enhance profitability of company. Vision of respective company is to provide quality innovative products and services to their customers and fulfil their needs and demand in appropriate manner.
  • Operational strategy: Guildford Tyre Company select customer driven strategy as an operational strategy. In which they m,manufacture or design products and services according to the demand and ned of customers. This is most effective operational strategy to enhance marketplace share and profitability.
  • Unique selling option: Guildford Tyre Company use private equity recapitalization as their selling options. In this a company sell their particular portion of business to another company for a time duration, it may of up to 3 to 5 years. It is a legal process and both companies have to go through the agreement process. Such as respective company sell their 80 % portion to another car manufacturing company. And then products of Guildford Tyre Company is purchased by that manufacturing company.
  • Strategic objective: To Introduce existing business services in new market within 2 month in order to maximise business sales approx. 30% more.

The Industry/ market analysis:-

For Guildford Tyre Company, it is required to analysis and evaluate effectiveness of their products and services so that it fulfil the need and demand of customers as well as marketplace (Wu, 2015). For this respective company conduct SWOT analysis, which help them in determining strength and weaknesses of company (Ziari And et. al., 2012). Along-with this they able to know about there opportunities and threats. SWOT of Guildford Tyre Company is mentioned below:-

Strength

Weakness

  • The respective company provide quality products at affordable price.
  • They have strong Research and development department.
  • Employees are loyal and productive and ready to acquire change.
  • The respective company has loyal customers which is big advantage for them.
  • Features of air conditioning is not to advance as compare to competitive company.
  • Distribution channel is not effective.

Opportunities

Threats

  • Growing economy
  • Use new technology and innovation in products designing.
  • Expand business in foreign countries.
  • Introduce products related to motor sports vehicles.
  • Major threat for respective company is cheap import of tyres and other car products.
  • Their are huge number of competitions in respective industry.

Financial plan

Pre launch cash budget

             

Cash Flow budget

             

Particulars

Jan

Feb

Mar

Apr

May

June

July

Cash inflows

             

Investment

8000

           

Credit sales

2000

3000

3000

4500

1500

3500

4200

Total inflows

10000

3000

3000

4500

1500

3500

4200

Cash outflows

             

Fixed : Equipment’s

2000

2500

1500

2000

1200

1500

800

Variable : Direct material

300

300

200

300

150

500

300

Total outflows

2300

2800

1700

2300

1350

2000

1100

               

Net cash flow

7700

200

1300

2200

150

1500

3100

               

Opening balance

0

7700

7900

9200

11400

11500

13000

closing balance

7700

7900

9200

11400

11550

13000

16100

August

September

October

November

December

Jan

1000

2000

800

1200

1500

3600

1000

2000

800

1200

1500

3600

           

200

300

100

600

300

2000

400

500

100

100

400

300

600

800

200

700

700

2300

           

400

1200

600

500

800

1300

           

16100

16500

17700

18300

18800

19600

16500

17700

18300

18800

19600

20900

Feb

Mar

Apr

May

June

July

3000

3000

4500

1500

3500

4200

3000

3000

4500

1500

3500

4200

           

2500

1500

2000

1200

1500

800

300

200

300

150

500

300

2800

1700

2300

1350

2000

1100

           

200

1300

2200

150

1500

3100

           

20900

21100

22400

24600

24750

16250

21100

22400

24600

24750

26250

19350

Post launch cash budget

       

Particulars

Jan

Feb

Mar

Apr

Cash inflows

       

Investment

8000

     

Credit sales

1200

2000

7500

3000

Total inflows

9200

2000

7500

3000

Cash outflows

       

Fixed : Equipment’s

2500

1200

1500

2500

Variable : Direct material

350

300

250

150

Total outflows

2850

1500

1750

2650

         

Net cash flow

6350

500

5750

350

         

Opening balance

0

6350

5850

11600

closing balance

6350

5850

11600

11950

May

June

July

August

September

October

November

December

5000

6500

1200

3200

1500

8200

1250

3210

5000

6500

1200

3200

1500

8200

1250

3210

               

1100

1500

1200

600

500

500

1200

700

100

500

500

250

450

250

1300

500

1200

2000

1700

850

950

750

2500

1200

               

3800

4500

-500

2350

550

7450

-1250

2010

               

11950

15750

20250

19750

22100

22650

30100

28850

15750

20250

19750

22100

22650

30100

28850

30860

Jan

Feb

Mar

Apr

May

June

July

1200

5000

2500

4500

1500

3500

4200

1200

5000

2500

4500

1500

3500

4200

             

2000

2500

1500

2000

1500

2000

200

300

300

200

250

360

250

500

2300

2800

1700

2250

1860

2250

700

             

-1100

2200

800

2250

-360

1250

3500

             

30860

32160

32360

33660

35860

36010

37510

29760

34360

33160

35910

35500

37260

41010

TASK 4

P5.Assess exit or succession options for a small business expanding the benefits and drawback of each option

When an organisation is not operating in effective manner and they are facing major problems in their operations and functions form previous few years (Ziari And et. al., 2012). Then in this case company can either close or dissolve the company operations or merge with some other company to succeed in business operations. In the case of Guildford Tyre Company they are facing problems in their operations, production process, quality, employees behaviours and so on. So they decide to select succession option to survive in the marketplace. For that they conduct evaluation process of various succession options, which are describe below:-

  • Merger:- In this situation two existing company come together under legal agreement and form a new organisation or combine their operations (Barbour and Deakin, 2012). It is beneficial for a company because by it they can gain profitability and able to expand their business in other market. Such as respective company merge their operations with some another company, in this situation Guildford Tyre manufacture different car products and another company fix those product in their manufacture cars. Their are both advantage or disadvantage of merger which is explain below-

Advantage-

  • It help company to operate their functions and operations at bigger level.
  • When two company combinationally conducts their functions they can reduce and eliminate their competitions form marketplace.
  • By merger goodwill and market shares of both the companies will increase.

Disadvantage-

  • Merger leads to job loss of both companies employees.
  • When a small company merge with big one, there is occurrence of difference on the basis of skills and ability of employees. Which leads to loss in employees productivity
  • Joint Venture:- It is a situation in which a two business parties decide to pool their resources to complete a specific project or task (Brinckmann, Grichnik and Kapsa, 2010). These all process are done by consideration of legal law and rules. Such as let respective company and another company decide to share their resources for a particular product and services. By it both the company can give their best efforts to achieve their combine goal and objective. The joint venture of companies is temporary basis and both parties share risk and cost. There are also various advantages and disadvantage of joint venture, which are explain below:-

Advantage-

  • It provide both company an opportunity to gain new capabilities and expertise.
  • In it risk and cost can be share in both partners.
  • It help company various ways such as enter into new related business, new geographic market and introduce new technology.

Disadvantage-

  • To build right relations with partners, it take time and efforts and during this sometime they face various problems (Burton, 2010).
  • Sometime creating joint venture is more expensive than operating business alone.

The Guildford Tyre Company select merger for their succession option because it is more appropriate for them. By it they can also able to operate their operational and functions at international market.

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Conclusion

From the above discussed topic it can be conclude that for analysing competitive advantage as a foundation of growth a company can conduct Porter's generic strategy model and to analysis to its opportunities and growth of expansion in national or international market they can use PESTEL analysis. When an organisation plan to expand in foreign market they conduct evaluation and analysis by Ansoff's growth vectors matrix through which they able to know about opportunities of growth in international market. Financial resource is one of the major resource which is required to expand business, for this company evaluate various sources of findings such as bank loan, financial institutions and so on. After that they select appropriate one for them which leads to expanding of business. To attract investors and customers company have to design business plan which include information regarding financial sources and strategies. Along with this it include company's mission and vision, pricing strategy, selling strategy, their target audiences and market and so on. When a company facing major problems and issues in their operations, then there is two options in front of them that is exit or succession. In exit they can chose liquidation process and for succession they can select merger, joint venture and so on.

References

  • Barbour, E. and Deakin, E.A., 2012. Smart growth planning for climate protection: Evaluating California's Senate Bill 375. Journal of the American Planning Association. 78(1). pp.70-86.
  • Brinckmann, J., Grichnik, D. and Kapsa, D., 2010. Should entrepreneurs plan or just storm the castle? A meta-analysis on contextual factors impacting the business planning–performance relationship in small firms. Journal of Business Venturing. 25(1). pp.24-40.
  • Burton, P., 2010. Growing pains: The challenges of planning for growth in South East Queensland. Australian Planner. 47(3). pp.118-125.
  • Chapin, T.S., 2012. Introduction: from growth controls, to comprehensive planning, to smart growth: planning's emerging fourth wave. Journal of the American Planning Association. 78(1). pp.5-15.
  • Christofakis, M. and Papadaskalopoulos, A., 2011. The Growth Poles Strategy in regional planning: The recent experience of Greece. Theoretical and Empirical Researches in Urban Management. 6(2). pp.5-20.
  • Eddleston, K.A. And et. al., 2013. Planning for growth: Life stage differences in family firms. Entrepreneurship Theory and Practice. 37(5). pp.1177-1202.
  • Grover, B.E., Bokalo, M. and Greenway, K.J., 2014. White spruce understory protection: From planning to growth and yield. The Forestry Chronicle. 90(1). pp.35-43.
  • Hough, P. and et. al., 2010. The worker co-op sector in Canada: Success factors, and planning for growth. Canadian Worker Cooperative Federation.
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