It is important for businesses to make such strategies that offer growth in the near future. The company chosen for this project is Quantum technology which offers marketing services to businesses. A junior manager is being appointed who will help the mentor to make such strategies for the expansion of the company.
- The key considerations for evaluating the growth opportunities.
- Methods to raise funds and different kinds of funding.
- Development of business plan and how to scale up the business.
- Different ways to with the help of which owner can exit the business and its implications.
Planning for growth is considered as the strategic activity which helps the firm in developing its business for growth purpose. In this top management of the organization prepares guidelines for the manager which is required to follow by the whole staff along with the business manager. It helps the organization in achieving its business goals and objective in a given period of time in effective manner. This given report is based on Quantum technology (Albert, 2017). It is the small enterprise that offers its marketing based services to technological companies. In this report, the Ansoff matrix is elaborated with its different strategies that are helpful for the company its growth. In addition to this, various potential sources of funding are elaborated with their advantages and disadvantages. In the end, this report is going to develop a business plan for growth that will enhance growth rate of the sm
P1 Key considerations for evaluating growth opportunities and justify these considerations
A company can grow through capturing the opportunities but it needs to plan according to the present state and future expectations that tell it what efforts are needed put in order to explore the growth opportunities. Effective planning plays an important role to to reach out towards the goals and objectives. Quantum Technology Marketing is a company that has established to provide marketing services for technology companies. The firm came in inception as a small scale organization but it can attain success with the planning that maximizes profit. There are some key considerations that can be focused to attain the growth of the business and competitive advantage as well. An organization can grow with the expansion of its services in other countries where it seeks opportunities. It can be elaborated as -
Resource – To attain the objective it should be determined that the firm has appropriate assets. Because resources are the major requirement of the business which are needed to accomplish the task. As Quantum Technology Marketing requires the funds that is essential to organize the marketing campaigns, through promotional webinars. It also requires staff who assists to attain the objectives and goals (Allmendinger and Haughton, 2012).
Capabilities and core competencies –A company should analyze the capabilities of its employees and other resources such as the investors. The workers and financiers are the major resources of an organization and it is essential to know that what are the abilities that can assist them to explore in the new market. For example, investors are required to expand in a new country and therefore a company needs to embrace the amount to launch a business. The funds should be available to Quantum Technology Marketing to explore in the market and to operate in the new area because the insufficient money can hold the firm's operations and functions. This can create obstacles in the processing of a company. Hence, it will be good for Quantum Technology Marketing to embrace the resources whether they are employees who will carry out activities or the investors which provides funds to attain the goals and objectives. The firm should also know the competition because it needs to focus on strengths and improvement area where expansion can be done to attain the competitive advantage (Barbour and Deakin, 2012).
Porter Generic Strategy
Porter's generic strategy is used to recognize the area in the competitive market to perform better than the rivals. This model specifies the direction where Quantum Technology Marketing can move to achieve the goals.
Cost leadership –Cost leadership can be defined in the broad segment that attains the cost advantage for the products and services. Because Quantum Technology Marketing can offer it services at the lowest prices to sustain in the market towards that the customer attracts can easily attract towards that. To attain a competitive advantage the firm can easily reduce the cost of the services.
Differentiation strategies – It is also based on broad segments as it is concentrated on achieving the customer in a wide perspective. Quantum Technology Marketing can opt for a differentiation strategy which provides products and services with some additional features which make the product distinct from the rivals. For example, if the company is offering marketing services to other companies then it can offer content with the SEO that makes the product different from others. As it is not offering by the competitors and that is good for the company because it is offering the additional attributes which can attract more customers that wanted to purchase for the special services. The customer can also pay the premium price for these extraordinary features.
The differentiation strategy states the product should be different from the existing products of the competitors . If the firm is delivering such features then customers can pay the premium price for the services.
Focus Strategy – Focus strategy refers in the narrow section target market. In this strategy Quantum Technology Marketing can focus on cost advantage or differentiation. The cost advantage will cater the customer who are seeking for the low cost product whereas the differentiation refers to attain the customer satisfaction by providing the extensive products. So the major focused is on getting the customers by applying both of the strategies. The company can focus on the differentiation because the advanced feature the customer can attracted towards the services.
PESTEL analysis refers to external environment that has a significance impact on the business and therefore, it needs to be consider in order to identity the growth in the marketplace (What is PESTLE Analysis? A Tool for Business Analysis, 2018).
Political factors – These are are implemented by the government such as the policies and laws. Policies are the major support of a business such as the tax rates that have to be pay by every business organization to run a company successfully. But if the tax rates are high then it become hard to sustain a business for a long run. There are some policies which also help the companies to enter in the new market like foreign direct investment. Quantum Technology Marketing can enter in the new market if the nation supports FDI (Eddleston and et. al., 2013).
Economical factors - A country has two growth factors such as GDP and per capita income. If a nation has increasing per capita income then it will also provide an opportunity for the market as the people can enhance their buying nature. These two factors can increase the profit of Quantum Technology in such countries where the financial condition is stable and growing. Because the financial state of nation supports to in the growth of business but if the country has low economic values then it can impact on an organization. As it can be define as if people of has high income then can spend their earning on their luxury but if they have low income then will have a less purchasing power and it will impact on the growth of the business.
Social factors – Social factors are depends on the preferences, choices and living style of the people. If people has good living style then they would like to purchase quality products. In order to grow in a new market the Quantum Technology Marketing should foucs on the core values of a country as they can reduce the prices of their products and services because customers can easily be attracted to the low prices. If the company is new in the market then to attain the attention of the local customers the company can keep the low prices that can capture the wide range of customer that will help to sustain in the market. If the customer are satisfied with services then they can promote the firm to others because the mouth of words builds a reputation of the company.
Technology factors – As Quantum Technology Marketing is offering its services to the technology companies and therefore, it can utilize the techniques to improve the profit of that company and its own as well. For an instance, the company can adopt the internet of things which will assist to stay connected with its resources, investors, and customer. The IoT can help to connect frequently and this will also enhance their proficiency in the workplace. The customers can also take the advantage of this facility because they can communicate with Quantum regarding their requirements and ideas. As much as customers interact with the firm they can build a strong relationship with the firm and that is beneficial for the company as well. (GlockJaber and Zolfaghari, 2012).
Environment Factors – It is necessary for every company that they follow the environmental rules because if they harm the environment then it will make a bad impact on the residents of the country and that is not good for the Quantum Technology Marketing. They should support the environment activities that also make their presence strong among the people and also gain an increasing number of clients. The company should protect the environment as they cannot harm the environment by disposing of the electronic waste that will generate the carbon and ultra violate that is harmful to the environment (Goodfellow, 2013).
Legal factors – Legal factors are the laws that abide the Quantum Technology Marketing to run a business in the market in a particular way. For example, the company has to follow the equality act that restrict the company to violate the laws for the employee. The company should follow the equality act that states that the firm should not discriminate the employees on the behalf of their diverse background, gender, race, and color. Along with this, there are several laws that have to be followed by Quantum Technology to run a business in an effective manner.
P2 Opportunity for growth by using Ansoff matrix
Ansoff matrix is considered as the strategic tool which help the top management of the organisation to formulate effective strategies for future business growth. This concept was given by Russian American Igor Ansoff. It is also considered as the marketing plan for the firm. In relation with the Quantum technology, its owner majorly focuses on expanding the business for long run. For this, its manager is analysing the external market situation to identify the growth opportunities available at market place. In addition to this, internal analysis also helps Quantum Technology to find out the strength of their services which differentiate them from the competitors. In order to understand the growth opportunities for this enterprise its manager have used Ansoff vector matrix. In this four different strategies are evaluated for identifying the best available strategy for Quantum technology. And these are evaluated as below:
Market penetration: This strategy refers to increase sales of the existing product at same market place for purpose of improving market share.(Allmendinger and Haughton, 2012). According to this strategy, manager of Quantum technology should evaluate the market and find out more number of customers. This will help the firm in expanding their targeted customers and also provide new marketing tenders that will improve market share. This strategy is beneficial for the firm as they are familiar with the market environment as well as customers taste and preference.
Product development: This strategies suggests to introduce or launch new product in the existing market. Developing new product is most beneficial strategy to increase the business at market place as its provides new variety to the customers in product range which attract them towards the organisation. Manager of Quantum technology can opt this strategy by offering customers new variety in the marketing services according to their need and wants (Barbour and Deakin, 2012). In addition to this, its easier for the firm to grab the attention of customer of same market as they are already serving their services and customers are familiar with enterprise.
Market development: This strategy of Ansoff matrix states that its better for the organisation to capture the new market with the existing product. It beneficial for the firm to analyse the external market to find out new market that is best suitable for business growth. Quantum technology can use this strategy for its growth. In addition to this, it is most convenient strategy for growth to gain the trust of new customers with existing offering. Employees of the firm are familiar with the marketing services and can persuade customers with more effective manner to enhance business growth. For example: Manager of this provide its services in the periphery countries and cities for expansion and should target customers available in the surrounded area.
Diversification: This strategy refers to introduce the new products and services at new market place. This strategy of Ansoff matrix is proven as most riskier strategy for the organisation as both the products and market are new. Its difficult for the employees to influence the customers and make them trust on the company. This strategy is non beneficial for Quantum technology as it is small enterprise and cannot take risk at the initial stage. It will difficult for the firm to compete other companies in new market and attract the customers for using their services (Beatley, 2014). This strategy also involves lots of investment for introducing new services and establishing them at new market place.
From the above mentioned strategies market penetration is the best suitable growth option for Quantum technology. By following strategy of market penetration this firm can increase its sales of the same services in the existing market. For this, manager of the organisation should evaluate the market place and target new customer.
For example: Quantum technology can target new sectors like hospitality and health care industry to grab the customers available of this era.
P3 Potential sources of funding for organisation
It is essential for every organisation to grow their business with high profitability. For this, it is required by every organisation to increase their fund for performing and accomplishing business objectives on the given period of time. In relation to this, Quantum technology is planning to expand its customer by targeting healthcare and hospitality sector. For this its manager have to evaluate best suitable funding option for business with less interest rate (Eddleston and et. al., 2013). There are various sources of funding available for the small business which offers funds at approximately similar interest rate but have their own drawbacks and merits points. Some of them are evaluated as below:
Personal saving: In this, owner of the firm invests his personal money in the business. This is the most convenient source of funding for the small business as it does not take documentation and legal procedure. In context to Quantum technology, its owner can invest its personal saving to fulfil the requirement of the business without involving any external authority in this process.
- Advantage: Personal saving is the bes option for raising the fund as it does not give right to the external person to interfere in the decision making process. Apart from this, Quantum technology can opt personal funding as it can be used used anytime for grabbing best opportunity.
- Disadvantage: In some it is not beneficial for the firm as if the business will not grow or face financial problem then the invested money of the owner will be wasted.
Bank loans: Banks usually provides loan to its people at nominal interest rate. It is considered as the best source of funding as amount of the loan is returned in the instalments at fix period of time.(Glock, Jaber and Zolfaghari, 2012).
- Advantage: Bank provides funds according to the need of the customers and also gives them several options in returning the amount. Apart from this, the bank does not involve in the decision making process of business that maintains the privacy of the business.
- Disadvantage: It involves lots of documentation work which consumes lots of time. Its quite harmful for the business owner as if in case the instalments are not paid on time then bank may authorised the property which is used as the security purpose in loan process.
Angel investors: These investors are the one who provide funding to small businesses and in return shares the equity on the basis of their invested amount. Angel investors are highly experienced and also owns lots of skills which are helpful for in the business growth (Goodfellow, 2013). In context to Quantum Technology, this firm can opt angel investors as it is planning to expand its business in healthcare and hospitality sector. These investors can also provide their innovative ideas for business expansion and also helps in decision making process.
- Advantage: These investors are comfortable with the flexible business policies which helps the organisation in modifying their policies according to the requirement of business. Valuable advice and guidance of angel investors helpful for the organization in order to achieve its goals and objectives.
- Disadvantage: Angel investors owns the authority and power that involves them in decision making process. Sometimes this authority is non beneficial for Quantum technology as these investors may harm the goodwill by taking wrong decision.
Friends and Family: Its beneficial for the small business to raise their fund from the friends and family members as they can give the fund in less time without asking for any security. Quantum technology can use this source to raise their fund as it is a small enterprise and does not take risk of giving its property as the security.
- Advantage: It does not involve any documentation and security to increase the financial funds. This funding option is fast in process that will fulfil the requirement of the business on quick basis.
- Disadvantage: If the amount is not returned on the given time period it may affect the relationship with friends (Grover, Bokalo and Greenway, 2014). Another disadvantage of this funding options is that money lender may interfere in the essential decision of the business and harm the profitability of the business.
From the above potential sources of funding Quantum technology should raise its fund from bank loan. In relation to this firm, its the safest mode of increasing the funding level of the organisation as it involves legal procedure. Along with this, interest rate provided by banks are nominal and fixed. Quantum technology use this option for developing their business and achieve the upcoming opportunities available at market place.
P4 Business plan for growth
A business plan is considered as the blueprint of the firm which guides the manager in the formulation of strategies. It is in the form of a written document that helps the manager in guiding its team to perform every task according to the given instructions within the given time period. It is required by every organization to analyze the external and internal forces to design an adequate business plan for growth (Lewis, 2013). The business plan of Quantum technology is elaborated as below:
Overview of the company: Quantum technology was started in 1938 and offers marketing service in technological sectors. Services of this organization are available in United Kingdom and its periphery areas which attracts the customers of other countries too. It is considered as one among the reliable companies on the basis of its past record.
Products and services of the company: This enterprise offers marketing services to the technological companies. Apart from this, its services also include accounting-based promotional events, several campaigns are organized for large organizations and other promotional activities on the basis of customer's requirements.
Mission and vision: Mission and vision statement of Quantum technology emphasize on the providing high quality services to its clients in order to satisfy the needs and wants of the customers.
Situational market analysis: In this, manager of the Quantum technology emphasize on analysing external and internal factors in order to identify the strength of the services and find out opportunities available at market place for the growth.
Formulation of budget: After evaluating the opportunity and internal strength of the organisation another step is to make the budget for the business activities and task (Mitchelmore and Rowley, 2013). This budget plan is prepared on the basis of the requirement of each sector. Budget of Quantum technology is evaluated as below:
From the above mentioned cash flow it has been interpreted that Quantum technology have adequate fund which can be used to pay all the liabilities and debts. This organisation have to pay taxes to every year. Cash in hand of 2015, 2016, 2017 are $102203, $200354, $238503 respectively and its average income of previous three year is $72001.
Identification of targeted market: It refers to the market where the organisation is planning to expand its business and willing to grab its customer. Targeted market is identified by Quantum technology on the basis of its size, nature and services. This firm is planning to target the healthcare sector for growth of the business.
Allocation of resources: It is the responsibility of the manager of Quantum technology to uses its precious resources like human (Moseley, 2013). Financial, technological, and physical in effective manner to achieve goals and objectives.
Implementation of plan: It is essential for the business organisation to consult with its team member or employees before executing this plan in the organisation. It will help in modifying the plan for better result.
P5 Exit and succession strategy for small businesses.
Every business is started with the motive of achieving targeted goals and objective that will directly enhance the profitability of the company. In order to develop the business growth of the company its the responsibility of its manager to evaluate the market scenario and also understand the requirements of the customer's to modify the product. This will enhance the customer satisfaction level with improved goodwill of the company. But sometimes because of external forces its not possible for the company to fulfil their target. In this situation lots of business have to exit their firm due to continuous loss situation. Its better for every business to formulate its exit and success policy at the initial stage (Osiyevskyy and et. al., 2013). In relation to this, Quantum technology should formulate various strategies for exit to minimise their financial losses. Along with this, this enterprise can also some of the succession strategies to save their business by sharing their responsibilities with others.
Exit strategies: Companies require to generate sufficient profit for surviving and sustain in market. if management is not able to fulfil costs, than they require to wind up firm and quit from market to save themselves from losses.
Liquidation: It is the legal procedure in which the business owner sells all the asset of firm to clear its debts before exiting business. Under this strategy major objective of the owner is to maintain the goodwill of the company after the winding up too. This strategy can be used by the Quantum technology in their exit situation for maintaining their good will at market place.
- Advantage: It is considered as the best way for organisation to come out from the financial crisis which are affecting the brand name. This strategy also increases the goodwill of owner which will help him in future if he wants to restart the business in future.
- Disadvantage: In this, assets are not sold at high price as its creditors and shareholders claim the property and wants to authorise it on then basis of their credit amount and share ratio.
Sell business to friends and family: In this strategy, business is sold to its friends or family member in order to secure the company from the winding up situation. It is considered as the best option for Quantum technology as they personally know the new owner and believes that it will grow in future (Schetke, Haase and Kötter, 2012).
- Advantage: this strategy is less time consuming as new owner is among the friends or family member. Its easier for the new owner to improve the business and its services for the growth purpose.
- Disadvantage: Selling business to friends or family may not be beneficial for the organisation as it does not provide valid prices of the business and its asset. Along with this, there are some chances that friends will acquire the business on the credit basis without any interest rate.
Succession strategy: This strategy refers to various available options for the business in order to reduce the financial burden. Succession strategy helps the organization to increase it market reach to enhance customer base and sales volume (Ward, 2016). These are evaluated as below:
Use of the internet: According to a modern business scenario, it is easier for organization to use internet for expanding its business through social media. Internet is used by the youth in their regular lifestyle. Quantum technology can use this internet for promoting its marketing services across the UK as well as its periphery. Apart from this, this firm can also use internet as the part of its marketing tool to promote the products and services of customers with a massive population. This will enhance the business of clients as well as its own.
- Advantage: Its spreads the information at high speed and also improves the way of enhancing the meeting customer needs and wants.
- Disadvantage: excessive usage of internet may affect the privacy of the company as hackers can reach the confidential data of clients.
Merger and acquisition: In this one business organization merge with a similar organisation in order to expand the business. It is one among the best succession option which can be used by the Quantum technology to improve the financial problem of the organization.
- Advantage: It increases the capital of the organization which directly enhances business profitability.
- Disadvantage: Major drawback of this succession option is that due to mergers employees of the enterprises might not be able to work together (Wey, 2015). It may loose the effective performance of the company.
From the above mentioned report it has been concluded that planning is essential for every business to enhance its profitability. Planning for growth and development is helpful for every small firm. It is required by the business manager to evaluate external as well as internal market to find several opportunities available at market place which are beneficial for the enterprise. This report includes description of Ansoff matrix with its different strategies through which the firm can grow its business. Apart from this several potential sources of funding such as angel investors, bank loans, personal saving and friends and family are elaborated with their advantages and disadvantages. At last business plan is designed for achieving business goals and objectives.
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