Questions- This assessment will cover the following questions:
- Aston Chemicals are the chemical distributor. Evaluate the key considerations SMEs should consider when evaluating growth opportunities.
- Discuss the different methods through which Aston Chemicals access funding and when to use different types of funding
- Develop a business plan (including financials) and communicate how you intend scaling up a business.
- Explain ways a small business owner can exit the business and the implications of each option.
Planning is needed at every place that helps to take further steps in order to meet with objectives. Without planning it is difficult for organization to attain their decided goals and make profits. It is also important for growth of organization as it helps to perform business activities effectively and look forward. Plans are developed by managers of the organization that states how they can attain business objectives (Ward, 2016). To understand the importance of planning in growth of organization Aston Chemicals has been taken that is medium size distributor of chemical products. The manager of such organization are running a business by making plans that helps in continuous growth of organization. Such project report discusses about PESTLE analysis, Porter's five forces, and Ansoff's growth matrix that helps to gain competitive advantages. In addition business plan is also discussed in this report that helps make decision about exit and succession options by evaluating plans and strategies.
P1 Key Considerations for Evaluating Growth Opportunities
A process of thinking and innovating new ideas for the purpose of achieving desire goals is known as planning. It is important for organization to make plans and follow them in order to get desired results. Such as manager of Aston chemicals set the goals and prepare planning in order to reach near by goals. It helps to shows a clear path to achieve business growth objectives effectively. Growth is defined as continuous development of company on the basis of maturity, profit margin, size and market share. It is very important for organization to to run a business by optimizing all resources, capabilities and core competencies that helps to maintain the productivity as well as profitability. Such as Aston Chemicals is a distributor of Chemical products in Thames Valley area which is in UK. The manager of such industry make plans and implement them effectively that helps to achieve business goals by getting the competitive advantages. The main aim of company is to provide better quality of products and increase core competencies (Thapa and Murayama, 2012).
Porter's generic strategy: This strategy is given by Michael Porter who tells many ways to gain competitive advantages and success of business organization. The manager of business organization should use this generic strategy that helps to know the competitors and how competition can be beat by make solid strategy. It covers different types of strategies that are as explained:
Cost leadership: This strategy is related to cost that is needed to adopt by organization in order to increase sales and growth of company. If Aston Chemicals adopt this strategy then it has to sales its chemical products at lower cost that rivalry, that attracts customers. By distributing chemical products at low cost it can increase sale turn over that states continuous growth of business organization and also helps to get core competencies.
Differentiation: This strategy is related to uniqueness of products and services that attracts customers more and they purchase products and services. It can be used by Aston chemicals by introducing the unique chemical products than rivalry organization. This uniqueness encourages customers more for purchasing that chemical product that helps to increase the capability and competitive advantages in Thames Valley area which is in UK.
Cost Focus: This strategy is related to cost of particular products in particular area with low prices of such products. For instance, Aston Chemical introducing chemical products in Valley area with a lower cost that can attracts customer and increase the number of sale of such products. The main motive of adopting this strategy is to get core competencies and competitive advantages by selling such chemicals at low cost (Valler, Phelps and Wood, 2012).
Differentiation focus: This strategy is related with differentiate products in small market segment that influences customers to purchase such products and increase their sale. It can be used by Manager of Aston Chemicals by distributing unique products in Valley area that helps to increase number of customers more. This strategy helps to increase the capabilities of organization by distributing chemical products with uniqueness and maintain the profitability.
Aston Chemical is focusing on cost leadership strategy that is relevant and feasible for organization. By using this strategy manager of such company sale chemical products at low cost that helps to attract customers more and sale of organization also increases. This strategy is resourceful, capable and core competency for instance, Aston Chemical has experienced and skilled employees that are consider as resources, it has ability to deliver better and less costly products that shows capability and chemical products are maintain high quality which are not available in rivalry that indicates core competencies in market. All qualities are helpful for organization as they sale products at reasonable prices that attracts customers and encourages them to purchase (Phelps, 2013).
It is a strategic tool that is utilized by business industry for the purpose of controlling external environment and gaining knowledge which impacts on operations and functions of businesses. All business concern should follow the PESTLE analysis that helps to perform business functions effectively. Some factors can affect the business of Aston Chemicals that are as explained:
Political factor: This factor illustrates taxation, trade agreements, labour regulations, tariffs etc. that impacts on business and may be an opportunity and threat for organization. Aston Chemicals is a distributor of chemical products that may positively impacted by trade agreements which give an opportunity to such organization in order to expand their business from small to large sectors. However, Aston Chemicals take advantages of trade agreement that allows to expand its business in competitive market and attracts customers.
Economical factor: This factor illustrates interest rates, employment rates, inflation rates, GDP rates etc. that impacts on business organization whether positively or negatively. Economic factor is an opportunity for Aston Chemicals such as employment rate are increasing that impacts positively quality, quantity and cost of employees. It provides employment to persons and maintain the quality of chemical products. Moreover, lower interest rates impacts sales of chemical products that helps to expand business by investing the amount. This factor attracts employees to get employment opportunity and increase sale of organization by expanding business in other area of UK that helps to maintain profits (Pothukuchi, 2015).
Social factor: This factor encompasses income level, education level, changes in lifestyle, fashion, taste etc. that might be impacts businesses. As people are aware about health and fitness so this factor may be an opportunity for Aston Chemicals whose manager are updated and focuses on changes in people's values and demands for chemical products. Values and people's interest are constantly changing and vary from country to country that creates a new market opportunity for Aston Chemical and manager of selected organization are trying to be familiar with new market. Therefore, sale of such organization are increasing continuously by expanding business across of Thames Valley area.
Technological factor: This factor illustrates technical services like internet, advanced technology etc. which impacts business positively and it may a risky for organization to adopt such factors. The chemical distributors are playing a vital role over past several years who has impacted by new technologies. For instance, Aston Chemicals has adopted new technology that is fast internet service which become a great opportunity for such industry. After getting fast internet services the manager of Aston Chemical created own websites in order to connect with suppliers and directly with customers. It helps to increase to increase sale and gain competitive advantages by expanding the business and grab the opportunity.
Legal factor: Such factor includes some legislations which are enacted by governmental entities, can impacts on business. Aston Chemical is following health and safety act under which it provides good health and safety to employees and their family also. It helps to create retain employees for long term that is an opportunity for organization and it achieve business objectives efficiently. Therefore, this factor creates an opportunity for organization who increase sales as well as productions of chemical products (Todes, 2012).
Environmental factor: This factors comprises environmental protection laws and regulation which is need to follow by companies in order to run and expand business. In Aston Chemicals, managers are caring about environment so they distributes qualitative products which does not harm environment. Therefore, it is an opportunity for Aston Chemicals to expand business by focusing on environment protection law and also maintain standard that helps to gain competitive advantages.
P2 Opportunities for growth applying Ansoff's growth vector matrix
Growth of any organization refers the development of products and services due to which sale of business industry increases continuously. Ansoff's matrix is model which is utilized by organization for the purpose of growth and sustainable development. This matrix was introduced by H.Igor Ansoff who is responsible for growing the business by formulating different strategies. It suggests managers to operates business and grow it by introducing new product and services (Kerzner and Kerzner 2017). There are different strategies, Aston Chemical is following one of them which is suitable and relevant that strategies are as follows
(Source: Ansoff Matrix, 2019)
Market penetration - Such strategy illustrates that organization should sale their products and services at existing place or market at the time of business in growing through minimum risks. This strategy may create an opportunity for business organization by selling the products in existing market. If Aston Chemicals adopt this strategy then it has to distribute chemicals in Thames Valley area. It helps to save the cost of promotion and other advertisement because people are already aware from such organization (Schetke, Haase and Kötter, 2012).
Market development - The mean of this strategy is grow business rapidly by providing products and services in other location. In addition, when company is expanding business by selling the existing product in new market that may a diverse option for organization. This strategy helps to attracts customers more by selling the product in other location. If Aston Chemicals wants growth of organization then it has to expand business by distributing products in other location within UK that will help to attracts customer and increase profitability.
Product development - In this strategy business organization need to bring new products and services in existing area for the purpose of growth. This strategy helps to grow company fast because business concern have already market knowledge and customer's perception, so they produce products accordingly which can attracts customers. If Aston Chemicals implement such strategy then it has to introduce new products along with chemicals that helps to attracts customers and emphasis them to purchase. Therefore, such strategy is also helpful for continuous growth of organization by introducing new products and services.
Diversification - Such strategy is also related with growth of organization by producing new products in new area or market. By introducing new products and services in new market influences customers and encourages them to buy new products. It can be adopted by Aston Chemicals by launching new products and services in new market. It is not possible for all organization to adopt this plan because it need high investment and skilled employees which is difficult for organization (Haughton, Allmendinger and Oosterlynck, 2013).
As per above growth strategies, it has been analysed that market development strategy is best option for growth of Aston Chemicals which is suitable and relevant by distributing products in other locations. In present, chosen company is distributing products in Thames valley area that is small market area. By adopting market development strategy it has decided to expand business by distributing chemicals in other location within UK. It is growth opportunity for such organization such as sale turn over will increases that helps to make high profits and also helps to capture market share by expanding business. Moreover, it helps to mitigate the risk by expanding business in other location like competitors.
P3 Potential Sources of Funding Available to Business and its Benefits and Brawbacks
The growth of business organization is also depend on funds and monetary resources that helps to execute business effectively. Funds fill the requirement of company that attracts shareholders, customers and other in order to growing business efficiently. Funds are important assets of company which is used by managers for growth by expanding business effectively. It has been assessed that there are different potential financial sources for growth that are as explained:
Source of funding
Bank loan-This is an amount borrowed by a person, organization or group of people for a specified period within an agreed repayment schedule. This is a source of raising funds from where Aston Chemicals can arrange funds for the purpose of expanding business effectively. This loan amount depends on the size and duration of loan (Pred, 2017).
This is predictable monthly payment where individual can repayment on the basis of month. It helps to build business credit and maintain professional banker relationship.
There is requires collateral security and strong credit in order to get bank loan. It may be exit option for organization because it charges high interest rate and penalty at the time of not paying loan amount on specified period.
The organisation raise the fund from the bank because it is suitable for the company due to effective rate of interest.
Crowdfunding-This means organization can start up or expand business by getting finance from such sources that helps to collect money from diverse number of individuals. Organization can raise funds by collecting amounts from various resources that helps in growth of business industry.
This is easiest and fastest way for raising funds with less fees and charges that helps to expand business. There is no need to face any legal compliances while taking funds from crowdfunding (Moseley, 2013).
It may be difficult for organization to raise funds because there is need to have good market image and also need to build up interest of investors for expanding business. If organization fails to create interest it cannot arrange funds for business.
It is suitable for the company to assess the fund because the finance which is raise by the company offer less fees and charges or there is no legal compliances.
Peer to peer lending - This is another source of lend money to growth of business by expanding business activities. This is a good resource of arranging funds that helps to maintain the relation between borrowers.
This contains online application which is fast and convenient all organization to get money any time. In this option borrowers can often access loans with low interest rates that helps to grow business.
Peer to peer loans requires high credit risk which is not easy for companies to maintain credit score. There is not any insurance and government protection that bounds lender to face debt in case of borrower's default (Gleeson, Dodson and Spiller, 2012).
It is suitable for the company because it is a fast process if raising monetary value by online mode and fund is available at low rate of interest.
Angel finance - This is a type of financial activity who provides capital for start ups and expansion of business. It is small size of business venture whose main aim is to make available funds for those companies who wanted to expand or start new business. It is a type of equity finance supplies funds in exchange of taking equity position in invested company.
The main advantage of such option is much risky than debt financing. It is free to make investment decisions quickly and no need for collateral securities.
It is not suitable for investment for below £10,000 or more than £500,000. It takes much time to find suitable angle investor and borrower has to give a share of their business.
It is suitable because there is no charges which is pay by the debtor.
As per above discussed fund sources it has been analysed that angle finance is good option for Aston Chemicals because it need £400000 which can get from angle finance. This source is suitable because it is much less risky and can arrange funds in short period. Therefore, Aston Chemicals can arrange funds from angle finance that is best option of expanding business in other location within UK.
P4 Business Plan for Growth that Consider Financial and Strategic Objectives for Scaling up Business
Business plan is a written plan which is prepared by management team for the purpose of growth by expanding business. Business plans involves strategic objectives and budget that helps business in scalping up rapidly. Therefore, all business organization who is looking for growth of business need to make business plan that helps to attracts customers and increase the productivity. It helps to formulate growth and development of business on continuous basis. With respect to Aston Chemicals, manager has found that organization is working good and able to maintain customer relations by distributing chemicals or medicines at reasonable products. Now company wants to enhance their performance with the help of business plan (Mitchelmore and Rowley 2013). Therefore the business plan Aston Chemicals for expanding the business are illustrated below:
Executive summary: Aston Chemicals is UK based organization that is a distributor of chemical products like medicine etc. in small location. Now, company is planning to expand their business by distributing the products
Vision and mission: To provide better quality of chemical product and create a high value of such organization by distributing products in large number.
- To expand business successfully by launching new and qualitative products in new locations in 10 months.
- To increase business sale 10% by distributing products in 12 months.
- To retain skilled and experienced employees for long term in 6 months.
- To control over business activities which is important for organization within 8 months.
STP analysis: This analysis consider segmentation, targeting and positioning which are liable for support business. The manager of Aston Chemicals focuses on this model while expanding the business. It helps to achieve business business goals in effectual way such as:
Segmentation: This is done on the basis of demographical needs like age, taste, brand and quality of chemical products.
Targeting: In respect of Aston Chemical is targeting all people who needs chemical products (Dimitriou, 2013).
Positioning: Its is utilising market development strategy that helps to maintain the position of existing business.
Financial information - It is important information for company that that make succession option for entire business. The main objective is to maintain the financial data in order to increase profitability. The success of any organization is depend on the financial activities that helps to make proper planning and control over business performance. Such as Aston Chemicals planning to introduce new chemical products by maintaining the financial information that will helps management to bring new products and increase sale by expanding business (Mason, 2015). To know the financial information budget has been prepared by managers of selected company that are as discussed:
Monitoring and controlling – In Aston Chemicals, manager collects information, analysis, monitor and control the all information that helps to achieve business objectives effectively and increase productivity. By perform this activities organization can retain higher profits and maintain capture market share as it wants (Chapin, 2012).
Therefore, it has been described that business plans is a strategic structure which should be prepare by all business concerns in order to achieve setting goals in pre decided budget. It covers different stages that need to follow in order to perform operations properly. Such as manager of Aston Chemicals prepares business plans that helps to expand business and maintain the profitability effectively.
It is assessed that budget is helpful for financial growth that helps to make planning and implemented by managers in order to achieve goals. It is a good strategy for Aston Chemical to prepare a budget work accordingly.
Product: Under this element, Aston Chemicals make an initiative to produce high quality product as they make use of all available resources at optimal level that lad them to obtain profit maximisation in an effective manner. Moreover, it serve wide range of products which empower organisation to enlarge its customer base in a better way.
Price: In this, Aston Chemicals analyse the market condition as well as consumer potentiality and based on that impose best pricing which drive them to improve its overall performance. Along with this, its all product's cost is affordable and less which help consumer to be loyal towards the brand for longer time duration.
Place: Aston Chemicals is headquartered at Thomas Valley in UK which is one of the centre location in city. Due to its impressive location, company is able to attract large number of consumers towards the organisation as it has been signified that it is linked to all kind of transportation that make customer more convenient and feasible.
Promotion: In this, Aston Chemicals make use of various promotional strategies like public relation, online marketing different social media platforms, direct selling and many more. Due to this initiation, establishment can easily enlarge its market division to new geographical region without nay hindrances and also can maintain its brand value among competitors.
Process: To this relation, Aston Chemicals follows simple procedure for its manufacturing section. With the help of such process, it help manpower to give their best contribution for an accomplishment of goal in an effective way.
Physical evidence: The interior and exterior ambiance which Aston Chemicals formulates for its business premises is determined as more impressive and attractive in nature. Hence, such effort aid organisation to capture the interest of wide range of population towards firm that increase the sales volume in an amended mode.
People: In this, Aston Chemicals has highly skilled or talented manpower who put novel or new ideas for the growth and enhancement of organisation and also assist firm to gain competitive advantage in an efficacious manner.
For analysing the operational performance of Aston Chemical, it make an effort to implement Porters generic model which are as follows:
Under this, Aston Chemicals allows a competitive edge by manipulating production costs. IN this regard, it keep lower price for its commodity i.e. chemicals that motive them to enhance market share and proficiency ratio among competitors within prescribed time limit.
In this component, it involves different strategies or tactics which an organisation adopts to make particular more unique and attractive in order to engage targeted consumer. To this relation, Aston Chemicals utilise marketing and promotion team who are highly contribute to deliver high quality product. Moreover, organisation make use of latest technologies that enlarge its market share or size among rivalries.
In this, Aston Chemicals allocate all required resources and maintain a balance between production cost and delivery. However, organisation make use of resources and find the markets where cost is at optimal level. With the help of this, it assist company to maintain its consumer base and also can enrich overall productivity ratio among rivalries.
Considering the given information, these are required to be consider while focusing on business plan to execute operational activities in correct direction. It will facilitate to achieve set goals of increasing quality of products and sales of Aston Chemicals along with retaining employees in organization. Hence, some of relevant facts about people responsible for planning and execution of plan to attain targets including other aspects are mentioned here.
- Who: In terms of Aston Chemicals, the market manager is involved to suggest changers in product as per clients demands whereas introduction manager is engaged to plan changes or improving quality of products. However, human resource manager of selected company has a role to establish effective strategies in terms of reducing over business activities and employee retention technique to reduce employee turnover.
- What: The marketing department is responsible or increasing sales target whereas production department has duty to focus on improving quality of product & services. Meanwhile, the human resource has a role to make strategies to reduce employee turnover and eliminate over business activities by evaluating them.
- Where: The collection information by different mangers should be stored in information system of Aston Chemicals which will be processed for decision making regarding objectives. Marketing strategies will be executed in the new market area of nearby Thomas Valley to promote sales by providing better quality of products to customers.
- When: The launching of new and quantitative products in new location is 10 months and increase of business sales by 10% has a deadline of 12 months. Employee retention should be done withing 60 months duration and control over business activities is required to be done in period of 8 months.
- How much: The budget required to complete the set objectives is 45000 Pounds.
P5 Exit and succession option
There are different option in business environment like succession and exit options. Theses decision are made by manager while running a business. If business is running good and maintaining profits then they choose succession and vice versa. It depends on all business activities and performance that emphasis to make correct business decisions. For instance, Aston Chemicals is a manufacturing industry that distribute chemical products that are going to be introduce in other location in UK. The manager of such organization make succession and exit plans after facing the risk and business opportunities that helps to make correct business decisions. Following are the types of exit and succession plans that are as defined:
Exit plan: This is the preparation of exit of an entrepreneur from their company in order to maximize the value of enterprise in merger and acquisition transactions. It helps to make future plans by making exiting strategies (Batty and Marshall, 2012).
Liquidation : This means many people who start a business with the aim of liquidate it some day known as liquidation. In this strategies all the assets of company are written off by and liabilities are paid of by managers. If something is left after paying all creditors then divided among shareholders. Aston Chemicals can adopt this strategy in case of not getting success in expansion of business.
Advantages: With the help of liquidation outstanding debts can be written off that overcome the stress of managers. It can help Aston Chemicals to stop the legal action as no personal liability for a company is created.
Disadvantages: All assets and skilled workforce of company are liquidate by organization.
Selling in open market: In this strategy business firm sales business in open market that can be purchase by third party in order to continue business. In such plans operations, workforce and business activities remains same while changed in ownership.
Advantages: This strategy helps to run a business without harming any business activities company image because third party continues such business.
Disadvantages: The real of business lose his authority and capable staff who are working in business existing company.
Succession plan: It is a strategy which is used by management for identifying and developing future leaders in business organization at all level. It is used to address the inevitable changes that occurs in case of employees resign, retire, sick or die.
Merger and acquisition: This indicates that business owner sells his controlling interest of business to other big buying company that helps to continue their business. It helps to spread the business by merger of two companies and acquiring by big company to small business (Boserup, 2017).
Advantages: It is useful to increase the size, scope and profitability of company by reducing the competitors of existing company. It helps to continue the business by other organizations.
Disadvantages: It can increase debt and liabilities in case of having both companies are in debts. It increase the liability of acquirer company to understand new business and provide training to employees.
It is recommended Aston Chemicals can make use of merger and acquisition that is succession option for such company. This is a growth strategy that will helps to expand the business by other organization in global market. By acquisition and merger manager can perform business operation properly that helps to increase productivity and profitability.
From the above report it can be concluded that planning is necessary for all organization as well as every place. It helps to achieve business objectives effectively by setting the plans and implementing them within business industry. Company should analysis the macro environmental factors that helps to grab the opportunities for expanding a business and control them. Porter's generic strategy is also useful for companies that helps top gain competitive advantages by optimizing resources, capabilities and core competencies. Business plan is a strategic structure which is prepared by managers for the purpose of growth and securing investment. Appropriate strategies are helpful for organization that helps to achieve business objectives. Get more details about assignment help UK from our experts.