Planning For Growth

This project report consist various topics such as Porter's five force model, PESTLE analysis, Ansoff's growth vector matrix, sources of funding etc. Business plan with detailed information and options for succession and exit are also covered under this report.

TASK 1

P1 Key considerations for evaluating growth opportunities

Planning is a tool which is required to achieve goals and make strategic decisions. It helps to create various options to face future uncertainties. Hichem Ltd is a manufacturing company of chemical products, it is going to be launched in London. To make the launch successfully the managers are required to make plans for this motive. There are two identified key considerations that may help to attain growth objectives.

Porter's generic strategy: It was introduced by Michael Porter. It can be adopted by the organisations to reach to the level of competitive advantage, where they can get success more than competitors by providing less costly and unique products to the customers (Dimitriou, 2013). It includes four different strategies, that are explained below:

• Cost leadership:In this strategy an organisation set objectives to minimize cost and be the lower cost manufacturer in its industry. It can be adopted by Hichem Ltd to be the lower cost producer in the industry so that it may help to attract customers. This strategy relates to mass production, in which the company produces end number of products that will reduce the cost of production. For example Hichem Ltd can set low price for its products while launching, it will attract more and more customers.
• Differentiation:It suggests the companies to produce different products as compare to competitors, it will help to attract customers who are willing to buy unique products. This strategy can be adopted by the managers of Hichem Ltd while launching its products in London, because the products with the element of uniqueness will help to attract more customers. It can be used by Hichem Ltd by providing different and quality products as compare to other.
• Cost focus:In this strategy a company launch its products in a small market segment with low cost. This strategy can be adopted by Hichem Ltd to launch its product in London's market while launching products there. In this strategy, the price for the products will be comparatively lower then others. For example Hichem Ltd is going to introduce its product in a small market segment with low price, it will help to record customer's reaction toward their products.
• Differentiation focus:In this strategy unique products are introduced in a small market segment. It covers the needs of the customers while launching the products (Boserup, 2017). Hichem Ltd can use this strategy while launching its products in London. This will help to target selected people and create various opportunities by fulfilling their needs and creating a good market image in London. Hitech Ltd is going to introduce its products in London, in a small market segment with low price which will help to attract more customers and satisfy them by providing unique products as compare to other.

From the above mentioned strategies, the most relevant strategy for Hichem Ltd is differentiation focus. As it is going to launch its business in London so it should select a small market segment to introduce its products there. It will be more beneficial rather than launching in a large market segment, because if the products are not according to the demand of customers or they are not able to adopt those products than company can modify the products accordingly.

PESTLE analysis: It is a tool that helps the managers in strategic decision making, by providing them actual information of external environment of work place (Kerzner and Kerzner, 2017). Hichem Ltd should conduct a PESTLE analysis to analyse the environment of the London's market. Following factors can affect the business of the organisation in London:

• Political:These factors are related to the government, it includes various policies such as fiscal, monetary, tax policies that are imposed by the government of the country. As UK has  constitutional autocracy, and the political environment is fair and stable hence, it is a great opportunity for Hichem Ltd to launch its business in London.
• Economical:These factors can directly affect the economy of a nation.  It includes interest rates, inflation rates etc. The economy of London is very strong and this is a good opportunity for Hichem Ltd to introduce its business there to earn maximum profits.
• Social:These factors examine the social environment of that market where a company launches its products. It includes cultural trends, social values, demographics, customer's lifestyle etc. The people in London are so much concerned with new and innovative products so it is a great opportunity for the company to launch a new product there.
• Technological:These factors are concerned with the technological aspects and innovations of technology (Mitchelmore and Rowley, 2013). Hichem Ltd should consider these factors while launching its products in London and should launch the products according to the innovative technology. Common people of London are so much technology friendly thus, it is a big opportunity for the company to launch its product with the help of latest technology.
• Legal:These factors are mainly concerned with various laws that may affect the business and the strategies that are planned by the management of the company. The Government of London has formed strategies to introduce various chemical products in the country, hence this could be a huge opportunity for Hichem Ltd to reach the higher level of growth.
• Environmental:It consist various environmental protection acts and rules, that may affect the business of an organisation. Hichem Ltd is concerned with environment protection act and it will create a positive image in the mind of government and customers of London, which can generate opportunities for the company to grow there.

P2 Opportunities for growth using Ansoff's growth vector matrix

Ansoff's growth vector matrix was introduced by H. Igor Ansoff. It is implemented by various companies to evaluate various markets to introduce products. It helps to identify the suitable market for the companies to launch their products there (Phelps, 2013). It includes four different strategies that can be adopted by Hichem Ltd to launch its products in London. Those strategies are described below:

Source: Ansoff's growth Vector Matrix

• Market penetration:It refers to the sale of existing products or services in existing market segment. Market penetration create opportunities to generate profits by acquiring more customers in existing market segment and will help to increase market share. It will also save the cost of promotions because the marketers already have the knowledge of customer's demand.
• Market development: It is related to the introduction of existing products in new market segment. While a company is willing to target various customers in different market places this strategy will help to attract them. It will save the cost of modification but will cost for research of selected segments (Gleeson, Dodson and Spiller, 2012).
• Product development:It refers to the launch of a new product in existing market segment. It will help the company to grow faster because the marketers already have the knowledge of customer's perception. If the company is having good market image then this strategy can save cost of researches and promotions.
• Diversification:This strategy is related to the introduction of new product in a new market segment. It will help the company to launch the products in a new market by targeting new customers. If the products get success in attracting customers it will help in organisational growth (Haughton, Allmendinger and Oosterlynck, 2013).

From the above mentioned different strategies differentiation strategy should be selected by the marketers of Hichem Ltd because it totally related to the situation of the company. As it is going to launch its products in London's market with the launch of new product, this strategy will help to reach to the higher level of growth. It provide direction to the companies to launch their business globally.

TASK 2

P3 Sources of funds with advantages and disadvantages

Funds are the monetary resources that a company use to execute its business operations. Funds are very important for a company to run its activities. Hichem Ltd requires £300000 while launching it self in London but it only has £20000, and the rest amount of £280000 will be collected from various sources of funds. Company enters to a contract which is “Supply and delivery of Chemical Substances” to launch its business. The identified sources of raising funds are explained below:

Internal sources:It refers to the medium of finance that are available inside the organisation. Hichem Ltd can collect funds from sales of assets, retained earnings, share capital etc. to successfully launch its business in London.

External sources: It refers to the sources that are available outside of the organisation and help companies to run their business (Batty and Marshall, 2012). Following are the examples of external sources of funds.

Bank loans:It is an easy way to generate funds for the business by giving collateral to the bank. It is mainly used to run start-ups, expansion or purchase of business assets. The management of Hichem Ltd can apply for bank loans to launch the business successfully in London. Bank loans are provided for a fixed period and the borrower have to repay the amount to the bank at the maturity date.

• Advantages: It is an easy way to raise funds when the company is able to give collateral to the bank. The interest rates on the bank loans are fixed so the borrower will have the idea of actual repayable amount.
• Disadvantages:If a company is not able to give collateral to the bank than it will not be easy for the company to get a loan approval form the bank.

Overdraft:It refers to the withdrawal of an amount from the bank account which is more then the balance of the account. Bank provide this facility to a few customers and charge a high rate of interest on such type of withdrawal (Pothukuchi, 2015). Hichem Ltd can use this option to generate funds when there is an urgent requirement of funds.

• Advantages:It reduces the load of high paper work and fulfil the urgent requirement of the funds of company.
• Disadvantages:Banks charge very high interest rate on overdrafts and some times business assets are seized by the bank when the withdrawer fails to repay the amount on due date.

Crowd funding:It refers to the collection of small amount from various investors. It is possible with the help of technology, the owner of the business can invite various investors with the help of emails, social media, websites etc. to invest in his business (Holman and Rydin, 2013). Hichem Ltd can raise funds from crowd funding if the execution plan is effective and interesting.

• Advantages:It a good and easy way to gather investors for the business. There are various investors who can provide their guidance to make modification in the plans of execution activities.
• Disadvantages:It will create problems when there is not a good market image of the company. If the company fails to collect the targeted amount then the remaining collected amount will be returned to the investors and company will have nothing as investment.

Angel financing: It refers to the persons who get attracted with the outstanding business plan. Hichem Ltd can pull various business angels to invest in its business by attracting them with excellent business plan.

• Advantages:If company is funded by angel financing then there is no need to pay interest and no need of debts from other outsider parties.
• Disadvantages:The owner of the business have to share authority, control, power, shares, decision making with business angels.

TASK 3

P4 Business plan for growth of business

Business plan is a written document that provides internal information of the company to the shareholders and other stakeholders. It includes vision, mission objectives and financial information of the company (Business plan, 2018). Hichem Ltd is manufacturing company of chemical products which is going to be launched in London, so the management should make a proper business plan to achieve organisational growth. The main goal of business plan is to attract more and more investors to generate business opportunities that will help to grow its business and increase profits. Business plan help to form strategies for future and make policies to reduce risks involved in various operational activities. Thus the management of the company is suggested to make a business plan before running the expansion activities. The plan is as follows:

Vision:The vision of Hichem Ltd is to produce various products and offer them to the different segment of the customers and to be on the top of the chemical products industry.

Mission: The mission of the company is to identify the needs of the customers and provide them products according to their requirement so that it will help to create a positive market image and attract various types of customers from different market places.

Strategic objective:The main objective of Hichem Ltd is to successfully launch its business in London by creating a brand value there and to increase the profits by 10% to 15% in upcoming years. The second main objective is to acquire market share of London and satisfy the customers there by providing them products according to their perception. This can be achieved by proper maintenance of business activities and control over execution process of business.

Financial information: The success of the business activities is totally depends upon proper planning and control over operation of the business. Hichem Ltd need funds to perform all the activities and the funds can be generated from internal as well as external sources of funds. Finance is lifeblood of a business and it is very important to run the business. If monetary resources are available in the organisation then it will be more easy to achieve the goals.

While planning for expansion the management of Hichem Ltd have to prepare a budget plan that will provide the information of those fields where funds are required and how the funds are going to be utilised. This budget can show the expenses that may occur while expansion i.e. promotions, technology installation, transportation etc.

Forecasted budget of Hichem Ltd:

From the above budget management of Hichem Ltd can get the idea expenses that may occur in future, while launching its business in London. dissertation help UK UK available at Assignment Desk.

TASK 4

P5 Succession and exit plan for small business

Hichem Ltd is a manufacturing company of chemical products, which is going to be introduces inLondon by launching new products, hence it is very important for the company to make succession or exit plan to face future risks and uncertainties and may leave negative impact on the business execution activities. It facilitates the decision making of managers by providing them various option to face issues that may occur in future. Following are the types of succession and exit plans:

Exit plan: It is a strategy which is used to close the business fully or hand over the authority to the another person. It helps the owner of the company by providing them various options to exit their business (Thapa and Murayama, 2012). When a company is in loss from a long period it is suggested to the owner to of the enterprise to exit the business concern. This options for exiting are as follows:

Winding up:It is an exit option for a business in which owners of the company sale out all the assets, pay off all the creditors and distribute remaining funds and assets to the shareholders and investors of the company. If Hichem Ltd did not get success in London this option can be adopted by the company.

• Advantages: The main advantages of winding up is that the owner will be free from the debts and another advantage is that the company will not have to face more losses.
• Disadvantages: All the assets of the business will be sold and company will lose effective workforce of the company.

Selling in open market:It refers to the sale of business in an open market and the business will be purchased by a third party outside of the business. The business operations and other activities will remain same but the owner of the business will be changed (Ozanne, Biggs and Kurowski, 2014).

• Advantages:The main advantage of this option is that it will not harm the business image and activities because the buyer will purchase a running business, that will not affect the operations.
• Disadvantages: The drawback of this option is that the owner will lose his authority and skilled employees of his business.

Succession plan:It is a future plan which is used to identify new and experienced leaders who can replace old leaders when they leave or retire. It helps to increase the number of experienced employees. Following succession option can be adopted by the company:

Merger and acquisition: Merger is a option in which two companies merge and establish a new business most commonly with a new name. In acquisition a large business outlet buys a small business and acquire its assets and liabilities.

• Advantages:It helps to increase the size and to reduce the number of competitors from the market place.
• Disadvantages:If both companies who are involved in merger and acquisition have debts it will increase the debts and liabilities for the new business.

It is suggested to Hichem Ltd to make succession plan because merger and acquisition is the most relevant plan for the organisation if it fails in the expansion plan in London. It will help the organisation to attain organisational growth.

CONCLUSIONS

Planning is the process of determining goals, objectives, future events and risks for the company to identify opportunities that may help to reach the goals. If there is a company who is willing to launch its business in different market places then it can conduct PESTLE analysis to analyse the factors that may affect its business. Ansoff's model can help to select best strategy for the market segment. To make the expansion plan successful the owners should prepare business plan that include insider information of vision, mission, objectives and financial information. It will help to attract investors. An organisation should also make exit or succession plans to deal any future event that may result negatively.

REFERENCES

• Batty, M. and Marshall, S., 2012. The origins of complexity theory in cities and planning. In Complexity theories of cities have come of age (pp. 21-45). Springer, Berlin, Heidelberg.
• Boserup, E., 2017. The conditions of agricultural growth: The economics of agrarian change under population pressure. Routledge.
• de Roo, G., 2017. Integrating city planning and environmental improvement: Practicable strategies for sustainable urban development. Routledge.
• Dimitriou, H. T., 2013. Transport Planning for Third World Cities (Routledge Revivals). Routledge.
• Gleeson, B., Dodson, J. and Spiller, M., 2012. Governance, metropolitan planning and city-building: the case for reform. Australia's Unintended Cities: The Impact of Housing on Urban Development.pp.117-133.
• Haughton, G., Allmendinger, P. and Oosterlynck, S., 2013. Spaces of neoliberal experimentation: soft spaces, postpolitics, and neoliberal governmentality. Environment and Planning A. 45(1). pp.217-234.

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