INTRODUCTION
Growth planning or planning for growth is a process through which businesses plan, co-ordinate strategies in order to track down their business activities and growth. This process also involves allocation and investment in sources in order to adapt changes which are caused by external environment such as competitors or industrial changes etc. This report is prepared for Bonmarché an SME, which was founded in 1982 operates nationwide, and also considered as UK's one of the biggest budget fashion retailers. The report will analyse key factors for growth of the company and also will justify those factors using appropriate frameworks. Then further report will evaluate opportunities of growth with the application of Ansoff's growth vector matrix, also covering demonstration of competitive advantages.
The report will also analyse about potential sources of funding based available for Bonmarché, by also considering their advantages as well as drawbacks, then on the basis of analysis the report will provide best suited source for funding. These funding options will be based on organizational needs. On the basis of above, the report will further develop a business plan for company including financial information and strategic objectives. Then finally, the report will assess exit or successions options for small scale businesses, by comparing and evaluating all the options and their benefits and drawbacks by justifying the option to support implementation.
PART 1
Factors to consider for evaluating growth opportunities
Growth opportunities which includes competitive advantages and innovation of new products and services are some opportunities that can be tremendously beneficial for any organization. Bonmarché should consider various factors for evaluating growth opportunities.
Competitive advantage: It is a combination of achieving cost as well as differentiation advantages. Company can achieve competitive advantage, by delivering same quality services as from competitors, but at cheaper prices (Darwin and Chesbrough, 2017). Also, it must consider using their resources and capabilities that are more superior and powerful than their rivals or competitors such as their brand equity, customer satisfactions, or launching products and services quicker than competitors. This will also help company in achieving core competencies thus it can provide more benefits as compared to their rivals (Prabhu, 2019). When exploring dissertation writing services, it is essential to apply these strategies to ensure that the organization remains competitive in the market."
Porter's Generic Strategies:
Through these strategies Bonmarché can also have competitive advantage in a particular market (Kamukama and et.al., 2017).Porter's Generic Strategies are stated below:
Cost leadership strategy- This strategy refers to increasing profits by lowering costs of products. Company can consider this to increase their market share, by reducing prices of their products in order to make sufficient profits (Mawdsley and Somaya, 2019). It is very important for Bonmarché to use attractive pricing strategies which can optimise profits. Discount schemes, cash vouchers or fits for lowering prices is one of the effective strategy which can be used by organisation to enhance its customer base and thus overall profitability of the company.
Differentiation strategy- Through this strategy, it can consider introducing unique products to differentiate them from competitor's products and developing ability to deliver high quality products. The differentiation in terms of product or service quality can be greatly successful in terms of gaining attention of customers as well as to gain competitive advantage. Thus for long term success it is vital for the organisation to continuously bring innovation and improvement in its services and product range so that it can effectively differentiate itself from other industry competitors.
Focus strategy- Through this strategy,company can consider studying about markets in depth, and analyse about customer's needs. Then supply that product at low cost and at high quality. One of the greatest advantage which can be gained by Bonmarché using focus strategy is that it can limit the competitor by bring expertise into quality of products and services. It is also helpful in building a strong relationship with target market.
Doing this Bonmarché can gain competitive advantages as well as loyal customers in the target market-place.
The best strategy which will suit company for growing their businesses is to consider focus strategy. Because Brexit could not impact upon customer's needs and desires. So, it can do market study and analyse needs of particular product or service and should supply that (Ifekwem and Adedamola, 2016). To link all these competitive advantage strategies with opportunities for growth of Bonmarché, it is required that organisation must analyse all the factors which influence the business activities and environment. These factors include elements such as political, economic social, technological, environmental, and legal factors. Current political scenarios are very uncertain post Brexit, but because of active government in of UK. Political uncertainties would be resolved quickly. Then with the help of government company can grow and expand their businesses.UK has fifth highest GDP, and large population.Bonmarché can benefit from large unemployed population due to post Brexit effects. Social trends of UK indicate high standard of living. It can increase their production of premium quality of products in order to grow their business. UK is recognized as a country which have most number of qualified IT professionals (Cantele and Zardini, 2018). Company can hire talented IT professionals in order to use latest and innovative technologies to gain competitive advantages. Globalclimate change also forces UK to tackle with global warmings and to adapt sustainable policies. Bonmarché should also reduce their plastic waste, and should develop some other alternative ways to promote their businesses. Employment Act forces organizations to protect rights of employees, this includes minimum holidays, wages of employees (Prabhu, 2019). It can promote such acts; this would attract talented employees to join the organization.
New Products and Services (Innovation): Bonmarché should consider developing new and innovative products or to offer high quality services. This would promote and highlight their business against mass audience (ÖNEREN, ARAR and YURDAKUL, 2017). Through this they will also gain competitive advantage, which would work ultimately as basis for growth.
To deeply analyse about potential of any organization and help them for growing their businesses, corporates use a tool is used known as Boston Consultancy Group Matrix (BCG).
BCG
In this the matrix is divided into 4 kinds, in context of market growth and market share.
Dogs: Products fall under this, are having less growth and low market share (Mawdsley and Somaya, 2019).Companyshould consider identifying and removal of such products from their portfolios. Company is unable to increase sale of Men wear due to ineffective marketing strategies. These products are mainly resource draining product and thus Bonmarché does not have any growth options for these products. Thus for enhancing profitability these products must be discontinued at the earliest.
Question marks: Products falling in this category are in high growth markets and low market share (Ifekwem and Adedamola, 2016). These products may become either stars or dogs. Bonmarché must consider investing heavily in such products to make them stars.Accessories range have high growth but low market shares in the industry. It is not sure if these products will fall into star category or in dog category. Thus at present Bonmarché must invest some effort and resources so that they can be improved to explore possible growth options.
Stars: products falling in this category are in high growth market with high market share. company should consider their focus on these products, through this they can become market leaders. Plus, size women wear is the star among the product category of the company as they market share is high. These products are already gaining high profits and growth and thus a minimum effort is required by organisation in this category to grow further.
Cash cows: Products falling in this category are in low growth markets with high market share (Genoveva and Siam, 2017). it should consider identifying such products to maintain cash flow and with that cash should consider supporting stars. Nightwear have low growth market with high market share in the industry.
GE-McKinsey Matrix
It is model or portfolio through which businesses make decisions of investment and de-investment. This model involves following steps.
Step 1: Bonmarchéshould consider listing factors that determine industry attractiveness. And rate them to evaluate most favourable factor. Such as high profit, market size and industry profitability (Grünig and Kühn, 2018). Rating them as industry growth-4, low competition-1, and high profit-5. The company should rate each factor for each business unit as low competition is favourable factor for Bonmarché. By doing this industry growth and high profit get scores of 5 and 2 respectively for unit A. For unit B industry growth scores 4, high profit 5 and low competition 1. Then, company should find out weighted score, for example scores for unit a and b are:
Unit a- low competition (weight x rate) = 10, Industry growth=12, High profit=5, Total score=27.
Unit b- low competition=2, Industry growth = 12, High profit= 25. Total score=39.
Step 2: Then Bonmarché should consider listing their competitive strength and rate them according to their organizational analysis, such as brand reputation, customer service. Rating them market share=6, profitability =3, brand reputation=1. Weighted score:
Unit a- Brand reputation=15, market share=6, profitability =3. Total score= 24.
Unit b- Brand reputation=2, market share=16, profitability= 15. Total score=33.
Step 3: Nowcompany should determine unit's positions on matrix.
Step 4: Then firm should consider strategies for units as per position of units. Bonmarché can make three decisions either to invest, hold, or harvest or divest in the markets for products.
Step 5: Implementation for units, organisation should now consider implementing strategies for their units positions and according to the scores on matrix.
Market attractiveness factors for Bonmarché such as market share, industry attractiveness and industry profitability are of medium range. However, the business unit strength factors such as brand value and competitive advantage for Bonmarché are high. Thus it makes organisational attempt to invest in plus size women clothing as suitable choice for growth option.
Product life cycle
It refers to stages through which a product undergoes. Bonmarché should consider this for their products and services. Product goes through these following stages.
Introduction: During introduction stage it should consider building awareness and developing market for the product. This is the first stage and thus in this phase marketing cost is also very high. The pricing may also be kept higher by organisation so that development cost can be recovered. In introduction phase it is also required to protect the knowledge and organisational resources using intellectual property tools.
Growth: During growth stage, firm should consider improving brand equity and increasing market share for the product. In this stage the product has been already accepted by target customers of the organisation. Thus for continuous increase in market share company requires to use innovation and suitable pricing strategies so that growth objectives can be achieved. The increasing profits and product demand can also allow organisation to keep its prices high on the grounds of innovation in its products so that competitive advantage can be gained.
Maturity: During maturity stage, sales falls due to competition. Bonmarché should consider dealing with competition to maintain market share and to gain profits. In this stage since product is mature it is required for organisation to improve its strategies for sustaining competition. For this purpose, Bonmarché may require to decrease its prices which is also supported by improved methods and efficiency of production.
Decline: During decline stage, the product's growth has been stopped, sales are declined completely (Genoveva and Siam, 2017). Organisation should consider either to raise the product again or to discontinue it, on the basis of analysis. Along with the decreasing sales and high level competition the change in customer needs can also cause decline in revenue. Thus either product is introduced with new features or attributes or it is completely discontinued.
Diffusion of innovation is kind of theory used by corporates, which describes how a product over a time gains popularity or diffuses. It includes 5 adopters, Laggards, Late majority, Early majority, Innovator.
Best innovation strategy that will suit the Bonmarché will be Innovator so it should consider encouraging innovators. Because those are interested in innovations and can deal with tough situations.
Evaluation of growth opportunities by application of Ansoff's growth vector matrix
Ansoff's growth vector matrix analysed market risks and helped many corporates to grow and expand their businesses. It includes four stages.
Market Penetration: Through this company should consider focusing on increasing sales of products or sales in the potential market. Risk involved with this is, uncertainties post Brexit in market will affect sales.
Product Development: By considering this, company can innovate new products. Risks with this is that launching product require good R&D and organisation lack in it.
Market Development: Through this, Bonmarché can consider entering to new markets with existing products (Bahmane, 2017). Risk associated with this is, company is already struggling in the market and then entering to new market place could be challenging and difficult.
Diversification: Through this company can consider entering to new markets by launching new products. Risk associated with this is high as the company is not aware about new market condition such as their choice and preferences.
Analysing all the above strategies, the best suited strategy for organisation will be product development. They should consider this strategy because customer's needs are constantly changing, so innovation will help it to grow and spread their businesses. They can mitigate the risk associated with this strategy, by hiring talented IT professionals to develop and improve their R&D department.
Technology and digital platforms also helps businesses to build their network and enhance growth. Bonmarché should consider usage of technologies and digital platforms in order to have following benefits. They can can consider building their brand awareness through the help of social media. This would also increase traffic on the websites, as more people are aware of company and their network will expand. People on social media are growing and if organisation consider using social media, then their sales will boost. It can also partner with various influencers who are active digitally. Organisation should consider using technology also for connecting with potential clients directly. This will also result in saving lot of money for Bonmarché.Collaboration helps businesses to work together in order to achieve common goals. In mergers, two companies join together to form a third company that will have more market share. Bonmarché can benefit it, by acquiring more market share. Disadvantage include, compromising to policies of other companies. For instance, Uniqlo is one of the biggest competitor of Bonmarché and thus their merger can create huge sensations in the market and industry. It will encourage and inspire the target customers to enjoy a completely new level of service quality through the merger. It can consider acquisition option in order to gain more resources. Company can benefit from it by, as their revenue will be increased. Disadvantage includes big company may face dis-comfort in co-ordinating and communicating with smaller firms. Bonmarché can consider joint ventures, which will allow them to create a business from partnership of different parties. Benefits include low cost of production, access to latest technology by organisation. Disadvantage includes conflict in objectives or it may have to face inequality in power-sharing (Curuksu, 2018). In order to expand business to other countries Bonmarché can also work in joint ventures with leading organisations of target market so that the existing brand value of the partner organisation can help Bonmarché to establish its supremacy in the new local environment. Bonmarché can also consider strategic alliances, as it will allow them to partner with only for a particular objective. Advantage include, it will remain independent company, and still access resources of other company. Disadvantage includes, poor communication in between partner companies which can result in failure of objectives.After analysing all the options, firm should consider adopting to strategic alliances, through which they can fulfil their objective, with the help of establishing effective communication with alliance, while not facing disadvantages of other collaboration options.
Bonmarché can also consider taking benefits from horizontal and vertical integration. Company can achieve higher production rate at low price. Also, company market share will increase, which will allow them to enter new markets. It can consider these to smooth their supply chain, while also increasing barriers for new entrants (Genoveva and Siam, 2017).
Organisation can also consider partnerships in value chain through the use of bidding consortia, where it can bid with other economic retailer to avail a contract in public procurement process. Also, it can consider using franchising, as there is tremendous potential in franchising for expanding businesses (Agénor and et.al., 2018). Through franchising Bonmarché can have access to capital, gain market knowledge and can also expand their businesses with less resources.
Assessment of sources of funding available for business growth
There are various sources for finance, through which organization can take necessary financial help in order to grow and expand their businesses. Including bank loans, crowdfunding, peer to peer lending, angel and venture finance.
Bank Loans: It can consider taking loans from banks, so that they can grow their businesses (Oppio and Torrieri, 2016). Banks provide short term as well as long term financing for early ventures as well. The organisation can also leverage their personal assets as collateral for the loan. Advantage includes easy and quickest source to get loans. Disadvantage includes high interest rates. However, in case the growth option does not succeeds then there is choice of losing personal collateral which is tied to loan.
Crowdfunding: Company can consider using crowdfunding to raise large capital through small investors. In case of crowdfunding multiple number of individuals or investors invest their money so that funding goals can be achieved. Advantages include, it is more efficient than traditional fund-raising options. Disadvantage include crowdfunding take slot of time to raise investment.
Peer to peer lending: Organisation can consider using this, as it involves borrowing from lenders thorough online services. Advantages include cheaper loan than banks. Disadvantage includes cannot trust lenders on online platforms, frauds may be present.
Angel and Venture finance: Company can consider using this funding option, as it involves a person or committee contributing investment through their own investment toward an organizations growth (Rao, 2018). Angels are usually experienced leaders in their firms who contributes knowledge, experience as well as contact networks. Advantage include, lots of such investors in UK. Disadvantage includes, generally such type of investors only invests in successful businesses. By risking the money angels reserve and held rights for supervising the management practices of organisation.
Based on above all, company should consider crowdfunding to raise their businesses, through this they can generate mass capital, they just have to deal with huge effort required in time management for crowdfunding.
Firm should also consider analysing various financial methods. For example, payback period, it should consider how much time will it take returning investments, and should make strategies according to that. Also, Bonmarché should consider net present value, which is the sum of discounted future cash inflow and outflow related to investment.
PART 2
Business Plan
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Executive summary A business plan contains future strategies, activities, and tasks that the company is going to perform to increase sales and profit margins, thereby aiding in the achievement of organizational goals. It provides a brief overview of the company's vision and mission, along with the methods to achieve them. The company is planning to launch a new product and has conducted a market analysis to identify various threats and opportunities. This analysis also assists in selecting the best sources of finance to increase the company's profit margin. Thus, a business plan promotes the growth and expansion of the business into new markets by analyzing various environmental factors. For drafting such comprehensive plans, a paraphrasing tool can be invaluable in refining and rewording key ideas. Company Description: Bonmarche was founded by Singh Chima in 1982 and one of the largest retailer selling women wear operating its business worldwide and by July 2002 it is acquired by Peacock Group. Vision: “To provide and maintain high standard customer’s services”. Mission: “Is to make mature women look fabulous and attractive by providing clothing in stylish design, affordable price and size range from 10 to 24”. Product and service Description: It provides wide varieties of product such as casual and formal separate, nightwear and accessories. Company is able to gain competitive advantages due to its specialization in plus size clothing and all design for larger women. Market Analyses: It includes complete analysis of market such as its size, number of competitors, customers buying patterns and condition of economic environment. Thus, company by conducting market analysis is able to gain competitive advantage. Swot Analysis: Strength: Company strength lies in highly establish brand image of the company as it provides quality and unique product to its customers. Thus, effectively customer’s services have led to increase in sales and profit margin of the company. Weakness: Lack of capital due to improper functioning of financial department of Bonmarche which lead to delay in expansion of business. Opportunities: Company can easily market its business to large number of customer's by promoting its product online through use of social media. Threats: Political instability and increase in number of competitors in retail industry are two threats company is facing in expansion of its business. Pestle Analysis: Political Factor: Due to Brexit, UK is suffering political instability which has impact adversely on the functioning of business. Its sales and profitability had been decrease due to reduction in import and export of country, purchasing power of consumer. Economical Factor: Due to recession in UK economy employment rate increase, low disposable income of customers and high debt of government and people living in the society. Thus, company sales have been decreased so it can expand its market share by entering into new market. Social Factor: It refers to the preference, needs and value of people living in the society it has positively impact on Bonmarche as able to expand its market share by offering clothing for larger women or plus size clothing. Technological Factor: Continuous updating of technology, innovative product design and offering quality services is able to gain competitive position in the market. Environmental Factor: Company has abided to environment protection law while performing its operations in order to protect environment and health of people living in the society. Legal Factor: Discriminative law, employment law and health and safety laws have been considered by the company while providing its services to customers. Thus, company by conducting its operation as per ethics is able to build and maintain strong brand image of the company. Marketing strategies and sales strategies Bonmarche uses various marketing strategies in order to influence customers to purchase their company products. Company is effectively able to expand its market share by differentiating its product with other competitors. Price strategies also helps in expansion of business in new market as the company provide product plus size clothing at reasonable. Strong Brand image of the company plays an important role in promotion of its product in new market. It can also promote its offers and various product online by use of social media in order to attract younger generation or large number of customers. Advertisement through hoarding and promotional events are some method that can be used by company in making aware to customers about the product. Thus, company by effectively using all such marketing and sales strategies is able to expands its business in new market. Organisation and management Bonmarche is a large organisation that operates its business across various nation with 380 stores and over 4000 employees working for achievement of organisational goals. It follows functional structure that means it divides various department on the basis of function performed by each department of organisation. Since its large company roles and responsibility of each individual are clearly defined and helps in smooth operations of business. Effective management and coordination of individual goals toward organisational goals helps in achievement of company objectives. Manager of Bonmarche use various techniques to motivate employees to improve its performance for achievement of company goals. Daily operations Day to day operations of Bonmarche company will be to manage human, physical resources of the company. To provide continuous qualitative product or services to customers, ensure availability of cash, raw material for smooth operations of business. Market analysis in order to gain competition advantages in the market by adapting to various changes of environment. Financial plans and projection: Control and evaluation: Company manager will continuous supervise activities and in case of deviation take various measures to achieve organisational goals. |
Exit strategies for small-business
It is essential for every small organization to prepare its exit strategies in advance in order to have some control over business in the future. So, some exit strategies are as follows:
Liquidation: It is one of the easiest and simple method for closing down operation of business by selling all its asset and paying its liabilities. It is mostly chosen by small-business in order to pay all its debt due from creditor.
Advantages: It involves less time and efforts and the individual can easily shut down its operations without any control in the future.
Disadvantages: The owner get lower return on its investment or low value for its assets.
Legacy: Sometime the business owner wants to have certain control over business in future so it chooses for legacy. Thus, by transferring business to next generation or its family member give chance to owner to have power to take decision in the functioning of business.
Advantages: Owner acts as an advisory thus having some control at the same time promote business for long term.
Disadvantages: The successor does not possess quality or skill to manage business effectively and change in management may not be accepted by customers.
Selling business in open market: It is one of the best method for closing down of operation as the owner is able to get maximum price of its assets and if business has goodwill than that amount is also payable.
Advantages: It provides wide option to owners to choose among and set a specific price for its assets and goodwill.
Disadvantages: It is difficult to value business so it may result in lower selling price of business.
Merge and Acquisition: Merging strategies is chosen by those owners who want to expand its business in new market by merging with other company. So, that they can share each other asset, skill to gain competitive advantages and for achievement of goals. Whereas, acquisition refers to when a company plan to acquire another company to operates its business on large scale.
Advantages: Able to expand market share of business by using resource of other company.
Disadvantage: Merge and acquisition consume lot of time and efforts of company.
So, from above analysis it can be stated that Bonmarche can use various exit strategies such as selling in open market as this strategy will provide owner maximum return on its investment by offering wide varieties of option to choose among. But as the owner of company is planning to expand its business in new market it can close its operation by merging with another company. Merging increases asset of the company, enhance skills as both company are able to use each other resource and skills thus able to expand their market share.
CONCLUSION
From the above report, it can be concluded that by considering key components, a small-scale enterprise can grow and expand its business into new markets. The company, in order to meet its capital requirements, has to identify various sources of finance and choose the best among them for the effective operation of the business. It can also be concluded that business plans help the company gain various opportunities that are available in the market for growth and expansion. Additionally, it can be concluded that the firm can use a merging exit strategy to expand its sales and profit margin in new markets. For students seeking assignment help, understanding these strategies is crucial for comprehending how businesses navigate growth and financial planning.
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