It is important for the business to plan for the growth of the business so that it can grow and expand in the market. The company chosen is Hook Norton Brewery company , a beer manufacturing organisation. A junior manager is appointed in order to make strategies for the massive expansion of the business.
- Key considerations of the SME when evaluating the growth opportunities.
- Methods of accessing funds and types of funding.
- Development of business plan.
- Different ways in which small business can make exit and implication of each.
Planning for growth is a foundation for every business enterprise. This assist in increasing productivity and improves the overall performance of an organization. It guides in defined and clear objectives that helps in attaining goals of a business firm. These strategies and tactics are included in a growth plan which focuses on revenue generation (Chen and et .al2014). Planning can be done for small and long term goals as per the requirement for a company growth.
This assignment based upon key factors such as porter's generic and pestle of Hook Norton Brewery company. It is a beer manufacturing company which is situated in Banbury, it is independent, traditional and family owned business firm. This involves selection of tasty seasonal beers also, involves a wide range of unique gifts such as clothing, glass ware artisan foods as well as complete range of beers. This project enlightens on how to develop a business plan, sources of funds and the exit or succession methods for small business enterprises.
P1. Analyse key considerations for evaluating growth opportunities
Planning plays a vital role in growth and sustainability of an enterprise. This guides and explains the purpose of strategic planning which consider as a business strategy. However, it includes analysing of a business firm through there resources and liabilities (BlackburnHart, Mand Wainwright2013). Also, this formulation assist in the vision, mission and goals of business organisation to achieve their desired objectives. Success of company depends upon the growth of an enterprise and growth is co- related to internal and external factors of a Hook Norton Brewery company. This stage involves porter's generic model and pestle these are defined in below as:
Porter's generic model
This model helps in to identify the competitive advantages that guide them in deciding a probability of a business enterprise. It involves three basic strategies these are as cost leadership, differentiation and focus strategy. It is briefly described as follows:
Cost leadership is a strategy that is used in reducing the cost and develop there sales by lowering prices of product but without dwindling their profitability of Hook Norton Brewery company. This deals well at a time of serving their goods and services by maintaining its standards. By using this strategy by a business firm it can gain cost advantage through economies of scale, cheap raw material and many more. This will achieved by reducing costs to a level below those of existing market competitors.
Differentiation strategy involves variation of products by using up of creativity and innovation by developing team to become strong in selling and marketing department. Also, it is emphasis in order to gain competitive advantages which offering unique feature which are more valuable to customers (Allmendinger and Haughton 2013). In case of Hook Norton Brewery company which is introducing new flavour night dog and designed in form of man tor-ex.
Focus strategy focuses on one or more particular segment of a brand into a market but does not serve whole market with one product. It generally involves in achieving cost leadership or differentiation within niche market which are more preferred. This includes other strategy such as cost focus and differentiate focus of a small businesses. These are as follows:
- Cost focus is per- determine strategy that is related to cost leader for a specific segments. This helps in to know more about the difference in cost behaviour in some product segments.
- Differentiation is used at a time of differentiation while choosing particular segment for product. This will help in to take decision regarding product differentiation.
Therefore, porter's generic helps in deciding and able to compete with existing competitors for developing strategy which can be suitable for Hook Norton Brewery company. This will assist them in appropriate manner while taking decisions through them.
It is an effective tool which is used by marketers of business firm in order to analyse different macro factors which are recognised by them (Kumar2016). This assist in measuring the impact which are treated as an opportunities of a business operation and maximize their profits. Pestle analysis provide vital information to possible threats and opportunities for a business enterprise. It stands for Political, Economical, Social, Technological, Environmental and legal. These are briefly discussed as below:
Political factor : This aspect is related to political laws and order that are governed by government of nation. It is indispensable for Hook Norton Brewery company to implement regulations within a business firm in order to make stability of business. As brewery is a beer manufacturing company which should maintain steadiness in a market and this requisite to execute all rules and regulations passed by the government in order to avoid illegal aspects.
Economical factor : this aspect has a great impact upon company's profitability and their productivity. Country economic condition plays a crucial role in case of stability and fluctuation can be caused either profit or loss to a business firm. There are certain factors which are to be concerned such as inflation, foreign exchange, interest taxes, and so on. As Hook Norton Brewery company is running a business of manufacturing beer, so they should track as record of economic condition which are able to decide price for operating their business.
Social factor : This aspect involves people attitude, their demands, beliefs, habits, values, health, career, population growth, income and many more (Wey2015). These are the main concerns for marketer to develop and formulate strategies related to these aspects. If Hook Norton Brewery company attain success and wants to establish better position in the market, which can fulfil customers demands.
Technological factor : This aspect is related to all technological advancement and development that can affect a market. As new technology are adopted by every business which assist in implementing better performance within an organisation premises. This will result in to increase profits and maximize their effectiveness and the quality of a products. With an enhance technology, it will ultimately provides better services to their customers. In the recent years, company are focusing mainly on digital technology with the consideration to new methods and techniques which are used at a time of manufacturing, production, logistics and distribution etc.
Legal factor : This aspect includes different legal laws and act which are developed in the process of health and safety measures related to labours, employment, equal remuneration, payment act and so on. Company should ensure their law related to corporate business within an enterprise to obviate illegal actions.
Environmental factor : This aspect measures the influence related to environment and their impact on ecological balance. This factor is gaining importance for recent past years. There are various aspects such as carbon emission, scarcity of resources, pollution, etc. Therefore, business enterprise should adopt environmental friendly equipments and techniques which can produce less emission of carbon and can adopt varieties of steps which can reduce in harming environment.
Although, it is important to analysis the external factor of environment as they help in determining various opportunities as well as measures the certainty risk which should be adopted by a Hook Norton Brewery company. This will assist in guiding, directing and to adopt controlling factors at a time of decision making.
P2. Ansoff’s growth vector matrix.
Planning for growth is an essential part to improve performance, growth and also risk related to this factor. It is also known as product or market grid. Ansoff matrix helps in determining the growth strategy for a business firm and increasing their sales (Crow2011). By adopting this matrix from Hook Norton Brewery company can able to get possibility such as pushing existing product into current market. This strategic market planning assist in linking commerce plan of action with the generic strategy that help in developing new goods and services to serve their customers. The main objective of this matrix is to know how an organisation should introduce new products related to an existing market. Hence, Ansoff's matrix guides in analysing varieties of risk related to introduce new product of Hook Norton Brewery company. This includes four approach, it is defined as follows:
Market penetration is a first strategy which means increasing profit of a company by selling same products into existing customers. To increase sales into market company can adopt different packaging, labelling or design of a particular product in order to increase their sales gradually. In case of Hook Norton Brewery company they should adopt this type of strategy to achieve their objectives. However, it is essential to Brewery limited to fulfil and provide facilities to their customer (Zhangand et.al2013). This will helps in to capture customers eyes to promote and diversifying beer manufacturing in their region. By introducing loyalty scheme and special offer for promoting their products will assist in increasing sales and improve the existing condition of a business firm.
Product development is second strategy which can be adopted by existing market for new product. This can be done by inventing new product such as in case of Hook Norton Brewery company has introducing new product that is night dog which attract their customers. At the time of product development, it is necessary to know about the review of that product which can be done through feedback in order, to know about the product quality and their performance which are necessary to know by the manufacturer. Or at a time of extending the products by using various varieties of Hook Norton Brewery company with the help of using research and development of services and there living standard or lifestyle.
Diversification is the third strategy which used in new market with a new products. This involves diversification as well. On other hand, introducing new product into a new market would also, increase the risk related to product (Porter 2012). This is more risky strategy as compared to the others, new product being created and business does not know the development problems that may occurred in the process. For every company it is crucial to study the market place that what customer demand for and their needs which can be fulfil through tracking records of research around the place. This will help company to adopt different strategy related to goods and services.
Market development is a fourth strategy in Ansoff's matrix that includes selling of same product to a new market. This involves some uncertainties which are a part of this matrix. Through research division it assist in identifying new team of consumers. Hook Norton Brewery company develop new market through usage of different distribution channel, advertisement, promotions, publicity and so on. By using these approach company can increase their sales and generate revenue and income for their staff. This will help them to sustain for a longer duration into a competitive environment (Leigh and Blakely 2016). In order to develop market, company should know the existing condition of that place before adopting any other strategies related to that particular product.
From the above discussion, hence it suggested that, for every business firm including Hook Norton Brewery company it is necessary to examine the market while adopting any strategy for developing new product into existing market. Through Ansoff matrix it helps in determining the situation and able to forecast through a business plan.
P3 Sources of finance and their benefits and drawbacks
Fund is essential part of every business whether established on small small scale or large scale. Source of fund refer to the method through which organisation raise its amount for business operations. Apart from skill and knowledge,amount is another thing which company ius more concentrated about it. There are various sources through which company can raise fund which are equity,debt, debentures, loan of credit,peer to peer lending,retain ventures, venture financing etc. It a very common source through which company start a new business (Barbour and Deakin, 2012) . Choosing right source and right combination is very difficult task for finance manager and for business. The process can be selected or chooses after analysing in depth analysis of each and every aspect. Hook Norton brewery of Banbury take funds from any of below sources-
Bank loan : Loan is the popular source which is used by small,medium ,large firm for the business proceedings. Through taking loan business get the money to carry out its day to day operations. the amount is only borrowed after discussing all terms and conditions like repayment time,interest and the amount. bank generally provided funds to well established or running businesses as compare to new start up because they are not conformed that whether their business able to repay them or not. Financial institution furnish it on the basis past credit score or ratings and profitability index of the company. This was check to know the ability of repaying loan amount with interest.
Advantages : Loan is generally ranges between three to four years which is long period for very business. Interest rate on the loan is fixed in many situations so that individual can estimate the repayment amount and make future arrangement for that (Beatley, 2014). It is not paid on the demand it comes with the fixed tenure between three to ten years unless contract is breached, protect from ciaos in the business.
Disadvantages : Individual or business have to face prepayment penalty when they want to repay the loan before the closure of the tenure. business get suffer problem of repayment when their customer is not doing prompt payment. This is a big problem for business who runs on a credit.
Bank Overdraft: Overdraft is short term facility which business or undertakings get from the bank or financial institution. Under this business can withdraw amount by exceeding its limit allotted by banks. This facility is provided on the ground of working capital and credit worthiness of the taker (Chen and et. al., 2014).
Advantages :This facility provide holder facility to withdraw the excess amount even having no balance in the account. In this very less paperwork is used which was present in long term loans due to that who need immediate fund take it from here. The person take it any time for any amount even as less as one or three days.
Disadvantages :Overdraft many times provided at some security which can be in the form of inventory,shares or life insurance to use it at the time of non payments. Cost of overdraft is generally higher as compared to many other sources because it provide fund in very less time.
Crowdfunding : It a method which arrange fund for large and small enterprises .the process comes from foreign market through social media. By this company can carry its all day to day operations like repayment of debts and interest. fund is gather in the form of small amount with large number of persons(Eddleston and et. al., 2013). Hook Norton brewery can use this for their expansion and survival.
Advantages : In this ideas is shared with large number of customer which make company able to know reactions of customer's on their product. It is the cheapest source of raising fund as it does not involve any fees.
Disadvantages : On crowding site information is compulsory to get protected with copyright and patent otherwise it get steal and person can use it as their business idea. If decided set target business not able to reach then they have to return it to the customer without getting any amount (Galland, 2012).
Peer to peer lending : Under peer to peer lending amount is provided in the form of loan to some unknown person through online site. The loaning is usually furnish under this for one to five years. This type of lending is generally done without taking personal property as a security.
Advantages : In this no prepayment penalty is charged by borrower in the case of paying before amount before due date. Low interest rate is charged from customer under this. It is beneficial for those,whose loan is rejected by the bank due to bad credit account.
Disadvantages : Less credit score means company have to pay high interest on their borrowings. To lend under this it is necessary that business have good score otherwise have to pay more amount of interest as compare to others who lend from same source.
Venture financing : Money is provided on the basis of its capabilities which means ability to earn profit and success. Person or institution who provide fund also provide assistance in the management of the business. Business get the fund after selling its share to the venture capitalist. The amount remain in the business in the form of equity capital (Levy, 2016).
Advantages : The lender provide guidance in the business for improving undertaking operations. In this large amount is brought in the enterprise in the form of equity capital. Capitalist provide information and resources to make business grow.
Disadvantages : As investment is in the form of equity capital it gives right to lender to interfere in the decision of the owner. Due to borrowing from lender,organisation autonomy and control get lost.
P4 Business plan for growth
Plan is necessary in every phase of life to lined up future activities. It a formal document which is used to know what undertaking going to do in coming Years. Business plan in the organisation is prepared to memorises the goals and objectives. It provide the proper road map through organisation can achieve its objectives and make able to formulate strategies and policies (MacLeod, 2013).
Overview : Hook Norton brewery is a independent, traditional family owned business of beer. They provide wide range of beers from 1849 like hooky,old hooky and hooky mild. The business is manufacturing night dog to increase their sale in the present market. For that they need to make proper business plan.
Vision : To become the world's most renowned brand in the beer.
Mission : Company mission is to provide the new product to large customer for enhancing market share.
Segmenting : The product should be sale to medium and lower class. It can't be sale to upper class because they are offering product at low price which is not preferable by them.
Positioning : They can position it at the cafe and bars where people generally visit very often and ready to adopt new taste(Moseley, 2013). They can position it to adults places like disk.
Targeting : For this Hook Norton Brewery can target its product to the young generation. For launching new product old generation is not suitable in the initial stage because they always resist from adopting new things. Adult is the best from whom company able to achieve its desired result.
Swot analysis :
In this case of Hook Norton Brewery company it is necessary to get analysis their position as well as there strategy to cope up with the threats which are needed at a time of resolving problems. The Swot of this company as follows:
P5 Exit or succession options for small scale enterprise with their pros and cons
There are various methods which was can used by the Hook Norton brewery for exit and succession in the environment. Here is a description of two succession technique which busienss can use in order to growth and succeed in the society. These methods are as follows-
Merger and Acquisition : In merger two companies joint hand and become one company to explore opportunities existing in the market. In acquisition one company take over other organisation business to make strong presence in the market. Businesses get under acquisition to increase their share of the market as compare to other companies. Both merger and acquisition is done by the organisation to increase its profitability and the wealth. It is performed in the business by purchasing assets, exchanging shares and by collaborating skills. Beer business can use this techniques to expand its business (Schetke, Haase and Kötter, 2012).
- The biggest advantage of merger is tax benefit. At the time of merger company get the tax shield from the government. Risk decreases up to large extent because the presence of presence of numerous technologies. This undertaken in the business to increase sale and profit margin.
- Due to merger and acquisition business control and power over the market get increases. It increase skills and techniques of the firm which their competitive firm does not contain. Acquisition generally performed by take over small organisations to become big. Disadvantages :
- From merging two business sometimes there is a duplication of the activities generally happen because of same fields.
- If any company involve in the merger and acquisition they should look that it get completed on time otherwise heavy loss and cost have to bear (Todes, 2012). .
- Due to this sometimes organisation get loss of experienced workers which can be replaced by new values. It happens because of different locality and different work culture.
- When small business get merged in the big business than it become problem for small firms employees because they are not habitual to handle such type of work. At that time they need to learn new skills or to modify their own skills (Valler, Phelps and Wood, 2012).
Initial public offering : IPO is the first sale which is offered to the public. It is a activity which private company adopt in order to raise fund for their operations. Private companies used it in order to expand their market share, by creating a image in the eyes of the customers (van Assche, Lo and Beunen, 2013).
- Enhance the company's prestige and public image which support organisation in their sales and profit.
- It provide large amount of money to the organisation which can be get from any other source of finance.
- Under this organisation have to disclose their financial,accounting and other information which can be used by the competitive firm in order to increase their market share.
- It require lot of time, attention and effort of the management for maintaining it.
- Organisation loss control under this method because shareholders by obtaining shares get the voting rights affect the decision of the board of directors.
The above report states that planning is very essential for the growth of the business. Every business want growth opportunity for their business which depends upon the external things which are not in the control of the business. Hook Norton brewery can do planning with various models and techniques to make business grow. Business plan is prepared to know the facts and figures of the undertaking. By business plan authority able to know what they do in future to achieve goals and objectives. From any of the above discussed source can be used to raise required fund for operation. These funds help business, in bringing plans into reality to survive for a longer period of time. To enhance its business, the beer business can join hand with other firm of the same field to sustain in the market. All the above techniques was adopted in the firm to forecast its sales,to increase profit margin and the risk which they face when business grows.
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