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    Business Expansion Plan of Oak Cash and Carry

    University: REGENT COLLEGE LONDON

    • Unit No: 42
    • Level: Undergraduate/College
    • Pages: 22 / Words 5401
    • Paper Type: Assignment
    • Course Code: MNG 00723
    • Downloads: 489
    Question :

    This assessment will cover following questions :

    • Understand the key consideration SMEs should consider for analysing the opportunities related to growth.
    • Assess the different methods through which the  Oak Cash and Carry access funding and when to you various types of funding.
    • Builds a business plan which includes the financial and communicate how you intent scaling a business.
    • Assess the ways in which a small business can exit the business and the related implications of each options.



    Answer :

    INTRODUCTION

    Planning for the growth is the core function which the organisations perform in order to succeed in the competitive market. Planning in advance will assist the business about the creation of the business plan and what is to be achieved and how it should be achieve. It is essential for the business to plan for their future growth and development as this provide the business with the big picture about their long term goals and vision. SME's are the business which are generally of small and medium size. In this report the chosen company is Oak Cash and Carry which is one of the wholesaler deals in the Grocery items. This assignment covers four different tasks such as the key consideration to measure the growth opportunity and several sources of funding. Along with this the reports also covers the development of the business plans to expand the business and also focuses on the determination of the ways through which the owner of the business can decide whether to exit the business or to continue the organisation with succession.

    TASK1

    P1 Key consideration for evaluating the growth opportunity.

    Planning refers to the ongoing process in every business organisation which assist the association in accomplishing their goals with proper guidance and strategies. Appropriate planning also helps the business to analyse the differences between the actual performance and planned performance (Keough, 2015). The business of Oak Cash and Carry must focus on the development of their association in the UK market by formulation of proper plans and strategies. For the growth of the business Oak Cash and Carry they must adopt various measures which are mentioned below:

    Porter's generic strategy :

    Porter's generic model is the one which helps the business association gaining a competitive advantage over their rivals. This model is the one which provides the business with the directions which will lead to the enhancement of organisations performance. This structure consists of the stages such as:

    Cost Leadership strategy-  This strategy calls for the low cost of the products. By keeping the low cost of the products the business of Oak Cash and Carry can successfully gain a competitive advantage which will help them in competing with the competitors available in front of them in the market. And will also assist the business in capturing the larger share in the market with the increased customer base (Barbour and Deakin, 2012).

    Differentiation- This strategy involves the creation of the new and unique product which will help the business in gaining the competitive advantage so that the firms can easily satisfy the demands and needs of the customers as per their expectations. The Unique features of the product will enable the business to capture the minds of the customers so that the large customer base can be built.

    Cost Focus- This strategy is the one which gives emphasis on the niche market or narrow market within this markets the firms tends to gain cost advantage as well as the differentiation. Cost focus strategy is the only strategy which is used by the businesses after identifying the changing demands and preferences of the customers so that the business of Oak Cash and Carry can easily capture the mind of the customers.

    Differentiation focus – This strategy calls for the creation of plans and strategy so that the business can easily create their brand recognitions and recall in the brain of the customers. Through this the management of Oak Cash and Carry can easily gain competitive advantage over their rivals. Thought and strategies can be made for initiating a brand new product in new industry in order to attract large customer base.

    Thus, The business of Oak Cash and Carry must focus on the adoption of cost focus strategy as this will provide the business with the competitive advantage, large customer base through their low cost products (MacLeod, 2013).

    PESTEL Analysis

    The business must consider all the external factors of the macro environment before the formulation of their business plan as this will enable them in understanding which factors are influencing their business. The management of the business Oak Cash and Carry will implement the PESTLE analysis in their business so that the firm can decrease their risks and all those uncertainties which can directly impact the profit margin of the business. Various components of the PESTLE analysis have been discussed below:

    Political: These factors are those which are regulated by the government of the country. This involves rules and regulations, policies etc. as the political background of the UK economy is stable the business of Oak Cash and Carry has broad opportunity to grow their association in the UK economy.

    Economical: Economical factor is the one which involves the inflation rate, interest rate, growth rates etc. which have been established by the government. The business of the Oak Cash and Carry have higher opportunity to grow and sustain their business by the generation of the higher amount of revenues into the UK market as the economy enjoys high amount of the growth rate.

    Social factors: These needs are the prime requirement of the customers as this involves needs, belief, values etc. so the company of the Oak Cash and Carry must focus on the taste and preference of the company for maintaining survival in the market (Lambert and Oatley, 2017).

    Technological factors: The business of Oak Cash and Carry must focus on the manufacturing of their grocery products with the latest and innovative products so that the customers’ needs and demands can be satisfied. Here the prime function is the installation of the new techniques which support the business to beat their competitors.

    Environmental- The business of the Oak Cash and Carry must focus on all those negative as well as positive aspects of the environment which can have great impact on the operations of the organisations.  For the resolution of all those environmental issues the business must focus on the adoption of the various laws and regulations to protect the environment on the systematic manner.

    Legal factors- This factor involves all those laws which have been imposed by the government for the protection of their potential employees and customers such as discrimination law, employment laws etc. so that the business of Oak Cash and Carry can enhance their business productivity and profitability.

    P2 Evaluation of growth opportunities using Ansoff's growth matrix.

    Ansoff's Growth Matrix:  This model is the effective marketing tools which supports the business in determining the products and its market growth so that the business can successfully compete in the market place with their rival firms (Lu and et. al., 2013). Below mentioned are the series of the strategies which the management of the Oak Cash and Carry have adopted:

    Market penetration: This strategy is used by the business in order to maintain their stability in the market by increasing the market share with the existing goods and services. Through the installation of these strategy the business of Oak Cash and Carry can easily maintain their sustainability in the industry for a longer duration of time. This can be achieved only when the investment in the marketing tools is done on the higher rate so that the brand can attract large customers mind.

    Benefits:

    • Increased amount of the profit can be earned, as the business is familiar to the situation prevailing in the market and its customers’ demands (Glock, Jaber and Zolfaghari,  2012).
    • Large market share can be covered as the product is adopted by the customers in a very quick manner as the business provides the product similar to the competitors but the prices of the items are less.

    Risk factor:

    • Less innovations in the products due to which new market ratio can be captured.
    • Decreases the goodwill of the firm.

    Market development: This strategy calls for the expansion of the market to the other marketplace in order to build the extreme market recognition. By the adoption of this strategy the business of Oak Cash and Carry can operates their dealings to the non-operated regions such as China, Australia etc.

    Benefits:

    •  The business can have built strong customer base for their product as the market here is new in the nature.
    • The business can easily achieve their targeted goals within the time frame given.

    Risk factor:

    • Proper tools for the advertising of the products must be used and should give more emphasis on the understanding of the customers’ demands and preferences.

    Product development:  this strategy is the one in which the company tries to increase their existing customer base by launching the new product in the existing market. By using this strategy the business can easily determine the opportunities and needs of the market so that the survival of the business can be maintained for a longer period of time (Arzaghi and et. al., 2017).

    Benefits:

    •  By the creation of the product with the innovative and unique feature the company can earn higher amount of profit and along with this the business can also be termed as a competitors for the other in the market.

    Risk factor:

    • The business must focus on the creation of the demand for the unique product in the competitive market.

    Diversification: Diversification is the term that involves the creation of the products and services so that the business can expand their profit margin in the competitive market. This strategy of diversification will also help the business of Oak Cash and Carry to launch new product in the new market segments (Litman, 2013).

    Benefit :

    •  It supports the business earning higher amount of profits in the new market segment which enables the business to gain a position of growth by competing their competitors. Also helps in pulling the customer towards the new products in the existing market segment.

    Risk factor:

    • Rising needs of the customers alter rarely due to which targeted goals and standards cannot be attained and decreases market value of the firm slowly.

    The business of Oak Cash and Carry must adopt the market strategy of market development as this will enable the business to cover large market share and large mass of the customers towards the new product. Launching of the new product in the market which is already in existence will increase the level of competition with the rivals which will indirectly prove as a benefit for the customers as well as the organisation (Pothukuchi, 2015).

     

    TASK 2

    P3. Sources of funding with their advantages and disadvantage.

    Funding refers to as the allocation of the finances in such a manner so that the business goals can be achieved with the proper investments. The business of the Oak Cash and Carry must focus on their allocation and management of the financial resources through which the growth and the extreme level of profit can be achieved. The business of the Oak Cash and Carry is operating their activities with limited amount of the finance for the expansion of the business across the globe. So the association have focused on the various sources to generate the funds. These sources are as follows-

    Internal sources of funding: These sources of the funding are those which are available to the business within their internal environment only . These includes the funds raised from the sale of the assets, reducing working capital, debt collection etc.

    External sources of funding: External sources of funding refers to as the extraction of the finance from the external environment of the organisation. These involves the raising of the funds from equity capital, bank overdraft etc.

    • Bank loan- Bank loan is the banking term where the amount of the fund is borrowed from the bank with the promise to pay it within the specific time period which have been mentioned. This is the amount which an individual borrow for the shorter span of time or for the longer span of time (Holman and Rydin, 2013).

    Advantage-  The benefits which the bank loan provides to the associations are that they can get exact rate of interest so that the business can repay that within the given time frame.

    Examples: The business of Oak Cash and Carry can be benefited by the extraction of loan from the bank as taking a loan from the bank will come up with the burden to repay it within the time frame by which the company can expand their market and can operate smoothly.

    Disadvantage-  With the certain advantages there are some disadvantages which are also attached to it. In this if the business fails to repay their loan the assets of the association can be seized.

    Example: If the business of Oak Cash and Carry fails to repay the amount of the loan   than they think of selling their assets which was kept as security because of which the goals of the business is not meet on time.

    • Overdraft-  Overdraft is the one in which the agreements between both the parties is signed for the extension of the credit limits. In this the agreement between the Oak Cash and Carry and the bank is being signed. Some pros and cons of overdraft are mentioned beneath:

    Advantage-  In this the issues related to the arrangement of the finance can be solved easily as the funds can be raised in the best possible manner. Example:  The targeted goals of the business can be achieved effectively as the amount of the cash in the overdraft can be collected on the immediate basis (Güneralp and et. al., 2015).

    Disadvantage-  the most important disadvantage which the organisation has to face  is that if the management wants to extent the overdraft they have to pay some extra fees.

    Example:  the debt ratio of the business of Oak Cash and Carry has increased just because the business was charged with the high amount of fees for exceeding the limits of the overdraft.

    • Crowdfunding- Crowdfunding is basically a concept of arranging of the funds from each and every individual. The amount which is raised though the crowdfunding is generally small. The concept of crowdfunding is used by the social media industry in order to raise their funds from different individuals. There are number of advantage and disadvantage attached such as -

    Advantage-  As this is used mostly by the online sources so the gathering of the funds is done within the limited period of time and it also leads to the increment in the brand recognition. Example: Oak Cash and Carry can easily collect the huge amount of the funds from these sources and can accomplish the targeted goals within the time frame (Boddy and Hickman, 2013).

    Disadvantage- It becomes challenging for organisations to build interest of general public for the accumulation of fund.  Example:  due to the weak relationship with the mass of people it is difficult for the Oak Cash and Carry to raise the sufficient amount of the funds.

    TASK 3

    P4 Business plan for growth of the business.

    A business plan is the documents which serve as a blueprint to the business for operating their operations in the best possible manner. Preparation of the business plans in the association is necessary as its covers all the detailed information about the organisations objectives, methods, time limits which provides the business with a big picture of how to execute the operations effectively. A business plan also consists about the information regarding the business background, its financial condition and it functioning with the strategy which have been implemented in order to achieve the goals which have been stated. The business of Oak Cash and Carry which deals in the Grocery items is planning to grow their business in diverse areas for which the preparation of the business plan is decided so that the business can grow with the increasing rate.  Business plan consists of the various elements such as vision of the company, mission of the company, objective of the company. Creation of the business plan assist the business in carrying all their business operations in the most effective manner (Hess and Sorensen, 2015). It also helps while formulating policies and procedures for the success of the business in the near future. The prime objective behind the formulation of the business plan is to attract the large number of investors by ensuring them that if they invest in the business they will get higher amount of return and also convince them to invest in new undertaking by showing the business plan as an attractive plan (Lu and et. al., 2013). The business of Oak Cash and Carry has planned for the expansion of their business by establishing new venture of Finest Organic Foods. For which the business plan has been prepared as follows- 

    Vision: The vision of the Oak Cash and Carry is to expand their business by the launch of the new shop of the Finest organic Foods so that the larger market share can be covered.

    Mission:  The mission of the business of Oak Cash and Carry is to satisfy their potential customers by providing them the quality products and services as per their taste and preferences.

    Objectives:  The business of Oak Cash and Carry works with the objectives to earn higher amount of the profits which from 20% to 50% in the coming 3 years.  The company also tends to increase their market share with the help of their potential employees so that the demands of the employees as well as the business can be fulfilled within the specific period of time (Zheng and Lv, 2016). The business of Oak Cash and Carry also focuses on the adoption of the SMART approaches so that they can easily identify that the objective of the business is Specific, Measurable, Achievable, Realistic and Time bound.

    Financial Information : By introducing new finest organic food shop an association requires large measure of assets because of which the administrator ought to think about various alternatives to raise finance. These alternatives incorporate bank credit, crowdfunding, overdraft, heavenly attendant financing and so forth. As indicated by the study, bank credit will be the most reasonable choice to pick who charges low pace of enthusiasm when contrasted with other raising money alternatives. Additionally, the firm needs to utilize online stages for advancement and promoting of their new items and furthermore to impact the buying conduct of their end clients (Crow, 2015). The estimated budget for the new finest food shops have been mentioned beneath :

    Total Estimated Budget

    Particular

    31/12/16 ($)

    31/12/17 ($)

    31/12/18 ($)

    Employing technology expenditure

    10000

    -

    7000

    Promotional cost

    15000

    7600

    2000

    Advertisement cost

    1000

    9000

    2000

    Catalogue

    8000

    6700

    4800

    Training cost

    7200

    5000

    6000

    Total Cost

    41200

    28300

    21800

     

    From the above mentioned estimated budget is can be clearly seen that allocation of the budget is done according to the requirement as these are necessary for the smooth functioning of the new undertaking in the new market segment (Å picar, 2014).

    Internal Analysis: The business of Oak Cash and Carry may focus on the Swot analysis so that the internal strength, weakness, opportunity and threat can be identified.

    Strength

    • The business of Oak cash and Carry experiences a large customer base as the business provides their customers with high quality of products and services (Seto and et. al., 2014).

     Weakness

    • The business may suffer from the lack consumption of their organic foods as  every individual does not consume organic foods.

    Opportunity

    • The business has the opportunity to expand their brands products to the regions or segment where the people does not have the knowledge of these organic foods.

    Threat

    • The business may suffer from the high and tough competition as there are number of companies dealing in the same products.

     

    Cash Flow Statement:

    From the above mentioned cash flow it can be summarised that the business of the Oak Cash and carry can easily pay their debt as the amount which is pending to pay the debt is available to the firm. The respective company has the cash in their hand for the 3 consecutive years that is 2015 as $102203, 2016 as $200354, 2017 as $238503 and average financial gain is estimated as $72001 for the 3 years.  

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    TASK 4

    P5.Succession or exit plan for small business with its advantages and disadvantages.

    There are various elements which have impacted the working of the business example, political, economic fluctuation, innovative up-degree and so forth which has come up with large number of difficulties and has definitely influenced the matter of Oak Cash and Carry because of which its productivity and business circumstances is in threat (Keough, 2015). It has lead the director of company to think whether to leave the market or sustain with the expectation of getting successful in the near future. A few different ways to exit and progression of business are referenced underneath:

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    Liquidation – It is the process which refers to the winding up of the firms when the business become insolvent in paying its debt.

    Advantage:

    • Employees working within the company can claims for any unpaid salary, holiday pay, notice pay and redundancy from the funds of the government. For Instance: the business of Oak Cash and Carry can build strong relations with the employees by asking them if there is any unpaid salary left so that the goodwill of the business can be maintained.

    Disadvantage:

    • Once the decision for the Liquidation is taken the firm will no longer be able to trade in the market. For example: If the business of Oak Cash and carry takes the liquidation decision they cannot trade in the market and are also not allowed to increase productivity (Barbour and Deakin, 2012).

    Sell of the business in Open market: Here the business is sold in the open market to the third party it can be either the employees or the manager of the firm. The firm here decides to continue the business by selling it to another party rather than winding up of the business.

    Advantage :

    • The employees who are working within the company turn out to be more familiar to the working environment due to which the business can easily perform their activities in the near future. For example: The business can easily achieve their business vision and objectives by expansion of their business operation in the market. Which has leads to the increment in the profit margin and sales volume of the business.

    Disadvantage:

    • The management of the business operation is affected due to the lack of trust among customers. For Instance: the goodwill of the business in the mind of the customer decreases as the business is being sold in the open market which leads to decreased level of profitability and productivity (MacLeod, 2013).

    Merger : Merger is generally a agreement between two different entities. It is also refereed to as a process where the two organisations come together to form a new ventures through a contract and a mutual understanding.

    Advantage :

    • Merger between the parties can leads to increased profit margin and revenues of the firms. For Instance : when  the business of Oak Cash and Carry come together with the another company with the mutual understanding than the chances of the business expansion and revenues increase.

    Disadvantage:

    • Merger can leads to decreased level of the communication and coordination as it is difficult for the business to communicate with large number of employees. For Example: the business of Oak cash and Carry may suffer from the decreased level of the productivity and coordination as there are number of people working within the company with different culture and mindset.

    Acquisition: Acquisition is the process of purchasing the shares of the other company so that the control over the other company can be gained(Lambert and Oatley, 2017).

    Advantages:

    •  It allow the business to enter into the new market with the new products as the risk associated with the development of the new product is minimised.

    Disadvantage :

    • The business may suffer from the issues which arise while integrating the new business and old entities.

    CONCLUSION

    From the above mentioned report this can be frame that planning plays a vital and significant role in the business as it provides the business with number of plans and strategies which support the business in accomplishment of their goals and objectives. Apart from this various models have been mentioned such as Porter generic model and Ansoff's model to evaluate the growth opportunity available to the business. Along with this a business plan has also been prepared so that the business of Oak Cash and Carry can successfully launch their new business venture and can provide the employees with the proper directions and guidance. A structure must also require to consider exit or succession ways after analysing the scope of company in near future.

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    REFERENCES

    • Keough, S. B., 2015. Planning for growth in a natural resource boomtown: Challenges for urban planners in Fort McMurray, Alberta. Urban Geography. 36(8). pp.1169-1196.
    • MacLeod, G., 2013. New urbanism/smart growth in the Scottish Highlands: Mobile policies and post-politics in local development planning. Urban Studies. 50(11). pp.2196-2221.
    • Arzaghi and et. al., 2017. Risk-based maintenance planning of subsea pipelines through fatigue crack growth monitoring. Engineering Failure Analysis. 79. pp.928-939.
    • Litman, T., 2013. Planning principles and practices. Victoria Transport Policy Institute. pp.1-35.
    • Pothukuchi, K., 2015. Five decades of community food planning in Detroit: city and grassroots, growth and equity. Journal of Planning Education and Research. 35(4). pp.419-434.
    • Holman, N. and Rydin, Y., 2013. What can social capital tell us about planning under localism?. Local government studies. 39(1). pp.71-88.
    • Güneralp and et. al., 2015. Balancing urban growth and ecological conservation: A challenge for planning and governance in China. Ambio. 44(6). pp.532-543.
    • Å picar, R., 2014. System dynamics archetypes in capacity planning. Procedia Engineering. 69.  pp.1350-1355.
    • Crow, L. H., 2015, January. Reliability growth planning curves based on multi-phase projections. In 2015 Annual Reliability and Maintainability Symposium (RAMS). (pp. 1-6). IEEE.
    • Seto and et. al., 2014. Human settlements, infrastructure and spatial planning.

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