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Critique Of A Business Growth Plan Add in library

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Question:

Critique a business growth plan to provide an overarching assessment of strengths and weaknesses, and across 4 dimensions:

• Scalability of opportunity
• Level and nature of innovation
• Articulation of risks
• Consideration of potential to increase profitability/reduce costs
 
 

Answer:

1. Introduction

Growth plan is the key to the survival of any business. For every successful business, it is important for them to review the business growth plan regularly to ensure continued success of the business and to review the current state of the business according to the plans and to monitor if the business objectives are being achieved. This helps in identifying new strategies for growth. The main aim of this essay is to critically review the business growth plan of a company that trains and educates adults with learning disabilities across the West Midlands and to provide an assessment of its strengths and weaknesses across the four dimensions: Scalability of opportunity, Level and nature of innovation, Articulation of risks and consideration of potential to increase profitability and reduce costs.

2. Scalability of Opportunity

Scalability of a company is its ability to increase its revenue significantly and not be constrained or stopped by its own resources and structure. The presence of proper management, information systems, documented processes and SOPs to manage the growth of the company aids in the scaling-up of the company. The resource-based theory (Barney, 1991) is a useful tool in measuring scalability and competitive advantage of a firm. The resources of a company can be basically divided into tangible and intangible resources.

2.1 Tangible Resources

This includes the financial, physical, human, and organizational resources.

2.1.1 Financial Resources

In case of this company, there was an initial collapse in the revenue stream where tight financial management helped the business survive. The company has since developed an additional revenue stream, proper financial reporting, and excellent relationship with banks. Financial reports to monitor income levels, salary costs to determine profits are done weekly and re-forecasted monthly. They have a proper chartered accountant firm documenting their annual reports. This makes the company financially healthy.

2.1.2 Physical Resources

The company has good physical resource structure and the capacity of expand. The business is nearly two decades old and has been growing strong. They have owned, rented and leased premises spread across the area and are constantly expanding with good quality accommodation. The company at present runs two minibuses which are used for only special clients. This has been done to reduce complexity and cost on their side which could be viewed as a discomfort by other clients. Otherwise, the company has up to date equipments required for the smooth running of the business and have invested in constantly updating the equipments in order for the latest software, internet and good reliable hardware to be available to the staff. Good quality furniture, photocopiers and computers are also available.

2.1.3 Human Resources

 The company contains a senior management team with experience in learning disabilities field and significant experience in dealing with adults with learning disabilities. Experienced middle management, and tutors, classroom assistants, learning supporters and mentors are all highly qualified and trained considering the complexity of their jobs. They also have a well developed HR system with a manager. As far as human resources is considered, they do have significant strength but need more processes to look into employee engagement issues and also an organizational hierarchy to ensure not to burden any single person with too much work.

2.1.4 Organizational Resources

The existing organizational resources of the company are strong. The organization has evolved over time as the business progressed and is constantly reviewed and remodeled with changing dimensions and complexities to ensure best possible work delivery. They have formal planning, controlling and coordinating system with a proper reporting structure.

 

2.2 Intangible Resources

The current business operation of the company has excellent reputation built over the last fifteen years due to excellent track record. The novelty of the idea and the continued deliverance has resulted in continual referrals and earned the company a first class reputation among the clients. They have also been awarded the National Offender Management award for their prison work. Their recognition as leaders in the field and the growing reputation makes for a significant resource when it comes to the scalability of the business. Also, the comparatively weaker competition and high entry barriers has increased the brand value of the organization enviably.

2.3 VRIO Analysis

Attributes

Value

Rarity

Inimitability (Costly to imitate)

Organization (Is the company organized?)

The company XXXX

Valuable

Rare

Yes

Yes


The core value of the company is valuing people with learning disabilities and also their employees via excellent employee management practices. There are very few companies in the field in the area and XXXX’s working closely with families, placing the students and providing them with work experience and giving ex-offenders another chance add to the value of the firm since it is also a rare capability. The cost to imitate this venture is difficult at least in the near future. And also the company has the capability and organization to exploit its advantages and keep growing.

2.4 Strategic planning

Strategic planning provides with the strategy for an organization to gain and maintain success. The strategies can be broadly classified as intended, emergent and realized strategies. According to Mintzberg, emergent strategies include learning what works. In case of XXXX, the strategic planning has been emergent with continued consistency, that is without conflicting goals, consonance, competitive advantage and feasibility of the change implementation.

Porter’s Three Generic Strategies

Porter devised three generic strategies for creating a strategy that defends the business in the long run and helps outperform competitors. Cost dealership which refers to being the lowest in cost relative to the competitions, differentiation which refers to the unique nature of the product pertaining to product design, brand images, number of features and new technology use, and niche strategy where the focus is on a particular user group. As far as XXXX is concerned healthy finance and tight financial management, constant growth of reputation, brand loyalty and catering to people with disabilities gives the organization the advantage and the ability to succeed.

3. Level and Nature of Innovation

There are four levels and nature of innovation: Incremental, New insight, Specialist and ‘New world’ innovation. Apart from the very idea being unique, on their way to their current stage, the organization has implemented several innovations like developing their social enterprise learning model for clients, working with prisoners with disabilities, adopting the new latest technology for their purposes and continuous expansion has worked in their favor.

4. Ansoff’s Matrix

Penetration

Penetration strategy is employed in selling existing products to the existing client base. Changing price, adding innovations, or highlighting competitive advantage and uses are some of the common strategies. The services of XXXX offered at nominal prices catering to a wide client base with innovations such as social enterprise learning models and prisoners educating service has aided as a good penetration strategy.

 

Market Development

The increase in survival and life expectancy rates of people with disabilities has increased the volume of disabilities in the West midlands leading to an increase in demand for special schools. Also people do not prefer institutionalization anymore and prefer these kinds of trainers due to the independence and the ability to live with family while getting educated. In case of XXXX, they are confident of the continued growth of their market in the existing geographical markets as well as the new geographical areas as more and more people see the advantages of the provision as they can exploit the potential new services.

Product development

The company is making continuous development in the care and educators sector. The personal development education provided is perceived as being very innovative. Also the training and placement activities and the prison service led to the creation of a brand value and a helpful product development strategy.

Diversification

Diversification is employed while introducing new products in new markets. The new health dependent specialism can be exploited by XXXX and enter new markets. Also the existing social enterprise learning model can be taken into new markets.

5. PESTEL Analysis

Macro-economical analysis of a business is done using the PESTEL analysis.

Political/ legal Factors

This includes the political/legal factors affecting the business environment. In case of XXXX, local authorities in the geographical area cut costs. To reduce the huge payroll and pension liability together with the premises cost, the conventional network of day centers is being radically cut. Also, local authorities have a legal duty to provide a funded service and hence look to pay private/ charitable providers to meet this. Even if it is politically/legally uncomfortable, the local authorities have to seek more efficient ways of meeting their obligations under UK and European law. Good quality cost effective alternatives are needed and the government’s intention to pass responsibility back to parents could pose as a problem.

 

Economic Factors

The services offered promote the economic equality among individuals. The geographical base of the economy has ample growth on the economic sector with lower inflation rates and hence can help the business growth. Also the market demand for the services offered is higher.

Social factors

The increased life expectancy rates and the rate of survival of children with disabilities and the general attitude and the lifestyle of people in the country make the demographics favorable for the business. The company is also developing new and useful contacts more and more within the local authority, colleges, policing sectors and prisons.

Technological Factors

The presence of appropriate technology required by the service, new server and cloud technologies, database management, outsourced payroll services, data back up and continual adaptation to any new technological requirements are also in favor of the business.

Environmental factors

The importance of environmental factors in business analysis is very important due to the direct dependency of the business on weather, climate, natural calamities, natural resources and environmental legislation. The company has a strong environmental awareness policy and has always maintained the desire to combat environmental issues. The weather conditions can have a direct impact on the services as the commuting becomes difficult for people attending the school.

6. SWOT analysis

Strengths

The social enterprise learning model, the capability to cater to complex needs, hands on activities and the good marketing strategies, reputation and brand image are the core strengths of XXXX.

Weakness

The weakness in case of this organization is the absence of a strong management team and employee evaluation program. Also, the absence of a defined hierarchy has resulted in the overloading of work to a particular individual resulting in inefficiency.

Opportunities

The exponential increase in the number of adults with learning disabilities in the UK has increased the pressure on the local authorities to provide appropriate support services. This is a major opportunity for their business and offers cost reduction opportunities, and innovative quality offers since using specialized providers is an attractive offer compared to managing one by themselves.

Threats

The threats to the business are very minimal considering the weak competition and high entry barriers. Also, the brand is already in an enviable position with high reputation and hence has the competitive advantage.

The company’s marketing mix is tailored to reach every corner of the market and is even capable of growing into new geographical areas. The pricing strategy of the company is aimed at providing fifty percent of gross profit while still keeping the prices competitive and also providing sufficient return to satisfy stakeholders and retain enough profit needed for the growth and development. There are ample opportunities for revenue creation from related target market. There is also a tight financial regulation process to closely monitor cash inflow and outflow. All things considered, the potential to increase profitability and reduce costs is ample in the business.

 

Conclusion

The company has a clear vision and mission but needs to use the resources and assets available to them as best they can. Though the competition at present is weak, they need to constantly drive improvement and be forward thinking while analyzing competition. Staying ahead of the competition is necessary. In this excessively competitive world when small mistakes are magnified and quickly displayed via the social media and media services, it is critical to minimize risks. Considering the proposed plan for growth the managing of the company, the span of control will be too wide for the MD alone to manage things, hence it is necessary to hire an operations manager. In order to cater to wider area, additional premises are required. Since the market growth is expected to continue at 2-5% p.a extensive market research should be conducted to have adequate market data. Sufficient back up plans could be devised for damage control so that the new services do not affect the existing operations. It is also important to ensure that the employees are well trained, well engaged and are customer friendly. Applying these recommendations can help strengthen the business prospects for the organization.

 

References

1. Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17 (1), pp. 99–120.

2. Barney, J. (2001). Is the resource-based view a useful perspective for strategic management research? Yes.  Academic of Management Review, 2 (1), pp. 41–56.

3. Cardeal, N. (2012). Valuable, rare, inimitable resources and organization (VRIO) resources or valuable, rare, inimitable resources (VRI) capabilities: What leads to competitive advantage? African Journal of Business Management, 6(37).

4. Grant, R. (1991). The Resource-Based Theory of Competitive Advantage: Implications for Strategy Formulation. California Management Review, 33(3), pp.114-135.

5. Peteraf, M. (1993). The cornerstones of competitive advantage: A resource-based view. Strategic Management Journal, 14(3), pp.179-191.

6. Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), pp.171-180.

7. Dess, G. and Davis, P. (1984). Porter's (1980) Generic Strategies as Determinants of Strategic Group Membership and Organizational Performance. Academy of Management Journal, 27(3), pp.467-488.

8. Mintzberg, H. (1978). Patterns in Strategy Formation. Management Science, 24(9), pp.934-948.

9. Mintzberg, H. and Waters, J. (1985). Of strategies, deliberate and emergent. Strat. Mgmt. J., 6(3), pp.257-272.

10. Murray, A. (1988). A Contingency View of Porter's "Generic Strategies". Academy of Management Review, 13(3), pp.390-400.

11. Tanwar, R. (2013). Porter’s Generic Competitive Strategies. IOSR Journal of Business and Management, 15(1), pp.11-17.

12. Richardson, M., and Evans, C. (2007). Strategy in action: Applying Ansoff’s matrix. British Journal of Administrative Management, 59, pp.1-3.

13. Gillespie, A. (2007). PESTEL analysis of the macro-environment. Foundations of Economics, Oxford University Press, USA.

14. Yuksel, I. (2012). Developing a Multi-Criteria Decision Making Model for PESTEL Analysis. International Journal of Business and Management, 7(24), pp.57-66.

15. RoÅŸca, I. G., Păunescu, C., & Pârvan, C. (2010). Shaping the future of higher education in Romania: Challenges and driving factors. Management & Marketing, 5(1), pp.57-70.

16. Piercy, N., & Giles, W. (1989). Making SWOT analysis work. Marketing Intelligence & Planning, 7(5/6), pp.5-7.

17. Houben, G., Lenie, K., & Vanhoof, K. (1999). A knowledge-based SWOT-analysis system as an instrument for strategic planning in small and medium sized enterprises. Decision support systems, 26(2), pp.125-135.

18. O’Farrell, P. N., & Hitchens, D. M. W. N. (1988). Alternative theories of small-firm growth: a critical review. Environment and Planning, 20(10), pp.1365-1383.

19. Walker Jr, O. C., & Ruekert, R. W. (1987). Marketing's role in the implementation of business strategies: a critical review and conceptual framework. The Journal of Marketing, pp.15-33.

20. Wong, P. K., Ho, Y. P., & Autio, E. (2005). Entrepreneurship, innovation and economic growth: Evidence from GEM data. Small Business Economics, 24(3), pp.335-350.

21. Brown, T. E., & Ulijn, J. M. (Eds.). (2004). Innovation, entrepreneurship and culture: the interaction between technology, progress and economic growth. Edward Elgar Publishing.

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