Please run the assessment through Turnitin before release.
Business scenario
Your family owns a small busin
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Please run the assessment through Turnitin before release.
Business scenario
Your family owns a small business (select a small / medium size business of your in London area) which has been trading for the last 15 years on a major high street. Over the last 12 months the business has suffered a major setback due to the COVID 19 pandemic.
With the recent lifting of restrictions for non-essential businesses to start trading face to face again, the business is now facing serious competition from online trading which has seen a surge in business trading. However, your family still believes trading on the high street is central to the history and fabric of the business.
The business has a very good credit rating, and you are informed that most lenders in the UK would consider lending to the business should additional capital be required. In the last financial year which ended 31st December 2020, the business posted a loss of £20,000. There is an arranged overdraft facility of £10,000.
Activity LO 1
Analyse the key considerations your family business must consider in evaluating the growth opportunities for the business and justify these considerations. Then, you must evaluate these opportunities for growth applying Ansoff’s growth vector matrix.
To enhance your grade discuss the options for growth using a range of analytical frameworks to demonstrate the understanding of competitive advantage for your family business. Then, critically evaluate specific options and pathways for growth, taking into account the risks of each option and how they can be mitigated.
Answer for LO1:
Analyse the key considerations SMEs should consider when evaluating growth opportunities.
Critically evaluate specific options and pathways for growth, taking into account the risks of each option and how they can be mitigated.
Guide answer for LO1:
Business scenario:
- Your family owns a small business (select a small/medium size business of your choice – see page 9 for a definition of SMEs in London area) which has been trading for the last 15 years on a major high street. Over the last 12 months the business has suffered a major setback due to Covid 19 pandemic.
- With the recent lifting of the restrictions for non-essential business to start trading face to face again, the business is now facing serious competition from online trading which has seen a surge in business trading. However your family still believe trading on the high street is central to the history and fabric of the business.
- The business has a very good credit rating and you are informed that most lenders in the UK would consider lending to the business should additional capital to be required. In the last financial year which ended 31st December 2020, the business posted a loss of £20.000. There is an arranged overdraft facility of £10.000.
Learning Outcome LO1
Analise the key considerations your family business must consider in evaluating the growth opportunities for the business and justify these considerations. Then you must evaluate those opportunities for growth applying Ansoff’s growth vector matrix.
Discuss the options for growth using a range of analytical frameworks, to demonstrate the understanding of competitive advantage for your family business. Then critically evaluate specific options and pathway for growth, taking into account the risk of each option and how they can be mitigated.
Guide answer L01:
- Select a small/ medium size organisation from UK
Small= 10 to 49 staff
Medium = 50 to 250 staff
- Explain how the company selected qualifies as a small/medium size company
- Explain the industry it is operating in
- Conduct SWOT analysis of the company
- Conduct PESTLE analysis
- Introduce ANSOFF matrix
- Recommend which of the Ansoff strategy would be most beneficial to the company
- Demonstrate how Porters Generic Strategies can be used
- Demonstrate how BCG can be used
What is the meaning of analyse
Synonyms for to analyse:
- Look over
- Study
- Scrutinise
- Search
- Investigate
- Explore
Inspect
- To examine methodically and in details, for compliance or defects.
- When you analysing an item you are about to purchase from a shop : you examine for size; colour; shape; prize and also if there are any defects etc
What are the key considerations using SWOT
- Strengths: staff mgmt; location; product or service; core competences;
- Weaknesses: reported loss of £20,000; current pandemic restriction; no online presence; loss of clientele; loss of staff; loss of suppliers.
- Opportunities: few competitors in the area; media coverage; underserved products; opportunity to introduce new products; collaboration /partnership with other companies; developing mobile apps
- Threats: Emerging competitors; lack of staff; vogue; due to lack of raw materials contracts may not be completed
What are the key considerations using PESTEL
- Political: new restrictions; increase of taxation; CIPD; new trade restrictions;
- Economic: increase in labour cost; inflation; interest rates; exchange rates;
- Social: decrease population; life-style attitude- online shopping; social distancing; people carrying hand sanitisers; wearing of face masks ; Sneeze guard (Acrylic)
- Technological: creation of websites/ creation of online apps; automation of machines; virus attacks; lack of skills for personnel using new software; low maintenance;
- Environmental: temperate checks; social distancing; hand sanitizer; CCTV;
- Legal: wearing of face mask; hand sanitizers; restriction number of people in groups;
Application of Ansoff Matrix to our Family business
- What is Ansoff matrix?
- How relevant is Ansoff matrix to our family business?
To evaluate growth opportunities using Ansoff:
Options of Trading to consider
- Virtual customers = Online customers
- Actual customers = Location visit customers
How to mitigate risks
1. Tolerate:
2. Terminate:
3. Transfer:
4. Treat:
Porters generic strategies
- Cost leadership
- Cost focus
- Differentiation
- Focus
Activity LO2
Assess potential sources of funding available to your family business and discuss benefits and drawbacks of each source. Then, evaluate potential sources of funding and justification for the adoption of an appropriate source of funding for your family business.
To enhance your grade, critically evaluate potential sources of funding with justified argument for the adoption of a particular source or combination of sources, based on organisational needs.
Guide answer L02:
Critically evaluate potential sources of funding with justified argument for the adoption of a particular source or combination of sources, based on organisational needs.
You may write this as a report to be presented to members of your family business.
2. State the name and size of your family business
3. Provide an introduction of why the report has been written. Refer to the assignment scenario.
4. Provide a definition of the size of your family business. Whether Small or Medium with justification to confirm your understanding of what a small or medium size organisation is. An academic definition as well as a reference to Companies Act 2006 would be great.
5. Explain the type of trade that your family business engages in, e.g what product(s) or service they offer to customers. Examples could be Catering business; Dry cleaning business; Groceries shop; Bed and Breakfast.
6. Who are the registered owners of the business: how many members of your family
7. Location of the business
8. How long it has been trading.
. Write a few points about how the current economic /financial condition in the country i.e pandemic has affected your family business. Don’t forget some companies have done well out of it.
10. Most importantly, the last financial loss of £10,000 and the good track record that has enable the company to be offered an overdraft facility of £20,000
11. Now introduce your proposals on how the company can step up/ grow from the current financial position.
12. Introduce Sources of funding available to your family business: Explanation of each source; advantages and disadvantages of each. Remember the size of your family business will determine the type of funds it can obtain.
- Friends and Family members
- Bank Loan
- Bank overdraft
- Government grant
- Venture capitalist / Business angels
- Sale of unwanted assets
- Hire purchase
- Trade creditors
- Debentures
- Issue of shares
13. To enhance your grade you may wish to point out factors that banks or venture capitalist would take into consideration before they offer credit facility
14. To enhance your grade you may discuss investment appraisal techniques as ways to determine how long it may take to generate funds to pay it back. Discuss other techniques: NPV; ARR
15. Recommend appropriate funding based on all the factors you have considered.
Activity LO3
Design a business plan for the family business’ growth that includes financial information and strategic objectives for scaling up the business. For higher grades your plan should be an appropriate and detailed business plan for growth and securing investment, setting out strategic objectives, strategies and appropriate frameworks for achieving objectives.
To enhance your grade further, present a coherent and detailed business plan that demonstrates knowledge and understanding of how to formulate, apply and achieve business objectives successfully.
Guide answer L03:
Present a coherent and detailed business plan that demonstrates knowledge and understanding of how to formulate, apply and achieve business objectives successfully.
Our business plan must include the following essential section
1.Executive Summary: Objectives / Mission / Keys to Success
2. Company Summary
3. Products/ Service
4. Market Analysis Summary
5. Strategy and Implementation Summary
6. Management Summary
7. Financial Plan
Coherent arguments that demonstrate knowledge of each section and conclusions. Please note financial information within your business plan such as estimated profit, sales forecast and cash flow forecast are essential to achieving a pass in this learning outcome.
Activity L04
Assess exit or succession options for the family business explaining the benefits and drawbacks of each option. Then, evaluate these exit or succession options for the business, comparing and contrasting the options and making valid recommendations. To enhance your grade further, provide critical evaluation of the exit or succession options for the family business and decide an appropriate course of action with justified recommendations to support implementation.
Guide answer L04:
Provide critical evaluation of the exit or succession options for a small business and decide an appropriate course of action with justified recommendations to support implementation.
Coherent exit and succession strategies available to small and medium companies must be discussed before presenting appropriate recommendations for your family business based on justifications. Your critical evaluation of each options in view of their financial circumstances and the economic condition of the country will undoubtedly enhance your grade.
Please run the assessment through Turnitin before release.
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