Growth Plans of Gower Ltd - Case Study Example

Course Title Assignment Title Gower Business Report Student’s name Word count - 1502 Seminar Leader Executive Summary The aim of this report is to analyze the possible implications of the proposed growth for each of the functional areas of the business. The report also tries to find out the biggest problem the business is likely to face. It explores production, marketing, organizational and structural changes that will be needed for its growth. It finds out that with a proper planning of all the expansion plans and arrangement of financial and human resources, it can reach its target. It will need to be careful about regular business review and must adopt a shift in attitude. Shared vision and efficient leadership has been its strength so far and that must be maintained for its growth. Introduction This report will study the growth plans of Gower Ltd. This Business has some special features. This is not very old as it was started in 2005. It does not have a large work force. It started with two staff, and now has six. The production is done on Gower’s own farms that are three in number. The marketing is done to special outlets as a premium product. The product range is three flavours of hand fried potato crisps in one pack size. In first year Gower’s Ltd. achieved a turnover of GBP 300,000 and profits of GBP 30,000. They have won a business award for entrepreneurship also. Their target is to reach a turnover of GBP 10m by 2012 and have staff of 60 by then. Its current turnover is nearly GBP 1m. Methodology The method will be to break down the implications of growth on various aspects of the business and find out the necessary steps that will have to be taken to make the growth possible and then to sustain the growth. The structure will be:- Review different aspects Draw conclusion from these aspects Identify problem areas Conclusion Production For reaching a turnover of 10m which is 10 times the current turnover the first and foremost requirement will be increase in production. Currently it is utilizing the maximum capacity of its three farms. It is evident that to increase its production, it will have to acquire more farms. It may have to explore agro-technology to increase its yield per hectare. The production can also be increased by improving the processing methods like better storage and faster transportation. Marketing actions The other most important aspect, may be more important than increased production, is improved marketing strategies (Mullins et al, 2005). It will have to increase its sale per outlet and have more outlets. Since it is averse to go to supermarkets, and has positioned its product as a premium product, it will have to think in that direction only. It can reach out to neighbouring cities and states and may be international. Locally it can find more suitable outlets like the five star hotels or other luxury places. To increase its sales per outlet, it will have to give them incentives on increased turnover. It can give them specific targets and announce rewards on reaching those figures. It can also have a variation in its packing size. A smaller packing can get the on-the-move customer and a bigger packing can be positioned as the family pack. There could be combo packs with all the three in one pack with an added fourth item of the smallest pack as free gift. Gower Ltd can also add more flavours to its range. This will get new customers and also give another option to the existing customer. Structure and Organization With expansion, it will require restructuring of the organization. In a small production, there is no clear demarcation of work and responsibilities (Collins, 2004). For expanding it there must be clear demarcation so that various aspects of the business can be dealt with efficiently and accountability can be fixed. There have to different departments for marketing, accounts, administration and production. This will also mean more human resources as well as financial resources. Managing and motivating a larger work force Managing and motivating a larger workforce has become the key issue with many businesses today. Unlike other resources needed in the business, this resource is most unpredictable and still most important. It is highly dependent on the leadership of the organization to keep the workforce motivated. One of the important factors here is clear vision of the leader and shared vision among all other employees. The leadership here, i.e. the chairman of Gower Ltd has a clear vision but to make it happen, it must be turned into a shared vision. So far he has been successful in keeping a motivated workforce happy with the success of the organization even when they are not getting high financial returns. With increased staff strength, he may need to adopt some different methods. There are five methods of leadership:- inspiration, facilitation, persuasion, manipulation and coercion( Powell,2003). In a larger workforce everyone may not have the same commitment level that is why inspiration may not work with everyone. Then one needs to try the other methods. Finance for growth As we have discussed above, increase in turnover means increasing production, increasing workforce and increase marketing and distribution. All these things require finance. Since the objective is to increase the turnover ten times in a span of five years, or twice every year, it will require immediate increase in financial input to increase all its facilities. Reinvestment of profits cannot be sufficient for the required growth rate. There are three main sources for raising capital apart from bank loans. They are – equity capital, venture capital and business angels (Allenby & Fennel, 2004). Equity capital is money invested in the business by the owner or close friends and relatives, which is not repayable immediately. The owners can raise money by mortgaging property and others can invest by taking a share in the business. This means that it will have to take help from a financial institution to fund its expansion plans. Venture capital is normally used in the initial developmental stages which is an investment by a fund. Business Angels are private investors who take a stake in the business and contribute advice and contacts that is extremely valuable. Gower Ltd will have to choose one of these options. Operational implications of increased production With all arrangements made for increase in capital investment, marketing and production, there will be certain issues that need to be addressed. The most important thing to be maintained is the quality. Gower’s product is a quality product and so far it is being produced at comparatively smaller scale. It is a handmade product. As the number of staff will go up, more people will be required to be trained for producing the same quality product. The production of the raw material will also need to be maintained as per quality. To ensure this, Gower’s will require a dedicated department for quality control, that will check the products before they go to the market and also supervise the farms and the hand frying of the crisps. Increased production will also require storage facilities for the farm produce as well as the finished product. Transportation facilities will also need to be increased and arranged. Gower’s will need to look into the legal and taxation part of the industry. It may be exempted from certain taxes as a small scale industry but with increase in turnover, it will need to reassess it position in context with tax laws. Overall implications As discussed above we find that reaching the target requires a strategic planning. The production and marketing need to be increased. For both these things, they will require a fresh input of financial resources and human resources. All these things should be implemented with expert advice and guidance. This will ensure a successful execution of the plan. The organization will need to become more professional in its way of functioning as it grows from a small business to a giant one (Allenby & Fennel, 2004). Possible problem The most important aspect of the business, especially when it is in growing phase, is change in the attitude of all the people involved (Dubois, 2007). A small business can be managed by one person or few people but as it grows, work and responsibilities need to be delegated. The current owners will learn to rely and trust a management team. They should refrain from having control of the day-to-day activities. In passion to protect the business, they may strangulate the creativity and the capabilities of the management team. Once they assign responsibilities to different department heads, they should also give them liberty to a certain extent. Similarly the employees will also have to shift their attitudes. They may be reporting directly to the chairman at present, but as the structure of the organization changes, they will have to report to the assigned authorities and follow a protocol. This may be uncomfortable for all the people presently involved in Gower Ltd. Change is always uncomfortable but change is also unavoidable. They will need to understand that growth is synonymous with change. Conclusion A strategic planning has three parts – where the business is now, where do you want it to go and what needs to be done for that (Kapferer, 1997). The above report focuses on the third part as the first two are quite clear. By breaking up the various aspects and analyzing the relevant changes needed in them, the growth path becomes clear. A closer scrutiny of proper implementation of a carefully devised plan is the key for growth. There must be continuous reviews of the growth and there must be an open mind for accepting changes. Market place is an ever changing place and one needs to keep a close watch of the same and keep correcting their course to avoid pitfalls. Reference: Allenby, G. M., & Fennel, G., 2004, Integrated Approach: market definitions, Market segmentation and brand positioning create a powerful combination, Marketing Research, 16, 4, 28-34. Collins Jim, 2004, Built to Last: Successful Habits of Visionary Companies Dubois, PL, Jolibert, A & Muhlbacher, H 2007, Marketing Management, "A Value-Creation Process", Palgrave Macmillan, New York Mullins, JW, Walker JR, OC, BOYD JR, HW & Larreche, JC 2005, Marketing Management, "A Strategic Decision-Making Approach", 5 Th Edition, McGraw-Hill/Irwin, New York Kapferer, J., 1997, Strategic Brand Management, ISBN 8175541091 Powell, C., 2003, The Leadership Secrets of Collin Powell Read More