LoginPage 0: Introduction
A business grows by increasing and/or improving those things that help it generate future wealth, i.e. its assets both tangible and intangible. Typically this involves investing in those assets. For example, by:improving the quality and appeal of the existing product range plus new product developmentbuilding up a portfolio of well-known brands (intangible)refitting and modernising existing...
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Page 1: Going for growth
Growth is an important business strategy; many advantages flow from being bigger. Size brings with it many savings, e.g. an ability to buy at a lower cost in bulk and to spread the company's fixed cost base over a far larger output. This allows the company to create leverage and improve the return on its asset base, achieving economies of scale. Some businesses are much better placed than others...
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Page 2: Internal growth
a) Developing and selling new productsMFI's strategy is to 'provide furniture for every room in the home'. It looks to ensure that every year at least 20-25% of its products are new ranges. To support this goal the company invests significantly each year in product design and introduMFI, customers, bathrooms, refits, bedroom, design, stores, market, kitchens, appealing, floor, Refitting, prices...
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Page 3: External growth
MFI's external growth has involved identifying businesses that match its goals. In the UK, the company mission is:"To offer UK homeowners the biggest range of branded kitchens, bedrooms and associated products at unbeatable prices; all delivered free with a full range of design, installation and credit facilities."MFI wants to help each customer live a better life in their home by offering full...
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Page 4: SWOT analysis
The acquisition of Sofa Workshop resulted from a careful SWOT analysis involving an examination of that company's strengths and weaknesses coupled with an examination of opportunities and threats in the wider business environment.Strengths were headed by the Sofa Workshop brand name - the established leader in design, quality and marketing. Another was Sofa's Workshop's resources, including:an...
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Page 5: Sources of finance
A business needs finance to fund growth. One source is the profits the business generates. However, if it wants to grow more quickly it can either issue new shares or seek funds externally, e.g. through bank loans. To be able to do these things, it must be attractive to investors. Raising capital through a share issue is expensive and becomes harder when you have borrowed from banks excessively...
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Page 6: The results of sound financial investment
The overall effect of MFI's modernisation programme has been to increase profitability levels while at the same time increasing the Return On Capital Employed (ROCE) in the business. With increasing profits the business is able to:generate the cash required to run the business on a day-to-day basiscreate the profits that enable faster internal growthmake much better use of all the capital...
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Page 7: Conclusion
MFI continually seeks to maintain its strong position as market leader. To achieve this it needs to move forward and grow by giving customers more of what they want. This involves detailed market research and careful investment in brands, store layouts, products, and new technology, and in staff development. Growth has been financed in such a way as to secure the cash and the profits that will...
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