The Growth Plan for Flashingblade Ltd.

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Sheffield Hallam University                Financial and Business Environment

The Growth Plan for Flashingblade Ltd

Throughout the industrialised world, wide economic innovation, rapid technological change, and increasing globalisation are striking to business.  It is in these circumstances that small firms have thrived.  The significance of all these effects, however, depends to a great extent on the ability of small firms, once established, to grow.  Innovative ability is, of course, an important source of growth, but it will often come up difficult choices and constraints (Barber, Metcalfe, and Porteous, 1990).  Flashingblade, a private limited company, which produces high quality penknives in Sheffield, is anticipated a major player in the global penknife industry.  Difficult economic environment may prevent the growth of Flashingblade Ltd, but the appropriate growth methods and accurate financial management should be ready to replace it (Croft, Norton & Whyte, 1999).  In what follows, each of them will be discussed.

“A small business stands a significantly higher chance of failure than a large business, and yet many small businesses survive and some grow” (Sloman and Sutcliffe, p241).  However, what are the chances of success?  Flashingblade is in the situation that a starting small firm is imperfect in the market for the growth of strategy and the provision of finance.  Growth in size may reduce risks for Flashingblade.  For example, if it does badly in one market then the firm can fall back on profits being made in the other market (George, 2001).  To being a major player in the global penknife industry, it thus may need to occupy and develop niche markets in order to fit the company to survive and grow in conditions of fluctuating demand.  

Since there has been a rise in the number of small firms in recent years, the support from UK government and EU become more significant.  Flashingblade thus may be supported by the UK government and other agencies.  The opportunities and various financial assistances to start small business are available from central and local government.  It is one of the principal aims that could reduce unemployment by increasing small firms.

To make Flashingblade grow, it is very obvious that the company should identify the potential methods of growth at this situation.  Being a small firm, Flashingblade cannot gain much of economies of scale, which reduce the unit cost of stocks.  It thus may lose in the price war, which will be discussed in the following.  Moreover, Flashingblade is a price taker in the market because of its scale (Sloman and Sutcliffe).  Therefore it has no power to charge the market prices of its penknives since the demand curve is very elastic.  Clearly, Flashingblade will lose its existing market share and even will be taken over, if other large penknife producers step into the market.  To overcome its weaknesses, a good strategy of expansion is very necessary.  This may be embarked upon by one or both of the internal or external expansion.

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In order to maintain its existing market and exploit a new market, differentiation of its products should not only be considered in short run, but also in long run strategy.  For example, if producing penknives is very profitable, more and more companies will turn to produce them, and this will cause a supply surplus and lower the revenue (Sloman and Sutcliffe).  As the imitating action among the same business sector is very common, Flashingblade should do some market segmentations and market researches to expand its products as a way of internal expansion.  To do a deep market segmentation and research, ...

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