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The Growth Plan for Flashingblade Ltd.

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Introduction

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. ...read more.

Middle

Advanced machinery and skilled staffs will make increasing returns to help Flashingblade to gain some economies of scale (Barber, Metcalfe and Porteous). In other words, Flashingblade could use large machines to decrease the cost of each penknife. Moreover, Flashingblade might gain more profits from selling the unused or waste materials, such as the waste metal, or even producing some by-product, such as tools made by waste metal. Merger looks like a quick way to instant growth for Flashingblade. Simultaneously, it also could prevent to be taken over at this certain scale. "Mergers within Europe have been predominantly horizontal rather than vertical or conglomerate" (Sloman and Sutcliffe, p232). This claims that Flashingblade will be in an intense competition with other penknife manufacturing companies with similar scale. Flashingblade should explore more research and technical development to upgrade its production to lower the costs of materials and increase the quantity and quality to compete with others (Barkham, Graham, Hart & Hanvey, 1996). In other words, Flashingblade may take over or merge with other businesses as a way of external expansion to equip itself. Moreover, merger of its core business could also enter into new geographic areas as Flashingblade only own its business in Sheffield. Due to Pete and Bob anticipate being a major player in the global penknife industry, merger for monopoly power, which is to reduce competition and thereby gain greater market power and larger profits is the suitable method for Flashingblade to be more powerful company in a stronger position (Sloman and Sutcliffe). ...read more.

Conclusion

For instance, if a business can lower its average costs per unit, they will be able to sell more units at a lower price per unit and still increase their total profits (http://www.tutor2u.net/economics/content/topics/buseconomics/scale_economies.htm). In many cases, small firms have their own competitive advantages as a crucial factor over their larger rivals. New technology is an important issue to exploit small firms, and market growth and the progress of technology shift them to larger enterprises (http://www.briefings.com/ca/Calling.html). In other words, Flashingblade should consider as lack of innovation, which is a significant barrier to growth. Flexibility is another competitive advantages that Flashingblade have, as they are more able to change market conditions and to meet customer requirements effectively (Sloman and Sutcliffe). For example, Pete and Bob, who are the owners of the company, may access external sources of technology and internal new products for specific needs, as they are craftsmen in the specialist steel company before. They may then succeed in the intensely competitive market. The growth of small firms is an important issue for economic development. It is very obvious that the growth of Flashingblade will bring many opportunities and profitable aspects. Based on its short run objectives and a financing strategy, the long run growth strategy facing Flashingblade become very practical and efficient to be developed over the next five years. However, much further work is needed to test the results in different circumstances. If it could overcome the difficulties faced, Flashingblade will be able to achieve its goal and have a good prospect in the future. Number of Words: 2086 Sheffield Hallam University Financial and Business Environment 1 ...read more.

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