Running Head: Name of Main subject

[Small and medium enterprises]

[Student Name]

[University Name]

[Date]
 Small and medium enterprises i

Introduction

Due to the rapid globalization and internationalization of the businesses, the capitalization,

revenues and profitability of the multinational companies are increasing which are playing

dominating role in boosting the economies. But despite the multiple opportunities and benefits of

the growth of the MNEs, they are imposing some inevitable challenges for the small and medium

enterprises. For example, Subway is a leading fast food chain which is known to be the fastest

growing franchise all across the globe and it is currently having 45,000 restaurants which make it

the largest single brand fast food chain ion the world (Martin, 2017). But the fast food chains like

Subway and other leading brands are increasing the barriers for the SMEs, and in such business

landscapes, the SMEs have to execute the growth strategies to keep the pace with competitive

requirements so that they could acquire the desired level of market share. in this regard, the

underlying report is aimed at analyzing the growth strategies and different growth initiatives by

focusing on Chilango which is a UK based fast food restaurant that is not having the franchise

structure until now but has the tasteful and quality food and if it avails the growth opportunities it

can gain the attractive market share in fast-food industry (Chilango, n.d).

Q 1:

In order to evaluate the growth opportunities and selecting the most value strategy for growth, it

is important to analyze the Chilango’s competitive advantage, the generic strategy adopted, its

products and services, level of innovation, the product lifecycle stage and the growth options and

collaboration. The competitive advantage of Chilango is its tasty food and well-maintained

quality which helps it in attracting many customers despite the extensive competition from the

leading international fast-food brands available nearby its locations. The generic strategy also
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needs consideration when deciding which opportunity to avail, the generic strategy Chilango has

adopted is the low cost leadership under which it is keeping their polices lower than the

international fast-food chains. Its products are relatively unique and new to the population of

London and it has also even ranked as No 1 Mexican restaurant operating in London (Chilango,

n.d). The restaurant was started in 2007 and it is currently in its growth stage of the product life

cycle and there could be many growth options available if it collaborates with another local

restaurants serving good food. the level of innovation can be considered moderate because no

wonder it surprised the Uk’s population with good Mexican food whch was not avail in most of

the Mexican restaurants until then, but since then on prominent changes into the menu can be

witnessed (Chilangon, n.d).

Q2:

Under the Ansoff’s matrix, the two most attractive growth opportunities for Chilango are the

product development and the market development. It can attain the opportunity of pursuing

product development as its product quality and food is exceptionally good and the London’s

people love it, it can further expand its menu items and start offering some unique recipes to the

same people while operating from its exiting restaurant. On the other hand, another very

attractive strategy is the market development. This growth strategy can help Chilango in availing

the geographical expansion opportunities. Currently, Chilango is located in Boxpark Croydon,

Brewer Street, Brushfield, Camden, Chancery Lane, Fleet Street, London Bridge etc. But all of

its restaurants are located in London (Chilango, n.d). In current scenario Chilango is having the

opportunity to expand in more cities of the UK by offering the same menu to different markets

where will still be new and unique and it can also avail the opportunity of entering into Chinese

fast-food industry. The Chinese population and its emerging economy can offer tremendous
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opportunity for growth and can help Chilango in taking its first step in becoming international

(Dellios, 2005).

Q3:

There are multiple potential sources of funding available to the businesses. For example the

businesses can opt for the traditional bank loans and it can be a default option for most of the

small businesses. The key benefits include non profit sharing, lower interest rates and it saves

time to search an investor willing to invest into the business. But these traditional banks loans

can impose many challenges such a lengthy application processes, cumbersome, following

prerequisites before qualifying for a loan, risk involved in losing the collateral etc. Crowd

funding is also another useful funding option which can be availed quite quickly, it can test the

public reaction easily and the investor can became a loyal customer. But crowd funding doesn’t

unit all types of businesses, and there are risk of not meeting the funding targets. Angel investors

can also provide the benefit of quick access to funding, no need of collateral, discipline and

security etc but this type of funding cannot be attained for an investment below the 10,000

pounds (Wallmeroth, Wirtz, & Groh, 2017). Another important funding source is venture capital

which can provide substantial opportunities of growth as firm can make huge investment but in

this case., the risk of losing the control is very high and as this fund is given in exchange for

equity, the risks are very high.

Q4:

The business plan for growth of Chilango is designed based on the sequence of steps discussed

below:

Step 1: Strategic goals and objectives

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 to increase the sale by 25% by the end of next year

 to increase the market share by 30% within the next 12 months

 to gain more brand exposure and positive word of mouth

 to increase the business revenues by 20% within a year

Step 2: Market research

Two attractive growth strategies have been recommended including the market development in

more cities of UK or entering the Chinese fast food market, and the product development selling

to same market but introducing new range of products and change the menu. For both of these

strategies, the business plan requires the market research, and for this Chilango has to analyze

both primary and secondary data. The secondary data can be collected from the web, but the

primary data must be collected from the fast food customers in the target market.

Step 3: Execution of Strategy

After the market research, one out of the two attractive growth strategies will be selected and

pursued based on the evaluation of the strategic options in accordance with their relevance to the

strategic objectives (Mellahi and Frynas, 2015).

Step 4: Marketing strategy

As Chilango is following the low cost leadership strategy, it has to adopt the marketing technique

that must also be cost effective due to which the best option is the use of social media marketing

which can provide extensive reach with the lowest cost possible (Kao, Yang, Wu, and Cheng,

2016).

Step 5: Financial information

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To set the budget it is significantly important to anticipate how Chilango will perform in the next

3 years. It can be projected that average sale price will be 6 USD each unit and against this price

the cost will be kept as low as 3 USD each unit. It is anticipated that Chilango will start earning

profit when its sales will exceed 4500 units. And it will become profitable once its sales will

exceed 100,000 units.

Step 6: Evaluation and control

After execution of the growth strategy and implementation of suitable marketing strategy of

social media advertisement, the Chilango will be in need of monitoring the progress so that

corrective actions could be taken in timely manner.

Q5:

The exit strategy for Chilango will be the liquidation due to its simplicity and safety. Chilango

will close up the shop and will sell all of its assets under this exist strategy which will help the

owners to reduce the stake and make higher profit in case of success. The succession planning

will be done to stay proactive and to increase the availability of experienced employees. No

mater Chilango opt for market development or product development within London, the

succession plan will be based on training the home country employees so that new leaders could

be developed to replace the old leader in case of any uncertain condition.

Q6:

There are many analytical tools and frameworks which can help in selecting the optimal growth

strategy by understanding the competitive advantage of the firms. The most valued frameworks

include the SWOT analysis based on the analysis of strengths, weakness, opportunities and
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threats (Hung, 2013). Another useful tool for analyzing the environment is the PESTEL analysis

which provides useful information regarding the external environmental trends (Gupta, 2013).

For gaining more detailed understanding if the company’s competitive advantage, the best

analytical tool is the porter’s five forces model. By analyzing the level of rivalry, threat of

substitutes, threat of new entrants, bargaining power of buyers and the bargaining power of

suppliers, detailed understanding of the competitive advantage can be gained. Based on what the

competitive advantage is, market penetration, product or service development, market

development or unrelated diversification can be adopted (Lo, 2012).

Q7:

In 2007, the restaurant was opened by combining the savings of the fiends who established

Chilango and a matching bank loan (Chilango, n.d). An option of funds available to Chilango is

the angel investors such as Costco and Google who can invest in Chilango. The key benefit of

this funding mode is that it can help Chilango in expanding beyond the geographic boundaries of

London and it can eve avail the opportunity of entering Chinese fast food market. But the key

disadvantage of this mode of funding is that Chilango will be bund to pay 20-25 percent return to

these angle investors. The second suitable mode of funding is the venture capitalists as Chilango

is having high growth potential. The advantage is that by his funding mode it can collect tens of

millions of dollars to invest and can grow its network. But by adopting this mode, Chilango will

loss the control as the VC partner will also show their involvement in business operations and

decisions (Edwards, 2018).

Q8:

Following are the steps of the detailed business plan

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Step 1: strategic goals and objective

Step 2: market research

Step 3: Execution of Strategy

Step 4: Marketing strategy

Step 5: Financial information

Step 6: Evaluation and control

A six step business plan is proposed previously based ns strategic goal and objective

identification, market research, execution of the strategy, marketing strategy, financial budgeting

and evalution and control. The key strategic objectives includes 25% increase in sale by end of

year, 30% increase in market share within 12 months, higher brand exposure and word of mouth

and 20% increase in revenue within a year. The best marketing strategy that is suitable for the

budget of Chilango is the social media am marketing no matter it sects the market development

or the product development. The most appropriate framework for attaining the objectives

includes the framework for detailed internal and external market analysis with the use of

PESTEL, SWOT, and Porter’s five forces model. These three frameworks will provide broader

perspectives into which opportunities must be availed and which strengths must be polished to

overcome weaknesses and to prevent the adverse consequences of the threats (Grundy, 2006).

Q9:

For Chilango one exit and one succession strategy has been proposed, but it is important to

evaluate the alternative options to select the optimal option. In addition to liquidation as an exit

strategy, another option is selling business into the open market as it can provide maximum
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return, but if the business will be marginally profitable this option will not be suitable. In contrast

to this, the liquidation will allow winding up the business quickly and gaining value of the assets.

Initially, a succession plan of training the staff was proposed but another option is looking for

recruiting new leaders or appointing local leaders in case of geographical expansion in china.

This external approach to succession is comparatively more attractive as compared to the internal

training and development. So the recommended solution for Chilango is liquidity as exit strategy

and external recruitment of local leader as succession plan (Christiansen & Maher, 2017).

Q 10

The two strategic options proposed includes the market development by entering into more cities

within Uk or entering Chinese fast food market and product development by introducing new

products for the existing market. Out of these two options the best strategic choice for Chilango

is expansion into china under the market development (Gale, and Huang, 2009). This option is

more valued because the emerging economy of china, its large population and social acceptance

for international food makes this market significantly opportunistic and it can meet the

organization’s need increase sale by 25%, increase in market share by 30% , higher brand

exposure and increase in revenues by 20%. The product development strategy cannot provide

such exponential growth and profitability and on the hold, the most attractive option available for

Chilango fast food restaurant is the market development (Dellios, 2005).

Q11

Out of the angel investment and venture capital discussed, the mot suitable option for Chilango

restaurants is the angel investment mode of funding. There is no wonder that angel investments

are also risky but in the current position, it the most suitable mode of funding for Chilango. The
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company require reinvestment that is higher than 10000 pounds but less that 500,000 pounds

which makes it very suitable. Secondly, the angel investors do not require the collateral and there

is higher discipline and security. Moreover, as compared to venture capital funding angel

investment allows access to investor’s sector knowledge and enables to access the mentoring and

management skills. So if Chilango plans to expand in China, by executing the market

development strategy, it can easily provide assistance it requires in addition to the financial funds

(Wallmeroth, Wirtz, & Groh, 2017).

Q 12

Following is the business plan for Chilango to execute the market development strategy while

staying adoptive to low cost leadership into the fast food industry of China.

Step 1: Strategic goals and objectives

 25% increase sale by end of next year

 30% increase market share within next 12 months

 significant brand exposure and increased word of mouth

 20% rise in revenues within a year

Step 2: Market research

When entering into the Chinese fast food market, business requires detailed market research, by

the use of both primary and secondary data. Chinese cousins are significantly different from the

UK’s culinary so the tastes of the population will be analyzed, their eating habits, acceptable

price, and the religious considerations will also be researched and a social media page wall be

developed to interact with the Chinese potential fast food customers (Abuhashesh, 2014).
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Step 3: Execution of Strategy

After the market research, strategy will be pursued and Chilango will enter Chinese fast food

industry by opening its first chain store in commercial area of Beijing.

Step 4: Marketing strategy

As Chilango will adopt marketing technique in accordance with cost effective and in this regard

social media marketing will be used to access and interact with customers (Mellahi and Frynas,

2015).

Step 5: Financial information

Initial investment of 5000 USD will be made and average price will be kept at 6 USD each while

cost will low at 3 USD. Only 100 USD will be spent on marketing as only 2 social media

marketers will be hired, and the staff will be paid the wage based remuneration in accordance

with the industrial standards (Ioanăs & Stoica, 2014).

Step 6: Evaluation and control

Social media matrix will be used along the financial measures to evaluate the actual performance

against the goals.

Q 13:

In case Chilango will fail to attain its objectives, liquidation will be used as exist strategy instead

of selling business in open market. For this a liquidator will be appointed and the company will

be brought to the end. The liquidator will presents company’s interest and interest of other

parties involved such as staff members. When the stakeholders will agree in response to the
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notice, liquidation will take place within 7 days. In case the company will require the change in

leadership, instead of hiring a new leader from home country (UK), the leaders will be selected

from the host country (China), as he/she will have more local knowledge and experience which

will help Chilango restaurant to sustain its position (Mellahi & Frynas, 2015).
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Harvard Formatted

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