How to Develop Growth Strategies for Businesses - Case Study Example

This paper is based on the case study of Planning for Growth and will provide information about opening a new restaurant in terms of growthstrategy, financial assistance, business form, and organizational structure, customer and promotion and ethical and social responsibilities of a new restaurant. It is divided into different sections, (a) Growth strategy (b) Business form will provide that why Limited Liability Company is better than other forms of business for a new restaurant. (c) Financial assistance will provide information about organizations that offer financial assistance for opening new restaurants. (d) Organizational structure explains that vertical structure is better for restaurants as everyone has to perform specific goal and also provide the best ways to organize, orient and train the restaurant staff (Airman, 2010). (e) Customer and promotion explains how to deal with the customer’s needs and their expectations and also what kind of promotion should be used for a new restaurant. (f) Ethical and social responsibilities explain how ethically a new restaurant can move while considering customers, employees and other stakeholders of a new restaurant. And at the end conclusion will provide the executive summary of all of the information of the paper. 1. Growth Strategy It is very important for a business to develop strategies for growth to ensure that business is growing in the right direction. No one can move forward without having solid understanding about the existing stock, target customers, market share, profit margin and market conditions. After having full knowledge about all these we have to develop strategies about taking advantage from existing customers. For this Kelly should not leave her established business and attract existing and loyal customers to her new restaurant by giving them some sort of incentives in terms of discounts and one dish offer. Better promotion policies should be used for the attraction of new customers. More focus should be on the quality of food items that restaurant will offer. Talented and efficient employees are the asset of any organization but organizations also have the responsibility to develop best working environment to take full advantage from these employees. The use of new technology is also required for best quality and efficiency. 2. Business Form Kelly should start her new business as limited liability company (LLC). Most of the costs for Sole proprietorship and sole LLC are the same but one fee is required (Anaejionu, 2012). When filling a certificate of formation for an LLC which is done through the secretary of state and its fee is not more than 300 dollars. There are many reasons to advice Kelly to run her restaurant as sole LLC. First of all LLC provide limited liability if there are losses in business then creditors are limited to the assets of the business and they can not claim against personal assets of the owner. Through sole LLC Kelly will be able to issue new shares of stock to new owners in order to raise funds to grow business. But in sole proprietorship she is limited to take loans only from banks. Sole LLC will allow Kelly the transferability of ownership if she wants to leave the business, she can immediately transfer ownership to another person but in sole proprietorship she can not do this. LLC or sole proprietorship also avoids double taxation because profits will only be taxed once as part of personal income tax return. 3. Financial Assistance There are several organizations that offer financial assistance for starting a new restaurant. Here are some of the organizations that offer financial assistance to Kelly to accomplish her dream of small restaurant business. One thing must be remembered that all government grants are funded by the tax dollars and require very strict compliance and reporting measures to ensure that money is well spent (Mccomas, 2011). 1. Grants.gov is a partner of the US Department of Health and Human services and provides a great service for grants to start a new restaurant business. Grants.gov offers 24 hours service and its website is easy to understand and have very easy process of downloading, completing and submitting the application. All of the details about the size standards for the types of grants are available on this website. 2. The U.S. Small Business Administration is an excellent source of taking grants for small restaurant businesses. This program not only helps to start a restaurant but also helps in managing it. 3. State development agencies can offer direct grants to small restaurant businesses. Most of these agencies have websites about the details of the types of the grants. 4. Kelly can also fund her restaurant by research grants that are awarded by the U.S. department of Agriculture by doing research on restaurant food. 4. Organizational Structure and Staffing Needs Kelly’s expanded business should have vertical hierarchy structure because in the restaurant business everyone has to play specific role. The restaurant business belongs to the owner i.e. Kelly and she is responsible for making all major decisions. She has to hire General Manager. The role of a General Manager is to ensure that the restaurant operates efficiently and profitably and he is also responsible for hiring and firing of the employees in the organization. Dinning Room Manager and Executive Chef are accountable to General Manager (Mealey, 2012). The role of Dinning Room Manager is to directs and coordinate food service in the dinning room and they also hire, trains and supervises employees and they have to handle budgets, payrolls and purchasing. Head servers are accountable to Dinning Room Manager and he supervises and coordinates dinning room employees for a section of dinning room. They may greet and seats guests and they may also serve guests. Servers have to report to head servers and their duties are to serve food and beverages and also clean soiled dinnerware and resets table. Executive Chef has to report directly to General Manager about inventory and ordering. They are responsible for the quality of all the meals that leaves the kitchen. Line cooks have to report to Executive Chefs and they are responsible for all the cooking in the kitchen. Kelly should give some incentives to employees in order to attract and retain hardworking and talented employees. In restaurant business it is very difficult to retain employees because their incomes are relatively low and also competitors attract potential employees to their restaurants by giving them incentives (Mealey, 2010). 5. Customers and Promotion Kelly should not leave her established lunch business “Kelly’s Sandwich Stop”. She had done much effort and hard work to provide best known and most loved sandwiches and other lunch items in the town. She should continue this business as she has done all the tough work requires and this business has pretty low overhead and require less staff. In this way she will not loose her loyal customers. She can also use “Kelly’s Sandwich Stop” as promotion campaign for her restaurant by spreading all of the information about her restaurant on the packaging of the food items and also on the food boxes that contains these food items. In this way these customers will attract to visit her restaurant as they already have very good image about the quality of lunch items provided in the “Kelly’s Sandwich Stop”. Kelly can also give some concessions to her loyal customers when they visit her restaurant, in terms of some special discounts or some sort of special dishes. This will increase loyalty of the customers and they will also attract to visit with their friends and families to enjoy high quality food at relatively low price. For attracting new customers Kelly should use face book, as she had done earlier for her “Kelly’s Sandwich Stop”. Is this way she can reduce cost on promotion campaign and can give much attention on the management and establishment of her new restaurant. She can attract new customers by making special arrangements on some special days like Mother’s day, Father’s day, Valentine’s Day and National days etc. She can also offer refill free on some inexpensive dishes in this way she will remain in budget and can also attract price conscious customers. 6. Ethical Issues and Social Responsibility In old days, social responsibility of businesses does not have much meaning and main responsibility of a business was to maximize its profits. In 1984, R. Freeman introduced the concept of socioeconomic view of responsibility, which considers welfare of the society as a whole. In 1986, Fredrick explained social responsibility of a business into four stages (Thomson, 2010). For a new restaurant these four stages can be elaborated as below. If Kelly’s restaurant is working under LLC, she can issue shares of stock to new owners in order to raise funds. Her main responsibility is to satisfy shareholders by using their money in right way and should use this money on research and development. If shareholders are satisfied then company has fulfilled its purpose. Second responsibility is to satisfy employees. Current ethical issues in restaurant employment include diversity, harassment, violence and drugs, safety and sanitation. In Kelly’s restaurant she should provide zero tolerance to harassment and violence and also provide respect for workforce diversity and safety to employees (Thomson, 2011). It is important for employees and management to work together to maintain a safe and secure restaurant environment. As in the Kelly’s restaurant there is vertical structure but she should give some incentives to employees in terms of workforce diversity, flexible leave arrangements and flexible work hours etc. She should provide an environment that not only has rules but also allows for individual decision making down on grounds. The third responsibility of Kelly’s new restaurant is to provide customers nutritious and hygiene food at affordable price. She should have most effective system of quality control. With the use of latest technology, she should have to maintain latest standards of freshness, fineness and cleanliness. Sanitation guidelines and proper food handling techniques should be used to avoid spreading diseases that may be distressing and life threatening to guests/customers. The company is not only responsible for shareholders, employees and customers but also to the society. This responsibility may include legal, moral and political involvement. Kelly should improve public image of the restaurant through environmental involvement and other social activities. Conclusion This paper have almost all of the necessary information required for opening a new restaurant, as it provide the small business growth in terms of growth strategy, business forms, short and medium term goals, financing assistance, organizational structure and staffing needs, customers and promotion, and ethics and social responsibility. For small business restaurant we have given preference to LLC over other business forms because it has characteristics like limited liability and transferability of ownership and also owner of restaurant can raise funds through issuance of new shares. Several organizations like Grants.gov, U.S. Small Business Administration, State development agencies and some research based grants offers financial assistance for new restaurants. Like successful business owners Kelly should spend borrowed money on research and development, not on hiring employees and promotion campaigns. Kelly’s new restaurant should have vertical organizational structure because everyone has to play specific role. Some incentives should be given for the retention of hardworking and talented employees. Kelly should continue her established lunch business, in this way she will not loose her loyal customers and can also attract them to visit her new restaurant and she should use Facebook as promotion campaign for attracting new customers. In this era, everyone realizes the ethical and social responsibilities of restaurants and it may include responsibilities for shareholders, employees, customers and society. References: Airman, J., (2010). Organizational Structure of a Restaurant. Retrieved 4 April 2012. Anaejionu, K., (2012). When Starting a new Business: Sole Proprietorship or LLC. Retrieved 4 April 2012. Mccomas, Y., (2011). Grants for Starting a New Restaurant. Retrieved 4 April 2012. Mealey, C., (2012). How to Hire a Great Restaurant Team. Retrieved 4 April 2012. Mealey, C., (2010). 10 ways to Promote your Restaurant. Retrieved 4 April 2012. Thomson, T., (2010). Four Stages of Social Responsibility for Stakeholders. Retrieved 4 April 2012. Thomson, T., (2011). How to Develop Growth Strategies for Businesses. Retrieved 4 April 2012. Read More