Strategic Growth Plan, Business Plan Example

Project Scope & Methodology

This project aims to build a growth plan for a professional recruiting firm, XYZ which is headquartered in Ireland and also has operations in few other European countries. The company is planning to enter two new European markets which are U.K. and Poland. This project analyzes both the internal and external factors relevant to the company as well as takes a critical look at the targeted markets to determine their strategic prospects for XYZ. The project ends with marketing recommendations that could be pursued to successfully launch company’s operations in both England and Ireland.

In order to determine the company’s strategic direction, the management has attempted to create a guideline to keep it focused on the primary objectives. Some of the questions the management has attempted to address include the key international markets XYZ should target, the business model that is best suited to the company, the use of technology to gain competitive advantage over the competitors, and the industry trends that may develop over the next five to ten years.

XYZ is a professional recruitment company guided by a management team that provides services such as permanent staffing, temporary staffing, managed services, outsourcing, contractor staffing, career transition, and training to its clients. The company is guided by a management team that includes industry veterans with extensive experience. XYZ currently generates most of its revenue in Ireland but is looking forward to expand its focus on Central and Eastern Europe along with the U.K. XYZ aims to achieve global revenues of €450 million by 2015 and will differentiate itself from the competition through an innovative business model with a major focus on technological superiority.

XYZ Internal Analysis

In order for a company to compete effectively in the market place, it should have a realistic idea of its own strengths and weakness as well as the opportunities available and the threat present that could jeopardize the chances of success. This is why we carried out a SWOT analysis of XYZ to have a better understand of the company and use the findings to help us formulate effective competitive strategies.

Strengths

XYZ has a diversified service range and plans to diversify its geographical focus as well. This means the company will be better able to deal with adverse conditions in one or more of the targeted market segments or geographical markets. XYZ’s other strength is its brand which has a high recognition rate in Ireland. The company has built a reputation for quality and reliable service, resulting in a loyal customer base. The brand image will also help the company grow at a higher rate than the competition as the economic conditions improve. The company is also financially strong and remained profitable despite adverse economic climate between 2008 and 2010. XYZ has a cash position of €42.5 million which indicates a strong liquidity position and will allow the company to expand overseas without debt financing. Another strength of XYZ is its management which has extensive industry experience and will help the company efficiently manage its growth as well as successfully navigate international markets.

Weaknesses

XYZ’s first weakness is its current revenue base which is highly dependent on a single geographical market i.e. Ireland. XYZ currently generates 80% of its revenues in Ireland and, thus, its financial performance is significantly impacted by the overall economic conditions. Extensive service range is an asset but it can also be a weakness. XYZ’s extensive service range means it has to allocate resources to all product lines instead of building core competencies in one or two. The company’s internet strategy is also not fully developed and, thus, requires significant attention from the management. A well-designed internet strategy becomes even more important once one takes into account the fact that most recruiting companies in the U.K. and Ireland are e-commerce businesses. XYZ’s business model is another weakness because it is still largely bureaucratic, with all managers responsible for reporting to CEO who makes most of the decisions.

Opportunities

One of the greatest opportunities available to XYZ is in international expansion and diversification of its revenue base. This will make the company’s financial performance less cyclical and better hedge the company’s long term future. Another opportunity lies in business partnerships with recruiting companies in international markets which may also increase value for the company’s current customer base. Technology also presents ample opportunities to the company to differentiate itself from the competition through better services and more efficient operations.

Threats

One potential threat is the future passage of Agency Workers Directive which will give the same rights to agency workers as are available to permanent employees. This may hurt the company’s customer base that primarily relies on temporary agency workers and would see fewer reasons to maintain their relationship with XYZ. Technology which helps companies expand operations without high capital investments as well as social networking websites also pose competitive threat to the company because social networking websites including Facebook and Linkedin have become important recruiting tools. The major recruiting companies such as Manpower, Adecco, and Hays are also expanding their global operations, thus, pose competitive threats to the company’s international aspirations. Threats also exist in the form of international regulations as well as operational limitations imposed by some countries on foreign corporations.

Country Analysis

U.K

U.K’s country analysis looks at different characteristics of the country that are important to understand in order to successfully launch operations in the country. The analysis specifically looks into five factors which are political factors, economic factors, businesses and customers, infrastructure, and competitive factors.

Executive Summary

U.K.’s recruiting industry is the largest within the European Union, worth approximately $37.6 billion in 2010. The country is a major commercial attraction due to a number of reasons including developed infrastructure, political stability, favorable business environment, and mature legal and regulatory environment. But at the same time, it is also highly competitive and saturated market with over 1,600 competitors.

The recruitment industry grew by 8.3% in 2010 and is expected to reach a value of $41.9 billion in 2015 at an annual compound rate of 2.2%. The industry is dominated by temporary staffing which accounts for 89.3% of the market share or $33.6 billion. Technology has also led to an increase in the number of industry players while on the other hand, consolidation is also taking place through mergers and acquisitions activities.

Political Factors

U.K. has a stable political system and the country is currently being led by a coalition headed by Conservative-Liberal Democrats. The debt situation is a cause of concern and tough fiscal austerity measures need to be taken by the government to bring the debt situation under control. The coalition is expected to prevail in 2015 elections as well. One cause of concern is the potential of tough immigration policies by the ruling coalition which could negatively impact opportunities for transient workforce.

Economic Factors

The country is currently going through an economic “soft patch” with real GDP projected to be mere 1.4% this year. An encouraging fact is U.K.’s largest tax base which helps the country successfully navigate the global economic crisis. Current economic projections predict that the country will expand its real GDP at an annual rate of 2-3% over the next ten years. Research indicates that areas outside the Greater London are struggling with finding skilled workers which is a positive news for XYZ and the company believes it can exploit the opportunity effectively and also land major clients in the process.

Businesses and Customers

World Bank’s ‘Ease of Doing Business’ index continues to rate U.K very high, with the country’s 2010 ranking at 5^th. The country has easy-to-understand tax structure for both the individuals and the corporations and there are low barriers to entry. Given the recent labor layoffs in the financial sector, a huge number of skilled workers are actively looking for jobs. There is a particular shortage of university graduates in the field of mathematics, science, and engineering and these areas are projected to be the sources of growth opportunities within the country in both the short term and the long term. Another sector with huge growth opportunities in the near term is the information technology. U.K. has the largest IT market in Europe and the third largest worldwide. The overall IT market is projected to be $84.6 billion this year and may grow at a 5% compound annual growth rate over the next five years.      

Infrastructure

U.K. has one of the most advanced infrastructures in the world, coupled with extensive network of airports as well as a reliable rail network. The country has the 7^th highest number of internet users worldwide, representing an 80% penetration within the country. Broadband penetration is estimated at 30% while 90% of the people are covered by mobile phone companies. Approximately 70% of the country’s residents own computer, making U.K. an attractive market for XYZ.

Competitive Factors

Low barriers to entry, developed infrastructure, and large market size make U.S. an extremely competitive market. The market is saturated, thus, the only way for a new entrant to gain a market share is through differentiation strategy. The recent difficult economic climate has forced some competitors out of business and has also led to consolidation activities. Many employees who were laid off are looking to re-enter the job market which provides attractive growth opportunities to XYZ.

Areas of Opportunity: XYZ has identified a number of growth opportunities which are listed below:

• IT Service Sector: The company may only focus on the fast-growing IT service sector which may also need immigrants to meet the employers’ needs. The company could enter the U.K. market by acquiring one or two recruiting firms in order to get access to their customer relationships, candidates database, and experience.
• Geographical Focus: The company may focus on the clients located outside the Greater London area that may being ignored by others and help them get access to low-cost labor from both within and outside the U.K. such as Ireland.

• Partnerships with the Government: XYZ may form working partnerships with the local governments and/or the contractors who are looking towards winning government contracts. XYZ will help its clients win contracts or lower costs through access to cheaper labor pool than the competition.

• Partnerships with the Consulting Firms: XYZ may form partnerships with the consulting firms to provide them HR outsourcing services and other HR functions. Consulting firms within the U.K. face shortage of desirable talent and XYZ may be able to help them and earn profits in the process.

Poland

Just like U.K., Poland’s country analysis also studies different characteristics of the country in order to successfully launch operations in the country. The analysis specifically looks into five factors which are political factors, economic factors, businesses and customers, infrastructure, and competitive factors.

Executive Summary

Poland was the only country to continue to grow during the 2008-2009 crisis. The country has benefitted from both government spending and private sector investments. The recruiting industry has only 300 players and the industry is still quite fragmented. This presents XYZ a valuable opportunity to develop a strong competitive position in a $1.3 billion national industry.

Political Factors

 Poland finally has a stable political system since the end of communism in 1989. The current coalition is being led by Polish People Party whose leader Donald Tusk is now serving his second term as a Prime Minister. Corruption is still an issue as compared to developed countries but the country has been making steady progress. The country has little to no barriers to entry for foreign companies and its corporate tax of only 19% is quite low as compared to other European countries.

Economic Factors

Poland has made a remarkable progress in a very short time. As of 2010, only 28.9% of the workforce was employed by the government and the percentage has further come down to 27.8% this year which is quite close to the 25% mark usually seen in the most liberal economies. The inflation rate also remains reasonable, currently between 3% and 4% and is expected to remain below 3% for the next five years. 2011 GDP is estimated at 4.6% which is one of the highest in the western world and median income is expected to increase from $17,000 in 2010 to $23,700 in 2015. Thus, Poland exhibits stable economic conditions with higher growth prospects than most of the western countries.

Businesses and Customers

Poland has less than 10% skilled workers in its workforce which may explain the difficulty organizations face in meeting their skilled labor needs. Poland also faces a threat of brain drain and XYZ can not only help organizations meet their labor needs but also help recruit skilled workers leaving the country. Also there is a growing interest from IT companies in Poland which may also work in XYZ’s favor. Poland scores low on skilled labor force and over 20% employers complain about the lack of advanced technical or vocal skills and 15% complain about the lack of right attitude. Only 32.8% of young people in Poland have a tertiary degree but recently there has been a significant increase in enrollments in tertiary education.

Infrastructure

Poland has adequate infrastructure in terms of internet and phone but the highway network does need investments. Some highway projects have been launched but the progress has been slow. The country has 120 airports though only few have international operations. The number of broadband subscribers is expected to grow from 10.5 million in Q2 2011 to 14 million by the end of 2015, resulting in a penetration rate of 37%.

Competitive Factors

The recruiting industry in Poland is worth $1.3 billion that represents about 1% of the overall European market. Out of 300 market players, only 10 earned revenues in excess of $10 million as well as profits in the last fiscal year. Thus, Poland is still a very small market and is not very competitive since top 19 players control approximately 48% of the market share.

Areas of Opportunity: As far as Poland is concerned, XYZ sees the following opportunities:

1. XYZ is already present in Poland, thus, in the short term the company will try to win business from its customers in other countries who also have operations in Poland. Executive Key Account Manager for Ireland will have the additional responsibilities to oversee the development of client base in Poland.
2. Within the next year, the company’s management team will send an evaluation team to Poland to identify possible candidates for acquisition. XYZ already has acquired valuation acquisition experience in Ireland and could use the experience to pursue similar objectives in Poland as well. The company will be a new comer, thus, will actively seek out new customers to build a strong presence in the country.

• In the short to medium term, the company plans to open satellite offices in Lodz and Krakow. These cities have been chosen because they have been experiencing strong growth in IT and Finance sectors. These two new offices will be in addition to XYZ’s offices in Warsaw and Wroclaw that are already in operation.

Technology Trends and Recommendations

Top 10 Technological Trends for 2012-2015

• The use of tablets will grow in the workplace. XYZ also plans to give tablet devices to all of its employees.
• Mobile centric applications and interfaces will replace the user interface model. XYZ has already created a mobile app for both iPhone and Android system to keep its social community engaged.
• The context-aware computing which aims to improve interaction with end-users will grow. XYZ will use social networking websites such as Facebook, Twitter, and Linkedin interact with end-users.
• More and more devices will have internet capabilities.
• App stores and marketplaces will continue their growth trend.
• The field of Analytics will also grow, with major focus on decisions and collaborations. Many social media development platforms provide analytics tools and XYZ plans to use some of them such as HootSuite, TweetDeck, and Seesmic.
• Data will continue to grow in importance and become a major asset of any organization. XYZ also plans to build huge data repositories to support its operations.
• In-Memory Computing such as the use of flash memory in computing devices will also grow.
• Low-Energy servers will gain popularity though the technology comes with huge management costs.
• Cloud-Computing will be a long-term phenomenon. XYZ also expects to shift some of its operations to the Cloud.

Conclusion

XYZ’s success will depend upon finding the right candidates for the clients’ needs in a timely manner and keep the clients’ costs to a minimum. Thus, XYZ should take advantage of the social networking capabilities. XYZ should use the social networking media to interact with candidates and clients and listen to their ideas and needs. Social networking media should also be used to build long-lasting relationships with the candidates and to build trust between the candidates and the company. Social recruiting is another great aspect of the social networking media and can be used to locate candidates all over the world. The total number of unique users on Facebook, Twitter, and Linkedin now exceed 900 million, offering a valuable source of qualified candidates with diversified skills. We will use three strategies to maximize the benefits gained from the social networking media which are acquisition, engagement, and monetization of social media.