Unit 3: Growth of

Hospitality Firms
Nature of business growth
• Business growth is the process of making a business bigger and more
successful over time. It is a process by which company increases its
capacity to generate revenue and expands its operations.
• This can be achieved in a number of ways, such as increasing sales,
expanding into markets or developing new products or services.
• Some common areas of business growth are: product development.,
sales and marketing, customer base, brand reputation and
employees.
• A business growth plan is thorough framework that includes
objectives, strategies and plans for achieving business growth goals.
• The nature of business growth typically involves several key aspects:
• Revenue growth
• Market expansion
• Product development
• Operational efficiency
• Acquisitions and Mergers
• Customer retention and Acquisition
• Financial Growth
• Revenue Growth: It refers to increase in sales over time, which can
come from selling more and more products and services, entering
new markets, or increase in price.
• Market Expansion: The next nature of business growth is market
expansion, businesses may grow by entering new geographical
markets or by targeting new customer segments within their existing
market.
• Product Development: By introducing new or innovative products and
services can drive growth by meeting new customer needs or
enhancing the value proposition to existing customers.
• Operational Efficiency: Improving processes and operations which
reduces the cost of production and increase productivity can lead to
growth by enhancing profitability and competitiveness.
• Acquisition and Mergers: company can grow by acquiring already
existing firms or merging with other businesses, which can provide
immediate access to new markets, customers and capabilities.
• Customer retention and Acquisition: Effective strategies to retain
existing customers and attract new ones are crucial for sustained
business growth.
• Financial Growth: Increasing profits, enhancing cash
flow, and strengthening the financial position of the
company are essential components of business
growth.
Planning for growth
• A business growth plan outlines where a company see itself in the next
one to two years or near future. Business owners and leaders apply a
growth mindset to create plans for expansion and increased revenues.
• A business growth plan is the written document that details the
proposed venture. It must describe current status, expected needs and
the projected result of the new business.
• Business growth plan should be formatted quarterly. At the end of each
quarter, the company can review the business goals it achieved and
missed curing that period. At this point, management can revise the
business growth plan to reflect the current market standing.
• The following elements should include in the growth plan:
- A description of expansion opportunities
- Financial goals broken down by quarter and year
- A marketing plan that details how you’ll achieve growth
- A financial plan to determine what capital is accessible during growth
- A breakdown of company’s staffing needs and training
Planning process for business
growth
1)Think ahead.
2)Study other growth plans
3)Discover opportunities for growth
4)Evaluate your team
5)Find the capital
6)Get the word out
7)Ask for help
8)Start writing
1) Think ahead: The future is always unpredictable. However, if you
study your target market, your competition and your company’s past
growth, you can plan for future expansion. The Small Business
Administration(SBA) features a comprehensive guide to writing a
business plan for growth.
2) Study other growth plans: Before writing a growth plan for your
company, review and research models from other successful companies
which provides a necessary information and knowledge for you to write
a better growth plan for you business.
3) Discover opportunities for growth: By doing some homework or research
you can determine the area of expansion. The expansion opportunities lie in
creating new products, adding more services, targeting a new market,
opening new business locations or going global, to name few examples. Once
you’ve identified your best options for the growth, include them in your plan.
4) Evaluate your team: After discovering the opportunities, your plan should
include an assessment of your employees and a look at staffing requirements
to meet the growth objectives. By assessing your own skills and those of your
employees, you can determine how much growth can be accomplished with
your present team. You’ll also know when to ramp up the hiring process and
what skill sets to look for in those new hires.
5) Final the capital: Include detailed information on how you will fund
expansion. Develop a detailed budget that includes projections for
revenue, expenses, and capital investments. In this step, identify and
secure funding sources, such as loans investors, or reinvested profits.
6) Get the word out: Growing your business requires a target marketing
effort. Be sure to outline how will effectively market your business to
encourage growth and how your marketing efforts will evolve as you
grow.
• 7) Ask for help: Asking advice from other business owners who have
enjoyed successful growth can be the ultimate tool in writing the
growth plan for your business.
• 8) start writing: Business plan software has streamlined the process of
writing growth plans by providing templates you can fill in with
information specific to your company and industry.. Most software
programs are geared towards general business plans, however, you
can easily modify them to create a plan that focuses on growth.
 or, develop a business
growth plan
• Define your goals
• Determine your metrics
• Consider your timeline
• Create a plan
• Meet with stakeholders
• Implement and adjust
Reason for growth
• Increase market share
• Expand revenue and profits
• Enhance Brand and Market presence
• Attract and Retain Talent
• Innovation and Development
• Customer Demand
• Strategic Objectives
• Increase market share: one of the reason for business growth is
competitive advantages which allows a firm to capture a larger share
of the market, strengthening its competitive position by introducing
creative and innovative products in the market. And as businesses
grow, they can benefit from economies of scale, reducing cost per
unit.
• Expand revenue and profits: Growth typically leads to higher sales of
products and services which subsequently, higher profits. Entering
new markets or developing new products can also provide additional
revenue streams and reduce dependency on a single market.
• Enhancing brand and market presence: growth of the business lead to
brand recognition in the market which increase brand visibility and
awareness, enhancing reputation. It can also establish a dominant
market position which can provide long-term competitive benefits.
• Attract and retain talent: the next reason for business growth is that it
helps in attraction and retention of talent labor or employees.
Growing companies can offer better career progression opportunities,
attracting top talent. It also lead to higher employee satisfaction and
retention through job security and development opportunities.
• Customer demand: Growth can be driven by increasing customer
demand for products or services. By meeting the market needs by
expanding product lines or services can enhance customer
satisfaction and loyalty.
• Strategic objectives: Achieving strategic objectives and long-term
vision often involves growth. Growth also helps in meeting the
expectations of shareholders and stakeholders who seek higher
returns on investments.
Managing Growth
• Strategic planning: Develop a clear vision and set long-term goals
of the organization for further growth. Create a roadmap that
aligns with your mission and values.
- vision and mission alignment
- Roadmap
• Financial Management: For effective growth of the business,
maintain a healthy cash flow(inflows). Plan for the costs
associated with expansion and secure funding if necessary.
- budgeting
-cash flow management
-funding
• Operational efficiency: streamline operations to
increase productivity. Implement lean management practices to
reduce waste and improve efficiency which reduce the cost of
production, and helps in increasing revenue.
- process optimization
- technology integration
-quality control
• Talent management: Attract, retain, and develop talent for the operation
of the business which helps in growth and development. By providing a
good salary and bonus helps to attract and retain staff in the business
firm. Create a culture that supports growth and innovation.
- hiring
- training
- retention
. Market Expansion
- market research
-customer segmentation
- global reach
• Risk management: Identify the potential risk associated with
the growth and develop the strategies for their mitigation.
- risk assessment
- contingency plan
• Innovation and adaptability: Introduce innovative products or
services in the market to stay competitive with the competitors
and adapt to market changes and embrace new opportunities.
-innovation culture
-flexibility
• Customer focus: Keep the customer at the center
of your growth strategy. Customer are the key
factor for business growth, expansion and even
for its existence. Without satisfying customer
needs, business does not achieve its objectives.
- customer feedback
- customer service
Stages of business growth
(knowing and managing)
• Every business, whether it’s big or small, goes through the four stage
of business growth:
• STARTUP
• GROWTH
• MATURITY
• DECLINE OR RENEWL
Startup stage
• This is the first stage of the business lifecycle. The startup or
development stage and tends to be the riskiest. This is the stage when
business concept turns into reality. Many important things happen
during the startup stage. In this stage the business firm face crucial to
obtain new customers, onboard employees, build a brand identity,
refine your products or services, and stabilize your cash flow.
• It’s also necessary to remain flexible during this phase. It’s not
uncommon for entrepreneurs to discover niches in the marketplace
that they didn’t initially understand.
Growth stage
Businesses entre the second phase once they’ve established a strong
customer base, tangible profits, healthy cash flow, and increased
market share.
The growth stage typically occurs after a year or two of operations. At
this stage, companies should have established standard procedures to
encourage business growth. At this point in the business lifecycle, stay
focused on your goals. Once you’ve established your business, it’s
tempting to take your foot off the gas and enjoy the initial success.
However, there’s still a lot of work to be done.
Maturity stage
• The maturity phase of growing a business will feel different from the
first two stage in the lifecycle.
• During the growth stage, you had to manage your business and work
hard to accomplish your goals. As you move through the maturity
stage, your primary objectives is to ensure that your revenue doesn’t
stagnate or go into decline.
• This stage is characterized by stability and steady cash flow. A mature
business has control over its customer base, so you’ve likely
established a solid market share in your industry. In this stage the
business must focus on continuing to drive growth.
For reaching fourth stage of
business growth, following are:
• Continue to explore new markets.
• Focus on research and development to create new products or
services for customer.
• Build on customer loyalty to increase profitability and secure cash
flow.
• Consider the benefits to selling the business or merging withanother
established company.
Decline or Renewal stage
• The final part of the four-stage business lifecycle is the renewal or
decline phase. Since establishing your business, market conditions,
consumer behaviors, purchasing habits have undoubtedly changed.
The organization should response to these changes, leading to
adaptation and evolution or decline.
• To ensure business renewal, it’s important to demonstrate strong
leadership skills and flexibility to adapt to changing circumstances.
This phase require upgrading your technology, pursuing new
opportunities, developing new skills to boost your competitive edge.
Following are some common red
flags that can lead to business
decline
• Employee turnover is increasing.
• There are online complaints and poor reviews about your products or
services.
• Clients are paying their bills late or later than usual.
• Teams are finding it difficult to collaborate.
• Management is showing a lack of innovation, organization, and
leadership.
Capacity management
• Capacity management is managing the available capacity to ensure
that resources are used optimally.
• It is the process of ensuring that a business has the right amount of
skilled resources to continuously and successfully deliver projects. It
involves monitoring and planning team workplace to prevent over-or
under-working team members adjustments when needed.
• The ultimate goal of capacity management is to have resources
available to create value for customers and stakeholders, while
balancing risks and budget constraints.
Managing capacity are of two main
categories:
1) Workforce capacity management
2) Capacity utilization management
• Workforce capacity management: Workforce capacity management
ensure that the organization have skilled people available to complete
tasks, effectively balance work schedules, and quickly discover
whether more staff is needed.
• Capacity utilization management: Capacity utilization management
balances the work in the pipeline with your team’s availability.
Keeping to 80% resource utilization instead of 100% to allow your
team members to handle new projects or issues while staying
productive with current tasks.
Benefits of capacity management
• Make informed decisions about staffing and projects, it involves
gathering data about your team’s skill sets and availability, helping
you decide who is the best fit for what projects.
• Create more accurate budgets, inaccurate forecasting may get team
to the middle of the project only to have to panic hire a independent
at last minute and agree to their budget requests because you have
no other options left.
• Keep tabs on team skill set, regularly assessing resource capacity
forces you to notice your team’s strong points and skill gaps.
• Make time for training and up-skilling.
Day-to-day challenges of growing a
firm
• Growing a firm on a day to day basis present numerous challenges that
touch every aspect of the business. Following are some detailed challenges:
1) Managing Cash Flow: Monitoring daily financial and expense
management. Keeping a close eye on cash inflows and outflows to ensure the
firm can meet its financial obligations and controlling costs and finding
efficiencies without compromising quality is a big challenge in today’s world.
2)Human resources: Next challenges in today’s world is human resources
management. Due to seasonal working visa, lack of employment opportunity
in nation, labor choose abroad for job opportunity. So, funding and hiring the
right talent to support growth. Providing employees training which reduce
turnover.
3) TIME MANAGEMENT
4) Inventory management
5) Technology Issues
6) Marketing and Sales
7) Work- life Balance
8) Communication
9) Adaptation to change
10) Customer services
Introduction to organic and
inorganic growth of hospitality firm
• Organic growth of hospitality firm: Organic growth refers to
the expansion of a firm’s operations and revenue internally
from its own resources and capabilities. This includes
increasing sales, expanding locations, and improving service
offerings without merging with or acquiring other companies.
• This means that the company is growing by increasing its
customer base, introducing new products or services,
expanding into new markets, all of which is achieved through
the company’s own efforts and resources.
• Example: A boutique hotel chain increasing its room occupancy and
customer loyalty through targeted marketing campaigns and
enhancing guest experiences with personalized services.
• Strategies for organic growth are:
• Market penetration (increasing sales of existing services to current
markets through marketing, improving customer services, and loyalty
programs.)
• Market development ( entering new markets with existing services,
such as expanding into new geographic areas or targeting new
customer segments.)
• Service development ( developing and introducing new services to
existing markets, like adding new amenities, dining options, or
entertainment offerings)
• Diversification: offering new services in new markets, which might
involve creating entirely new business lines within the hospitality
sector.)
Inorganic Growth
• Inorganic growth involves expanding a firm’s operations through mergers,
acquisitions, partnerships, or alliances with other companies. This
approach allows firms to quickly increase their market presence, diversify
services, and gain new capabilities.
• An inorganic growth strategy involves pursuing external growth
opportunities to expand a company’s business and increase its market
share. Inorganic growth strategies can be risky and expensive, as they
involves significant financial investments and require careful due
diligence to identify suitable partners and integration challenges.
• Example: a large hotel group acquiring a smaller competitor to quickly
expand its market share and gain a presence in a new geographic region.
• Strategies for inorganic growth:
• Mergers and acquisitions (M&A)
• Joint ventures
• Strategic alliance
Greiner Growth Model
Grainer’s growth model
• Larry E. Greiner originally proposed the Greiner Curve also known as the
Greiner Growth Model in 1972 with five phases of growth. In 1998, he
added a sixth phase in an updated version of his original article. The six
growth phases are described below:
• Phase 1: Growth Through Creativity
• Phase 2: Growth Through Direction
• Phase 3: Growth Through Delegation
• Phase 4: Growth Through Coordination and Monitoring
• Phase 5: Growth Through collaboration
• Phase 6: Growth Through Extra-Organizational Solutions
• Phase 1-: Growth through Creativity
• Organizations growth depends on the founders creativity and
personal involvement.
• The first growth phase starts when the company is new and
experiences rapid growth as its founders explore the new market and
create new products. At this stage, there aren’t many staff members
so communication is inform. More staff are then hired, along with the
addition of further capital into the business, as the initial stage of
growth continues. This then requires a more formal approach to
communication and leadership management.
Phase 2: Growth through direction.
• At this point, there’s a more formalized business environment and the
growth of the business continues. This growth results from a
separation of business processes and budgets, such as marketing,
sales and production. As growth continues, the company reaches a
point where there’s not enough time for one person to manage all the
business processes. This person also now knows less about the
product or process than the people lower down in the organizational
structure. Therefore, new structures of delegation become necessary.
Phase 3: Growth through delegation
• Growth continues now that mid-level managers have more time to
respond quickly to the new market and product opportunities. At the
same time, upper management focuses on the larger issues that the
company faces. In many cases, the upper- level management may find
it challenging to hand over control to mid- level management. This
means a new, more complex organizational structure of the business
is necessary so that each individual part of the business can work
more efficiently together.
Phase 4: Growth through monitoring
and communication
• This is when companies create standard policies, procedures and
processes and build a elaborate coordination system to align the
entire leadership team. Hence, the period of coordinated growth.
• Eventually, as the company grows the existing system fail to deliver
effective decision making and to adopt to market trends. basically.,
the information needed to make effective decision is kept in the
functions. Hence, employees feel disappointed and disconnected. This
is the crisis if Red Tape.
Phase 5: Growth through
collaboration
• Growth can continue after replacing the former bureaucratic structure
with a smarter system that’s based on professional sense. In this
stage, there’s a focus on regrouping and staff flexibility, assisted by
more advanced information systems. At this point, the business is still
experiencing growth, but its growth is now limited until it develops
the right strategies partnerships with other organizations. “Right
information in Right hands at right time”.
Phase 6: Growth through extra
organizational solutions
• At this point, well- established and structured companies can
continue their growth through mergers, the development of strategic
networks, outsourcing and other processes related to external
organizations. This is the final, open- ended growth phase can vary in
length, depending on the company and market. The longer the
growth phase lasts, the more challenging it generally is to get into the
next phase of growth.
Growth challenges for entrepreneurs
• Entrepreneurs often face several growth challenges as they try to scale their
businesses. Following are the key challenges faced by entrepreneurs :
1) Access to capital
2) Market competition
3) Talent Acquisition and Retention
4) Operational Efficiency
5) Customer Acquisition and Retention
6) Adaptability
7) Financial Management
8) Regulatory Compliance
Formula for successful growth
• Success in business, especially in growing businesses, does not require an
ingeniously complex solution. Often, success comes from mastering the basic
fundamentals. In short, success is about addressing a customer need better
than you or your competitors currently address it.
• Formula for successful entrepreneurial growth are as follows:
1) Develop an understanding of customer value
2) Create a better product or solution for a specific customer
3) Determine how to scale the product from one customer to many
customers.
4) Develop a business model that allows you to build scale while generating
incremental return on investment.
1) Develop an understanding of
customer value
• What’s the value equation from the customer perspective? This is
defined, most simply, as benefits minus cost. Many businesses and
entrepreneurs simply don’t understand what would make a customer
happier or better off. Often they are trying to fit their product to the
customer rather than identify what product would fit the customer.
So, by identifying the needs and wants or the problem faced by
customer and customize the product as per those wants which helps
to satisfy customer need. Satisfying customer is one of the formula for
successful growth of the organization.
2) Create a better product or
solution for a specific customer
• Create a better product for specific customer because each customer
is different and their choice is also different. Identifying the specific
customer and segment a customer as per their choice and wants,
targeting him and develop a quality product or services as compared
to its competitors which satisfied his wants. Attempting to be all the
things to all people typically results in an indistinct product that
benefits no one. This is the next formula for business success.
3) Determine how to scale the
product from one customer to many
customers.
• Once you’ve mastered the value equation for one customer, you focus on
finding many customers that think and act alike. Most management teams
try to scale the business before they’ve created a valuable product with one
customer. It’s similar to launching a rocket to the moon without mastering
the aerodynamics. It might have the power to get there, but it’s not going
to make it.
• 4) develop a business model that allows you to build scale while generating
incremental return on investment: In the end, you’ll need to build a
business case for investing capital to grow the business. If the customer
value equation is still in flux, no amount of growth capital will fix the
problem. It’s important to calculate how the investment will create a return
on capital.
Barriers to growth
• Growth in business can be hindered by various barriers, which may be
internal or external. Here are some common barriers to business growth:
• Lack of strategic planning and a vision
• Working ‘in’ rather than ‘on’ your business
• Knowledge, experience and skills
• Market saturation
• Technological limitation
• Customer demand
• Economic factors
 1) Lack of strategic planning and a vision: A strategic plan and vision for the
business is a critical starting point for growing business. So a business should
have a proper vision for where the business want to be in future and for that
the business should have a proper strategic plan to be their in near future,
including a proper roadmap to get that position. Lack of proper strategic
planning and a vision is one of the barrier.
2) Working ‘in’ rather that ‘on’ your business: Give too much focus on the day
to day working on the business to aside regular time to step back and focus on
your business strategy and business growth? It is challenging to move from
working in the day to day of your business to bring more strategic. To enable
your business to grow and prosper you need to spend time working ‘on’ your
business, not just working ‘in’ your business.
 3) knowledge, experience and skills: Next barrier is lack of knowledge,
experience and skills. Difficulty in attracting and retaining skilled employees
can limit growth, especially in specialized field.
4) Market saturation: It is one of the barrier to growth. In highly competitive
or saturated markets, finding new customers or expanding market share can
be challenging. For the growth of business, the firm need new customer for
the expansion and growth , finding new market is difficult in today’s
competitive world.
5) Technology limitation: Lack of access to modern technology or the inability
to adapt or implement and leverage new technologies can put businesses at a
disadvantage. To give competition in today’s world the business must focus on
creative and innovative product and services.
 6) Customer demand: changing the taste, habit and preferences of the
customer is next barrier of business growth. Changing customer
preferences and decreased demand for products or services can limit
growth opportunities in the market. So, customize the product and
services as per customer needs and wants helps business for its growth.
7) Economic factors: Economic downturns, inflation, and currency
fluctuations can impact consumer spending and business investments.
During recession, income of the consumer decrease which leads to
decrease in spending habit of the consumer. This affects the business
growth.