W5_Folakemi_Business Expansion Options 2

1.      Problem recognition, definition and evaluation

A group of four business development services providers are considering expansion options in order to achieve the objectives of better structure, stronger client base and increased revenue. The question I want to answer is: which of the expansion options considered should they choose?

2.      Development of the feasible alternatives

I will use one compensatory and one non-compensatory multi-attribute decision making method in order to identify the best alternative. The different alternatives considered for solving this problem include:

• Continue to operate as individual small businesses and invest some money in marketing, branding and governance structure
• Collaborate on specific projects in order to achieve the desired objectives
• Combination of the businesses through a merger with the objective of achieving improved structure, brand and more revenue.

3.      Development of the outcomes for each alternative

Discussions with the business owners revealed that the preferred option should have the following attributes:

• Governance Structure: The expansion should afford the business the opportunity to attract the right people into its board of directors
• Brand Visibility: There should be immediate brand visibility as a result of the expansion
• Increased Revenue: There should be increase in revenue, which is a key measure of success for both the business and the entrepreneur
• Cost Reduction: The expansion process should involve stronger financial control, which should result in cost reduction for the business
• Ownership Percentage: The expansion should still afford the entrepreneurs some measure of ownership. However, none of the business owners is particular about 100% ownership
• International Affiliation: The business owners are interested in being part of a business that has international affiliation, especially as this appears to be a major selling point for business development services in certain industries

4.      Selection of criteria

An analysis of the alternatives above produced the following:

Table 1: Analysis of Alternatives

 

5.      Analysis and comparison of the alternatives

Using the non-compensatory model called Satisficing, the feasible ranges for the attributes listed above are:

Table 2 – Feasible Ranges

 

The easiest to measure and most important measure of success of the expansion is increase in revenue. Based on these acceptable values, the most appropriate alternatives are the project collaboration and the business combination options.

Using the compensatory model called the Nondimensional Scaling:

The nondimensional data for the different alternatives is as follows;

Table 3 – Nondimensional Data

 

From this analysis the business combination appears to be the most acceptable method.

6.      Selection of the preferred alternative

Based on the analysis and comparison of alternatives, the most preferred alternative in expanding the businesses for better structure, a stronger brand and increased revenue is the business combination.

7.      Performance Monitoring & Post Evaluation of Result

The business combination option will be reviewed in greater detail. Financial analysis will be carried out on the specific products and services to be provided in order to determine the best products and services to focus on.

8.      References

• FORBESWOMAN. (October 2011). The True Measure of Business Success. FORBES. Retrieved from http://www.forbes.com/sites/dailymuse/2011/10/27/the-true-measure-of-business-success/

•  Sullivan, W. G., Wicks, E.M., & Koelling, C.P. (2012). Engineering Economy (15^th ed.) New Jersey, NJ. Pearson Higher Education, Inc.

• Yilmaz Agruden. (16 April 2010). Measuring the Effectiveness of Corporate Governance. INSEAD. Retrieved from http://knowledge.insead.edu/csr/corporate-governance/measuring-the-effectiveness-of-corporate-governance-1149