Unit 42 Planning for Growth _Exist Strategy Assignment 2 (GC0739)
Table of Contents
3.0 Introduction.
3.1 Critically evaluate both exit and succession options for your selected business.
Exit options with their benefits and limitations and impact on your business.
Benefits of succession planning.
The considerations of growth affect the family business.
3.3 Determine and justify a suitable course of Acton (Exit or Succession)
3.4 Conclusion and Recommendations.
References.
3.0 Introduction
In this report, the proposed business is executed for “CityLink Limos Ltd”. In this section, the evaluation of exit and succession planning for this selected business is mentioned. From this part, it will clear the process of exiting from the business that includes liquidation, selling shares to the other shareholders, open market operation; keep the business in the family or looking for the shareholder or partners. This section also describes the benefits and limitations of the succession plan of the proposed business. Finally, this section recommends the process of implementing the succession plan and the course of action.
3.1 Critically evaluate both exit and succession options for your selected business
Exit options with their benefits and limitations and impact on your business
Concept of exit options
The term “Exit strategy” can be defined as the process of liquidating or selling the company or exiting from the company by selling the ownership. It is also the process of trading the share of a company to reduce ownership. According to Ward (2018), a business may exit or liquidate due to several causes. It includes the existence of huge competition in the market, lowers negative profits, changing the goals, retirements, introducing a new venture, changing the objectives and interests, etc. However, one person can reduce ownership or exit from a business without any reason.
Exit options
The process of exit can be accomplished in various ways. Some ways include liquidation, selling shares to the other shareholders, open market operation; keep the business in the family, or looking for the shareholder or partners (Mills, 2017).
Liquidation of the business: Liquidation can be defined as the process of selling of firm’s assets and liquidate the business. It helps to increase the cash inflows of the business firm to meet up the liabilities through the selling of inventories. The inventories of the firm are selling at discount because without discount buyers are not willing to purchase it (Mills, 2017). Liquidation of the business has some advantages like it is an easy and fast way to liquidate the business and make cash. However, the liquidation of the business has also disadvantages include the selling of assets is the discount rates that reduce the return that is not adequate to meet the liabilities (Ward, 2018).
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Selling the business to the other shareholders: It is considered another method of exiting from a business. Here, the owner sells his ownership to the other shareholders of the firm who are willing to purchase. Sometimes owners are selling their ownership to the employees and managers (Mills, 2017). It is a very easy and simple way to exit from a business. But this process also reduces the return that is not adequate to meet the liabilities and the expectation of creditors.
Keep the business in the family: Some people do business in respect of family relationships. Due to this reason, they sell their ownership of the other firm and grow their own family business. This family business is very much suitable and profitable business but a matter of regret that this the control and maintain the family business is very much difficult (Ward, 2018)
Selling the business in the open market: Open market operation is the process of selling the part of ownership in the market (Mills, 2017). The owner can easily sell their ownership and exit from the business by using open market operations. He can sell his ownership to a third party. But it is a very time-consuming and costly method of exiting from the business.
Looking for the shareholder or partners: In this process, the ownership looks for shareholders or partners to sell their portion of ownership to them (Ward, 2018). After getting shareholders or partners, the owner transfers his ownership to them and exits from the existing business……………..
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