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C I M A case study 2012 Application of knowledge management to “B” Supermarket
Group Name: Enough is Enough.
“B Supermarket” 2 Enough is Enough
TABLE OF CONTENTS
Description 1. Financial Analysis 2. Mission, Objective & Strategy 3. Structure 4. Corporate Governance 5. Control 6. CSR 7. IT 8. Supply Chain 9. Treasury 10. HRM 11. Change Management 12. Appendix Page No. 01 - 10 11 - 43 44 - 44 45 - 48 49 - 63 64 - 65 66 - 67 68 - 71 72 - 74 75 - 80 81 - 89 90 - 91
“B Supermarket” 3 Enough is Enough
“Enough is Enough”
Group Members 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Kavindhya Osun Gayan Sakila Shashini Ruvithra Ruwini Chayanga Niluka Sajeewa
Asset base valuation Earnings base valuation Dividend base valuation Cash flow base valuation Normally the valuation could be done considering the unseen material.37*1350 = € 42. 3. 4.“B Supermarket” 4 Enough is Enough 1. of shares = 31. 2. Asset base valuation Valuing the business based on the ownership of assets (actual value) Types Net asset base valuation – value of the assets based on the financial statements Replacement value – cost incurred for the replacement of a particular asset Net realizable value – value derived by selling the assets in the market Divisible value – value of segregated assets of the business Uses the historical value and ignores the market Application of the method –“B” supermarket Total Equity = € 24.1 Business Valuation Concept This provides a justifiable value to a given business The value of a business can fluctuate at any time Current Market Value of the company Market Value = MPS * No.019 million (net asset base value) Earnings base valuation Value of a business based on future earnings potential Identifies the developments in the market Basis is the P/E ratio . Following valuations are done according to the pre-seen material.Financial Analysis 1.350 million Methods of Business Valuation 1.
Therefore using Gordon‟s Growth Model(GGM) the earnings base value of B is as follows.58*1350 = € 48.033 million Dividend base valuation Uses dividend as a base for valuation Types Constant dividend MPS = Dividend now / Cost of equity Growth dividend MPS = [Dividend now (1+g)] / [ke-g] .66(1+0.37/2.66 = 12 Total Market Value = 12*3591 = € 43. of shares = 3591/1350 = € 2.“B Supermarket” 5 Enough is Enough Total Market Value = P/E*Total Earnings Application of the method –“B” supermarket Earnings per share (EPS) = Total Earnings/ No. GGM = [EPS(1+g)] / [ke-g] = [2.07] = € 35.37 P/E ratio = MPS/EPS = 31.092 million One of the financial objectives of B is to achieve constant growth in earnings per share of 7% each year.15-0.58 Earnings based value = 35.07)] / [0.66 Market price per share (MPS) = € 31.
07*1350 = € 29.65/2.193 million Cash flow base valuation Value based on the Present Value of future cash flow Intellectual Capital (IC) Concept Creating value through knowledge Components Human Capital (knowledge & expertise.) Organizational Capital (systems.“B Supermarket” 6 Enough is Enough Application of the method –“B” supermarket Current Dividend Payout ratio of B = Dividend per share/EPS = 1.07] = € 22..) Techniques of measurement Market to book value IC = Market value – Book value Tobin Q value Q = Market value – Replacement cost Calculated IC value Excess return = [ROI – IR][Average assets] . training & development.) Customer Capital (brand name..etc.65(1+0.15 – 0.etc.07 Market Value = 22. patents. market share…etc.07)]/[0.66 = 62% MPS = [1. culture.
37 IC = MPS – BVS = € 13.85 Market value per share = € 31. of shares = 24.091/1350 = € 17.52 Mergers & Acquisitions Concept Types of mergers Horizontal merger (Two companies in the same industry) Vertical merger (Merger with a distributor or a supplier) Conglomerate merger (Two companies irrespective of the industry) Synergy (Merger carried out to increase wealth) Facilitates organizational growth Expansion of customer base Can lead to conflicts in management Variables for successful mergers & acquisitions Common core Contribution Value Linkage Management cover Payments for acquisition Cash – suited only for small scale acquisitions Share for share offer – acquiring company issuing shares for the acquiree‟s shareholders Earned out agreement – payments for the acquisition will be carried out for a period of time .“B Supermarket” 7 Enough is Enough Application of the IC –“B” supermarket Book value per share = Book value of Equity / No.
This is a very good revenue when compared with the group revenue per store of € 7.78 million. Even the operating profit is highest in Asia This clearly shows a growth potential in Asia B can consider acquiring an already established supermarket chain in Asia B can even look for a Vertical Merger with a distributor in Asia .“B Supermarket” 8 Enough is Enough Actions against hostile takeover Communicate directly to the shareholders regarding better prospects White sworn – management inviting a better company for the acquisition Poison pills – Operating with convertibles Share repellent – Operation with a super majority requirement for an acquisition Revaluation of assets Reverse takeover Alternatives for acquisition Sell-off (selling off a particular division or a unit) Spin-off (internal unit or a division to become an independent company) Management buy-put (Internal management acquiring the business management from the shareholders) Management buy-in(External team of specialists acquiring the company from shareholders) Application of Mergers & Acquisitions –“B” supermarket The company mainly depend on Europe with 82% of the company revenue and 77% of the operating profit and with 13210 stores B can consider a spin-off of the European region as it can create more value as an independent company The average revenue per store in Asia is € 9.06 million.
State with reasons whether it is favorable for the company to spin off the European region from the main company 5. Evaluate the possibility of expansion in Asia 4. Advise the management of B whether it is beneficial to merge with or acquire an already established company in Asia when considering the expansion 7.“B Supermarket” 9 Enough is Enough Possible Questions 1. Explain Intellectual Capital and how it could be related to B supermarkets . Discuss the appropriateness of each valuation approach used in 1 3. Explain the most suitable method that could be used by B to fund the acquisition in Asia 8. Explain the non-financial factors to be considered on the expansion decision 6. Calculate a range of values for B 2.
WC Policy Conservative Policy. .2 WORKING CAPITAL MANAGEMENT This involves managing cash receipts & payments on a day to day basis. it operates with a higher amount of current liabilities than current assets which indicated by an aggressive working capital policy. This will lead to overtrading situation. This will lead to under trading situation. A Company will operate with a higher amount of current assets compared with current liabilities. FCA STF FCA STF FCA STF LTF LTF PCA PCA PCA LTF Application to B Supermarkets In the case of B. Aggressive Policy A Company will operate with higher amount of current Liabilities compared with Current Assets. Moderate Policy A Company will operate with equal amount of Current Assets & Current Liabilities.“B Supermarket” 10 Enough is Enough 1.
Gearing = Debt Debt + Equity .“B Supermarket” 11 Enough is Enough WORKING CAPITAL CYCLE – CASH CYCLE This explains the trend in working capital policy based on a company. Dividend policy 1. This will indicate the cash flows generated & payments system. 3. stock days and creditor days Application to B Supermarket Debtor days Creditor days Inventory days 5 109 27 Therefore the working capital cycle for B is 77 days GEARING This will indicate the borrowing level of the company. Stable policy – fixed dividend Constant payout – Constant percentage of profit Scrip dividend – Issue of shares Homemade dividend – Based on the investor‟s personal requirement Residual dividend – Based on business opportunity Share repurchase – Provides a return on any surplus cash Application to B supermarkets From 2007 to 2009 B has paid a stable dividend of € 1. This indicates the relationship between debtor days. 2.54 Currently the company‟s dividend policy is blurred B currently pays 62% dividend payout irrespective of it‟s financial objective to pay 50% constant divide . 4. 5. 6.
7. Evaluate the current working capital policy of B & discuss the suitability of the existing policy for B 5. Nevertheless. Appendix (W1) Operating Profit Margin = = = Net Operating Profit *100 Revenue 6. The B operates with quick ration of 0. Identify the impact of non – achievement of the stated financial objectives. However there‟s 42 % drop in operating profit due to tax & finance cost. Advice the directors on factors that should be considered in developing a dividend policy 1.7% & Net profit is arrived at 3.“B Supermarket” 12 Enough is Enough POSSIBLE QUESTIONS 1.17 :1 which seems inadequate for a company like B where the sales is carried out mostly on cash basis. 4. 6. Discuss the methods of Short – Term Finance including supplier credit.3% after deducting groups finance cost & Tax expenditure. 3. Advice the directors on measures that can be taken to reduce its operational cost. 2.712 5.3 Ratio Analysis Performance Indicators for B Group Operating Profit Margin Net Profit Margin ROCE Current Ratio Quick Ratio 5.211 * 100 109.17:1(W5) B‟s operating profit is 5. Evaluate to what extent B‟s Directors has achieved its financial objectives. it‟s unable to carry-out further analysis on this & advice B to reduce its finance cost due to the unavailability of the data on interest rates of debt of B.6% (W3) 0.7% (W1)* 3.42:1(W4) 0.3% (W2) 15. Advice the directors about the benefits of proper Working Capital Management.7% .
777 =0. 24.Current Liability =5. 1 .019 =15% (W4) Current Ratio = Current Assets: Current Liabilities =13.591 * 100 109.368: 30.42: 1 (W5) Quick Ratio = (Current Asset-Stock) .17.3% * 100 (W3) ROCE = PBIT Equity = 6.“B Supermarket” 13 Enough is Enough (W2) Net Profit Margin = Net Profit Revenue = 3.038: 30.777 = 0.211 .712 = 3.
2. 1. Identify the competence of the organization. Define the target market. 1. The mission does not create any differentiation in the market to the supermarket & does not facilitate to build any competitive advantage. Concept Objectives are a quantitative statement develops from the mission. Objectives demonstrate a clear result orientation based on a particular achievement. Measurable. Identify the needs of the target market.We refresh the world) 3.(Specific. 5. Objectives. The Mission is too board & the purpose of the business cannot be identified directly from the mission statement. B supermarket is a stock market listed company. Mission Statement Concept Mission can be defined as a statement which explains the purpose of the organization. B has a main focus on CSR & Ethics.(e.g. Therefore. Mission provides a framework to develop strategy & indicate the target market & key stakeholders of the business – “what business are you in?” Limitations of Mission Statement of B Supermarket.. Objectives & Strategy 2. Attainable. However. Objectives should be SMART.-BMW-The ultimate driving machine/ Coca Cola. Mission. 3. Steps in developing a mission statement of B Supermarket. 4.1.“B Supermarket” 14 Enough is Enough 2. Realistic & Time Bound) . Identify how to add value to stakeholders Identify how to differentiate. mission statement should focus mainly on profits. business philosophy & value system. 2.
This is not a realistic or attainable objective since. . Increase customer satisfaction ratings to 95% as measured by customer feedback surveys. at the end focus should be providing to maximize shareholder wealth. Therefore increasing the commitment of local suppliers is not practical & if B tries to achieve this objective it will matters for cost increase & quality of the products. 2. Although this is a measurable objective the period for the measurement is not specifically mentioned. 3. This is also not a realistic task due to the nature of the business. This objective is not a SMART objective. this is measurable. Therefore cannot exactly identify the end result. Reduce carbon emissions calculated by internationally agreed measures by at least 1% per year until B becomes totally carbon neutral.“B Supermarket” 15 Enough is Enough Limitations of objectives of B Supermarket. attainable and specific with a time bound. However. 5. Build shareholder value through consistent growth in the company‟s share price. This objective is not SMART at all. 1. Increase commitment to local suppliers by working towards achieving 40% of our supplies from sources which are local to where B stores trade. Maximize returns to shareholders by employing different generic competitive strategies depending on the market segment in which B stores trade. B operates over 36 countries. However. 4.
Founding Family Trust – 7% 4. Employees . General Public – 75% 1. Government .4% each. Pressure Groups Interest Low 1. High 1. Mendelow Matrix can be used to manage stakeholders by prioritizing their needs based on the situation. Hedge Fund – 5% 3. Regulatory Bodies – Ex-Inland Revenue/Board of Investments of each country 5. Power & Interest of stakeholders are used as variables to categorize stakeholders. Mendelow Matrix. Power Low High 1.“B Supermarket” 16 Enough is Enough Identifying the Key Stakeholders involved in the business. Hedge Fund – 5% 2. Two Investment trusts .5% 2. 2. Government. General Public – 75% 3.
. Evaluate each objective against the mission & the value statement of the company. 1.“B Supermarket” 17 Enough is Enough Possible Questions. 2. Identify how objectives can change in a situation like change of ownership or change of strategy. 3. 4. Identify new objectives relevant to B Supermarket. Identify the areas that stakeholder conflict could arise 13. 9. 6. Importance of critical success factors. 8. Identify the positives & negatives of each objective. Evaluate the basis for the mission statement. 5. Develop Key Performance Indicators to the Critical Success Factors Identified. Appropriateness of the B‟s mission statement to the supermarket industry & B‟s business sector. Develop critical success factors relevant to the objectives 10. Identify the Key Stakeholders involved in the business using the Mendelow Matrix. 11. Management of stakeholder conflict of B Supermarket. 12. 7. Identify the steps in developing a mission statement.
3.“B Supermarket” 18 Enough is Enough 2. 4. 5. Opportunities are any developments in the market which enables to create competitive advantage. Threats are any development in the market which creates negative influence on organization success. . 7.2 Internal Appraisal Concept The concept mainly evaluates internal capability of the Organization to achieve their objective. Weaknesses are particular activities which indicate limitation or competitive disadvantage. 6. According to inter appraisal concept -organization can review whether they can reach to their maximum potential using internal resources Models of Internal Appraisal 1. SWOT Analysis M Model Value Chain Benchmarking GAP Analysis Scenario Planning BPR (Business process re-engineering) SWOT Analysis This can consider as a position audit carried out by the organization to evaluate present position of the market Model mainly appraised internal environment based on four variables which are Strengths/Weaknesses/ opportunities/threats Strengths are an activity which enables organization to create competitive advantage. 2.
poor control of inventory management.“B Supermarket” 19 Enough is Enough Application of the model –“B” supermarket Strengths of “B” supermarket.existing policy of HRM (0. muck. recognized as world largest chain of stores Weaknesses. higher amount of trade and payables . machinery . strong integration with local suppliers (40% local supplier policy) “M” Model This a type of model which evaluates the performance of internal environment based on a particular frame work. and North America) different characteristics identified in different markets. lack of segregation duties between audit committee and board of directors Threats-Mission statement not integrate with companies core values. level of competition .5 employees.current pricing policy against competitor Opportunities‟.up Application of the model –“B” supermarket Men.growth potential in Asian regions. money. method. new franchise options available in the market. Objective of this model is to identify any weaknesses within organization in order to ensure consistent performance Variables of the model-men. regulatory barriers. competence of workforce Machinery – existing IT system (problems detect in IT system). inaccurate training for employees. training program provided for employee. Threats. CSR policy differentiate company from competitors. management . Asia. reputation as a Global entity. over 15000 stores operates in worldwide.poor it system which provide misleading information for staff.degree of stock loses detect as theft from staff which leads to create criminal culture. latest machinery used in supermarket industry should be reviewed Markets – the existing regions “b” operates (Europe. reduction share price between 2007-11. markets.49 year history.
CSR policy of carbon emission Benchmarking The model can defines as comparing the organization performance against the best practice in the market. Benchmarking can undertake both internally and externally Internal benchmarking. North America and Asian regions Benchmark existing EPOS system (IT system ) against another stock controlling system and identify the areas to be improve in existing system Develop performance appraisal system after the training program for employees and benchmark their performance against industry statistics ex: number complains about staff service . management control system operates through regional head office.“B Supermarket” 20 Enough is Enough Management – top down decision making . EPOS system to control stocks. productivity of employee against industry averages According to external benchmarking appraise performance against market leader in Europe because currently “b” reach to 20% of market share in Europe There is growth potential in Asian region (current mkt share 1%) and compare performance against market leader in Asia Benchmark existing CSR policy with competitor and evaluate possibility to become carbon neutral in real environment Benchmark existing profitability levels of “b” against market leaders . structured planning for 5years. corporate governance issues in main board Methods – franchising policy .functional and activity benchmarking/ External benchmarking-competitor and strategic benchmarking Application of the model – “B” supermarket Currently “B” recognized as one of the leading supermarket chain in world Identify the market leaders in Europe.
The objective is to identify the rationale behind any deviation in order to make corrective actions in advance Gap analysis should be practice based on clear objective and result orientation. This enables to recognize impact on environment variables and influence on achieving objective . Asia: 1% and North America 1. This mainly evaluates market variables in present and future context. The model can be practice through using rational planning model and cannot be apply in uncertain environment Demand gap. Asia 9%. North America 9%) The potential demand for supermarket.-(Europe 82%.5%) Compare revenue levels of each region against forecast budgets (turnover targets). hyper market. This enables the organization to recognize different possible options that can be happened and preparation for future developments.“B Supermarket” 21 Enough is Enough GAP Analysis This is a technique developed to identify any deviation in performance against expected standard. Sales gapdifferent between actual sales in the market and organization Application of the Model “B” Analyze the fluctuation in potential market share of “B” compare with past years (currently Europe: 20%. convince and discount stores against industry averages can evaluate and identify the actual demand against forecast targets Scenario Planning The technique recognizes the importance of future developments for the organization success.different between potential and actual demand.
create criminal culture between staff . development in technology . joint venture with local supermarket chain instead of franchise Competition Losing market share of 20% in Europe. staff avoid responsibility and de-motivation Change regulatory barriers Change policy of future franchise agreement. reduction of repeat orders made by clients. possibility of takeover. lose growth potential in Asia Change customer preference Customers become more price conscious. easy access and more car – parking facility Recommendations Undertake a competitor analysis Maintain positive relationship with each regional government Forecast more reliable KPI to evaluate customer satisfaction and compare against 95% Improve the existing EPOS system (Access control. Automatic monitoring stock levels ) and reduce possibility of fraud Undertake market survey and analyze the level of competition in supermarket industry. change in consumer behavior. CSR issues related carbon emission.“B Supermarket” 22 Enough is Enough Application of Model – “B” supermarket Variables Detection of loses occurred due to theft of staff Future impact Negative impact on “B” reputation. approval from government for future expansion in new countries Change of ownership Impact on share prices.
employees. Currently “b” paying inducement to government officials – if this case published impact on companies brand name. suppliers. radical redesign of a business process to achieve dramatically improvement in cost . According to competitor overview different markets have different characteristics so company need to analyze the possible threats from new competitor. and etc. consumers.“B Supermarket” 23 Enough is Enough Management need to review to what extend CSR can apply in future based their core business activity and check whether its practice become carbon neutral . negative publicity from media and whether it‟s acceptable according to companies ethical framework There is a possibility of reduction in share price in future which make negative signaling effect for the share holders It‟s important to evaluate expectation of different stakeholder groups such as management of “b”. In long run employees can be demotivate with existing training programs BPR (Business Process re-engineering) This model can easily define as fundamental re thinking. government bodies.quality and performance Their two main concepts in BPR model which are Michael hammers model and Devon ports model .
monitoring and updating the stock levels automatically . the concept determine based on customer satisfaction . review the physical stock levels against records Company can introduce BPR process for existing procurement chain and stock controlling system to –currently certain stocks been detected as outdated items (ex: TQM system of managing stock levels) Re design the existing Training policy for employees Value chain Porter develops this concept based on manufacturing organization.ex: misleading information for staff.“B Supermarket” 24 Enough is Enough Application of Model – “B” supermarket “B” need to identify the possibility of undertaking a BPR process for the existing EPOS (IT related stock management system ) because existing IT system failed to generate expected results. This concept emphasis on identify any activities which add value for business process and eliminate non value adding activities There are primary and secondary activities . not detecting stock outs Re-design the Existing system – provide accurate information for the staff.
maintain 40% local suppliers Procurement : existing policy of 40% local suppliers. check the quality of perishable goods when supplies by suppliers. undertake marketing campaign in Asia to reach mass customers After sales service : warranty claims for electric items in discount stores. need to develop proper it policy. Franchising policy.5 million employees. no it manager and should appoint one for main board Sales and Marketing : reliable sources to advertise FMG products. discounts provided for bulk purchasing. existing EPOS system need to change in line with stock outs. structured planning process. introduce a logo for each store and printed in package. certain stock loses detected as theft from staff and this create a criminal culture in future. customer complaints regarding staff service and quality of products Process : quality control system . market survey to review the satisfaction of customer. inaccurate training policy for staff.20% perishable goods purchase from local suppliers. strategies been revived in three years. management control operates through head office. labeling of electric items HRM : 0. identify the cheapest suppliers for supermarket chain Out bound logistics : review the packaging system FMG products. monitoring and supervision. strategic plan been designed by main board. long distance covered from road or air. Long term contract with suppliers Inbound logistics: need to purchase more from local suppliers. company can follow international quality standards in operation . employees have 5% share ownership IT : problems of existing IT system which provide misleading information for employees. secures packaging system. introduce loyalty cards for existing clients . no performance appraisal system for employee.“B Supermarket” 25 Enough is Enough Application of model – “B” supermarket Primary Activities Secondary Activities Firm Infrastructure : top down decision making. suppliers from wider geographical area. disposal policy for out dated stocks.
“B Supermarket” 26 Enough is Enough Possible Questions 1. convince stores. 13. Evaluate how value chain analyses can used by “B” supermarket chain 15. Discuss the benefits of SWOT analysis and explains how organization can use this model to analyze its internal competence 6. Analyze advantages and disadvantages of scenario planning based on “B” existing competitive overview. If company expect to carried-out BPR process for EPOS system then explains how model could assist IT team in formulating new IT system 5. Identify the two models that the management could use to analyze internal environment. Discuss how internal appraisal can be useful for company “b” to evaluate performance and recommend three models could use to analyze internal environment of “b” 11. According to companies competitive overview explains how scenario planning can used analyze competition of the environment. hyper market and discount stores . Advice the board of directors how Benchmark is important to improve regional performance 9.(Briefly explains the model) 2. Explains the components in porters value chain model and advise how model can apply for supermarket. Construct a Benchmarking process for change existing EPOS system of “B” 10. Explains the characteristics of BPR concept 4. Explain how these models could assist the management to analyze internal environment of “B” supermarket 3. Evaluate how benchmarking concept can used to analyze regional performance of “B” 8. 14. Advice top management how GAP analysis can be used to evaluate it potential demand for each region. Explains the characteristics of Benchmarking process 7. 12.
Therefore B supermarket performance is highly influenced by the political and legislative conditions of these countries. North America and also Asia. Environmental Analysis Concepts Evaluation of the possible or probable effects of external forces and conditions on an organization‟s survival and growth strategies Models of Environment Analysis PEST Analysis Diamond Theory Five Force Theory Competitor Analysis Uncertainty Game Theory Concept PEST Analysis PEST analysis stands for „‟Political.3. Social and Technology analysis‟‟ and describes a framework of macro. including the European Union (EU). .environmental factors used in the environmental scanning components of strategic management. Application of the model –“B” supermarket Political Factors B supermarket operates in a globalized environment with stores around 36 countries It operates in the regions of Europe. Employment legislation can be considered as another critical factor that affects B supermarket in terms of political factors.“B Supermarket” 27 Enough is Enough 2. Economic.
“B Supermarket” 28 Enough is Enough Economic Factors Economic factors concern on the B supermarkets impacts towards demand. it create a smooth inventory flow with availability of correct information on time and accurate information regarding stocks will be useful in decision making as well. The B supermarket‟s prevailing EPOS system will be used in achieving the above objective. technology directly influences the customer satisfaction which is an ultimate B supermarket objective. an increase in female workers and a decline in home meal preparation can be assumed as few examples for demographic changes in B‟s operating regions. Therefore all the up and downs in European market will directly affects the B supermarket performance. Even though B supermarket has been expanded to Asian and North American regions still European region contributes greater amounts to its overall profits since it comprise a 20% market share. B own brand also can contribute towards the social factors since it can drive cost out of the business. cost. . prices and profits. Not only the customers but also B supermarket itself will be benefited through this since. Social Factors Demographic changes in each region will directly affects the demand for retail FMCG in B supermarkets. Aging population. more personalize and convenience customer service with the support of modern technology. This can be approach via readily available information. Technological Factors Technology can be regarded as a major macro-environmental variable which directly contributes for B supermarkets future survival. Moreover.
It possesses a market share of 20% in Europe and 1%. Application of the model –“B” supermarket Threat of new entrants B supermarket is one of the largest retailing companies in the world and it faces different levels of competition in each region. better choices. 1. As an example consumer durables products in its supermarkets and hypermarkets force to sell them at a competitive prices since there is a strong competition for sale of such goods. constant floor of instore promotions and ultimately satisfying the customers with an ultimate .“B Supermarket” 29 Enough is Enough Five Force Theory by Potter This theory emphasis on developing strategy based on specific industry and environment. Bargaining power of customers As per the standardize nature in B supermarket customers can experience a high bargaining power. Therefore dominant supermarkets such as B have become a powerful force and it has made a great impact on small traditional business. In addition to these customizing services. Successful customer retention strategy can be achieved via introducing loyalty cards and club cards. But food products and clothing in its supermarkets and hypermarkets gain a comparatively less bargaining power since the better quality of them. But in Asia and North America comparatively they can expect more fresher‟s since they are yet expanding economies. Hence the prevailing market leaders must be possessing as barriers for new entrants. The practical scenario according to Ritz is over last 30 years the grocery markets has been transformed into the supermarket dominated business. Moreover huge initial capital and highly developed supply chain will reduce the attraction to new entrants. This identifies possible entry points to the market and concentrate on survival.5% in Asia and North America respectively.
Therefore B discount stores used to charge a lower price to compete with other players and satisfy and retain the customer base. of suppliers who do have the same policies. In the case of supermarket. a hypermarket again the rivalry varies based on the type of products. But in other aspect of it along with the economics of scale benefits B supermarket is in a position to exercise less bargaining power. Therefore even the standardization keep the rivalry high. very small differentiations matters in B supermarkets regardless of what type it is.“B Supermarket” 30 Enough is Enough shopping experience will enable the B supermarket brand to retain and control their customer base. Even though the policy declares 40% yet B supermarket sourced of its 80% of goods from large international manufactures and distributors. Bargaining power of suppliers Along with the B supermarkets‟ policy of 40% local purchase they will experience a high bargaining power based on the availability of local supply chain. And naturally there is a tendency of charging premier prices by suppliers who supply organic foods and environmental health products. Convenience stores seems facing to the rivalry better since they are in position to charge a higher price in terms of the convenience they provide. Moreover its carbon emission strategies will cause to reduce their bargaining power since they can‟t switch or barging with small no. Rivalry In B supermarket rivalry will differ from one type to other type super markets. Ex: Customer loyalty cards . Consumer durables seem having considerable higher rivalry compared to food products and clothing. In discount stores selling electrical products usually B exercise a higher rivalry especially because of the informed customer base.
B supermarket should focus on the competence based on the advantage and &create a competitive advantage in the market. Competitor Analysis The following areas are identified in conducting a competitor analysis. since it fulfills the basic needs such as food items and etc. .“B Supermarket” 31 Enough is Enough Threat of substitutes General substitution is able to reduce demand for product. And also benchmarking will guide to figure out the position of the company in the industry. Identifying the competitive advantage and the disadvantage of the organization. B supermarket should clearly recognize the advantages and disadvantages compared with other players who are in the industry in developing strategy. Benchmarking can be used in identifying the competitive advantage compared with best players in the industry. convenience stores can be serve the urban customers as a substitute to supermarkets. Develop a competitive advantage. B supermarket should clearly recognize the nature of the competition over a period of time. If Business successful in reducing carbon emission that can be used as a core competence. Development of sustainable advantage. There can be a situation where B supermarket‟s two different types of stores recognized by the customers as substitutes. except the fact that. especially in FMCGs. As an example. present and future competition. convenience and less choices. Identifying past. as there is a threat of consumers switching to other alternatives. since customer awareness on green policies seems attractive in current context.
Game Theory The Game theory identifies the competition strategy formulation and survival in the market as a game. But B supermarket should take strategies initiatives in order to maintain the 20% market share. Application of the model –“B” supermarket Simultaneous game theory can be applied for B supermarket since the industry support for all individuals equally with opportunities. Not only that but also B supermarket will be able to grow with the sustainable investments opportunities and expansions in North America. B supermarket need to grow its market share in Asian market as well as North American market. The Game theory emphasize on identifying the position of the key players and the strategy of each player in the market. Therefore the organizations are the players of the game.5% market share has been gain by B supermarket currently. This provides opportunity for any players including B supermarket to become successful. . The comparative highest market share that B supermarket enjoys is European market which is 20%.“B Supermarket” 32 Enough is Enough - The recognized core competence of B supermarket should develop for the betterment of sustainable future. Respectively 1% and 1. The imaging markets in Asian Region will provide opportunities for B supermarket along with its rapid economic expansions.
Explain the steps of carrying a competitor analysis by B supermarket in Europe. Marketing – Relationship Marketing Product Profitability Analysis Branding Six Market Model Customer Profitability Analysis 2. 4. Using game theory analyze the competition in all 3 regions where B operates 2. This will provide a competitive advantage for the organization based on . Identify and Explain possible theories that can be used to evaluate the environment of B supermarkets. 3.“B Supermarket” 33 Enough is Enough Possible Questions 1. This will provide a realistic measure regarding possible achievement. 1. 5. Therefore every decision will carried out based on customer requirement. Evaluate how to analyze the competitors in Asian markets with use of its expansion policies. This concept mainly evaluates the ability of the organization in achieving its objectivities based on the environment.4. Information Systems Organizational Knowledge Management Networks Relationship Marketing This involves in developing a long term relationship with the customer. Concepts. Asia and North America. Corporate Appraisal Definition. Apply Porte‟s 5 force theory with B supermarket scenario and explain the limitations of it. The organization will clearly recognize the requirement of the customer in determining the products & services. 2.
This will consider the profit based on the customer visit or the total purchase irrespective of a product. Bread. Product Profitability Analysis (PPA) This concept recognizes total purchases of a customer. This will demonstrate mutual respect & understanding.Carrefour supermarket in France has used different brand names for its stores. This provides a long-term view since the needs of the customer is recognized. This will enable B supermarket to identify products which has co-relation in consumption. E. E. Following models can be identified under relationship marketing.Shampoo & Conditioner. A brand will enable the organization to create competitive advantage. Application of the model –“B” supermarket PPA will enable B Super market to identify the nature of consumption of products. This model enables to understand the suitable way of displaying products as per the consumption. Butter & Jam. Application of the model –“B” supermarket B supermarket has created a reputation through its name over 49 years. . . A brand can be used to differentiate in the market than a product.g. Branding A Brand can be identified as a concept which enables the company to differentiate in the market.:. B can use different brand names for its stores to create differentiation in each store. Therefore a bundle of products are recognized.g.“B Supermarket” 34 Enough is Enough developing partnership with the customer. However.
Supplier Markets.:.:.B supermarket can use this strategy by providing a suitable training For or the Staff to ensure that they treat well to the customer & maintain a long term relationship. E. This emphasis on developing a relationship through existing customer While satisfying their needs. This is developing a relationship based on the ability & the quality of Suppliers. E. .g.:. E.Social Background. Influential Market. Reference Market. E. This is developing a relationship based on the influence of other people or institute.20% of goods are purchased locally (Europe) & 80% from International manufactures & distributors.g. Recruitment markets. Therefore it is essential for them to have a good relationship with their suppliers.Discount stores can be applied this concept by providing high Quality electrical items & warranties for the products sold.g.B Supermarket has already created a reference market from its Reputation over 49 years.g. Customer markets.B Supermarket .g. Following variables can be identified.:. E.“B Supermarket” 35 Enough is Enough Hypermarket – Carrefour Supermarket – Carrefour Market – Champion Convenience stores – City Express Discount Stores – Dia Six Market Model This identifies different options in developing relationship marketing.:. This is developing a relationship with a customer based on staff & the service. This is building a relationship through the reference of other stakeholders. Religious Background.
Customer Life Cycle Value Analysis. Offer discounts for the good purchased. Customer Account Profitability. Identify the key customers from the contribution generated by each customer. This recognizes the contribution of the customer for a specific period. Offer loyalty cards for key customers. Identify a separate process to reward the key customers. . This emphasis on building a long term relationship with the customer. Application of the model –“B” supermarket. This is developing a relationship based on the internal capability & the competence of the organization. Customer profitability analysis. This technique will enable the organization to satisfy & retain customers in the long term.“B Supermarket” 36 Enough is Enough Internal Market. Offer gift vouchers or allocate to raffle draws. Following variables can be identified. Identify the contribution of the customer over the economic life of the customer. This includes comparison of potential revenue & potential cost over the life of the customer over the economic life.
Wheel Chairs 40% Food items. Books & Periodicals 20% 30% % of NPV Information Systems. This will enable the company to obtain knowledge from outside if it is not available within the organization. Tacit Knowledge – Knowledge which is available within the organization & with people. . This model involves determining the net present value of B‟s customer over the life cycle Age Revenue generated products 0-5 5-18 18-30 Food Items. Explicit Knowledge – Knowledge already available & used within the organization. Application of the model –“B” supermarket. Books & periodicals. Medicines 80% Above 55 Medicines. Clothes. Toys Stationery. Electrical Items 50% 30-55 Food Items. Data Mining – Data mining emphasis on obtaining information effectively & efficiently for strategic decision making. Knowledge provides the basis for business decision making. Baby Items. Food Items. Knowledge can be defined as any information that can be used to generate a competitive advantage. This involves arraigning data in a logical order to ensure efficiency in obtaining information. Organizational Knowledge Management. House hold Items. Date Mart – Data Mart represent the information relating to particular SBU or a department. OKM will enable B to identify the knowledge available within the organization & its usage. but not been exploited or used.“B Supermarket” 37 Enough is Enough Application of the model –“B” supermarket. B supermarket can use their human assets in order to provide knowledge. Data Warehousing – A Systematic process of developing & maintaining information for strategic decision making.
Determine the features of an intranet & evaluate the usefulness of an intranet to an organization like B. Explain the importance of Branding for a supermarket. 5.“B Supermarket” 38 Enough is Enough Data warehousing will enable B to store information in a prominent manner which can be easily obtained when it‟s needed. Networks Internet. 14. 6. 1. 7. Identify the model of Product Profitability Analysis & its relevance for B. Possible Questions. Explain the concept of customer profitability analysis. 13. Identify the advantages & disadvantages of internet for B Supermarket. 2. Determine the percentage of NPV generated by customer over his/her life cycle. 11. Explain how the customer account profitability could be useful for B in providing value additions to its customers. Identify the importance of networks to the marketing activities of B supermarkets. Explain the importance of relationship marketing for B Supermarket. 4. Determine the concept of Organizational knowledge management & its importance to B Supermarket. e-commerce. Identify the six market model & its importance for B supermarket. 9. extranet & value added networks can identified As examples for networks. 12. 3. Identify the concept of customer life cycle value analysis & determine its importance for B supermarket. Explain how branding could be useful for B to create a competitive advantage. Internet & intranet will enable to develop positive relationship with key stakeholders over the world at any given time. Value added networks can be used to add value to the customers. intranet. 8. Determine the concept of data warehousing & evaluate the relevance for B supermarket. . 10.
1. This involves deciding on development strategies. and seem to be even more popular today.2 Alternative direction This involves in future of the product and customer portfolio of the business. They outline the three main strategic options open to organization that wish to achieve a sustainable competitive advantage. Introduction After completing position audit the next step is to decide how to develop the business in the future. Following phases taken place when selecting appropriate strategy.“B Supermarket” 39 Enough is Enough 2. 1. 2. Porter’s generic competitive strategy model Generic strategies were used initially in the early 1980s. Each of the three options is considered within the context of two aspects of the competitive environment: . Strategic Options Generation 1.3 Alternative methods This considers how the firm will gain access to the products and markets it wishes to develop into.5. Development strategies Basis of choice Alternative direction Alternative methods 1.1 Basis of choice This deals with choice of competitive strategy to win customers and beat rivals.
Increasing profits by reducing costs.“B Supermarket” 40 Enough is Enough Competitive advantage. 2. though their intention is to practice generic strategies depending on the market segment. Give better margin in short run Barrier to new entrant. According to present context discount stores are focusing on cost leadership.2 Differentiation Premium perceived value in the eyes of the buyer. Application of the model –“B” supermarket. The company has failed to indicate whether each store is a cost leader or a differentiator. Increasing market share through charging lower prices. while still making a reasonable profit on each sale because you've reduced costs. while charging industry-average prices. because their strategies producing high volumes at low price levels.1 Cost Leadership The low cost leader in any market gains competitive advantage from being able to many to produce at the lowest cost. Bargaining power of supplier. Competitive scope – This decides about the market segment. There‟s a possibility that the discount stores can reach to the cost leadership through analyzing the price levels of other competitors. the price levels of discount stores are lower than prices charged in supermarkets & hypermarkets. B is practicing both strategies and they are stuck in the middle.Firm must adopt a strategy that can combat five forces better than their rivals. Application of the model –“B” supermarket. 2. . Currently.
The firm will need to be adapt the management of innovation Advantages are . High degree of customer loyalty 3. In long run this facilitates both supermarkets & hyper markets to differentiate themselves from other competitors. 2. Expansion Policy matrix. Regarding to the differentiation strategy super-market and hyper-market has differentiated themselves based on their high quality consumer durables. These are the methods by which the firm will gain access to the product and market it has selected. Internal development External development Internal Development Home country Merger Acquisition Joint venture Alliance Franchise Merger Acquisition Joint venture Alliance Franchise Turnkey International Exporting Overseas office Overseas manufacturer Multinational operation Global operation 3.“B Supermarket” 41 Enough is Enough Application of the model –“B” supermarket. Alternative growth strategies.3 Focus Concentrates on narrow segment and within that segment attempt to achieve cost leadership or differentiation.1 Internal development Involves firm is growing using its own resources. This enables them to provide unique products based on their quality.
This can be practiced locally & internationally. discount stores & convenience stores in Europe. This involves continuing the current strategy based on the international market. 3. B supermarket operates supermarkets. Advantages o Quicker business expansion o Reduced risk due to capital having been provided the franchisee o Retains the dynamism of local management o Control over the activities of the franchisees o Reduced cost of control Disadvantages o Reduced profits o Poor franchisee performance will harm the parents brand . B supermarkets are expanding to Asia and North America within the existing business.“B Supermarket” 42 Enough is Enough o Firm does not need to understand different cultures and operating systems o Investment can be controlled o Provides learning and development opportunities for staff Disadvantages are o Slow response to dynamic market o Increasing number of firms o Firm may lack access to key resources. Application of the model –“B” supermarket.2 Joint development strategies Franchise Firm expands its business by granting other firms the right to use its business system The franchiser will provide a variety of supports to the franchiser. Internal international market. This demonstrates a lower risk & market development. hypermarkets. External development involves developing strategy with another organization.
1. Dog Low market share and low growth rate. Growing market requires investment in assets to increase capacity and therefore results in the consumption of cash. 4. The expansion of B supermarkets is already done through franchises & continuing on that strategy. Increase in relative market share will result in an increase in the generation of cash (In accordance with the experience curve increase in relative market share will result in an increase of generation of cash. Four Categories 1. 1. Therefore it does not generate more cash and does not consume more cash. Relative market share is low. Growth rate is high. Market growth rate of the business unit (Cash Usage) 2.“B Supermarket” 43 Enough is Enough o Problem of protecting intellectual capital Application of the model –“B” supermarket. BCG Matrix This demonstrates four categories which a company‟s business units can be classified. Relative Market Share of the business unit (Cash Generation) This is also called as Growth-Share Matrix. This model uses two assumptions.) 2. Problem Child. . This means it consumes large amount cash and generates a small amount. To overcome regulatory issues existing in some countries. It considers two parameters. 2.
Cash cow This has low market growth rate and high market share which implies it generates more cash than it consumes cash cows provide cash to cover the administrative and R&D cost of the company and cash to turn question marks into market leaders.and market share of 1%. 3.and market share of 20%.“B Supermarket” 44 Enough is Enough Application of the model –“B” supermarket.105/. Asian region can be classified as the problem child since.899/. According to B Supermarket European region is the cash cow because. it generates the highest revenue & market share. . Stars Growth rate and relative market share is high. The revenue of B Europe is Euro 89. The revenue of B Asia is Euro 10. there is a potential economic growth & potential market share to be covered. 4. Therefore it consumes a large amount of cash and also generates a larger amount of cash. Application of the model –“B” supermarket.
. 3. This is relevant for organizational growth to evaluate the potential options in developing counties. 2.g. Application of the model –“B” supermarket. Feasibility test – This consider whether the firm will be able to carry out the strategy successfully. Acceptability test – Consider whether the strategic option will gain crucial support from the people it needs to or whether it will lead to opposition and criticism. E.:.Asian franchise.6. Feasibility can be measured on the intended return. Suitability test – Whether the option is the right one given the circumstances of the firm. The suitability & acceptability of this option to the overall company mission is high since this expands the current supermarket chain. Strategic Evaluation Johnsons and Scholes outline three tests for assessing whether a strategic option should be undertaken. This model can be used to evaluate expansion decision in several markets.“B Supermarket” 45 Enough is Enough 2. 1.
Evaluate each generic strategy using three tests . Explain how B supermarket could conduct strategy evaluation using three tests. 2. (ii) Differentiation. Discuss the advantages and disadvantages of franchising B‟s operations 3. 2. BCG Matrix 1. 2. Your advice should include discussion under the following headings: (i) Overall cost leadership. Discuss position of each type of store using BCG matrix Growth matrix 1. Discuss the strategic and operational issues which the directors of B should consider before making a decision on whether to implement an overseas expansion strategy. and (iii) Either: Cost focus or Differentiation focus. Discuss position of each region using BCG matrix 2. Discuss benefits of internal growth over external growth (franchising) of B supermarket. Advise the Board how B Supermarket could achieve sustainable competitive advantage as defined by Professor M Porter. Explain how an understanding of Porter's three generic competitive strategies could help the team to satisfy customer according to segment.“B Supermarket” 46 Enough is Enough Possible questions Generic strategies 1. Evaluation tests 1.
culture and life styles. Suggestions: It should be flexible with less complicated features in its overall aspects where regional managers are given authority and power to take the decision in their regions which differ from region to region in nature. control& effectiveness of overall company can be evaluate as follows considering the impact to each regions as well. Moreover this caused to ignore regional decisions. attitudes and cultures. B-Asia and B-North America respectively. Therefore even though committees are available. Considering this the nature of decision making. Therefore from the name to service its all about satisfying customers‟ needs. This will give the opportunity to understand and respond to the environment in which it operates considering society. B-Europe.“B Supermarket” 47 Enough is Enough 3. . In practice the leading supermarkets has given enough power and authority to serve their customers based on the values. The decision making power has been delegated to head office with less power attributed to regions in decision making. As an example Wal-Mart is operating in UK as Asda since customer prefer it than the group name Wal-Mart. Asia and North America. Thus decision making process should be in line with it. Decision Making Problems: Board structure seems too complicated including regional board structures. decision making process seems less effective. Structure B is an international grocery retail chain which operates in Europe. The three subsidiary companies referred to as Regions within B.
Turnbull code. accountability of management towards shareholders especially considering the listed companies. Higgs code. In practice there is a clear gap between decision making and ownership of the company and the purpose of this concept is to minimize those gap. the chief executive director and nine executive directors Apart from chairman (Non-executive directors) there are nine other nonexecutive directors Currently “B” operates with adequate number of directors but the role of chairman and other nine non-executive directors are not clear IT‟s important that segregation of duties should be allocate to ten nonexecutive directors including chairman and their roles and responsibilities required to be highlighted .Corporate Governance The concept of corporate governance is developed to ensure. Cadbury code.Share holders 6. Smith code. The main objective of the corporate governance is to provide accurate information to the share holders 1. Green bury code. Hampel code-Disclosure 4.Directors remuneration 3.Audit committee 5.Reporting system Combine code Application of corporate governance – “B” supermarket chain Directors The existing board comprises with Non-executive directors .“B Supermarket” 48 Enough is Enough 4.Directors 2.
Clear roles and responsibilities required to allocate for the regional store directors because currently there is a conflict of interest between regional directors and main board. The existing non-executive directors need to be capable on ensuring that they have significant input .“B Supermarket” 49 Enough is Enough It‟s important that non-executive directors should contribute on corporate decision making and need to develop positive relationship with executive board No nonexecutive directors appointed for regional board which creates problems related to transparency in regional work. To overcome situation regional non-executive board need to be appointed. Clear roles and responsibilities need to be highlight for the audit committee explaining their audit roles Main board need to appoint separate team for undertake risk management Clear roles and responsibilities need to allocated for new risk committee . it‟s important to reduce the workload of the audit committee.although the proportion of non-executive directors is strictly less than the 50% Audit Committee Currently lack of segregation of duties allocate for audit committee because they have to involve on risk assessment and control apart from their main duties. The appointment of executive and non-executive required to reviewed and evaluate whether appointments are transparent or not Lack of information provided about service period but directors need to be changed after a reasonable service period It‟s important to appoint a nomination committee for appoint executive and non-executive directors.
new franchise agreement.“B Supermarket” 50 Enough is Enough Company need to check whether sufficient number of directors in the audit committee and if not adequate number of non-executive directors need to be appoint for the audit committee “B” need to check that whether audit committee meets regularly to practice internal control and reported to the top management Related to role of audit committee mainly they need involve with companies internal audits and need to carry out their operations transparently Due to expansion policy “B” has failed to undertake internal audit in certain countries so it‟s important to carry out internal audit in every country. rational behind share price changes need to be communicating to the shareholders. reinvestment of capital and etc. Board of directors of “B” should consider that decisions based on the best interest of shareholders and critical information required to be disclosed to shareholders Currently “B” faced fluctuation on their share prices between 2007-11 so. Further changes in dividend policy required to disclosed Board of directors should undertake annual general meetings and financial statement required to be distributed for every share-holders . Share holders Currently majority of decisions made by head office (top management ) and board need to ensure that decisions required to be disclosed to share holders Currently shareholders of “B” not involve in decision making so board members need to ensure that shareholders participation in critical decision related to business ex: moving to new region.
5. but the main board‟s committee can determine the remuneration of all directors Adequacy of the remuneration provided not stated so proper policy need to be design to determine remuneration for directors If the remuneration of regional directors is decided by the remuneration committee at head office. Recommend the actions to be carried out in order to minimize the identified risks. Identify the limitations of the current Structure and explain how it will lead to poor management decisions. then it‟s required to identify the basis are they going to measure the performance of directors through performance appraisal system The performance appraisal method going to use to evaluate directors performance should be monitored by independent group. Explains the need of audit and risk committee for “B” supermarket 2. Disclosure Related to disclosure “B” needs to review whether following criteria‟s have been met under disclosure Names and details of the existing executive and non-executive board Business interest of directors need to be disclosed Possible Questions 1. Comment the involvement of Non-executive directors involvement at regional level given the size and diversity of business 3. .“B Supermarket” 51 Enough is Enough Director‟s remuneration Currently there is lack of information provided about policy of determining directors remuneration Currently regional board does not have a separate committee to decide on director‟s remuneration so remuneration committee should be appointed A separate Remuneration committee is not available in the regional board. 4. Identify & evaluate the risk associated with the current allocation of duties to different committees.
risk associated with strategic decision making.risk associated with a particular business.Reputational risk if the products sold in supermarkets are outdated since the inventory system is misleading.1. Risk Management Risk. .Regulation risk restricts operations or nationalizes the industry due to exposure of unethical practice involving bribery of government officials to overcome regulation barriers.risk associated with business process of the organization.“B Supermarket” 52 Enough is Enough 5. Strategic risk. Application to “B” supermarket Business risk .risk associated with the customer. Control 5. Market risk.Risk demonstrates the possibility of failure. Risk recognizes the possible outcomes however the exact outcome is unknown. Operational risk. Classification of risks Business risk. -Risk of fraud where the supermarket products available in the black market for cheap prices. .
.The risk on focusing more on carbon emissions without focusing on the customer would result in a competitive disadvantage . . -Risk of supply chain integration with the malfunction of the EPOS system.Risk of losing of key suppliers due to dragging payments over long periods and loss of bargaining power due loss of supplier confidence .“B Supermarket” 53 Enough is Enough Strategic risk . -Reputational arising from deviation in total carbon neutrality further the practical aspect of total carbon neutrality to a supermarket would be impossible -Risk of franchisees deviating from the strategic objectives of B supermarket as a result of no internal controls Operational risk -Risk of stock outs during peaks seasons as a result of false inventory balances in the EPOS system -Risk of supplier quality in the selection of local suppliers and the commitment made by them towards minimizing carbon emission . -Risk of business continuity if no sources of long term finance obtained to resolve the liabilities.Risk of wrong strategic decisions made based on the incorrect information from the EPOS system.Risk of financing working capital since the cash & cash equivalents are insufficient to pay the creditors.Risk of a criminal culture developed as theft within the supermarket becomes a practice and no security systems towards prevention of theft.
Risk of customers switching to competitors based on price differentiation between competitors and B supermarket -Reputational risk in the long term if B supermarket is unable to sustain increased dividend payout ratio during reduction in share price to avoid negative signals to the market -Risk on competition in B-Asia & B.The risk management process of the Institute of risk management is used as a standard for managing risk. Management of Risk. Risk Management Process.Standard process for managing risk Business Objective – expected results of any organization Risk Assessment – comprehensive guideline regarding risk based on the nature of the business.North America is high since the market shares of bother the countries are low. Risk Evaluation Risk Reporting Decision Risk Treatment Residual Risk Reporting Monitoring .“B Supermarket” 54 Enough is Enough Market risk .
Appointment of risk committee has not done therefore this affects the risk management process of B supermarket. Adams . Concepts on Risk Management Risk management Cycle by CIMA Drivers of Value @ Risk by the Institute of Risk Management Risk & Shareholder Value by Ernest & Young Reduction in share price 2008 but the company increased the dividend payment.“B Supermarket” 55 Enough is Enough Application to “B” supermarket Risk management responsibility is allocated to Risk Assessment & Control Committee dispersed from the Audit Committee in 2009. Enterprise Risk Management Risk & Society by J. Adams Risk Thermostat by J. Roles and responsibilities are unclear. However in the long run there is a risk of sustaining the dividend further this creates risk of hostile takeover by competitors.
These controls are developed based on managing the lower level staff based on routine decisions. Concepts of Control Levels of Control by Anthony. Strategic Control Systems.These controls are developed based on the top management decisions. Financial objectives.This demonstrates development of control based on the nature of decision making therefore the control systems based on the nature of decisions. Operational Control Systems. 5 year strategic plan. budgets Minimum training hours. Management Control Management Control To identify the nature of the business environment and to ensure adoptability of organizational staff to the given environment.“B Supermarket” 56 Enough is Enough 5. strict financial targets . Tactical Control Systems.These controls are developed based on the middle management decisions. Nature of Control System Strategic Control Systems Tactical Control Systems Operational Control Systems Controls Strategic objectives.2.
This is an isolated system that obtains no input from the environment nor provide any output to environment.This structure is based on specialized decision making based on technical expertise.This structure is based on different divisions of the organization.This demonstrates clear responsibility & authority. It obtains input from suppliers worldwide and provides output in the form service to customers by storage of products for purchasing Control through learning by Simon-this demonstrates management control as a process of learning. Divisional structure. Functional structure. Organizational Structure – This demonstrates the nature of decision making . Management control developed based on the strategic uncertainty of the organization.The decision making is personal & judgmental. Application to “B” supermarket B supermarket is an open system that integrates with environment effectively. Open System.This is a system that integrates effectively with the environment by obtaining input and providing output to the environment. Neither closed System. . Types of Systems Entrepreneurial structure – This structure is based on individualistic decision .“B Supermarket” 57 Enough is Enough Systems Theory-This is a collection of sub units which a relationship through integration.
Planning . . Discount & Convenience stores and Europe three directors responsible for supermarkets & hypermarkets. HRM .This structure is based on integrating with another organization with objective of developing a competitive advantage through the specialization of & competence of another organization. Discount stores but in Asia there are director‟s responsible supermarkets & hypermarkets. The responsibility of stores is however varying between regions. Network structure. The level of autonomy to regional board is restricted through financial targets which both the regional and operational employees are dissatisfied since it‟s imposed from the head office. Procurement everywhere a director is in charge and directors for each type of store in the region.This structure is based on the combination of two different structures with the objective of focusing on the target market & maintaining adequate control. Regional MD in charge over 9 regional divisions specializing in Finance. Discount & Convenience stores. Marketing . as in North America there is director responsible supermarkets & hypermarkets.“B Supermarket” 58 Enough is Enough Matrix structure. Corporate Affairs. Application to “B” supermarket B supermarket demonstrates a complex divisionalised structure by area.
The supervision of regional functions is done by the Regional MD further the Audit committee also provides supervision on governance & control. This would involve the allocation of targets and performance would be benchmarked to evaluate personnel. The formulation of plans and strict financial controls to managerial and operational staff to operate. Marketing and Procurement is segregated to regional functional directors further segregated to their own staff. HR. Corporate Affairs.Financial control.Overall supervision of performance. The responsibility of Finance. Supervision . Elements of Internal Control Segregation of duties Organizing Accounting Physical Supervision Personnel Authority Management Application to “B” supermarket Segregation of duties.3. .“B Supermarket” 59 Enough is Enough 5. Planning. Internal Control Internal Control This is a set of controls financial and otherwise established by the management for a particular organization to maintain the expected level of behavior & standard throughout the decision making process. Accounting.Allocation of more than one staff member to carry out a function.
This ensure the safeguarding of assets and smooth functioning of operations in the organization.“B Supermarket” 60 Enough is Enough Personnel . Authority Management – evaluates decisions based on the ability to achieve organizational objectives. Chief Internal Auditor should report to the Audit Committee comprising of Non-Executive Directors Issues on internal audit will be communicated to the shareholders by the audit committee. .demonstrates a control mechanism based on employees. Chief Internal Auditor should operate with a dotted line relationship with the Finance Director. Establishment of Internal Audit Internal audit is audit is carried out by internal employees. training & development of staff based on international guidelines. The establishment of the internal audit function and the functioning of the audit committee to ensure goal congruence of management decisions. Chief Internal Auditor should operate at a higher level ensure smooth functioning. Internal Audit This is an independent appraisal carried out based on the management policies of an organization . The selection of employees from the local community.
This demonstrates operating treasury as a single unit based on the central decision making process. Determining Dividend Policy 5.“B Supermarket” 61 Enough is Enough Application to “B” supermarket Audit committee comprising of ten Non-executive directors The Audit committee is pressurized with the work load of the Risk Assessment committee. Treasury Treasury. Project Appraisal 6. The audit committee is monitoring the internal audit and control within B supermarkets.This demonstrates operating treasury as an investment centre therefore the treasury will allocate funds only if the investment demonstrates the expected return Centralized or Decentralized Centralized .Treasury demonstrates how the finance function is established based on the expectation of various stakeholders. Profit Centre. Liquidity Management 4. Parceling 3. Manage sources of finance Profit or Cost Centre Cost Centre. Financial Management 2. Functions of Treasury 1.This demonstrates operating treasury as another function with objective to provide support service other functions & SBU's. .
Evaluate the importance of segregation of Risk Assessment & Control Committee & Audit Committee? 5. Develop a Risk Management strategy using the concepts of Risk Management? . Application to “B” supermarket B supermarket treasury demonstrates a cost centre focus and its centralized since operated as another function to support the regional boards. The independence of the treasury department is however questionable The current working capital problems are directly associated the treasury mismanagement.“B Supermarket” 62 Enough is Enough Decentralized. Evaluate the roles & Responsibilities of Risk Assessment & Control Committee? 4. Advise B supermarket on developing a framework to manage risk using the Risk Management Process by the Institute of Risk Management? 2. Recommend the changes required in B supermarkets to implement a Risk Management Culture? 3. Prediction Questions Risk 1.This demonstrates allowing each department or unit to operate with its own treasury function. The group treasurer is under the Finance Director with no special function established for treasury.
“B Supermarket” 63 Enough is Enough
Management control 1. Evaluate the existing structure of B supermarket and recommend changes required to minimize bureaucracy? 2. Advice the board on the importance of administrative & Network controls in information systems? 3. Discuss the appropriateness of imposing strict financial controls to manage B supermarket? 4. Discuss the decentralization of planning function to individual regions? 5. Advice the main board on controls for selection of franchisees? 6. Recommend changes to the structure of B supermarket to enhance organizational performance? 7. Develop a reporting system to facilitate control? Systems & Control 1. Recommend changes to general controls in the IT system? 2. Recommend network controls to the IT system? 3. Discuss the relevance of financial performance indicators to non-financial indicators as methods of control? 4. Recommend system changes to rectify IT risks? Internal Control 1. Discuss the existing internal controls and provide recommendations to overcome problems? 2. Explain the characteristics of internal control? 3. Evaluate the importance of reviewing internal controls by the audit committee? 4. Advice the board of directors on internal controls to monitor franchisors? 5. Evaluate development of security systems to minimize fraud? 6. Discus the impact on no internal controls established to review periodic internal audit?
“B Supermarket” 64 Enough is Enough
Internal Audit 1. Evaluate the role of the Audit Committee in internal control? 2. Discus the impact no review periodic internal audit? 3. Recommend B supermarket changes required in structure to facilitate internal audit? 4. Explain the role of the chief internal auditor? 5. Discuss the importance internal audit function in the regional board?
Foreign exchange risk Concept
The risk that an investor will have to close out a long or short position in a foreign currency at a loss due to an adverse movement in exchange rates. Mainly four categories. Transaction risk – The risk originate due to timing difference considering the acceptance of the transaction and the actual payment Translation risk – Originates due to translation of assets and liabilities based on different currency Economic risk – The risk originates due to the economic developments in the market Political risk - The risk developed due to the political system in a particular country
“B Supermarket” 65 Enough is Enough
Application of the foreign exchange risk – B supermarkets Mainly translation risk, political risk and economic risk are related to B Supermarkets due to their existence in several parts of the world Translation risk arises at the end of the financial year when consolidating the assets and liabilities throughout the supermarket chain The effect of risk will be high due the proposed expansion in to Asia Since 80% of the goods are sourced from large international manufacturers and distributors the effect on transaction risk will be high. ex: trade and other payables.-€ 30,777million. B-Asia and North America are facing a political risk due to the high regulations regarding information systems. In some occasions they have to pay high inducements to government officials to overcome the problem. Management of B will face a difficulty in negotiating with the officials of other countries regarding the reduction in carbon emission. The socialistic thinking of the customers of other countries will be different.
5.4 Management of foreign exchange risk
The technique of managing foreign exchange risk is referred to as hedging. Mainly two types. Hedge No hedge Hedging techniques Internal Hedging Invoicing in home currency
“B Supermarket” 66 Enough is Enough Netting Matching Leading and lagging Restructuring‟ External Hedging Forward rate agreement Futures contract Options Money market hedge Swap Swaption Application to B We can consider that B reconciles the potential receipts and payments between the units of the organizations using a common currency. State and briefly explain the possible factors that B should consider in order to minimize the foreign exchange risks. Possible questions 1. 5. Advice the management of B whether they should consider hedge or no hedge policy. Explain the non-financial factors B should consider during the expansion policy in to Asian countries. 3. Identify the risks associated with the scenario. . Explain the internal hedging techniques that could be used by B 2. . 4.
refers to firm‟s obligation to maximize its positive impact upon stakeholders whilst minimizing the negative effects. 1.“B Supermarket” 67 Enough is Enough 6.To minimize damage to natural environment by organizational activities. Sourcing of 40% Local suppliers 2. Application to B Supermarket B supermarket carries following four main areas considering its corporate social policies. Providing funds for the development of local amenity projects. .COPARATE SOCIAL RESPONSIBILITY CONCEPT CSR is key element in the management of the organizations relationships with governments and regulatory agencies. Since this has been highlighted in strategic objectives as well as financial objectives there is a high consideration along with its benefits to both B supermarket and local communities. Reduction of Disposable Plastic bags to customers per Square Meter 4. CSR Factor Expected level Actual Level Variance - 40% local suppliers policy 40% 5% 20% 9% -20% 4% .Reduction of carbon emission by 1% Reduction of Disposable Plastic bags to customers per Square Meter 60% 51% -9% Expected 40% sourcing local suppliers has been achieved to a 50%. Reduction of Carbon Emission by 1% annually. NGOs and civil society. CSR however. 3.
3. Support for the local community and economy of the country of operation. Benefits of this approach will be enjoyed by everyone since it has lead to minimize the damage to natural environment by organizational activities. Minimizing the carbon emission through reduction in travelling miles. Construct a CSR analysis for existing business practice of “B” supermarket . Upgrade the individual living standard of each country. Reduction of plastic bag usage has been achieved up to 51% and yet to achieve 9% since the target has been 6% Possible Questions 1. 2. Identify the concepts of Corporate Social responsibility Discuss how the CSR factors support in achieving each Compare and contrast the CSR factors with mission and objectives Explain how concept of CSR can operationalize for “B” supermarket‟s existing objectives 5. It records a 4% additional achievement since B supermarket has targeted 5% initially. Reduction in the consumption of Kilowatt Hours per square meter has been reduced by 9%.“B Supermarket” 68 Enough is Enough Following benefits can be identified from local supplier‟s point of view. 4.
Control developed to ensure long term strategy in information systems. Business Continuity Control.risk theft by employees.Information Systems & Control General Control. B-Europe to access the EPOS -Electronic identification devices.Asia.Controls developed to prevent unauthorized access to the system Facility Control. B-North America.Control developed based on people & management. Administrative Control. misleading inventory -Anticipate future business strategy. Access Control.specialized terminals with barcode readers to capture the sale & adjust inventory levels. Application to “B” supermarket Access Control-These are controls developed to prevent unauthorized access to the information system. . -Physical access controls -Passwords.These are controls developed to ensure continuation of information based business strategy -Identification of system risk.“B Supermarket” 69 Enough is Enough 7.these controls are developed based on the use of information systems in a management perspective.expansion into Asian markets therefore the developments in the system to facilitate this strategy.Controls are based on establishing the information system Business Continuity Control.users in B.
Non-financial Control-.this demonstrates how control is developed within an organization.“B Supermarket” 70 Enough is Enough - Practice of Control.These controls are developed based on the modern management techniques to overcome flaws of financial measurement. Financial Control. Application to “B” supermarket Financial Controls Constant growth in EPS of 7% Dividend payout ratio of 50% Gearing 40% Non-financial Controls Customer satisfaction of 95% Local supplier sourcing of 40% Reduce carbon emissions by 1% Value chain .These controls are developed based on a financial perspective considering a financial measurement.
Supply chain management is directly attached with B‟s strategic objectives. Transportation 4. Process of purchasing of goods 2. Quality checking – A process of quality control must be carried out before goods are displaying on racks. Local suppliers – Sourcing 2. Importance of supply Chain Management for B 1. Global organization 3.availability of goods b. The supply chain is the network of organizations that are involved. 3. Customer satisfaction. Screening suppliers – B should be careful when selecting suppliers because reputation of B can be damaged due to slipups of suppliers. Supply chain management is significant in retail organization because continuous supply according to demand is compulsory in retail industry. a. Group procurement director Role of procurement director . Sourcing 3. Supply Chain Management. through upstream and downstream linkages. 4. Inventory management 5. Procurement 2. Distribution Procurement 1. in the different process and activities that produce value in the form of products and services in the hands of the ultimate consumer.“B Supermarket” 71 Enough is Enough 8. Supply chain of B can be analyzed under following criteria 1.
Local suppliers might not feel as their own organization because B is European based company. Physical quantity is not an appropriate measure 3.20% b. Increase commitment to suppliers to achieve 40% target c. The percentage is below as stated in objectives. B can expand its sourcing beyond perishable goods Ex:. Consequences.Frauds Low quality products Sourcing 1. Reduce the wastage e. Evaluation of having B‟s own brand name on products.80% 2. Low transportation cost d. Better relationship with government b. 4. Disadvantages a. Quality issues c. . Solution a. Issues a. Use appropriate measures like percentage of cost of sales. Reduction in carbon emission because of low distance transportation 5.FMCGs from local suppliers b. Local suppliers in host country. b.“B Supermarket” 72 Enough is Enough Issue – Some contracts are agreed between procurement director and supplier. International manufacturers and distributers. Advantages of sourcing from local suppliers a. (Less than 40%) c. There are two types of sourcing a. Reputation among local community c. Products might not meet the required standards of B 6. Only perishable goods are purchased from local suppliers and b.
Continuous supply according to the demand is the key success factor in retail organizations. Perishable goods must be transport carefully otherwise it will lead to wastage. Inaccurate management information regarding inventory 2. Transportation is indirectly attached with B‟s objective regarding carbon emission. Issues a. More sourcing from local suppliers 4. Solution a. As a result of above issues B is losing sales revenue and the worst case is B will lose its customers. Discount stores only sells consumer durable products d. Alternatives to reduce carbon emission in transportation a. Sales and Distribution 1.“B Supermarket” 73 Enough is Enough Transportation 1. Different pricing for same product in different stores b. Efficient fleet management. 1. Competition among stores c. Same pricing for same products otherwise customer could switching to another supplier because bargaining power of buyer is high in retail organizations. 3. . Limited brands in convenience stores 3. b. Stock outs do occur from time to time b.It is preferred to have a own fleet for transportation Inventory Management There is no proper inventory management exists within B. 2. There are four types of distribution 2. Issues a. Expand the product range in discount stores.
B and its upstream and downstream partners should be linked by information. Backward integration 2. Continuous supply 3. B can utilize its EPOS and Inventory management system in order to efficiently run the business.“B Supermarket” 74 Enough is Enough How to gain competitive advantage through enhancing supply chain 1. Seasonally changes 4. . This has analyzed in details in Information Technology chapter. Information technology – Information technology plays vital role in supply chain management.
It is clear that company currently facing an OVERTRADING situation where company is operationally managed through credit. Company has adopted an AGGRESSIVE POLICY of working capital where it need to be changed as soon as possible. treasury in an organization will create an appropriate capital structure of debt & equity to fund the business. mergers and . confusing in B supermarket chain. getting the optimum balance between cost & risk. In this case it is imperative to evaluate the role of the treasury function since its Role of the treasury function Capital markets & funding. It answers the fundamental questions as to what assets the business should invest in-including major projects. acquisitions. Cash & Liquidity management. Organizing appropriate funding. this focus on what business to invest in . Controlling risk in the organization. This involves in forecasting the company‟s cash needs to run the business & then managing group wide CF. In B‟s case they are hoping to expand B supermarkets to Asian countries where especially North Asia regional treasury should evaluate the finance options/sources to fund the expansion. Further. This considers on different sources & techniques for raising funds.“B Supermarket” 75 Enough is Enough 9. Corporate financial management. Most importantly. Treasury Concept This is considered as the key in firm‟s financial strategy & financial policy. This looks at the company‟s business strategy and financial strategy and seeks to determine the optimum solution to mesh the 2 together.
interest rate risk. Risk management This is simply the process of understanding the exposed risk. financial control is responsible for investment decision. In this case B supermarket is highly exposed to foreign exchange risk where company should focus on hedging techniques in order to minimize the exchange rate risk. Treasury Finance Function Financial Control . For instance currency risk. Hence. Finance function in an organization is a combination of TREASURY & FINANCIAL CONTROL. Treasury is responsible for obtaining finance & managing effectively where financial control is concerned with the allocation & effective use of resources. liquidity risk.“B Supermarket” 76 Enough is Enough divestment – and what capital structure should be put in place to raise the money to make the investments.
Marketing management will be given a competitive edge by specialist expertise and speed of response in making important cash based decisions. 6. Evaluate the roles of the treasury function in each region. Discuss the factors that the treasury department should consider when determining financing or re-financing strategies in the context of the economic environment in emerging Asian countries. Discuss the importance of having an appropriate treasury role. It also allows for economies of scale.“B Supermarket” 77 Enough is Enough Advantages of a specialized treasury function Control of cash will be recognized as a separate & significant activity. 3. Corporate planning staff will be aided by expert advice & quick feedback from specialists in such matters as interest rates & currency movements. Central funding arrangement provides greater control to ensure that adequate funding is in place & that debt covenants are monitored & standardized as far as possible. . Possible questions 1. 5. 2. Explain the impact of overtrading to the treasury function. Advice the BOD on how the treasury functions should be structured in order to be more efficient & effective in decision making. concentrating on the more efficient use of this resource. Discuss the conflicts that might occur due to inappropriate treasury structure in B supermarket chain. 4.
5 Million employees = B-Europe B-Asia B-North America Employees = Local staff – (The existing policy in B supermarket provide priority on recruiting local staff) Foreign staff 2. Roles and regulation in each region –ex: Labor law / minimum wage rates / Trade unions 2. The existing policy of recruiting local staff.“B Supermarket” 78 Enough is Enough 10.roles and responsibility of regional human resource director 4.5 million (500000) 0.ex: Language problems Conflict of interest between local and foreign staff Health and safety issues in working environment . Human Resource Management (HRM) in B-supermarket 1. Recruitment policy of Local staff 1. Individuals knowledge / thinking / behavior and cultural issues 3. Number of Employees Total number of employee =0. Economic development and income level of people to determine wage rates 5. New job opportunities create to economy Problems Regulatory barriers Cultural barriers.
Feed-back of employees towards training group D. Success of past training program C. C.“B Supermarket” 79 Enough is Enough 3. Involvement of regional HR director H.2 Analysis of Training program A.1 Training Hours 2011 Training hours per year Monthly training hours Increase in training hours 17 hours 1 hour 41 min + 30% 2010 13 hours 1 hour 8 min 4. D. C. Human resource Director A. Monitoring process of training program G. Training program for store staff A. Compulsory training program Specialist team carried out training program Every store participate in training program Some countries the training considered to be at sufficiently high level to be recognized by national training bodies 4. B. Financial feasibility –cost allocate on training program . National regulation towards training program ex: minimum training hours F. B. Performance appraisal of staff after training program E. Integration between specialist (training group) and store staff B. Member of a main board of B Roles and responsibly of Regional Human resource director Involvement of HR director in staff training program No clear integration between HR director and Regional HR director 4. D.
additional staff Declared as Disability A.3 Problems Conflict of interest between specialist (training group) and staff members Negative experience staff make resistance from staff No clear monitoring system to check progress in training program Only 1hour and 41 min per moth –not sufficient time real working environment Cultural issues National regulatory issues for training No clear roles and responsibilities for specialist team Financial feasibility can be a problem.performance appraisal I. Operationalizing CSR issues in training program ex : reduction of carbon emission 4.3 45%. Involvement of group and regional HR director 4. Roles and responsibility of specialist team (to whom they accountable regarding to training program J.“B Supermarket” 80 Enough is Enough I. Process of selecting disable staff. Loss in daily operations by undertaking training program L. Regulatory framework in staff redundancy ex : regional employment law/government influence C. Healthy and safety issues during training program K. voluntary disclosure H. Involvement of specialist team in selecting disability staff G.high cost related to training program Resistance for 45% additional staff redundancy/ regulatory problems No monitoring system to review the progress of training . Job security of remain staff members E. CSR issues in Human resource management F. Resistance from existing staff ex: pressure from trade unions. Impact on “B” brand image/reputation D. media B. Staff redundancy policy – redundancy scheme.
No investigation carried out to review the loss of theft by staff B. Staff can be confused with misleading information A. Human resource management (HRM) in Franchise stores Analysis –Franchise stores staff Problems Regulatory issues on franchise agreement Control issues for regional HR director of management franchise store staff Language and cultural barriers of communicating franchise store staff Conflict of interest between store management and HR group of “B” Involvement of regional HR director towards franchise stores staff management No clear policy for management of staff in franchise stores Recruitment policy. Information can be overloaded A.1 Misleading information provided to head office staff through IT system A.1.1.“B Supermarket” 81 Enough is Enough 126.96.36.199. Theft of staff in chain store groups and Misleading information provided to head office staff 188.8.131.52.1. Existing information system provided misleading information A. Fail in operation due to misleading information provided to staff C.1. Disciplinary procedure for frauds .1. No action has taken against IT system B. Demotivate employee to deal with IT system D.1. experience or in adequate technology 6.1.1.foreign or local store The training program undertake for franchise staff members Performance appraisal of staff members and reward structure ex : fixed salary or hourly rate payments Monitoring process of “B” head office towards franchise store staff Problems of maintaining and monitoring staff service in franchise store Issues of undertaking training programs in franchise stores-lack of knowledge.184.108.40.206.2. Poor integration between IT staff and head office staff A.2 Analysis of current situation A. No involvement of HR director 6. No action taken against for theft of staff in chain store groups C.4.
5 million employees and individual ownership is smaller percentage.participation for annual general meeting.2 Problems Conflict of interest between employees and remain 95% share holders Employees influence in corporate decision making Currently company operates with 0. Other HR related issues of the “B” supermarket Currently company have no clear performance appraisal technique to measure employees performance According to present context majority of decisions taken by head office (strategic planning style) and employees not take part in decisions Bureaucracy culture for employees due to top down decision making No clear policy has developed to monitor employees motivation .background check of staff/ involvement in criminal activities 6.675 million shares Total number of employees = 0. Additional benefits for employees. Dividend policy for employees needs to be review because company might use different dividend policy for employees. Review recruitment policy.3 Problems The loss of theft in stores will continue for future No involvement from group and regional HR director Encourage employees to involve in criminal activities due to poor control Negative impact on companies brand image 7. Employees 5% share ownership A.share option scheme. Independent and transparent investigation required E. voting rights. Employee‟s involvement in decision making.5 million 7. Total number of shares = 1.“B Supermarket” 82 Enough is Enough D.350 million * 5% = 0.350 million (1350000)-(employees have 5% share ownership 5% employee ownership = 1.
mission not explains characteristics of business The existing value system required to be redesign because using generic strategy in value statement has create complication situation .“B Supermarket” 83 Enough is Enough 11. procedures. incremental. step and transformational change. It‟s important for an organization to identify the internal and external and external variables which can influence for an organizational change There can be five types of changes in an organization: Plan. no performance appraisal system carried out after training program.not in line with core objective of company . Areas to change in “B” supermarket The existing structure required to be change because it complicated and inconsistent practices used in different region. no monitoring system to evaluate training CSR policy required to be change mainly because “B” need to check whether it‟s realistic to become carbon neutral . emergent. values. Further this made negative impact on sales revenue during peak seasons The existing training program required to be change because time allocate for employer is insufficient. Change Management Change In a Competitive environment markets are change in rapid scale and every organization has come across the concept of change in day to day life. application of CSR policy to supermarket industry. goals. rituals and etc. Existing EPOS system need to be change because systems are not perfect in stock outs and existing system provide misleading information for employees. not defines what business are you in . carbon emission related to railway transportation Mission statement should change because it too broad . Lack of segregation in different units. An organization change can arrived in different forms such as rules.
fear of new development. very high financial control. fear to change and etc. lack of audit governance related to expansion Decision making process required to change because rigid control.lack of segregation of audit committee. regional treasury operates with dual responsibilities Changes related to corporate governance. It‟s a difficult task to identify the exact reasons for the resistance to change in an organization and understanding the shape of resistance enables to develop a strategy to overcome it. autocratic decision making of top management .culture.“B Supermarket” 84 Enough is Enough Change required for existing culture of employees because certain stock loses detected as theft from staff. General barriers to implement change. uncertainty. in-adequate focus on risk management. poor leadership skills. central planning creates bureaucratic environment and poor management of regions Dividend policy need to be change because it might provide negative signaling effect for shareholders (reduction in share price between 2007-11) Barriers to change According to present context many organizations failed to introduce successful changes for their existing working practice due to resistance created through from internal and external environment. This reduces the flexibility to introduce changes for the “B”. Strict finance control and possible conflict between regional managers and Head office . Barriers in “B” supermarket to introduce change Mainly the existing top down decision making has created bureaucratic and authoritarian culture within the company.conflict of interest between regional staff and main board Treasury function need to be change because role of treasury is not clear.
Management of change in “B” supermarket New IT system need to be introduced for control stock outs and monitoring physical stocks against records.redesign EPOS system Appoint an IT team to investigate existing problems of providing misleading information to staff.“B Supermarket” 85 Enough is Enough External barriers – changes in regulation of each regions. Segregation of duties should allocate to the audit committee Mission statement need to be change and new mission statement need to design in line with core-business activity of “B” supermarket Appoint Non-executive director for each region and separate committee for risk management Change the existing training program and allocate more time for individual employee. entrance of new competitor. In-sufficient training provided to employees and staff can be demotivate in future Ability to control every franchise store operates in each region. develop monitoring and performance appraisal system for workforce . Management of change is about capitalizing today‟s strength and create platform to develop future niches. change in customer preference towards FMG goods. Ability to implement change for over 15000 stores operates in nearly 36 countries Application of CSR policy in to companies operations is complicated Poor internal IT system – insufficient technology to control inventory Change management Management of change is a very challengeable task for any organization because due to high level uncertainty arisen from the environment and many organizations are not very keen on responding towards the change.
“B Supermarket” 86 Enough is Enough
“B” supermarket can used following models to introduce change for the organization Force field analysis (Kurt lewin) Change through Entrepreneurship Theory E and theory O Change through Learning(Peter senge) Constant change – Chaos theory (Tom peters)
Example: Force-field Analysis (Kurt Lewin) Unfreeze Change Refreeze
Conflict of interest between regional board and main board – regional board dissatisfied with existing bureaucratic procedure Problems can be arise among IT staff related to poor information system Insufficient training for employees which leads to staff dissatisfaction
Change the structure of decision making
Develop a proper reporting system and arrange meeting between main board and regional board
and redesign EPOS system of managing inventory
Develop monitoring and control for review the IT system
Change training policy for work force
Performance appraisal after training program
Possible Questions 1. Advice board of directors of “B” to what extend change management is required for the existing IT system 2. Explain how change management is important for improving performance of employees and culture 3. Discuss the barriers that company “B” going to face introducing change for current training program 4. Explain the barriers that “B” need to face engaging with new franchise agreement with local player
“B Supermarket” 87 Enough is Enough
5. Identify the two models that the management could use to introduce change for it existing IT system 6. Explain how these models could assist the management to overcome the barriers of IT system and training program 7. Discuss how force field analysis could be used introduce changes for existing culture of the organization
Change In a Competitive environment markets are change in rapid scale and every organization has come across the concept of change in day to day life. An organization change can arrived in different forms such as rules, procedures, goals, values, rituals and etc. It‟s important for an organization to identify the internal and external and external variables which can influence for an organizational change There can be five types of changes in an organization: Plan, emergent, incremental, step and transformational change. Areas to change in “B” supermarket The existing structure required to be change because it complicated and inconsistent practices used in different region. Lack of segregation in different units. Existing EPOS system need to be change because systems are not perfect in stock outs and existing system provide misleading information for employees. Further this made negative impact on sales revenue during peak seasons The existing training program required to be change because time allocate for employer is insufficient, no performance appraisal system carried out after training program, no monitoring system to evaluate training
“B Supermarket” 88 Enough is Enough
CSR policy required to be change mainly because “B” need to check whether it‟s realistic to become carbon neutral , application of CSR policy to supermarket industry, carbon emission related to railway transportation
Mission statement should change because it too broad , not defines what business are you in ,not in line with core objective of company , mission not explains characteristics of business
The existing value system required to be redesign because using generic strategy in value statement has create complication situation Change required for existing culture of employees because certain stock loses detected as theft from staff, autocratic decision making of top management ,conflict of interest between regional staff and main board
Treasury function need to be change because role of treasury is not clear, regional treasury operates with dual responsibilities Changes related to corporate governance- lack of segregation of audit committee, in-adequate focus on risk management, lack of audit governance related to expansion
Decision making process required to change because rigid control, very high financial control, central planning creates bureaucratic environment and poor management of regions
Dividend policy need to be change because it might provide negative signaling effect for shareholders (reduction in share price between 2007-11)
Barriers to change According to present context many organizations failed to introduce successful changes for their existing working practice due to resistance created through from internal and external environment. It‟s a difficult task to identify the exact reasons for the resistance to change in an organization and understanding the shape of resistance enables to develop a strategy to overcome it.
poor leadership skills. fear of new development. uncertainty.culture. This reduces the flexibility to introduce changes for the “B”. In-sufficient training provided to employees and staff can be demotivate in future Ability to control every franchise store operates in each region.“B Supermarket” 89 Enough is Enough General barriers to implement change. Management of change is about capitalizing today‟s strength and create platform to develop future niches. entrance of new competitor. . Strict finance control and possible conflict between regional managers and Head office External barriers – changes in regulation of each regions. Barriers in “B” supermarket to introduce change Mainly the existing top down decision making has created bureaucratic and authoritarian culture within the company. Ability to implement change for over 15000 stores operates in nearly 36 countries Application of CSR policy in to companies operations is complicated Poor internal IT system – insufficient technology to control inventory Change management Management of change is a very challengeable task for any organization because due to high level uncertainty arisen from the environment and many organizations are not very keen on responding towards the change. change in customer preference towards FMG goods. fear to change and etc.
develop monitoring and performance appraisal system for workforce “B” supermarket can used following models to introduce change for the organization Force field analysis (Kurt lewin) Change through Entrepreneurship Theory E and theory O Change through Learning(Peter senge) Constant change – Chaos theory (Tom peters) .“B Supermarket” 90 Enough is Enough Management of change in “B” supermarket New IT system need to be introduced for control stock outs and monitoring physical stocks against records.redesign EPOS system Appoint an IT team to investigate existing problems of providing misleading information to staff. Segregation of duties should allocate to the audit committee Mission statement need to be change and new mission statement need to design in line with core-business activity of “B” supermarket Appoint Non-executive director for each region and separate committee for risk management Change the existing training program and allocate more time for individual employee.
Identify the two models that the management could use to introduce change for it existing IT system 13. Explain how these models could assist the management to overcome the barriers of IT system and training program 14. Explain the barriers that “B” need to face engaging with new franchise agreement with local player 12. Explain how change management is important for improving performance of employees and culture 10. Advice board of directors of “B” to what extend change management is required for the existing IT system 9.“B Supermarket” 91 Enough is Enough Example: Force-field Analysis (Kurt Lewin) Unfreeze Change Refreeze Conflict of interest between regional board and main board – regional board dissatisfied with existing bureaucratic procedure Problems can be arise among IT staff related to poor information system Insufficient training for employees which leads to staff dissatisfaction Change the structure of decision making Develop a proper reporting system and arrange meeting between main board and regional board and redesign EPOS system of managing inventory Develop monitoring and control for review the IT system Change training policy for work force Performance appraisal after training program Possible Questions 8. Discuss the barriers that company “B” going to face introducing change for current training program 11. Discuss how force field analysis could be used introduce changes for existing culture of the organization .
Fast food giant McDonalds and French supermarket chain Carrefour have apologized to Chinese consumers following the exposure of food safety scandals on Thursday. Fast food giant McDonalds and French supermarket chain Carrefour have apologized to Chinese consumers following the exposure of food safety scandals on Thursday.1 Issues of carefour supermarket. losing some €249 million in the first six months. Shares in Britain's biggest supermarket chain Tesco (LSE: TSCO) are down by 21% this year. The two supermarket stalwarts trail Wal-Mart globally. Appendixes 12. . However. with whom Tesco fights for second place in the global market. The two companies said they are willing to cooperate with government inspections to ensure the highest standard of food safety. would love to see "minimal" profits growth. but the French group is faring worse. shareholders in the French supermarket group Carrefour. thanks to last Thursday's Christmas trading statement where the company said that profits growth in the current year would be "minimal". That's because profits have fallen in the last few years and Carrefour issued five separate profit warnings in 2011.“B Supermarket” 92 Enough is Enough 12. Quick apologies are announced after a report exposed food safety problems at a Mcdonalds branch in Beijing.
From today." The food safety scandal was exposed on Thursday. we will rectify operations of more than 1. moreover. "As a member of the managerial staff.“B Supermarket” 93 Enough is Enough Sophia Luan. I apologize to our customers. Food Safety Supervisor. Yan Chuanyan. Fast food giant McDonalds and French supermarket chain Carrefour have apologized to Chinese consumers following the exposure of food safety scandals on Thursday. said. and worse still. Investigators started probing the problems immediately. showing that a McDonalds branch in Beijing was selling fried chicken wings beyond the preset time limit. "Trash cans in the operation room were not covered in time.400 outlets in China. said. Im very sorry for the loopholes in our system. Vice President of McDonalds in China. not only this one. which led to food contamination." . which violates our rule. The bread bases stored in normal the atmospheric temperature were mixed with groceries. dropped cutlets were directly picked up for use again. there were some damage to plastic bags of some bread bases.
Head of Food Safety and Quality of Carrefour China. apologizes for the case that has happened. Meanwhile. said." Carrefour China said it will enforce out serious punishments to people involved in this food quality case. Carrefour apologizes. . and apologizes to our customers about this incident. Xavier Bodenes. "Carrefour China knew about the case that happened yesterday. Standard chicken was also as the more expensive free-range variety.“B Supermarket” 94 Enough is Enough The branch has been closed until the investigation is complete. Carrefour also made a apology after reports exposed the practice of labeling some poultry products with incorrect production dates.
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