Unit of Competence: Improve Business Practice

Module Title: Improving Business Practice

LG Code: EIS HRO3171012

TTLM Code: EIS HRO3M171012

LO-1: DIAGNOSE THE BUSINESS

1.1. Data required for diagnosis is determined and acquired.

 Data required includes:  internal policies, procedures and
 organization capability: practices
 appropriate business structure  staff levels, capabilities and structure
 level of client service which can be  market, market definition:
provided
To diagnose a business problem is to determine the source.
Diagnosis may not be easy in business but there are things that can improve an
executive’s chances of getting it right.
First, define the problem properly. Time spent getting good definition of a problem is
usually time well spent.
Second, listen to different people. Much of the information needed to diagnose the cause of
a problem invariably comes from the people associated with the problem.
Third, analyze the problem. Analysis is another key to proper diagnosis. Try to quantify
the problem at hand; develop hypotheses on causes; collect data; study the data in light of
the hypotheses; keep digging in the data; keep an open mind; go where the data and the
analysis takes you. So called fact-based decision-making is simply decision-making based
on the analysis of facts.
Fourth, know the history of the problem.
Fifth, think about the problem. Listening is tough; thinking is even tougher.
Sixth, get advice from experts. No executive knows everything. There is a lot of
professional expertise out there that can be brought to bear on the cause of a problem.
1.2. Competitive advantage of the business is determined from the data SWOT
analysis of the data is undertaken.
Competitive advantage includes:
 services/products
 Product is: A good, idea, method, information, object or service created as
a result of a process and serves a need or satisfies a want.
  Service is: Intangible products such as accounting, banking, cleaning,
consultancy, education, insurance, expertise, medical treatment,
or transportation.
 Fees: A charge for services rendered.
 location
 Timeframe.
COMPETITIVE ADVANTAGE: is an advantage that a firm has over its competitors,
allowing it to generate greater sales or margins and/or retains more customers than its
competition. It gives a company an edge over its rivals and an ability to generate greater
value for the firm and its shareholders.
There are two main types of competitive advantages: comparative advantage and
differential advantage.

 Comparative advantage, or cost advantage, is a firm's ability to produce a good or

service at a lower cost than its competitors, which gives the firm the ability sell its
goods or services at a lower price than its competition or to generate a larger margin
on sales.
 A differential advantage is created when a firm's products or services differ from its
competitors and are seen as better than a competitor's products by customers.

The fundamental basis of long-run success of a firm is the achievement and maintenance
of a sustainable competitive advantage.
A competitive advantage (hereafter CA) can result either from implementing a value-
creating strategy not simultaneously being employed by current or prospective competitors
or through superior execution of the same strategy as competitors. The CA is sustained
when other firms are unable to duplicate the benefits of this strategy.
1.3. SWOT Analysis of the data is taken
Using SWOT Analysis to Develop a Marketing Strategy
SWOT analysis is a straightforward model that analyzes an organization’s strengths,
weaknesses, opportunities and threats to create the foundation of a marketing strategy.

What is SWOT analysis?

As mentioned above, the process of SWOT analysis evaluates your company’s strengths,
weaknesses, market opportunities and potential threats to provide competitive insight into
the potential and critical issues that impact the overall success of the business. Further,
the primary goal of a SWOT analysis is to identify and assign all significant factors that
could positively or negatively impact success to one of the four categories, providing an
objective and in-depth look at your business.

LO-2: BENCHMARK THE BUSINESS

Benchmarking is the process of comparing one's business processes and performance. It is
also referred to as "best practice benchmarking"

2.1. Sources of relevant benchmarking data are identified

2.2. Key indicators for benchmarking are selected in consultation with key
stakeholders.
 Key indicators may include:
 salary cost and staffing
 Personnel productivity (particularly of principals): Workforce productivity is the
amount of goods and services that a worker produces in a given amount of time.
 Profitability: Profit (accounting), the difference between the purchase price and the
costs of bringing to market
 Fee structure: A fee is the price one pays as remuneration for services. Fees usually
allow for overhead, wages, costs, and markup.
 client base: A customer (sometimes known as a client, buyer, or purchaser) is the
recipient of a good , service , product , or idea,
 size staff/principal
 Overhead/ overhead control: In business, overhead or overhead expense refers to
an ongoing expense of operating a business; it is also known as an "operating
expense". Examples include rent, gas, electricity, and wages.
2.3. Like indicators of own practice are compared with benchmark indicators
2.4. Areas for improvement are identified

How Do Businesses Use Benchmarking to Improve Productivity & Profit?

 Observing Competitors
 Identifying Areas of Excellence
Benchmarking means comparing the operation of your business to other similar
businesses, and establishing a performance level that you try to reach.

How to benchmark a business

Step 1
Identify the processes in your businesses that are important for achieving the business goals.

Step 2
Survey your industry and similar industries for the best performers.

Step 3
Establish the benchmarks for each key quantity by choosing the best numbers from each
data pool.

What Is the Difference Between Benchmark Indicators & Key Performance Indicators?
Benchmark indicators and key performance indicators are two measurements that help
companies improve performance. You can set benchmarks and key performance indicators
for individuals, departments, projects or the company as a whole, and use them to measure
everything from manufacturing production to employee performance. Though similar in
some ways, benchmark indicators and key performance indicators are not the same thing.

Benchmark Indicators
Benchmarks are goals to aim for. Other names for benchmarks include best practices and
exemplary practices. Businesses choose benchmarks based on standards within their
industry. For instance, you might look to peak performers in your industry and set their
performance levels in areas such as manufacturing or marketing as your benchmarks --
the levels you will strive to reach.

Benchmarks as Baseline
Another use of the term benchmark is to indicate a baseline or starting point. In this use,
you'd gather information to determine where you are right now and then set further goals
building on that baseline or benchmark.

Key Performance Indicators

Key performance indicators are specific measurements used to gauge performance. They're
a way to precisely measure performance.

Common Marketing KPIs (Key Performance Indicators) includes

 Sales
 Brand Awareness
 Repeat Business
 Market Share
The Objectives of Key Performance Indicators
 To find out how they are performing and what they can do to make the business
operate better overall.
 To make decisions about a company's prospects for future success.
 To determine what aspects of your business are "key."
 To find actions and events that the business can clearly identify, measure and
quantify, and that the company itself or its employees can influence.

Lo-3: DEVELOP PLANS TO IMPROVE BUSINESS PERFORMANCE

3.1. A consolidated list of required improvements is developed

3.2. Cost-benefit ratios for required improvements are determined
3.3. Work flow changes resulting from proposed improvements are determined
3.4. Proposed improvements are ranked according to agreed criteria
3.5. An action plan to implement the top ranked improvements is developed and agreed
3.6. Organizational structures are checked to ensure they are suitable.
 Organizational structures include:

 Legal structure (sole proprietorship, partnership, Limited Liability Company,

corporation.)
  organizational structure/hierarchy
 Reward schemes: Reward system refers to all the monetary, non-monetary and
psychological payments that an organization provides for its employees in
exchange for the work they perform. Rewards schemes may include extrinsic and
intrinsic rewards. Extrinsic rewards are items such as financial payments and
working conditions that the employee receives as part of the job. Intrinsic
rewards relate to satisfaction that is derived from actually performing the job
such as personal fulfillment, and a sense of contributing something to society.

BASIC FORMS OF BUSINESS OWNERSHIP

1. A sole proprietorship is a business that is owned, and usually managed, by one

person; it is the most common form.
2. A partnership is a legal form of business with two or more owners.
3. A corporation is a legal entity with authority to act and have liability separate from its
owners.
1. Sole proprietorships
Advantages of sole proprietorships

A. Ease of starting and ending the D.  Leaving a legacy behind for future
business generations
B. Being your own boss E. Retention of company profits
C. Pride of ownership F. No special taxes

Disadvantages of sole proprietorships

A. Unlimited liability E. Few fringe benefits

B. Limited financial resources F. Limited growth.
C. Management difficulties G. Limited life span
D. Overwhelming time commitment

2. Partnerships: is a legal form of business with two or more owners.

     Types of partnerships

A. A general partnership is a partnership in which all owners share in operating the

business and in assuming liability for the business’s debts.
B. A limited partnership is a partnership with one or more general partners and one
or more limited partners.
a. A general partner is an owner (partner) who has unlimited liability and is active in
managing the firm.
b. A limited partner is an owner who invests money in the business but does not have
any management responsibility or liability for losses beyond the investment.
 Advantages of partnerships
1.  MORE FINANCIAL RESOURCES.
2. SHARED MANAGEMENT AND POOLED
3. COMPLEMENTARY KNOWLEDGE
4. LONGER SURVIVAL
5. NO SPECIAL TAXES
Disadvantages of partnerships
1. Unlimited liability.
 Each general partner is liable for the debts of the firm, no matter who was
responsible for causing those debts.
 You are liable for your partners' mistakes as well as your own.
2. Division of profits. Sharing profits can cause conflicts.
3. Disagreements among partners.
 Disagreements can arise over division of authority, purchasing decisions, and
so on.
 Because of such potential conflicts, all terms of partnership should be spelled
out IN WRITING to protect all parties.
4. Difficult to terminate.
3. CORPORATIONS.

A CONVENTIONAL (C) CORPORATION is a state-chartered legal entity with authority to act

and have liability separate from its owners.

 The corporation’s owners (stockholders) are not liable for the debts of the corporation
beyond the money they invest.
 A corporation also enables many people to share in the ownership of a business
without working there.

Advantages of corporations

1. Limited liability.
 Limited liability is probably the most significant advantage of corporations.
 Limited liability means that the owners of a business are responsible for losses
only up to the amount they invest.
2. More money for investment.
 To raise money, a corporation sells OWNERSHIP (STOCK) to anyone interested.
 Corporations may also find it easier to obtain loans.
 Corporations can also raise money from investors through issuing bonds.
3. Size.
 Corporations have the ability to raise large amounts of money.
 They can also hire experts in all areas of operation.
 They can buy other corporations in other fields to diversity their risk.
  Corporations have the size and resources to take advantage of opportunities
anywhere in the world.
4. Perpetual life: The death of one or more owners does not terminate the
corporation.
5. Ease of ownership change. Selling stock changes ownership.
6. Ease of drawing talented employees. Corporations can offer benefits such as
stock options.
7. Separation of ownership from management. Corporations can raise money from
investors without getting them involved in management.

Disadvantages of corporations

1. Extensive paperwork.
2. Double taxation.
3. Two tax returns: A corporate owner must file both a corporate tax return and an
individual tax return.
4. Size: Large corporations sometimes become inflexible and too tied down in red
tape.
5. Difficulty of termination.
6. Possible conflict with stockholders and board of directors.
7. Initial cost.

LO-4: DEVELOP MARKETING AND PROMOTIONAL PLANS

4.1. The practice vision statement is reviewed

4.2. Practice objectives are developed /reviewed.
4.3. Target markets are identified/refined
4.4. Market research data is obtained.
Market research data includes:
 data about existing clients  libraries
 data about possible new clients  Internet
 data from internal sources  Chamber of Commerce
 data from external sources such as:  client surveys
 trade associations/journals  industry reports
 Yellow Pages small business surveys  secondary market research
4.5. Competitor analysis is obtained
 Competitor analysis.
 competitor offerings
 competitor promotion strategies and activities
 competitor profile in the market place
4.6. Market position is developed/ reviewed.
 Market position should include data on:
 product  the core product
 the good or service provided  the tangible product
 product mix
  the augmented/greater than before/  market position
product  distribution strategies
 features/benefits  marketing channels
 product differentiation from competitive  promotion
products  promotional strategies
 new/changed products  target audience
 Price and pricing strategies  communication
 Pricing objectives  promotion budget
 cost components

4.7. Practice brand is developed.

 Practice brand may include:
 practice image  templates for communication/invoicing
 practice logo/letter head/signage  style guide
 phone answering protocol  writing style
 facility decor  AIDA (attention, interest, desire, action)
 slogans
4.8. Benefits of practice/practice products/services are identified.
 may include:
Benefits
 features as perceived by the client
 benefits as perceived by the client
4.9. Promotion tools are selected /developed.
 Promotion tools include:
 networking and referrals
 seminar
 advertising
 press releases
 publicity and sponsorship

 brochures
 newsletters (print and/or
electronic)
 websites
 direct mail
 telemarketing/cold calling
LO-5: DEVELOP BUSINESS GROWTH PLANS
5.1. Plans to increase yield (give way) per existing client are developed. Yield per
existing client may be increased by:
 raising charge out rates/fees
 packaging fees
 reduce discounts
 sell more services to existing clients
5.2. Plans to add new clients are developed
5.3. Proposed plans are ranked according to agreed criteria
5.4. An action plan to implement the top ranked plans is developed and agree
5.5. Practice work practices are reviewed to ensure they support growth plans.
Steps to develop business growth plans
1. Study the past successes of your company and use this to create new ideas for
future achievements. 
2. Look over the business growth plans of various others companies that have
seen great recent success in both your industry as well as other industries.
3. Determine where your expansion opportunities are. 
4. Assess your current company employee's efficiency, abilities, and adaptability
as well as your own. 
5. Assess your company's current technology and acknowledge any need for
updating operating systems and computer networks to assist and adapt to the
new developments.
6. Create a thorough proposal on how you will raise excess capital to support the
expansion. 
7. Generate a high intensity marketing strategy that will catapult your new
development efforts into the population's conscious. 
8. Collaborate with a business owner that has successfully expanded his or her
company as you are trying to do. 
9. Write your business growth plan. This should include the following:
 Explanation of development opportunities.
 Financial plans per each quarter as well as yearly.
 Marketing strategy you will utilize to accomplish said growth.
 Financial breakdown of internal or external capital and its accessibility
throughout the development process.
LO-6: IMPLEMENT AND MONITOR PLANS

What is Monitoring?
Monitoring is the action watching the movement or behavior of something or someone
In plan implementation, monitoring is defined to be the systematic attempt to
measure the extent to which:
1. Results achieved correspond to the set goals and objectives, in terms of quantity,
quality and time standard, and
2. Corrective actions need to be taken in order to reach the intended objectives
 EFA Planning Guide (UNESCO) defined monitoring as: “the process and
mechanism of overseeing and Controlling the implementation of a plan, a program,
or a budget in order to assess its efficiency and its effectiveness”
What is Monitoring?
“Monitoring is a continuing function that uses systematic collection of data on
specified indicators to provide management and the main stakeholders of an ongoing
development intervention with indications of the extent of progress and achievement
of objectives and progress in the use of allocated funds”.
• “Monitoring is a continuous management function that aims primarily at providing
programmer managers and key stakeholders with regular feedback and early
indications of progress or lack thereof in the achievement of intended results.
Monitoring tracks the actual performance against what was planned or expected
according to pre-determined standards. It generally involves collecting and analyzing
data on program me processes and results and recommending corrective measures”.
Monitoring Process
• define benchmarks within the implementation process concerning
 Inputs (physical, human resources, budget)
 Process (progress of work, performance)
 Intermediate outputs or results
 Development impact
• define objectively verifiable ‘indicators’
 What? - How much? - When?
• specify sources of verification
 Where are the data (to construct indicators)?
• assess assumptions, conditions, and risks
 What are the outside factors?
• specify the reporting system
 Who is responsible? – What types of reports?
 When is the report due? (Reporting schedule)
 What should Monitoring Indicators Cover?
• Quantity of inputs
used
• Quality of inputs
• Efficiency of process
• Effectiveness of
process or impact
• Context
• Input
• Process
• Outputs/Results
• Outcomes/Impact
• Context/Environment
• Internal efficiency
• Effectiveness
• Quality