Improving Business Performance (SM20)

Introduction

The particular essay deal with the study of a company along with it product and service. Then a detail study about the product and service. Next three operational changes are needed to be identified and reason for the change. With the help of investment appraisal theory one change need to be selected along with the method which will help the change. Every business requires a proper process for working. But in the same time it needs to acquire certain changes. This change helps the company to achieve its objectives and goals. One thing is very necessary that organisation needs to identify the change and work accordingly.  The three operational areas are needed to be analysed with the help of investment appraisal theory and implementation of required plans. The radical change and continuous improvement are studied along with the improvement methods. Next job is to evaluate the chosen change. Risk management is very important for an organization and also to identify the barriers of risk management. The essay will be concluded with the help of MS project. Project plans are to be evaluated so that company get benefits after the risk management. Identification of risk factor is very important and the needed strategy to overcome those risk factors.

Task 1

Overview of the company

The selected company is Morrisons. It holds fourth position in the industry as compared to supermarket in United Kingdom. The company was founded in the year 1899 by a person name as William Morrison. At the very beginning it started business with selling egg and butter in Rawson Market. This is a public limited company deals with retailing. Headquarter of the company is in Bradford, United Kingdom. Current report of 2016 and 2017 says that Morrisons have total 498 stores around UK, yearly revenue £16, 317 million, net income is  £305 million and total number employees are 132,000. The company is even listed its share in London stock exchange and FTSE 100 index. 10% of the company is currently owned by Morrison family. Sir Ken Morrison retired from chairman in the year 2008. In the year 2012 Morrison started the business of online retail and its first website was known as Morrison cellar.

Figure 1: Logo of Morrisons

(Source: www.morrisons.com)

Task 2

Operational area changes for operational and financial performance of the selected

Company

This is a public limited company deals with retailing. Headquarter of the company is in Bradford, United Kingdom. Current report of 2016 and 2017 says that Morrisons have total 498 stores around UK, yearly revenue £16, 317 million, net income is £305 million and total number employees are 132,000 (Barton et al. 2013, p.121). Morrisons is the company which deals with the retail industry in supermarket. Basically it deal with every products that human beings requires such as fruits, vegetable, meat, butter oil, egg and even utensils. There are some area which requires change such as need to change its strategy from stores to online business, need to open more store which are convenient to the customers and lastly need to cover other nation also.

Reasons for changes: The main reason for the change is to improve the financial outcome of the company. Data says that Morrison’s financial performance keeps on fluctuating as in 2017 its turnover was £16,317 and in 2015 it was £16,816. With the change of its total turnover keeps on going up and down (Burke, 2013, p.12). Strategic plans and management will help the company to improve its financial performance. As the world is been digitalized so company needs to do business online. Due to tough competition from other rivals it needs to open more store so it will be more convenient to the customer. Company needs to change the thinking of doing business only in home country and it needs to expand to the other nations. All this will give more business to the organization and thus its financial performance will be improved.

Advantages of such changes: There are many benefits of doing changes. The main one is that its financial performance strong. It will not degrade with every change of year. The first change is about changing business operation to online will help to attract more customers. Youths will be attracted as thus number of customers will be increased (Capon, 2009, p. 254). Opening convenient store will help to gather those customers who fail to do shopping in Morrison stores. Again it will increase the number of customers. Lastly company expand business to other countries will help to increase the sale along with the net profit.

Task 3

Reviewing of investment appraisal techniques

a. Using of factors for investment appraisal techniques

Investment appraisal technique is something which is a technique or methods of investment proposal. It the most important part of capital budgeting and are related to those areas where returns are not easily achievable (Clements and Gido, 2014, p. 121). The investment appraisal technique has four factors such as accounting rate of return, payback period, discounting cash flow and investment risk and sensitivity analysis. Among the three changes the changes of thinking to online is been selected (Hammer and Champy, 2014, p. 125). In writer's point of view this change is the most important for Morrison as this will help to attract more customers and increase the financial performance of the company (Imai, 2012, p. 147). Among the four factors of investment appraisal techniques discounting cash flow method is most suitable for the change. This method is more suitable as it will help to analysis the expenditure and cost required for the change (Jackson, 2003, p. 25). Discounting cash flow is a method which main focus is on the time value of money.   

b. Interpretation of capital budgeting methods on operational changes

The main focus of capital budgeting is on features and capital budgeting decisions. This is all similar to the investment appraisal techniques. This part is the interpretation of all the three change along with focusing on the payback period method and the discounted cash flow method.

• Payback period method: It is something which is related to the cash required before investment require Basic focus is on the economic life of the project with no relation to time value money. Morrison focus on the three changes that are the strategy from stores to online business, need to open more store which are convenient to the customers and lastly need to cover other nation also (Kerzner, 2015, p. 85). These three changes requires cash or investment to complete the change.  The formula for calculating payback period method is as follows:

Payback period= Investment/ Annual cash inflow

• Discounting cash flow: Discounting cash flow is a method which main focus is on the time value of money. Focusing on the three changes of Morrison is that strategy from stores to online business, need to open more stores which are convenient to the customers and lastly need to cover other nation also. Discounting cash flow method is most suitable for the change (Lock, 2013, p.98). This method is more suitable as it will help to analysis the expenditure and cost required for the change. It is been calculated with the cash inflow and cash outflow in analysis with the assets of the company. The cash inflow and cash outflow are been compared with the interest factors band payback period.

Task 4

Selection of approach for implementing and managing change

The changes which possess good management face fewer problems. Changes which are managed quickly, flexibly and carefully are the real winner as they can cope up very easily. This will help Morisson to have long term success and also to compete with the competitors. Another effective ways to carry out the change is by delivering the project on time. This is duty of project manager to think and plan according to the change (Maylor, 2010, p.121). The manager is more responsible for the managing the change.  

Comparison between Radical change and Continuous improvement

Radical change: It is a type of change when an organization possesses some strategy which changes the position of the organisation. This can be any type of change relates to finance, management or the HR. Sometime this change motivate the employees to work more seriously but most of the time it discourage the employee.

Continuous improvement: This is a improvement where the company regularly or continuously improves or develops. Its strategy and management helps the company to have regular improvement (Meredith and Mantel, 2012, p.20). Quality, management and plans are the mains reason for continuous improvement. This improvement motivates the employees to work and thus position of the organisation improves.

Evaluation of change using criteria

As mentioned in the first part of the assignment is that it needs to change its strategy from stores to online business. In relation to radical change and continuous improvement it is analysed that this change is a radical change. As it is a sudden change for the company and will help the company to earn more profit (Slack et al. 2015, p.55). But at the same time it will affect the organisation. Sudden change may not be adopted or accepted by every employee. Thus it can have its own side effect. Sale or progress of Morrison could be hampered.

Recommendation regarding methods for improvement

In writer's point of view continuous improvement is the best change management process as this helps the company to enjoy regular success. Success is something which organization or individual wants to enjoy regularly. The continuous improvement proves positive to the organization as this motivates other to give their best (Slack and Lewis, 2012, p.147).But still it requires certain changes or improvement such as higher authority of Morrison needs to be more serious regarding the progress of company, employees needs to be more attentive while doing projects and lastly this improvement should not divert the company from its ultimate goals and objective

Task 5

Presentation of project management plan applying timeline

INITIATION	PLANNING	EXECUTION	MONITORING	CLOSING
Develop project charter. Identify all the stakeholders.	Develop project management plans. Collect all requirements for the change. Define scope. Define activities. Sequence activities. Estimate activity resources. Determine budget. Plans activity. Plans communication. Plans risk management. Identify risk. Perform qualitative risk analysis. Perform quantitative risk analysis. Plans procurement.	Direct and manage project execution. Performance quality assurance. Acquire project team. Develop project team. Manage project team. Distribute information. Manage stakeholder’s expectation. Conduct procurement.	Monitor and control project work. Verify scope. Control scope. Control s chedule. Control cost. Perform quality control. Report performance. Monitor and control risk. Administer procurements.	Close project. Close procurements.

Types of risk	Level of risk	Impact
Financial risk: During a change it need lots of financial support to establish itself in a new market	This is a very high risk because if the company fails to do good business then it will face lot of financial loss.	Impact or outcome will be that financial strength of the organization will be disturbed. In the same time it will discourage the other employee. Hence the position of the organization will be hampered.
Tough competition: As it will be very new to the online market so it will have to face a tough competition with the competitors. Thus smooth functioning of the company may get hampered.	This is a moderate risk because every company has the habit of facing their own competitors.	A good company don not have fear from its competitor, in fact this motivate them to give their best. Performance and outcome of the company is improved.
Quality of product or service: A change can disturbed the quality of product or service of an organisation. A company get diverts while giving attention to adopt new change.	Risk is low because main objectives of a company are to give best quality of product and service. So it is not possible for company to divert from its objectives.	Effect of this risk is that position of the organization reduced and it can low loyalty of customers.

Explanation of major phases of project management plan

A project management plans is consisted of five main points such as initiation, execution, planning, monitoring and closing. These five points are very important for every organisation to manage the change. The management of change always varies from company to company. Here the details about the five points of change management plan.

• Initiation: This is the starting stage of change management plan. It deals with development of project charter and identification of stakeholders. Morrison needs to develop a project and by the same time needs to understand its stakeholders. Stakeholders deal with the staffs, customer and shareholders of an organization (Kerzner, 2013, p.121). As primary change needed for Morrison is starting online business. So first of all it needs to think about the change and also to divide the work among its stakeholders.
• Planning: The second stage of project plan management deals with the planning. So the first duty of project manager is to develop project management plans, collect all requirements and step for the change, define the scope, determine the budget, plan communication, plans management and plans procurement. This stage will play a vital role for Morisson change in operational activities. Budget of the change are been decided in this stage.
• Execution: The third stage deals with the direct and manage project execution, performance quality assurance, acquire project team, develop project team, manage project team and manage stakeholder’s expectation (Heagney, 2016, p.120). While making certain change it is the duty of Morrison's authorities to have focus towards these points. The change should not disturb the expectation of the stakeholders.
• Monitoring: This particular stage deals with monitoring the project, verify scope, control scope, perform quality control, report performance and monitor and control risk. While the change is on progress, project manager needs to have regular monitor and control on the change. The organization should be aware of the change and report about the progress.
• Closing: The last stage of the change management is that organization needs close the project after getting a satisfactory outcome. The stage consists of the close the project and close procurement.

Task 6

Risk related to successful implementation of the plan for mitigating risk

Risk management is a management which help to control, minimize and monitor the risk. The main objectives are to cut down the uncertain events. Risk in an organization can come from various sides such finance, management, natural causes or production (McNeil et al. 2015, p.20). An organization contains a specialized team which continuously work to minimize the risk. The process to manage the risk is as follows:

• Identify  and understand the risk
• Vulnerability to specific threat
• Known the details about the risk
• Process to reduce the risk
• Measure to reduce the risk

Figure 2: Risk management

(Source: Chance and Brooks, 2015, p.80).

Evaluation of risk to the chosen change

The was suggested to Morrison is that to think about doing online business. Data says that Morrison’s financial performance keeps on fluctuating as in 2017 its turnover was £16,317 and in 2015 it was £16,816. With the change of its total turnover keeps on going up and down. Strategic plans and management will help the company to improve its financial performance. Company needs to change the thinking of doing business only in home country and it needs to expand to the other nations (Chance and Brooks, 2015, p.80). All this will give more business to the organization and thus its financial performance will be improved. Risk that Morrison will face is that tough competition with the other competitors as it will be new in the market of online. If is don not adopt proper plans and strategy then it may fail in this online business. Another risk is that it needs lots of financial support to establish itself in a new market. But the main point is that every change has its own risk. A change has its own positive and negative impact on the organization. The negative impact could be reduced if organization adopts the change with proper management and planning.

Task 7

 Final project plan

The final project plan is that change which is been decides for Morrison is that it need to focus towards the online market. Strategic plans and management will help the company to improve its financial performance. As the world is been digitalized so company needs to do business online. Due to tough competition from other rivals it needs to open more store so it will be more convenient to the customer (Barton et al. 2013, p.121).. The main one is that its financial performance strong. It will not degrade with every change of year. The first change is about changing business operation to online will help to attract more customers. Youths will be attracted as thus number of customers will be increased. Opening convenient store will help to gather that customer who fails to do shopping in Morrison stores. Again it will increase the number of customers.

Outcome of the change are as follows:

• Improvement in the financial position of the company
• Attract more new customers.
• Increase in sale of the product
• Will gain support and popularity in the market.

   Conclusion

Finally the essay concludes as that Morrison needs to adopt certain strategic plans and management in order to possess this particular change. As this is a radical change it will have some drawback but company needs to overcome them. One thing is very necessary that organisation needs to identify the change and work accordingly.  The three operational areas are needed to be analysed with the help of investment appraisal theory and implementation of required plans. Again it will increase the number of customers. Lastly company expand business to other countries will help to increase the sale along with the net profit. Among the four factors of investment appraisal techniques discounting cash flow method is most suitable for the change. This method is more suitable as it will help to analysis the expenditure and cost required for the change. Discounting cash flow is a method which main focus is on the time value of money. According to the requirement all point are been fulfilled.