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D/601/0578 Unit 6 Improving Business HND Business Level 5

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Improving Business Performance

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INTRODUCTION

Business Management in an organization is a process in which various aspects of the business is managed by the management team of the organization. This is very important for any business to be successful in what they are doing. Improving business performance is a must process for the organization to work effectively. Through this process it can evaluate the areas where changes are required in order to increase the productivity of the Nisa Retail Limited organization. This report will explain the process of improving the business performance of the Nisa Retail Limited by identifying major three operational areas which requires change and planning the improvement of the projects through methods like continuous improvement or radical change. It will also focus on risk management for the organization and making proper strategies to solve these issues as soon as possible.

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TASK 1

1 Introduction of the organization Nisa Retail Limited:

Nisa Retail Limited is a brand which is known as a grocery wholesaler operating in United kingdom. This organization is owned by the Co-Operative Group Limited. The company was founded in 1977 and is currently based in Scunthorpe, United Kingdom. The two pillars who founded this organization are Peter Garvin, a Yorkshire-based retailer and Dudley Ramsden, who was a wholesaler and owned a supermarket in Grimsby.

It helps the exiting independent retailers in the food and drink markets in United Kingdom. Nisa Retail Limited provides different products and services to their customers such as, cakes, sauces and rice, bottled water, wine gums, gems and jellies, liquors, sports mixes, biscuits, nachos, cheeses, washing powders, vegetables, cold drinks, coffees, breakfast products, bathroom sprays and wipes, kitchen sprays, hand washes, tomato ketchup, popcorn, beers and many more. Nisa Retail Limited is serving many people a quality service which makes them to become their favorite destination in order to buy groceries in United Kingdom (Baum, A.E. and Crosby, N. 2014).

2 Evaluating Nisa Retail Limited current performance:

Nisa retail limited is currently working successfully in United Kingdom by providing huge variety of grocery as compared to its competitors in the market. It has many options to choose from which makes customers to come and shop here. Currently Nisa retailers has announced the opening of new stores including 140 from existing members, and demonstrating the continued investment being made by Nisa retailers into their businesses and outlining the position of strength and security Nisa offers to its members. They have recruited many new members into their team to work more effectively.

Apart from the successful launching of different stores in the market there are several operation areas of the Nisa retailers which requires some changes in order to increase their sales and productions. Some areas in which they have to work hard to improve their business performance are lack of skilled employees, improper management of the stores and poor investment techniques of the organization (Gotze, U., Northcott, D. and Schuster, P. 2016).

To work on these operational areas and applying different strategies to overcome such issues is the main objective of the Nisa retailers. The HR department of the organization has to work hard in recruiting skilled and appropriate employees for the organization which can help them in uplifting their business in the market. For this practice, the HR has to take personal interviews of all the candidates in order to check their strength and weakness which can affect the working of the Nisa retailers. The management of the organization is not performing its best. For this Nisa retailers has to make some new and improved techniques which can help the organization to manage things properly. For example, Nisa retailers has opened new stores in the city, but they don't have enough employees to operate their stores which can decrease their customer rate and can lead to loss in their business. Proper decision-making has to be done by the management team of the organization. Nisa retailers have poor knowledge on investment techniques. They are not able to understand which project is good for them and which is not. This investment processes help the organization to increase their overall profit margin and helps to stay in the market in a good position (Harrison, F. and Lock, D. 2017).

3 Literature Review on Project / Investment appraisal for Nisa Retail Limited Company:

According to Heagney, J. 2016, Investment appraisal is a collection of techniques and plannings which used to identify the attractiveness of an investment by the organization in the market. It includes organization's different long term investments for their betterment such as new machinery and replacement of old machinery, new products which is being launched in the market, and research development projects, etc and evaluating whether they are worth for the investment through the firm's capitalization structure. The main of this process is to increase the value of the firm to the shareholders in the market. It helps to assess the viability of project for the organization, program or portfolio decisions and the value they are generating from these projects. As per Kerzner, H. and Kerzner, H.R. 2017 there are many factors which can help in the investment appraisal process for the organization, such as,

  • Financial Factor : This is the most common factor used in the investment appraisal process. Being financially strong can help the organization to invests better in the market.
  • Operational Factors : These factors are very beneficial for the Lisa retailers as they help to understand the benefits in terms of ‘increased customer satisfaction level’, ‘higher staff morale’ or ‘competitive advantage’. These factors help the organization to give better and improved service to their customers.
  • Environmental Factor : Before investing into anything, Nisa retailers should evaluate the impact of the work on the environment.
  • Legal Factors : These are the most important factor which can affect the process of investment appraisal of the Nisa retail limited. They have to follow all the rules and regulation before initiating this process.
  • Risk Factor : These factors help to calculate all the risk factors which can arise during investment appraisal process. A good investment decision is required to reduce risk for the organization.

The decision rule is that if the ARR is equal to or greater than the desired rate of return, the project is accepted by the organization.

  • Payback Period or PBP : The payback period method, is a process that represents the number of years required to recover the initial outlay using net cash flows of the organization after tax. This is simply used as an initial step of screening process. After the payback period is calculated by the Nisa retailers, it is then compared with the minimum acceptable payback period which is chosen arbitrarily by the organization. If the calculates payback period is less than or equals to the desired time period than the project is accepted by the organization. This is the main decision rule which is donebt the Nisa retailers very carefully (Hill, A., Cuthbertson, R., Laker, B. and Brown, S. 2017).

Mostly, discounted cash flow techniques such as Net Present Value (NPV) or Internal Rate of Return (IRR) are appropriate to evaluate the value of benefits and alternative ways of delivering them.

  • Net Present Value or NPV : NPV involves management which helps in estimating the future relevant revenue and expenses of organization to find expected future net cash flows from the capital project. NPV is calculated by discounting future net cash flows after tax using the Nisa retailer's risk-adjusted cost of capital. Then all present values of the future cash flows are added up. Then the initial outlay is subtracted from the sum of the present values.
  • Internal Rate of Return or IRR : It is described as a process in which discount rates equates the present value of the expected future net cash inflows with its initial outlay or which projects have a NPV equal to zero. It can also be explained as the net rate of the growth of the project in the given time period. The decision rule is when IRR is equals to or greater than the capital cost of the Nisa retailers after tax, than the project is accepted by the organization.

There is a great advantages of methods like Net Present Value and Internal Rate of Return, which can be useful for the Nisa Retail Limited company in order to invest properly in the market. They can calculate the profit and loss margin for the organization which be can be generated from investing into different projects. Both NPV and IRR methods are useful for determining whether to accept a project or not (McNeil, A.J., Frey, R. and Embrechts, P. 2015).

  • Advantages of Net Present Value : It is important for financial appraisal of long-term projects for the organization. It also measures the excess or shortage of cash flows. NPV is a direct measure of the dollar contribution to the stockholders. This is appropriate in the absence of capital rationing. It will help Nisa retailers to understand the investment appraisal process more accurately.
  • Advantages of Internal Rate of Return : IRR is used to calculate Break-even point in the organization. It helps to calculate an alternative cost of capital including an appropriate risk premium. It also shows the return on the original money invested by the Nisa retailer in the market.

4 Literature Review on Radical Change vs Continuous Improvement:

As per the views of Norman, D.A. and Verganti, R., 2014, Kaizen is a Japanese terms, which means “continuous improvement”. It is a slow and progressive approach towards work. It is a method used for identifying opportunities for work and reducing waste in the organization. It is now used by thousands of companies all over the world to identify their savings opportunities. Continuous improvement is a toolbox and set of methodologies.

Advantages of Continuous Improvement or Kaizen Method : There are several advantages of Continuous Improvement method which the organization can apply into their system to get benefit from this. For example, reduce project costs and prevent overages, streamline workflows, and gain flexibility.

  • Reduce Project Costs and Prevent Overages : The project manager of the organization has to manage the cost of completing a project for the company. Using methods like Forecasting Software, project managers can reduce project cost and prevent overages. This will help to increase their overall effectiveness for the organization.
  • Streamline Workflows : To reduce the burden of workload in the organization, continuous hard working and effectiveness of the work done by the employees is very important. The Lean way of working enables efficient workflows which helps to save time and money, allowing the organization to reduce wasted time and effort.
  • Gain Flexibility : Nisa retailers should be flexible in doing work and making their work a fun loving task for the employees. This will ensure that they are working with more dedication and enthusiasm.

According to Singh, J. and Singh, H. 2015, Kaikaku is a Japanese term which means “Radical Change”. It is a process which refers to change that occurs relatively faster and modifies the essence of social structures or organizational practices. It is a process which is limited to only one type of product, equipment or a well-identified problem within the organization. A team is prepared by the Nisa retailers for the problem and the whole approach is realized and finalized in a very short time to solve it. Some external process resources are often used in this approach to help make changes in a very short time period. Radical Change is an approach that is highly appreciated, because it requires great effort, and produces results very quickly.

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For Nisa Retail Limited, Kaizen or Continuous Improvement and Kaikaku or Radical Change, both can be an effective methodology. Continuous Improvement method will help the organization to constantly re-examining and improving their processes. It will make sure that company is focused on incrementally improving their processes, services or products which is available for the customers. By adopting to this method, it will increase the rate of productivity and profit for the organization which makes the entire organization more efficient. This process also ensures that employee's morale is not affected as they are the key to organizational growth. Whereas, Kaikaku or Radical Change method can also bringout better results for the Nisa retailers. For the company, the Radical Change method must be aligned with the strategic goals. To bring all the required changes in the Nisa retail limited to improve their business performance Kaizen or Continuous Improvement or Kaikaku or Radical Change method, both can play a very important role (Continuous Improvement or Radical Change. 2014).

5 Review the literature on Risk Management:

According to Tischner, U. and Verkuijl, M. 2017, Risk Management is a process which is used ti identify the potential risks of the organization in advance, analyzing them and taking precautionary steps to reduce or overcome that risk in effective way. Risks can come from various sources including uncertainty in financial markets, threats from project failures, legal liabilities, etc. There are several methods through which risk can be identified by the organization, for example,

  • Identification of the risk : This the initial step in risk management process. In which organization identifies the risks factors occurring in the company.
  • Analyze the risk : In this step, analyzing the risk and its consequences which can occur for the organization. When the organization assess the project risk they can ultimately address or can identify many impacts, such as avoiding potential litigation, addressing regulatory issues, complying with new legislation, reducing your exposure and minimizing impact.
  • Evaluating the risk : After analyzing the risk, organization has to evaluate the effects of that risks which can affect the functioning of them. They should make decisions about whether the risk is acceptable or whether it is serious enough to treat immediately.
  • Treating the Risk : Also known as Risk Response Planning. This process is executed by making strategies which can help them to treat the risk and lower down its effects. Making new and innovating plans to implement in the operational area (Risk Management. 2015).
  • Reviewing the risk : This is the step in which monitoring and reviewing of the risks factor is done by the organization. They analyze the amount of percentage which is reduced by implementing different techniques and strategies to overcome the risk factor. Organizing meetings with the project management and taking updates on the projects will help them to solve the risk.

CONCLUSION

From the above report it can be concluded that project management is an important part for the Nisa Retail Limited as it helps them to improve their business performances in the market. Various factors have been studied in this report such as Investment Appraisal method, Radical Change and Continuous Improvement method and Risk Management which are important for the organization to evaluate factors which has to be change in their system in order to work effectively. A Project Plan using MS Project has also been prepared for the organization which includes the costs and timescales for the project.

REFERENCES

  • Baum, A.E. and Crosby, N. 2014. Property investment appraisal. John Wiley & Sons.
  • Gotze, U., Northcott, D. and Schuster, P. 2016. INVESTMENT APPRAISAL. SPRINGER-VERLAG BERLIN AN.
  • Harrison, F. and Lock, D. 2017. Advanced project management: a structured approach. Routledge.
  • Heagney, J. 2016. Fundamentals of project management. AMACOM Div American Mgmt Assn.
  • Hill, A., Cuthbertson, R., Laker, B. and Brown, S. 2017. Service fitness ladders: improving business performance in low cost and differentiated markets. International Journal of Operations & Production Management. 37(10). pp.1266-1303.
  • Kerzner, H. and Kerzner, H.R. 2017. Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons.
  • McNeil, A.J., Frey, R. and Embrechts, P. 2015. Quantitative risk management: Concepts, techniques and tools. Princeton university press.
  • Norman, D.A. and Verganti, R., 2014. Incremental and radical innovation: Design research vs. technology and meaning change. Design issues. 30(1). pp.78-96.
  • Singh, J. and Singh, H. 2015. Continuous improvement philosophy–literature review and directions. Benchmarking: An International Journal. 22(1). pp.75-119.
  • Tischner, U. and Verkuijl, M. 2017. Design for (social) sustainability and radical change. Perspectives on Radical Changes to Sustainable Consumption and Production. pp.159-164.
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