Business Analysis for Greens Electrical Store - Assignment Example

Business Analysis Report Table of Contents Introduction 3 2.Solution approach and scope 3 3.Business case 7 4.Assessment of proposed solutions 9 5.Requirement allocation 10 6.Assessment of Organizational readiness 12 7.Transitional requirements 12 References 13 1. Introduction The purpose of this report is to provide solution approach to the problems that have been identified in the first part of this assignment. The following sections involve a thorough explanation of the solution approach as well as the scope of applying those solutions. The researcher has provided an in-depth justification of the viability of the solutions provided for the individual problems. In addition to that the researcher has also included a business case which highlights the cost and benefits associated with implementing the solutions. Thereafter the proposed solutions have been assessed in order for the researcher as well as the readers to adjudge the efficacy of each of the solutions in terms of addressing the problems identified in part one of this assignment. A resource allocation table has also been provided and a corresponding requirement traceability structure can also be found in an accompanying excel sheet. The researcher has also evaluated the organizational readiness towards accepting and implementing the solutions besides commenting on the transitional requirement s. 2. Solution approach and scope Buying a property can often be difficult for a start up store like the Green’s Electrical store. It requires the company to make massive investments which in turn will delay the time at which breakeven is realized. Moreover, making a huge investment in growth phase may actually slacken the growth rate of the company. If properties are purchased in order to set up brick and mortar stores then the managers in Green Electrical Store will have less cash in hand which in turn may stall or reduce the efficiency of business operations (Doyle & Stern, 2006). Therefore, the first solution to establishing more brick and mortar store is leasing. The managers of Green Electrical Store can lease properties for five to ten years in order to set up its brick and mortar stores thereby increasing its physical presence. Leasing properties will cost considerably lesser than buying the property at once. This will give enough time for the managers to enhance business operations and productivity thereby generating greater revenues with every passing year. The managers will have to translate the revenue into equivalent profit so that they have enough funds for them to buy properties instead of leasing them in the future (Hoskisson, 2009). The managers can look forward to borrowing money from external sources such as bank and other financial institutions in order to gather funds for renting properties on lease. The second solution approach is directed towards improving the product delivery services offered by Green Electrical Store. Currently the delivery service offered by the store is limited to proximity of 6 km. This makes it extremely difficult for the customers to transport their products from the store to their house. Even though transportation of smaller products can be arranged by customers on their own who prefer to use their own cars, transportation of large sized goods can be a big issue (Barney, 2009). Moreover, transportation of good can also be difficult for customers who do not own any vehicle. Therefore it is extremely important for the managers to look into this matter so that customers do not become disgruntled. Ensuring the enhancement of this service is crucial at a time when the company is looking forward to extend its physical presence and enhance its brand image (Brennan, 2009). In such a context, two solutions approaches can be recommended to the organization’s managers. Firstly, the managers should buy more delivery vans as they currently have only two vans in their possession. These two vans are primarily engaged in delivering goods to households that are situated within the proximity of 6 km from the store. Therefore, it becomes difficult for the delivery executives to arrange transportation of goods to households that are located beyond the proximity (Eesley & Lenox, 2006). In fact they also encounter problems while delivering products within their proximity when more than five or six customers buy product simultaneously (Brennan, 2009). Thus, it is believed that buying more delivery vans will not only ensure quality delivery to households located beyond 6 km but also allow them to deliver products to households that are located within 6 km. Secondly, the managers of Green’s Electrical Store can also seek services from third party logistic companies who arrange for delivery services. Many online retail companies have trade partnership with third party logistic services providers who arrange for the delivery of goods to customers on behalf of the organization (Ethiraj & Zhu, 2011). This can be a very good option for Greens’ Electrical Store if the managers do not want to make investment behind renting or buying delivery vans. It is extremely important for the managers of Greens’ Electrical Store to establish customer service departments in order to deal with customer grievances. Given that Green’s Electrical Store is mainly associated with the selling of electronic and electrical equipments, the managers might encounter number of issues related to product malfunction. Therefore, in order to ensure that customers are able to report their complaints, the managers will have to set up customer service departments at the earliest (Marcer, 2012). As far as the solution approach is concerned, the managers of the store are recommended to set up their customer service department in house (in the store itself). This will enable the managers to save investment which would have been incurred if they had to rent a separate place just to set up a customer service department. Given the current size of the store and its customer base, the managers will be able to make do with just two employees appointed within the customer service department (Brennan, 2009). The company needs to post an advertisement online in order to recruit people (both fresher and experienced) who have the requisite skill to deal with customers. A network of telephones and computers will have to set up which will enable the customer service executives to address the issues raised by the customers at the earliest (Tarplett, 2009). The customer service executive will address issues of customers with the use of a digit portal/platform by means of which the issue raised by the customers will be routinely transferred to the concerned division. As mentioned earlier, the managers of Green Electrical store should adopt proper strategies in order to improve the way accounting is done within the company. Given the fact that the company has encountered several issues of data loss as well as accounting miscalculation, it is extremely important that the managers look forward towards digitalizing the accounting process in the company. The first solution in this regards is to buy advanced accounting software from the market. The software should have the capability of linking the company’s online sales database with the accounting archives (Brennan, 2009). This will help the managers to sync the data associated with online sales and company’s accounts as a result of which any changes in the company’s sales will get equivalently reflected in the company’s account in the form of revenues, expenses and profit (Moutinho, 2010). In order to be able to do that not only will the company have to buy an advanced accounting software package but also appoint an IT analysts will be configuring the accounting databases of the company. However, in future when the company will scale new heights, they will be transacting in huge amounts and dealing in wider range of products. In such cases, normal accounting software may not have the required capacity to help the company keep track of stocks coming in and going out of the store (Brennan, 2009). In such a context it can be said that the managers of Greens’ electrical store to appoint third party software developers who would be majorly responsible for developing a customized accounting software according to the needs and requirements of the managers of Green Electrical Store. However, till the company acquires the capability of funding their own in house software developing team, the managers should rely on the most advanced accounting software that is sold in the market. It is extremely important for the managers to ensure that an IT analyst is appointed who would primary responsible for the maintenance related service of the software. The managers will have to install new computers that have the necessary configuration required to support the software. Given the software is advanced in nature, it is recommended that managers try and install computers with high configurations. Considering the fact that the company is in its start up stage right now, the managers are recommended to rent computers instead of buying them. This is because electrical products depreciate faster than any other product categories (Kotler & Andresen, 2011). Therefore, by renting computers instead of buying them would not only enable the managers to reduce the cost of operations during the early stages but will also allow them to avail maintenance oriented services from the dealers who have given the computers on rent to the companies. The managers can call for a tender or quote from five or six of the most prominent PC peripherals retailer in the vicinity in order to have the option of choosing from the most inexpensive quote (Brennan, 2009). The managers should look forward to develop an organizational website within the next two years in order to appeal to a wider customer base. The managers will have to initially appoint third party website designers who would be responsible for designing the website. Thereafter the company should appoint search engine optimization managers whose task would be to promote the website (Paley, 2009). The website will include crucial details regarding the products that are being sold within the store. The website will be an effective medium of communication between the company and its customers. The managers will be able to convey any information related to discounted offerings as well as seasonal fare to its customers (Brennan, 2009). In that way not only will the managers be able to enhance the brand image of the company but will also allow them to influence customers to make repeat visits and purchases. In addition to designing the website, the managers should look forward to integrate online shopping facility within the website (Jeannet & Hennessey, 2010). This is going to be a great opportunity for the managers to extend the company’s presence in the digital platform and target a massive base of internet audiences. In order to incorporate online shopping facility, the managers of Greens’ Electrical Store will have to seek help of third party software developers as having an in house team at the moment would not be feasible for the company (Brennan, 2009). However, in future when the business attains a sustainable position, the managers will have to appoint their own in house team of website designers and software developers in order to upgrade the features and facilities of the website (Hitt, Ireland & Hoskisson, 2009). 3. Business case Cost and benefits associated with the solutions The managers of Greens Electrical Store will incur some upfront cost while managing the changes that have been recommended. These are necessary investments that are required to be made by the managers in order for them to be able to achieve long term benefits. The managers will be incurring costs while implementing all the solutions that have been recommended as a part of the business development strategy. As far as the cost of improving the delivery services of the store is concerned, the managers will incur a cost of $18000 in order to buy six additional delivery vans in addition to the already existing two delivery vans. Moreover, the managers will also be incurring cost associated with the fuel consumption of all the vehicles. The managers have made an assumption of $8000 per year as a part of the fuel consumption cost. Additionally the managers will also incur an operational cost of $9000 per month that will be required to pay wage to the drivers. The managers of Greens electrical store may also avail the services if third party logistic service providers for which they may incur a monthly expense of $2500. One of the major benefits of this service is that the store will be able to expand its service coverage area which in turn will enable the managers to target a wider customer base. By providing services of such degree the managers will be able to create a large pool of satisfied return customers (Analoui & Karami, 2009). As far as the customer service department is concerned, the managers have set a budget of $4000 per month that is to be paid to two executives who would be heading this department. Apart from that minor costs related to the set up of computer and other network oriented peripherals are to be incurred. This service will have a continuous life span whereby the increasing rate of returning customers will definitely outweigh the sunk cost. The managers of the Greens electrical store believe that improving the customer service department will allow the company to increase its market share in a fiercely competitive environment (Afuah, 2007). Talking about transforming the company’s accounting operations from being paper based to software based, the managers expects to incur an upfront cost of $2500 required to purchase the software. Thereafter the managers would be incurring an expense of $750 every year in order to ensure that the software is being upgraded and maintained consistently. The managers will also be an incurring an addition cost of $700 that would be required in order to train the existing accountant officials so that they can acclimatize well with the new accounting software. The software oriented accounting simulation has a very limited life span. This will enable the managers to reduce accounting miscalculation and misinterpretation. In addition to that by shifting to digitized accounting opes ration, the managers will also be able to prevent data loss. As far as installing the new computerized system is concerned, the managers are expected to incur a cost of $90 per month for renting each computer. The rent is inclusive of maintenance and any replacement of peripherals. The life span of this solution is also limited precisely because of the fact that the managers will need to upgrade the hardware periodically in order to make sure that the configurations of the computer is stable enough to support an advanced accounting software. One of the major advantages of installing computer systems with high configurations is that it will allow the managers and the accountants to enhance accounting accuracy. It is expected that the managers will incur an expense of $5000 initially while developing the website. Additionally the managers will also be incurring an expense of $550 every year which in turn will enable the managers to avail maintenance oriented services any time in a year. In addition to the managers will also be incurring an extra cost of $4500 in order to integrate the organizational website with the online shopping facilities and services. There are lots of benefits associated with the development of organizational website. Firstly, the managers will be able to enhance the brand awareness of Greens electrical store. In addition to that they will also be able to communicate effectively with their target customers through the website. The incorporation of the online shopping feature within the organizational website will allow the managers to target a large base of internet audiences. As a result, the managers will be able to increase the market share of the store. Talking about setting up the brick and mortar stores, the managers will have to pay $4500 as rent for establishing one of its stores in one of the most commercial regions in California. The managers will look forward to seek help from various sponsors who would be funding the company’s business operations in terms of helping them to rent new commercial properties. This financial help will come in exchange for a promotion of the sponsor’s brand within the store. In addition to that the managers will also have to pay an interest for the funds borrowed from the sponsor. The major benefit of setting up more number of brick and mortar store is to enhance the physical presence of the store in addition to increasing the service coverage area. 4. Assessment of proposed solutions The solution related to the set up of more brick and mortar stores through leasing is absolutely feasible considering the current position of the company in the market. The store’s market share is considerably low when compared to other companies that are engaged in similar business operations. Therefore setting up brick and mortar stores will not only allow the managers to extend the store’s physical presence but will also enable them to provide service to a wider customer base. This will enable the managers to increase the company’s share in the market. The managers should lease the properties instead of buying them as it will not require the managers to make huge expenses during the initial phase of the company’s operational life cycle (Brennan, 2009). As far as the establishment of the customer service department is concerned, the managers should look forward to implement this strategy with immediate effect as the company does not have a customer service department till date. There is no mechanism by means of which the customers can register any complaints. The best way to recruit executives for the customer service department is to post advertisement online. This will help the managers to decide from a pool of talented customer service executives. Establishment of this department will allow the managers to influence the purchasing decision of the customers thereby inspiring them to make repeat visits and purchases (Brennan, 2009). The solution related to the transformation from a paper based accounting system to a digitized accounting system is extremely viable considering the fact that the store managers have encountered several issues related to accounting errors as well as data loss. That is why the most appropriate option for the managers is to buy advanced accounting software packages. This solution is very feasible as the price of such software is considerably less in the market. In fact development of an accounting database by an in house team will cost the store much higher. Therefore, given that the company is going through the initial phase of its operational cycle, buying accounting software would be the best option. This will help them to improved accounting accuracy. The solution associated with the development of the organizational website is also justified as it will serve as an effective and robust communication channel between the organization and the customers. That is why the managers should look forward to seek the help of third party website designers as it will cost relatively lower when compared to the cost incurred by recruiting an team of talented website designers. The development of this website will allow the mangers to convey important details such as product ranges, discounted offerings, and seasonal fares to the customers. Moreover, the managers will also be able to enhance the brand awareness of the company. The organizational website combined with an online shopping platform will allow the managers to extend the store’s services to large base of internet based customers (Brennan, 2009). Therefore and extended physical and digital presence will allow the managers of the store to increase the company’s market share. 5. Requirement allocation Solution approach Allocation of requirements Leasing of properties in order to set up stores External and internal finances, contractors, interior designers, storage facility, warehouse, car parking facility, logistic service providers, accounting software, IT analysts. The budget allocated for this solution is $4500. Establishment of in house customer service department External and internal finances, customer service executives, computerized system, telephones and other networking peripherals. The budget allocated for this plan is $4000 per month for two executives. Minor budget has been allocated for installing computerized system, telephones and other networking peripherals. Purchase of accounting software External and internal finances, advanced accounting software, IT analysts. The budget allocated for this process is $2500 that will be used to purchase the software. In addition to that a separate budget of $750 has been allocated for the purpose of upgrading the software periodically. The managers have also allocated $700 worth of funds which will be used in order to train the existing accounting professionals. Organizational website design + online shopping platform. External and internal finances, Third part website designers, SEO managers, marketing managers, content writers. The budget that has been allocated for this process is $5000. In addition to that the managers have also allocated $550 that is to be incurred every year in order to avail website upgrade and maintenance related service from the website designers. A separate budget of $4500 has been allocated for the purpose of integrating the organizational website with online shopping facilities and features. Installation of computerized system External and internal finances, high configuration computers. A budget of $90 per month has been allocated for the purpose of renting each computer. This rent is inclusive of maintenance services. 6. Assessment of Organizational readiness The managers of Green Electrical Store are confident about themselves and they believe that they will be implementing the strategies successfully. However, they might encounter minor problems in the middle as all the strategies are associated with a certain level of expenses. Given the fact that the store is relatively new to the market, the managers have not been able to pool up adequate funds in order to make sure that all operations are conducted effectively. Therefore, it is extremely important for the managers to seek help from sponsors who will provide the manager with sufficient funds and ensure that all the strategies are implemented successfully. The managers can count on the prospect of the strategies developed by the analysts as they will surely enable them to achieve long term benefits. 7. Transitional requirements Given the fact that the company has a limited presence in the market, the managers’ access to pool of funds is limited. Therefore the managers should include a good mix of organizational capital as well as external debts in order to make sure that all the transition strategies are successfully implemented. The managers should borrow $25000 from external sources and use $35000 from the company’s own capital. References Afuah, A. (2007). Business models: A strategic management approach. 4th ed. New York: McGraw-Hill Analoui, F. & Karami, A. (2009). Strategic management in small & medium enterprises. 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