Business Resources - Assignment Example

Business Resources Contents Introduction 3 Discussion 3 Conclusion 12 Reference List 13 Introduction Business resource indicates those critical resources which are inevitable for successful operations and expansion of a business such as human resources, financial resources, information technology, physical and knowledge factors as well as other factors important for production and distribution (Goleman, 2002). Efficient and effective management of resources is a significant aspect of organizational studies. Proper estimation and allocation of such functional and cross functional resources is also a comprehensive aspect of successful management of business projects. In corporate and large organizations, well defined resource management teams are appointed to ensure optimum allocation of all resources and to avoid over or under allocation of same resources in multiple projects at a time. In this paper, allocation and management of human, technical, physical and financial resources will be evaluated. For the purpose of the study, the resource management techniques of Waitrose will be analysed for getting an insight of the company’s resource management. Waitrose is a UK based supermarket chain and retail division of Britain’s largest employee owned retailer John Lewis Partnership with headquarter in Berkshire. As per the reports of 2014, Waitrose currently has 317 stores across the UK including 30 Little Waitrose, making the retail based grocery superstore the sixth largest in the United Kingdom. The company also have the warrant of supplying groceries, wine and spirits to the royal family of Queen Elizabeth (Waitrose.com, 2015). During the course of study, how Waitrose has been successful in identifying and managing its critical resources to ascertain smooth running of such well expanded business will be examined in details. Discussion P1: Recruitment Documentation of Waitrose Recruitment documentation may be defined as the system of filling up information related to personal, educational and working qualifications, required at the time of applying for a job. The process consists of collecting copies of application forms and all supporting document of the information provided from all individuals present in the panel and interested in applying for the particular job opening. Recruitment documentation ensures consistency, standardization and streamlining the recruitment process for the HR and administrative personnel of a company (Armstrong, 2006). Requirement for recruitment documentation varies according to companies and job profiles. For instance, for a job profile of Supermarket Assistance in Waitrose, the requirements specified by the company show Waitrose’s pattern of recruitment. According to the specifications, it is a contractual job with a salary of £6 to £8 per hour. The working hour extends from 4PM in the evening, during festive seasons and weekends. Posting will be in one of the retail outlets of the mentioned cities in the UK. Main job responsibilities are to provide high standard customer service to meet the company’s objective of maximizing sales for the store and to check and control inventory management for uninterrupted supply of stock and to minimize wastage and risk of short in supply. Frequent recruitment is also done for the position of Stock Manager in Waitrose and resources are also assigned in various counters such as stock counter to keep the shelves always filled with goods, cupboard counter to assist customers to choose appropriate items from all the alternatives available in food, bakery, tobacco, beauty products etc, fridge counter to help the customers to choose from frozen goods such as meat, milk, yogurt etc. Waitrose provides online notification in its website specifying the skills required for the job, before driving the recruitment process. Suitable candidates apply for the concerned position through filling up online forms, mentioning all the required information as asked by the system. It is the responsibility of recruitment team Waitrose to shortlist candidates from the application received and further communicate the detailed description of the job responsibilities. According to the designation, ranging from supermarket assistance to managerial roles, whether the job is required full time involvement (five working days) or it has part time flexibilities, is also communicated during the time. By the time the candidates are called for the interview, all the documents are collected from them. After the interview has been done, the HR recruitment team has to present a report to the management mentioning reasons for selecting or rejecting candidates on the basis of the documentation done and interview results. Hence, recruitment documentation process is very important for Waitrose. P2: Employability Criteria and Importance of Communication and Aptitude in Recruitment Process of Waitrose Recruitment and Selection Process is defined as collecting a pool of prospective candidates with required knowledge, skill and experience relevant for the organization and the specified job as well and selecting the most appropriate candidate for the designated position (Nickson, 2013). With the rapid expansion of retail outlets of Waitrose, especially after joining the John Lewis Partnership, the company is looking for fresh minded candidates who can incorporate their innovative and fresh thinking into the business operations and make the shopping experience of customers more convenient. Hence, presently the company is extensively driving recruitment process to appoint a range of human resources starting from Store Managers to Counter Assistants, Inventory Managers, staffs and Managers for Online Stores and Little Waitrose. Naturally, the required level of skills, aptitude and communication expertise varies along with the designation (Curtis, Hefley and Miller, 2009). For instance, communication skills are expected to be very good for the Counter Assistants and Store Managers so that they can comprehend customers’ mind and direct the customers towards the product that can satisfy the customers’ need. They should also be well informed about new product innovation by the companies. However, Waitrose doesn’t conduct aptitude test for recruitment in this segment as such skills are irrelevant for satisfying customers in a retail grocery store. Online Numerical Tests, Verbal Reasoning and Value based questions and Psychometric Tests are conducted while recruiting store managers, inventory managers and other high positioned officials. Questions such as how a candidate evaluates Waitrose as an employer, what customer service is meant for him, prevision experience on team work and how the candidate can add value to the organization are frequently asked to most candidates of Waitrose to assess their mind set towards the company as well as customer services. Referral system is also wide practiced in Waitrose as a source of trusted recruitment criteria. P3: Physical and Technological Resources Required in the Business Process of Waitrose Physical resources are most important to carry out routine activities in an organization for successful running of business process. Hence, managing Physical resources is important for every organization. Such resources include buildings and infrastructures, materials, plant and machineries, equipments and other facilities (Chevalier and Gutsatz, 2013). Being one of the largest supermarkets in the work, Waitrose enjoys its competitive advantages as a result of having strong physical resources. All buildings of Waitrose are situated in premium locations of the major cities of Britain such as Stirling, Helensburgh and Kenilworth. The sizes of the outlets ranging from 3000 sq ft to 56,000 are constructed in such a way that is most convenient for all ranges of customers, depending on the location of the stores. In some locations, such as Dubai and Britain, small restaurants, coffee shops and fast food centres are incorporated within the outlets and some of the outlets are situated into shopping malls to attract additional customers. The outlets are constructed in high fashioned manner along with inclusion of all modern day equipments and facilities such as Close Circuit Television, escalators, lifts, parking place etc to accommodate a large number of buyers at a time. Design and display of the stores are also superior in quality and products are placed on the shelves in such a way that the customers can find the most accepted brand of a particular product at one go. In fact, some of the stores of Waitrose are large enough for making a customer 3 hours walk around to have a glance of the whole store. Toilets, entrance, heating, elevators, fire exits are also well maintained to control security emergencies. Waitrose puts effort to recycle the wastages and tries to utilize those materials which are environment friendly. Technological resources include the tools and systems required for efficient production or innovation of products and services. Information, technological considerations, service delivery components, energy are some of the technological resource considerations for a business organization. In Waitrose, technical systems such as MS Visio Network Equipments are largely appointed to transform the system messages in a concise manner so that employees can understand and interpret systems messages easily and can overcome technical barriers. Advanced system software is also installed and computers are also replaced with a contemporary version in human resource and administrative departments so that they can complete their day to day responsibilities in an efficient manner. Recently, Waitrose has entered into a five year contract with Computacenter for providing IT support and maintenance of the in store technologies of 290 branches and more than 70,000 devices. Waitrose has also adopted Point of Sales (POS) technologies to enhance consumer services. Appointing service desk support systems and providing training to the store staff for minimizing printer problem are some of the technical efforts that Waitrose has taken to improve the service areas. Such effective management of physical and technological resources has enabled Waitrose to establish a better customer experience at an optimum cost, boost sales, enhance cost control and support growth through improvement in scalability of consumer services (Chadwick, Doherty and Anastasakis, 2007). P4: Internal and External Sources of Finances for Waitrose According to the theory of capital structure, internal sources of finances for a business organization is the retained profit of last quarter/ year, working capital and sale of assets for further investments whereas external sources of finance consists of share capital, loans and overdrafts, hire purchase, venture capital, credits from suppliers, factorings and grants etc for expansion of business. Similarly, the main source for internal finances of Waitrose is the retained earnings. Retained earnings are the net income of the company that is detained after paying out all sorts of debts (Pandey, 2009). Being a subsidiary of John Lewis Partnership, Waitrose includes personal finances made by the partners as internal sources of finance to be invested for the business requirements. This is relevant for Waitrose as it is assumed that money lent to the business will be paid back to the individuals in the future, with an extra amount to compensate the individual for the help they gave. In fact, the first investment made by the company was the personal savings of Waite, Rose and Taylor, the business partners to start up the business. This source of business is indicated as Owners’ investment. Another source of internal financing is sale of fixed asset such as machineries, buildings, warehouses etc for liquidation holdings into cash. Current assets are also the key sources for any retail business to meet their short term debt obligations. Waitrose is not an exception. Current assets are used by Waitrose as a source of liquid cash to get hold of stocks and once the company’s stocks are sold, the earning is retained to meet future obligations. Hence, Waitrose tends to maintain a sound Current asset ratio to ensure requirement of cash. Waitrose, being a large company, some of the sources of long term finances such as bank overdrafts, credit cards etc. are too insignificant to benefit the company and make it financially strong. The most important sources for long term financing come from the shareholdings of the parent company. Apart from that venture capital and credit from suppliers also ensure strong long term financing for Waitrose, the company being retail subsidiary of a partnership firm. P5: Interpretation of the Financial Statements of Waitrose Balance sheet of a company explains the assets and liabilities of an organization and position of capital through balancing income and expenditure for a certain period of time. Trading account denotes holding of cash and securities whereas profit and loss account indicates credit of incomes and gains and debit of expenditures and losses to derive net profit or loss of a company for a particular period of time. According to the Balance Sheet and Profit and Loss Statement published by Waitrose in 2013-2014, the company’s Gross sales grew up by 6.7% in spite of a slow movement of retail grocery market. Like for like sales which indicates the comparison between this year’s sales with last year’s sales indicates an acceleration of 3.4% mainly due to the company’s shifted concentration towards lowering the price level. Operating profit of Waitrose had increased by 12.2% whereas operating margin amplified by 5.1%. Sustained investment in the lower price segment along with maintaining the standard of product quality and customer services of high standard helped Waitrose to outperform industry with a captured market share of 4.9% in this period. The online sale of Waitrose grew by 49% as compared to a 19% rise in the sales of online grocery market. Export sales increased by 19.2% in 2014 (John Lewis Partnership, 2014). Figure 1: Gross Sales and Operating Profit of Waitrose (John Lewis Partnership, 2014) P6: Budgetary and Financial Control Exercised by Waitrose Under budgetary control, the actual income and spending of a company is compared with the forecasted income and spending to examine whether the company is being able to follow the planned budget, to measure the deviation and accordingly prepare the upcoming budget, keeping in mind the required changes to be brought in profit making, aligning with the company’s policy. Financial control refers to planning, coordination and evaluation of all financial activities to ensure sound business operations (Chevalier and Gutsatz, 2013). Successful Financial Control is reflected through the sound financial ratios of a company. According to the 2009’s report from Marketing Magazine, Waitrose had taken an initiative for introducing a modified budgeting that signalled the company’s focus to adapt changes according to the changing business environment. In this budget, the company has taken the initiative to invest sufficiently in advertising and promotion via online and social media channels. Another recent strategic decision made by Waitrose in its 2012 budget is to keep the prices of the products relatively low in order to attract customers apart from their targeted segment. Hence, the company tried to multiply its profit potential through expanding its customer base. Break even analysis is important for any company involved into retail business. Breakeven is achieved at a point when total cost meets total revenue. At this point, the company doesn’t earn a positive profit; it only covers all its fixed and variable costs. Hence, at breakeven point, the company arises at a no profit a no loss situation, where the risk adjusted expected return or profit is zero. Waitrose, being a sales based company attempts to calculate its breakeven situation to evaluate the profitability from selling a proposed product, taking into consideration the expenses associated with this. Breakeven = Fixed Cost / Gross Margin Percentage Figure 2: Breakeven Analysis As Waitrose is already experiencing sufficient positive profit, the company should drive extensive rapid promotional strategies to capture a larger market share and increase sales in the budget of 2015. P7: Financial Statements of Waitrose The financial condition of Waitrose can be evaluated through interpreting financial ratios. In this segment financial ratios of Waitrose will be analysed according to the statements of Balance Sheet and Profit and Loss of 2014. Current Ratio Current Ratio shows a company’s ability to return its short term debt obligations which indicates capability of the firm to liquidate its resources to meet its short term liabilities. An ideal current ratio should be 1 which indicates the company’s capability to pay its debts. However, the current ratio is 0.66 which is not a good sign for the financial health Waitrose as it might face serious problems of liquidation in upcoming future. Hence, being day to day sales based retail Company; Waitrose should concentrate in procuring a better current ratio to meet its future debt obligations in short run (John Lewis Partnership, 2014). Return on Capital Employed Ratio Return of Capital employed is an indicator of firm’s profitability. This ratio shows how much profit a firm can generate out of its capital investment. The return on capital employed for Waitrose is 0.07. Such moderate ratio shows the company’s efficiency to capitalize profitability out of its initial investment for a specified time period (John Lewis Partnership, 2014). Return on capital employed= EBIT – (Total Asset- Current Liabilities). Fixed Asset Turnover Ratio Fixed Asset Turnover Ratio establishes relationship between a company’s fixed assets (property, plant and equipment) and their ability to generate revenue. A higher fixed asset turnover ratio is better for a company as it shows company’s effectiveness to capitulate its fixed assets while needed (John Lewis Partnership, 2014). Total Asset Turnover Ratio = Revenue / Property, Plant and Equipment A fixed turnover ratio of 19.08 indicates Waitrose’s efficiency to manage its fixed asset significantly. Cash Flow Indicator Ratio Operating Cash flow Ratio shows a company’s ability to convert its operating cash flow into net sales. A low or negative cash flow indicator ratio shows poor financial health of a company as it indicated firm’s inability to turn sales into regular cash if requirement arises. Operating Cash flow Ratio= (Operating Cash Flow/ Net Sales) Though there is no predetermined guideline to measure efficiency of this ratio, according to experts, the higher the ratio, better the company’s financial position is. Cash flow ratio for Waitrose is 19.08 which show the company’s ability to generate fund for positive investment consistently (John Lewis Partnership, 2014). Conclusion Business resources are significant for any company, and a company’s success relies on effective and efficient utilization of such resources. After analysing all the resources of Waitrose, especially the human, physical, technical and financial resources, it can be inferred that Waitrose has been successfully able to utilise all the internal and external resources available to them. Though referral system in recruitment and selection consumes a minimal existence of biasness and the financial ratios show scopes for future improvements, considering the present business operations, profitability and growth opportunities it can be assured that the Waitrose will definitely sustain the short term difficulties in future and certainly evolve as world’s one of the largest supermarkets. Reference List Armstrong, M., 2006. A Handbook of Human Resource Management Practice. London: Kogan Page Publishers. Chadwick, F. E., Doherty, N. F. and Anastasakis, L., 2007. E‐strategy in the UK retail grocery sector: a resource‐based analysis. Managing Service Quality: An International Journal, 17(6), pp. 702-727. Chevalier, M. and Gutsatz, M., 2013. Luxury Retail Management: How the Worlds Top Brands Provide Quality Product and Service Support. New Jersey: John Wiley & Sons. Curtis, B., Hefley, W. E. and Miller, S. A., 2009. People CMM: A Framework for Human Capital Management. New Jersey: Pearson Education. Goleman, D., 2002. Business: The Ultimate Resource. London: Bloomsbury Publications. John Lewis Partnership Plc, 2013. Annual Report and Accounts 2013. [PDf] Retrieved from: [Accessed 10 January 2015]. John Lewis Partnership, 2014. In the hands of our Partners: John Lewis Partnership Plc Annual Report and Accounts 2014. [PDf] Retrieved from: [Accessed 10 January 2015]. Nickson, D., 2013. Human Resource Management for Hospitality, Tourism and Events. London: Routledge. Pandey, I. M., 2009. Financial Management. New Delhi: Vikas Publishing House Pvt. Ltd. Waitrose.com, 2015. John Lewis Partnership, John Lewis, Waitrose. [Online] Retrieved from: [Accessed 10 January 2015]. Read More