Online Business Challenges and Solutions

This assignment delves into the complexities of establishing and managing an online business. It highlights the heightened pressures faced by managers in this environment, such as ensuring high-quality service delivery and navigating increased costs. The document examines various concepts, including the Balanced Scorecard and CATWOE analysis, to help address these challenges and provide effective solutions for online business leaders.

BUSINESS OPERATIONS
AND
SYSTEMS

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
Main components that create an effective management process for B&M............................1
Comparison of B&M of their current operation process with ASDA, TESCO and
MORRISONS.........................................................................................................................1
Possible issues that may arise when going online for B&M and delivering goods to customers
................................................................................................................................................3
PART 2............................................................................................................................................6
PART 3............................................................................................................................................8
CONCLUSION..............................................................................................................................10
.......................................................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business operations and systems are those approaches and enterprise-wide collections of
business processes which is used in many diversified industrial companies (Chang, 2016).
B&M was formed in 1978 and they have variety of retail shops in the UK. It operates 450
stores across the UK and employs around 20,000 workers.
In this assignment, the essential components for effective business operations
management for B&M stores have been discussed. To evaluate the issues in B&M like
centralised/decentralised inventory, delivery chain, customer value chain, cost implications and
sustainability, soft systems methodology has been used.
Main purpose of this assignment is to discuss about the facilities possible for B&M to
enable their customers to order food online and make easy delivering of goods to their door.
PART 1
Main components that create an effective management process for B&M
There are several components of B&M which create an effective management process for
company. These processes are discussed as below:
Distribution Process: It distributes the products directly to retail shops of company
(Gharajedaghi, 2011). It has acquired many warehouses to reduce the time for delivery to near
retail shopping malls. B&M also saves cost of delivery with time by placing warehouses at the
centre of city.
Stock Process: B&M purchased its 30% stock directly from China. Retailers adapt this
strategy because it can offset higher import costs by increasing the volume of sales.
Purchase Process: B&M acquires products directly from factories to avoid the situation
of overproduction and buy in bulk which gives them opportunities to purchase at low prices.
Comparison of B&M of their current operation process with ASDA, TESCO and MORRISONS
ASDA, TESCO and MORRISONS are big supermarkets which have several branches
across the world. They have powerful strategies for marketing and utilise effective pricing
strategies to make their products cheap against competitors. These companies are taken as the
rivals for B&M.
Current performance of ASDA, TESCO and MORRISONS is given as below:
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SALES: It is also known as revenue (Kojima, 2010). Below is the sales of these three
rival companies as compared to B&M in 2016 (Source: Yahoo finance):
ASDA- $1.65 Billion
B&M- $2.03 Billion
MORRISONS- $16.31 Billion
TESCO- $53.35 Billion
Interpretation: After analysing sales revenues of rival companies and B&M, it can be
concluded that TESCO is at the top and ASDA is at last.
PROFIT: It is the net earning left with company at the end of financial year (Koren, 2010).
Below is the profit of rival companies as compared to B&M in 2016 (Source: Yahoo finance):
ASDA- $152 Million
B&M- $125 Million
MORRISONS- $222 Million
TESCO- $138
Interpretation: After comparing profit, it can be concluded that TESCO is failing to earn
profit as compared to its sales revenue. This indicates that due to discount stores, company is
able to increase its sales revenue. Morrison’s is at the top in earning net earnings.
MARKET SHARE: Market share is equivalent to net worth of company’s assets in
market. Below is the market share of rival companies in comparison to B&M in 2017(Source:
Yahoo finance):
ASDA- 13.089 Billion
B&M- 3.821 Billion
MORRISONS- 5.076 Billion
TESCO- 15.779 Billion
Interpretation: Tesco has the largest market share and B&M is standing at last in this
list. This indicates that B&M has to increase its market share to grab more market.
Overall, B&M stands at 3rd rank which indicates that company has good status and it has
opportunity to reach at 1st rank with its available resources.
Below is the explanation of factors which give B&M an advantage over their rivals:
Acquiring Strategy: B&M directly acquires products from factories which gives them
competitive advantage over their rival companies. Because through purchase directly from
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factories, B&M is able to avoid overproduction situations while producing new products. Buying
strategies of a company to buy in bulk helps company in purchasing at low cost and sell their
products at low price. On the other hand, company’s rivals produce their products manually to
reduce costs. But rival companies are not able to reduce the cost of products due to
overproduction.
Selling process: B&M purchases its stock directly from China as it helps company in
sourcing stocks at low price. B&M is gaining competitive advantage over their rivals because it
eliminates higher import cost through high sales volume. This strategy suppots company in
selling its product at £1. It also gives them advantage over single prices competitors like ASDA,
TESCO and MORRISONS.
Possible issues that may arise when going online for B&M and delivering goods to customers
There are several issues which may possibly raise at the time of going online by B&M.
These different issues are explained as below:
 Distribution: Missing in delivery may raise the issue of costs money and exasperating
customers (Morecroft, 2015). As let's assume 12% of B&M's products out for delivery is
fail first time that it will costs to industry with an estimated amount of £1bn in delivering
the products again.
 Costs: Re-delivery of a product might raise the costs of a company by £1bn, this
increment in cost would decrease the net earnings of a company at the end of financial
years.
 Quality: To increase the efficiency of delivery at right time, quality issue might rise.
Like there might be issue with electronic products or item ordered by customer doesn't
fitted with his requirements.
 Time: It might raise issues specially for costly items like laptops, phones, etc. Because
these items have to take care and safety is required. This will leave customer’s waiting
whole day for delivery of the product.
 Service: To improve time, delivery boys will be given a target. This target might raise
the issue of delivery of product at doormat or to other persons like neighbour, relative,
etc. These issue might raise the chances of customer’s complaints.
Below is the TOWS model to show current position of B&M and future opportunities for
growth of the company:
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Threats
 Increase in costs.
 New rivals like TESCO, ASDA and
MORRISONS.
 Technological issue.
Opportunities
 First company to deliver products
through online.
 Reach to all those customer’s which
can't visit stores.
Weakness
 New to online business.
 Less effective delivery boys.
 Online stores and centers are not
available.
Strength
 Low price of product as compared to
other competitors (Reim,Parida and
Örtqvist, 2015).
 Required resources are available with
the company.
 Purchase directly from China and
factories, which reduces cost of
product.
Soft systems methods
Soft systems methodology is formulation which helps organizational process structures of
a company (Searcy, 2012). It can be refer both for general problem solving and managing
change.
Below are some of the solutions which B&M can implement to solve the problems:
GAPS PROBLEMS B&M Solution
GAP 1
Between the customers
expectation and
manager perception
Customer’s expected to receive
quality products and managers
might perceived that customers
want products on time.
B&M could deliver quality
product on time. By giving
opportunities to a customer to
track his product online (Shaw,
2012). This could give the
experience to customer more
than they expected.
GAP 2 Managers perceived that customers
products safety is prior and late
B&M can fill this gap by
communicating with customers
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Management perception
of the customers and
standard of service
specification
deliveries may happen. On the
other hand, customers don't want
to spent their whole day for that
receiving that particular product.
and ask them the feasible time
they are available at home.
GAP 3
Standard Service
specification and actual
delivered
There's possibility that company
promised customers that company
will delivered quality product and
timely services to them but due to
less effective staff, actual quality
might not meet the standard of a
product.
B&M could adapt the strategy of
TQM which is total quality
management to solve the issue of
quality and Just in time strategies
to solve time related issues while
delivering products to them.
PART 2
In the given scenario B&M wish to expand its business to new markets with the
assistance of implementing new technique of making good available through online services. It
will help refereed organisation in reaching to more customers and will also aid in satisfying their
needs (Turban, Sharda and Delen, 2011). To do same it is required that management use high
technology and developed applications as managing everything online effectively is of complex
nature.
This way it has become a root cause for B&M. In order to solve this problem
management will have to take a number of steps which will effect continuity of organisation.
Pressure will increase on marketing team as they will have to give more attention towards sale
efficiency. Overall cost of operations will further increase which will have direct impact on the
profit margins. It is important that for same the refereed organisation adopt measures which can
be implemented in order to minimise the problems that will be created due to change which will
take place through online marketing. Major issues arises due to ineffective maintenance of
communication among stores and systems. It has to be ensured that online site is user friendly so
that clients do not find it difficult to select what they need. In this way managing the layout of
online site becomes an important task for the web developers.
Therefore, in order to overcome different issues assistance of CATWOE analysis can be
taken as this way management can reach to the ultimate solution. It is an effective technique
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which helps in defining the comprehensive root definition so that accordingly solution to the
subject matter can be given. It is a soft system that defines all the quality aspects related to a
particular situation. Main problem which is find during solving an issue is it is not defined in a
proper manner which further leads to identifying most appropriate solution to the situation. As
there are a number of stakeholders involved in the given case scenario everyone has their own
perspective which leads to different reaction to the problem. Therefore it is necessary that a
common technique is used which can be used as general for all through which actual situation of
problem can be recognised. Given below is the explanation of same to the given scenario.
Customers Customers will be most effected by the introduction of new technology as
not everyone know how to operate the online sites.
Actors In the given situation the leaders are involve as it would be their idea to go
online and in order to solve different issues that will be faced during and
after developing sites web developers will play a great role in providing
solution to various issues.
Transformation
process
The technology department of B&M will be effected as pressure on same
will increase as they will have to work more on making the use of sites
more convenient.
World View Due to implementation of online business by B&M problems are effaced
by management but once it is successfully done it will have a positive
impact n the business. Total sales will be improved and enterprise will get
more market to sell its products.
Owner Leaders of B&M will be handling the given situation by taking the
corrective actions so that degree of risk and issues can be minimised. By
guiding and setting a clear mission at the work place management can
influence people to corporate with situation and proved corrective measures
which can be used in the the solution.
Environmental
constraints
Though the issues which arises due to online business can be minimised by
developing good communication and making the access of site a simple
one so that it becomes user friendly there are different issues which are
difficult to eliminate. It is difficult to convince employees to adopt new
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changes as this way they have to give more efforts which not everyone
wants to take.
In order to reach at solution it is important that a rich picture of issues involved with the
new system and its associated solution is created so that a basic idea is provided to management
regarding how the situation can be improved. It is identified that web developers will find it
difficult to design an online site which is best suitable for customer and they like surfing same
(Yager and Zadeh, 2012). For this the technology department of refereed organisation can go
through other sites and according to their ratings website for M&S can be made. There are other
issues also which are recognised like increase in total cost, distribution, quality which is difficult
to maintain while operating business through online applications. Same can be solved by
implementing effective communication within different department as this way information
specific to a particular activity will reach on time which will further add value to the final output.
PART 3
After analysing all the issues that are associated with the introduction of new business
type in which company is introducing the concept of online it is identified that there is a need to
change the present code of conduct. For same actions need to be prioritise as this way
implementation work becomes more easy and possibilities of achieving success increases
(Krajewski, Ritzman and Malhotra, 2013). To bring alteration in B&M it is important that
required data is properly communicated to all the members of firm which can be done with an
assistance of balance score card technique. It is strategic planning tool which assist management
in setting clear vision in the organisation and also standards are set which further helps in
comparing the actual outcome with that desired one. Manner in which this can be implemented
in the given situation is given in the following text:
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The balance score card approach enables managers of the cited company to foresee the business
from four crucial perspectives.
Financial Perspective
Objectives Measures
Survive
Succeed
Prosper
With the help of Cash flow.
Quarterly sales growth and operating income
by division.
Enhanced market share and Return On Equity.
Customer Perspective
Objectives Measures
New products
Responsive supply
Preferred supplier
Customer partnership
Percent of sales from new items.
Percent of sales from proprietary products.
Timely delivery.
Share of key accounts' purchases.
Number of cooperative engineering efforts.
Internal Business Perspective
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Objectives Measures
Technology capability
Manufacturing excellence
Design productivity
New product introduction
Production geometry vs. competition.
Cycle time unit cost yield.
Silicon efficiency, engineering efficiency.
Actual introduction schedule vs. plan.
Internal Business Perspective
Objectives Measures
Technology leadership
Production learning
Product focus
Time to market
Time to emerge next production.
Process time to maturity.
Percent of goods which equal to 80% sales.
New product introduction vs. competition.
B&M wish to expand business by covering greater market share for which it is adopting
online business operations. For this management needs to develop interaction with customers
who will be directly effected by change. Independent surveys should be conducted which can
help in tracking the different segment of market which are spread in the whole country.
Executives of refereed organisation has to ensure that all the required resources are provided to
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the management members. There are different resources which will be required by management
in order to implement this change such as:
Funds – For any business activity cash is the basic requirement as without this expansion
is a tough task. When B&M will start operating online it will have to invest funds in different
areas like employing new staff,, web development, purchasing of domain etc.
Man power – In order to develop the online product management need to recruit more employees
so that work can be carried out and delivery of orders is done on time.
Centres – To deliver products it is important to have organisation centres in different
areas through where supply of products can be maintained.
Technology – Present applications are not enough to carry out the business online. It is important
that more advanced software are used so that efficiency and effectiveness in the work can be
maintained.
Online domain – It is the most important resource that is required in order to carry out
business in online market (Big brands, big savings, 2017). B&M needs to buy domain on net
where it can develop its sites in order to interact with customer.
CONCLUSION
From above report this has been summarised that starting business online is a tough
activity. It increases much pressure on the management as they have to be more alert and needs
to give more attention towards the quality of services they are giving to its customers. There are
various resources required to be adopted before implementing this change and hence it will add
more cost to business. In order to overcome different problems that are encounters by the leaders
of referred organisation various concepts like balance score card, CATWOE analysis etc. are
discussed which can help in defining the root problem more clearly and also provide solution
against each issue identified.
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REFERENCES
Books and Journals
Chang, J. F., 2016. Business process management systems: strategy and implementation. CRC
Press.
Gharajedaghi, J., 2011. Systems thinking: Managing chaos and complexity: A platform for
designing business architecture. Elsevier.
Kojima, K., 2010. Direct Foreign Investment: A Japanese Model of Multi-National Business
Operations. Routledge.
Koren, Y., 2010. The global manufacturing revolution: product-process-business integration
and reconfigurable systems (Vol. 80). John Wiley & Sons.
Krajewski, L. J., Ritzman, L. P. and Malhotra, M. K., 2013. Operations management: processes
and supply chains (Vol. 1). New York, NY: Pearson.
Morecroft, J. D., 2015. Strategic modelling and business dynamics: a feedback systems
approach. John Wiley & Sons.
Reim, W., Parida, V. and Örtqvist, D., 2015. Product–Service Systems (PSS) business models
and tactics–a systematic literature review. Journal of Cleaner Production. 97. pp.61-75.
Searcy, C., 2012. Corporate sustainability performance measurement systems: A review and
research agenda. Journal of business ethics. 107(3). pp.239-253.
Shaw, M., et. al., 2012. Handbook on electronic commerce. Springer Science & Business Media.
Turban, E., Sharda, R. and Delen, D., 2011. Decision support and business intelligence systems.
Pearson Education India.
Yager, R. R. and Zadeh, L. A. eds., 2012. An introduction to fuzzy logic applications in
intelligent systems (Vol. 165). Springer Science & Business Media.
Online
Big brands, big savings, 2017. [Online]. Available through<http://www.bandmretail.com/>.
Yahoo finance, 2017. [Online]. Available through<https://uk.finance.yahoo.com/quote/BME.L?
p=BME.L>.
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