Improving Business Performance | Report
Added on 2020-02-03
46 Pages8810 Words108 Views
Improving BusinessPerformance1
EXECUTIVE SUMMARY In the current scenario, every business enterprise is required to identify major issues andchallenges which it is facing. Further, organizations are also required to seek for the waysthrough they can overcome those issues and enhance its performance. It can be also stated that atthe time of operating in business environment, businesses needs to stay competitive in order toachieve higher profits and sales. It is also required by organizations to make changes in theirprocess, product and services at regular intervals in order to attract customers. Lidl is one of themost renowned chains of retail supermarkets in UK and at present it is facing different types ofissues. It can be also explained that introducing online shopping stores will help the brand toovercome its issues and find better opportunities related to growth and development. 2
TABLE OF CONTENTSIntroduction .....................................................................................................................................5Task 1...............................................................................................................................................5Task 2...............................................................................................................................................5Task 3...............................................................................................................................................6Task 4 ..............................................................................................................................................8Task 5.............................................................................................................................................11Task 6.............................................................................................................................................14Task 7.............................................................................................................................................14Task 8.............................................................................................................................................22Conclusion ....................................................................................................................................24References......................................................................................................................................25Appendix........................................................................................................................................273
ILLUSTRATION INDEXIllustration 1 ..................................................................................................................................12Illustration 2: Six sigma.................................................................................................................13Illustration 3: Business needs / Readiness matrix (quadrants) ......................................................14Illustration 4: Risk matrix..............................................................................................................16Illustration 5: Prince2 Model ........................................................................................................284
INTRODUCTION In the present scenario, the competition among businesses in retail supermarkets of UKhas become very intense. In order to survive in market and earn higher profits, organizations arerequired to improve their overall performance at regular intervals. This will support in enhancingthe overall competitiveness of businesses. Along with this, it also assists in attracting more andmore customers which results in increasing sales and profitability. The present report is based onthree issues which are faced by Lidl. Furthermore, it also highlights three major changes requiredto enhance overall operational performance of the organization. TASK 1The mission statement of Lidl reflects that the retailer respects cultural variety anddifferences which lies in tradition and value. Lidl is Germany based grocery retailer which was started in the year 1930. The retailer iscarrying out its operations with the help of more than 10000 stores. Further, it offers differentrange of products which includes organic products, eggs, sunflower oil etc. One of the mostimportant factors which have contributed in the success of retailer is that it has always kepthealth and safety of customers as its primary concern (Bath, Button and Rayman, 2014). Lidl hasbeen always successful in offering the best quality of products and services to all its customers.At the time of carrying out its operations in UK, Lidl faces very tough competition from marketplayers such as Aldi, Sainsbury and Morrison. The operations of Lidl can be termed as veryeffective one as along with following all legal rules and regulations, the retailer is also takingcare of its corporate social responsibility in appropriate manner. TASK 2After carrying out evaluation of Lidl's performance, it can be stated that the sales andprofits of organization is increasing at a moderate rate. However, it can be argued that the brandis facing issues related to its customers and website. People are no longer interested in waitingfor long queues and complaining regarding the same. Along with this, they are also asking Lidlto bring its online shopping store in order to make the entire process of purchase moreconvenient. In the year 2013, the brand generated €63,35 billion euro revenue and in the year it5
was €79.3 billion euro which means that the company is performing well. Its net sales has grownby 7% in 2014 as compared to what it was in 2013. In 2014, Lidl was owing 3.7% of totalsupermarkets in UK and in 2015 it was 4.4% (Rise of Aldi and lidl, 2015). All these facts clearlyhighlights the fact that the supermarkets chain is performing well in the market.Hayes & Wheelwright framework is a important tool which is used to determine theoverall competitiveness of a business enterprise. The frameworks consist of four major stageswhich are stage 1,2,3,4. Organizations which fall in stage one simply involved in making simpleproducts and services. Companies in stage 2 are the one which are able to develop products asper industry standards (Hayes and Wheelwright's Four Stages, e.d). Stage 3 highlightsorganizations make decision on the based of competitive strategy. Businesses in stage 4 areusually one which are innovative and way ahead of competition. As per the Hayes & Wheelwright framework can be stated that Lidl lies in second stageof the framework. The brand is required to satisfy all the major standards which are imposed byits major competitors. Along with this, it is also using the same kind of approach which majorplayers in the industry has adopted for quality and employee’s management. Lidl is facing three major issues while carrying out its operations in the country. Theissues are related to long queues, no online shopping and loyalty cards. In order to sustain in themarketplace, the organization is required to resolve the above stated issues as soon as possible.In situation where competition among businesses is very tough, it is not easy to attract newcustomers and retain old ones (Fernie and et.al., 2006). Lidl needs to measure its overall businessperformance and improve the same at frequent intervals. The three operational changes requiredin Lidl along with their need and benefits are mentioned below as: Self check outs- It has been observed that at the time billing, the customers are required towait for very long time due to long queues. This irritates them and also results in creatinghigh level of dissatisfaction among the same. Furthermore, it can be argued that waitingin long queues also encourages customers of Lidl to buy products and services from othermarket players. Therefore, it can be stated that self check out is much needed changerequired by the organization in order to create high degree of customers satisfaction6
(Sogn‐Grundvåg, Larsen and Young, 2014). The key benefit of this change is that it isgoing to improve speed and overall efficiency of check outs. It will become very easy forcustomers of Lidl to make purchase and payment of the same. In addition to this, thischange will also benefit the retailer by providing more space. Self check outs will allowLidl to carry out customers transactions in very minimal space. Introducing online shopping store- Another change which is required by the brand is ofonline store. People in market are not able to buy products and services of Lidl via online.To a certain extent it has restricted growth and development opportunities of the retailer.Therefore, it is required by the retailer to introduce online shopping portal from wherepeople can buy products (Menachof, Bourlakis and Makios, 2009). The benefit of this isthat it will enhance overall sales and profitability of Lidl. Another advantage is that thebrand will be able to lower down its cost of operations as in will not require to payexpenses such as rent, staff and electricity. Loyalty cards- The third change which is required in Lidl is that it needs to introduceloyalty cards. It can be argued that its major competitors such as Sainsbury and Morrisonare offering such kind of cards to customers. Therefore, in order to stay competitive inmarketplace, Lidl needs to offer such cards. The benefit of this is that it will support inattracting new customers and retaining old ones. It will also encourage customers torepeat their purchase. TASK 3In the present scenario, investment or projects requires large amount of human, financialand technological resources. Further, failure of projects can be a great loss to organizations and itcan also affect the performance of business enterprise in negative terms. Investment appraisalconsists of set of different activities which are employed by the organizations to determinewhether a project/investment is attractive or not. In the present study, reason behind usingmultiple approaches is that it gives a clear idea about the attractiveness of different projectsavailable. It has also helped in determining which the best among available options is. Project/ investment appraisal 7
In order to carry out the above stated three changes in Lidl, methods which can beselected are discussed below as: Payback Period- As per the view of Mahlia, Razak and Nursahida, (2011) paybackperiod can be termed as the time needed to cover the overall cost of investment (Mahlia, Razakand Nursahida, 2011). Furthermore, it is considered as very important factor as it helps indetermining the fact that whether to undertake a project or not. However, Gorshkov and et.al.,(2014) argued that the benefit of using payback period is that it is very easy to use and requiresminimum efforts during analysis (Gorshkov and et.al., 2014). On the other side of this, Gotze,Northcott and Schuster, 2008 has explained that in this period, time value of money is not takeninto consideration which is its major drawback. Along with this, pay back period also neglectsinvestments lengths (Götze, Northcott and Schuster, 2008). SAFE criteria- has asserted that SAFE criteria is another important method which can beemployed to identify overall effectiveness of a project or investment. One of the major advantageof this is that with the help of this method, businesses can also evaluate overall performance oftheir workers.Net Present Value- According to Ginevičius and Zubrecovas, (2009) Net Present valuecan be simply defined as the difference between value of cash outflow and inflows. Furthermore,it is the method which is commonly used during capital budgeting with an objective to assessoverall profitability of a project (Ginevičius and Zubrecovas, 2009). However Götze, Northcottand Schuster, (2008) argued that the drawback of using this method is that NPV is very sensitiveto discount rates. In addition to this, the method is also not capable of carrying out differencebetween project proposal with less cash flow and with high cash flow (Götze, Northcott andSchuster, 2008). Performance matrix- As per the view of Ginevičius and Zubrecovas, (2009) it is amodel which is used to determine performance of a project/ investment (Ginevičius andZubrecovas, 2009). On contrary of this, Delmon, (2009) has argued that in situations wheremathematical methods are used to gauge information value, measures which has very less valueare selected by experts (Delmon, 2009). 8
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