Analysis of Project Management Tools and Techniques in SMEs

The assignment discusses the application of project management tools and techniques in small to medium-sized enterprises (SMEs), specifically in Western Cape. It references various studies and research papers that explore the use of project management methodologies in SMEs, including business network approaches, agile methodologies, and knowledge management. The analysis aims to identify key challenges and opportunities for SMEs in implementing effective project management practices.

MANAGING AND RUNNING
SMALL BUSINESS

Table of Contents
INTRODUCTION .........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Main consideration that needs to be undertake by small-business when planning and
allocating resources................................................................................................................1
TASK 2............................................................................................................................................3
P2/P3 Process of customer relationship management ...........................................................3
TASK 3............................................................................................................................................4
P4 Produce monthly cash-flow statement .............................................................................4
P5 Application of break-even analysis in respect of organisational situation .......................7
P6 Interpretation of key financial statement ..........................................................................9
TASK 4..........................................................................................................................................12
P7 Key regulation and legislation that have implication on small-business .......................12
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
A Small-Business enterprise is an independently owned and operated business. Such type
of businesses have fewer number of employees and does not have high volume of sales. These
are generally operated and controlled by corporations, partnership and sole-proprietorships.
Being an owner of small organisation, there are various challenges they undergo in the form of
business size and function (Ali and Babiker, 2017). They solely handle all challenges related
with financing, selling, delivering, managing and growing the company with few or no
workforce while trying to make it successful. The chosen organisation for this report is Unicorn
Grocery which is a co-operative grocery store located in England. The main purpose of this
report is to understand all essential aspect of running a social enterprise or small-business. The
given assignment covers methods of allocating resources, process of customer relationship
management, interpret financial statement and key regulation and legislation that have
implication on social-enterprises.
TASK 1
P1 Main consideration that needs to be undertake by small-business when planning and
allocating resources
The success and growth of any organisation depend upon how they utilise their available
resources in order to achieve its objectives. Resource management can be defined as effective
and efficient development of company's resources when needed. Generally there are four basic
type of resources namely raw material , human, capital and monetary. These are combined,
transformed and used into finished product during the production process. Finding and hiring
right people for right job is the essence of successful resource management (Chauma, 2017).
Similarly allocation of effective resources is equally important in context of accomplishing pre-
defined goals and objectives.
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(Source: Key resources of organisation, 2018)
Resource Allocation refers to the diligent preparation of resources based on given
timelines and skill set. Managers are required to allocate available organisational resources
according to virtue of situation instead of tasking strategic decision (Cojoacă, 2017). But
selecting practices that promote healthy allocation of resources can change everything. Some of
the methods are discussed below:
11 Planning Resources: It is a kind of structured approach that assist company in
automatize its business processes and enhance the effectiveness and efficiency of
operation. An Enterprise Resource Planning is a management information system that
integrates various department such as marketing, planning, inventory, sales, human
resource and finance.11 Make room for strategic reallocation: Here reallocation does not mean overloading
work with same or similar set of resources. It means adding few extra resources that lead
to maximise the efficiency of defined task and achieve it in cost-effective and timely
manner. This is important to keep employees occupied optimally.11 Diversify skill sets and responsibilities: According to the statistics report, it has been
observed that trained resources always pays better as compared to untrained. It is
essential for every business enterprise to recognize and must aware of employees
secondary skill set and focuses on nurturing them with the passage of time (Durst, Yip
and Lee, 2015). When they face issues like reallocation requirement, they like to exceed
their capacity and solve problem by finding better solution for them.
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Illustration 1: Organisational Resources

11 Make “optimal utilization” the benchmark: Putting optimal utilization of resources as
default status, may help company in achieving their objectives in structure and through
manner. When available resources are utilized or allocated optimally across the pool, it
eliminates the chances of under or over allocating of resources under any circumstances
(El-Rafei and et. Al, 2017).
Tangible resources of an organisation:
Tangible assets are known as the resources that has a physical form. Fixed assets of an
organisation such as building, machinery, land and current assets such as cash and inventory is
all come under this. Mainly tangible assets are the physical items that a company use in order to
earn profits. These type of assets are recorded as the amount incurred to get them. Transpiration
cost, insurance cost, installation cost all come in the cost for tangible fixed assets. Tangible
assets are used in execute or perform business operation such as to manufacture product or to
provide a specific service to a client. These are also use to obtain loan and sometimes company
use these assets to improve its cash’s flow. Tangible assets improve market value of company.
TASK 2
P2/P3 Process of customer relationship management
Anyone into business knows that customers are considered as the king of market. Money
is not sufficient to promote business relationship as it requires some loyal customers who
believes in company's product or services and also enable others to start believing in their
product as well (Javaid and Iqbal, 2017). Strong or powerful relationship with target audience
can not be generated from one time meeting rather every company must search for those 20% of
loyal customers that contributes in generating 80% of their revenues. The process of customer
relationship management includes strategies and activities used by business enterprises to
manage their interaction with potential and current customers. Here the keyword is
“relationship” as company's are liable to simultaneously focus on generating new customers and
nurture the relationship with existing target audience. In other words, the process of CRM laid
more emphasis on customer loyalty and retention.
Customer Relationship Management deals with collecting information about the
customer across different channels between consumer and company. This may include social
media, e-mail, live chat, telephone etc. The goal of any enterprise is to gain maximum
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profitability and revenues from its customer bases. Following are the steps included in the
process of CRM are described as follows:
1. Customer Portfolio Analysis: The first and foremost step involved in CRM process is
analysis of company's customer base to identify what kind and group of potential buyers
are the most profitable. This will help the business entity in defining their target customer
base.
2. Customer Intimacy: It refers to the process of establishing relationship and getting
familiar with individual customers (Ludmila and Stanislava, 2015). The relationship of
organisation with its potential buyers is predicted or analysed on the basis of how well
company knows its consumers including its purchasing habits, likes-dislikes etc. Every
single interaction with customers comes out as an opportunity for company to improve
consumer intimacy and acquire more knowledge about target market.
3. Network Development: It is the process of determining and developing strong
relationship with target audience as well as with external partners including investors and
suppliers (Nowotarski and Paslawski, 2015). Now-a-days there are various channels
through which company can easily identify likes and dislikes of its potential buyers such
as social media platform, direct chat etc. This aid in modifying product or services as per
customer's needs and expectation.
4. Value Proposition Development: This step focuses on collecting information while
working on customer intimacy. Once the company is done with identifying target
customer they can easily move forward and develop tailored value proposition with
individual customer. Creating value for customer means providing them goods and
services that effectively meet their requirements and for which consumer is ready or
willing to pay.
5. Customer Life-cycle management: It discuss the journey of ideal customer starting
from potential consumer to product/service advocate. This include how company
organise themselves and adopt various approaches that help in effectively managing
consumer relationship. According to the rule 20/80, it has been figured out that 20% of
loyal customers generates 80% of firm's revenue (O’Connor and Kelly, 2017) . So the
main motive of every business concern is to retain that 20% of loyal customers and also
tries to attract new customers as well.
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Development of business transnationally with its benefits and drawbacks
Company develop its business transnationally by expand its operations in different
countries. One of the main benefit of this is that it increases market share of company and
provide opportunity to generate a large number of profit. This also help in utilise all resources
and an optimum level which enhance efficiency of business activities. Various ways are there
which can be use by an organisation to develop transnationally and this can be understood by the
following points:
Exporting: Organisation which sell their products and services to the individuals of other
countries is known as exporting. This is one of the most popular way to expand the business in
other markets. One of the main benefit of exporting is that in help firm to reach new markets and
also increase profits of enterprise.
Franchising: In this an arrangement take place between two parties in which one parts give
permission to another party to use its trade mark and name as well to sell its products in another
market. Franchiser grants permission to franchisee and franchisee pays one time fees plus royalty
to the franchiser.
Different benefits and drawback of develop business transnationally can be understood by
the following points:
Benefits:
Increase visibility of business: When an organisation expands its business activities in
new countries then it enhances the visibility of its brand. All this make it easy or organisation to
grasp the opportunities of expansion due to increase brand recognition.
Increase sales and number of customers: New market help in attract new customers
which help firm in generate large number of profits. Further this help company in attain its set
sales objective which help in sustain in market for long run.
Drawbacks:
Complex: When a company enter into a new market then local language of that area can
become a barrier to wards company success. Further, it become difficult for company to carry
out effective advertisement of its products. Further, firm require to comply with all legislation
and rules of the country in which it wants to operate all this make the business operations more
complex.
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Costly: Starting a business in new area or country is not an easy task as company requires
equipment, knowledge, skills and labour to serve to the local individuals of that area. All this
require huge financial resources.
Importing: Importing can be defined as the bringing of products or services from another country
to home country for the purpose of their sales. Imported goods have made a major contribution
towards the success of small business in UK. It is beneficial as it is provides high quality goods
and increase in the profit margins of the company. The major drawbacks of importing is the
fulfilment of many legal requirements which consumes much time.
Licensing: It can be defined as a business arrangement in which one company gives another
company permission to manufacture its products for a specified payment. It is beneficial as it
allows easy and quick entry in the foreign markets. The major drawback of licensing is that the
level of control is low.
The Development of Strategic Alliances: It can be defined as the arrangement between two
companies about sharing the resources available of which the both companies are making use of,
for a mutually beneficial project. It is beneficial for the company as it provides competitive
advantage to both the companies. The major drawback of this alliance it is not possible for both
the companies to be equal in the financial condition so it creates burden on another company.
TASK 3
P4 Produce monthly cash-flow statement
Cash Flow Statement: This tool is often used by business enterprises to determine cash generated
and spend over a fixed period of time (usually a financial year). This statement mainly include
outflow and inflow of cash. It exclude all those transaction that do not directly affect cash
payment and receipts. For example: Depreciation
Benefit of Cash Flow:
1. This statement gives information regarding company's liquidity and solvency and also
depicts the ability to change cash flow in future circumstances (Parkin, Fielder and
Ashby, 2016).
2. Render additional information for analysing change in liabilities, equity and assets.
It is generally classified into 3 categories:
 Cash ash flow resulting from operating activities
 Cash flow resulting from investing activities
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 Cash flow resulting from financing activities
Operating Cash Flow includes:
 Interest received on loan
 Interest payment
 Payment given to workers or on behalf of employee
 Payment to supplier for goods and services
 Receipt from the sale of product or services
Unicorn Grocery Limited
Statement of cash Flows
Year ended 31 December 2017
Investing Activities:
Cash inflows from investing activities compromises of:
1. Receipt from the sale of investment
2. Receipt from the sale of land, equipment, plant, property or land
Cash outflow from investing activities covers:
1. Payment given to acquire or purchase an investment
2. Payment to purchase property, land, equipment or plant.
Financing Activities:
Cash inflow from financing activities includes:
1. Receipt from issuing member share
2. Receipt from taking out a bank loan or issuing loan stock
Cash outflow from financing activities covers:
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1. Payment given to redeem member share
2. Repayment of bank loan and loan stock
A summary of Financing and Investing cash outflow and inflow for 2017-2015 is described
below:
Unicorn Grocery Limited
Investing and Financing Activities
Investing Activities
2017 2016 2015
Cash to purchase fixed
assets
(62,424) (50,908) (7,087)
Cash from sale of
fixed assets
- 329 275
Cash to purchase
investment
(1) (32,507) (417)
Cash from sale of
investment
500 - -
(61,925) (83,086) (7,229)
Financing Activities:
Issue of share capital 1 3 (4)
Repayment of loan
stock
(934) 8,291 (3,580)
Repayment of bank
loan
(14,677) (6,338) (90,871)
(15,610) 1,956 (94,455)
Unicorn Grocery Ltd.
Cash Flow Statements
2017 2016 2015
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Operating activities
before tax
306,878 190,170 199,809
Taxation (47,313) (45,047) (56,573)
Operating Activities 259,565 145,123 143,236
Investing Activities (61,925) (83,086) (7,229)
Financing Activities (15,610) 1,956 (94,455)
Increase in Cash 182,030 63,993 41,552
Variable Cost: These are those cost that changes with any sales proportion. For example: Cost
of raw material, overheads etc.
Fixed Cost: Such type of costs remain constant irrespective of any change in the level of sales.
For example: Purchase of new equipments, salary of employees.
P5 Application of break-even analysis in respect of organisational situation
Break-even Analysis: This tool is used by business enterprises to determine the level of
production or targeted desired sales mix. In order to be profitable in the company, it is essential
to figure out firm's break-even point at which total cost/expenses is equal to total revenue.
Basically it depicts the point of time at when company is facing no profit and no loss situation
(Break Even Analysis, 2018). It is the most popular tool used by business enterprises to identify
its profitability level. With the help of this tool, company can set certain target to cover their cost
and make profit through the year. It is a kind of comprehensive guide that aid in setting target in
context of revenues or units. Formula for calculation break even point is as follows:
BEP = Fixed cost/ selling price per unit – variable cost per unit
Calculation of BEP=
Fixed cost= 12000
Selling price per unit= 10
Variable cost per unit= 4
BEP= 12000/10-4
BEP= 12000/6
= 3000.
The organisation needs to sell 3000 units to recover all its expenses.
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As Unicorn Grocery is mainly operating its business in UK thus an organisation is a small
business firm due to which it requires to analyse the point where they can recover all expenses
with the help of sales. Conducting BEP analysis, the company can able to recover its total
expenses which are incurred in production process as it can guide to produce an appropriate
units.
Application of BEP:
 It is used to identify the actual point where an organisation can achieve huge profits.
 BEP analysis directs the manager to frame an appropriate prices for the products
produced by the company.
 Managers may get the of idea of such units that needs to be manufactured to recover all
the costs that are related to manufacturing process.
From the above image it can be analysed that when revenues and total costs meet than it
results in break even point. Fixed costs always remain same for the production and variable costs
always fluctuate according to production units
P6 Interpretation of key financial statement
Unicorn Grocery Limited
Profit & Loss Account
Sales (figures generated by EPOS) 100,000
Cost of Sales:
Opening Stock 10,000
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Purchasing (Including delivery) 79,250
Wastage 100
Packaging 70
Closing Stock (20,000)
Total 69,420
Gross Profit 30,580
Less: Miscellaneous expenses 5000
Net profit: 25850
Above given table is indicating the profit and loss account of Unicorn Grocery Limited
and this is indicating that gross profit of company is 30580 and net profit is 25850. Total sales of
company is 100000. As the sales figure is good and the profit of the company is showing
good amount so it would give them expansion opportunity.
Profit ratios:
Gross Profit Margin: (Gross Profit/ Sales)* 100
2017: (1,391,921/ 4,542,785)*100 = 30.6%.
The gross profit margin of the company is showing a percentage of around 30.6%
which is sufficient for them to achieve the objective of expansion. This is considered as a
good result for the year.
Net profit margin = (Net profits ÷ Net sales) x 100
2017: 25850/100,000*100= 25.85%
Also the net profit of the company is showing the percentage of 25.85% this shows
how efficient the managers of the company are in organising the business. It also shows
that the company to achieve a good amount of profits on the invested capital.
Liquidity ratios:
Current Ratio: Current Asset/Current Liability
2017: 939,264/429,577 = 2.19 (In pound)
This depict that for every 2.19 pound of current asset are available to cover every 1 pound of
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debt including supplier payment.
This is the ratio that shows the liquidity of the company. As the ratio is around 2.19.
which shows that the company is having a good amount of liquid assets and is moderately liquid.
Which shows the efficiency of the managers of the company.
Acid test ratio= (Cash+Accounts Receivable+ short term investment)/ Current liabilities
2017: (182,030+5,000+ 0)/83000= 2.2
This ratio specifies the high liquidity of the company. As the company is having cash and
the other liquid asset in high quantity which shows the mangers were suitably using the business
asset so as to perform the business operations.
Other ratios:
Stock Turnover: Cost of Goods Sold/Stock at cost or market price
2017: 3,087,449/230,057 = 13.42
This is the ratio that shows the turnover of the company over the year. As the
turnover of the company is around 13.42 which depicts that mangers of the company are
not using their resource in best and efficient manner. It is seen that it can be increased to a
specific number by using certain techniques.
Pre-Tax Profit% : (Profit before Tax/Sales)*100
2017: (216,977/4,542,785)*100=4.78%
This depict that for every 1 pound of sale, 4.8 pence is left as profit before tax
This depicts that the company is earning around 4.78% profit before giving the tax to the
government which can be increased if the sales and the profit of the company is increased
accordingly. The managers of the company has to perform certain obligations which helps them
to increase the profitability of the company.
Debt to Equity Ratio: Total Liabilities/Shareholders Funds
2017: (429,577+67,081)/1,464,821= 0.34
The debt equity ratio of the company is considered to be the around .34 which is not
suitable. As it is seen that the standard debt equity ratio of the company should be around 2:1.
this can be achieved from the managers decisions which helps them to achieve the objective of
better return to the investors.
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Fixed Assets (In Pounds)
Computer Equipment 3,650
Premises Improvement 26,870
Plant& Machinery 13,144
Fixture & Fittings 23,280
Others Debtors:
Loan to Glebelands II 5,000
Prepayments:
Insurance 12,500
Bank Loan Repayments 6,640
2017 Loan stock Repayments 239,215
Corporation Tax 50,150
Dividends 42,000
1% & 4% Donation 31,193
453,642
Above given table is balance sheet of company which is showing that 453642 is the total
amount of firm.
Short term liabilities (In pounds)
Creditors 50000
Bank loan 30000
Outstanding expenses 3000
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Profit before tax
2017 2016 2015
Profit before tax 216,977 199,292 146,147
Depreciation 53,237 (47,807) (60,254)
(Increase)/decrease in
stock
18,219 (22,238) (19,126)
(Increase)/decrease in
debtor
(2,453) 1,020 (6,234)
Increase/(decrease) in
creditors
20,898 (35,711) 18,768
Net Cash Inflow
from Operating
Activities
306,878 190,170 199,809
Given table is showing the profit of company. 216977, 199292 and 146147 is the profit
of Unicorn Grocery in year 2017, 2016 and 2015 respectively. Net cash flow in 2015 was
199809, 190170 in 2016 and 306878 in 2017. All this indicate that company profit in 2017 was
high.
Investing Activities
Cash to purchase fixed
assets
(62,424) (50,908) (7,087)
Cash from sale of
fixed assets
- 329 275
Cash to purchase
investment
(1) (32,507) (417)
Cash from sale of
investment
500 - -
(61,925) (83,086) (7,229)
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This table is indicating the investing activities done by Unicorn Grocery Limited and this
is indicating that company’s investment decisions are not good as its is suffering form loss on
continuous basis.
Financing Activities:
Issue of share capital 1 3 (4)
Repayment of loan
stock
(934) 8,291 (3,580)
Repayment of bank
loan
(14,677) (6,338) (90,871)
(15,610) 1,956 (94,455)
Cash Flow Statements
2017 2016 2015
Operating activities
before tax
306,878 190,170 199,809
Taxation (47,313) (45,047) (56,573)
Operating Activities 259,565 145,123 143,236
Investing Activities (61,925) (83,086) (7,229)
Financing Activities (15,610) 1,956 (94,455)
Increase in Cash 182,030 63,993 41,552
This table in indicating the total inflow and outflow of cash of the year 2017, 2016 and
2015. From all its operating and other financing activities company face an increase of 41552 in
its cash in 2015. Further, in 2016, 63993 increase in cash and in the year 2017 total increase in
cash take place of 182030.
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TASK 4
P7 Key regulation and legislation that have implication on small-business
There are various legislation and regulation that possess an implication on small-business
enterprise like Unicorn Grocery. Such type of regulation directly affect the performance and
operations of respective company. It mainly includes:
Equal Pay Act (1970): This act was enforced in UK for preventing the discrimination of men and
women on the basis of their contract of employment which is related in terms of pay provided to
them.
Sex Discrimination Act (1975): According to this act, it becomes unlawful to discriminate an
individual on the basis of their sex concerning about education, training, etc.
Race Relation Act ( 1965): This Act makes unlawful to discriminate an individual on the basis of
their colour, ethics or national origins.
Sale & Supply of Goods Act (1979): This Act was made in order to govern the contracts in
between both consumer and commercial good contracts. These goods are such as the specific
goods, future goods, ascertained goods.
Trades Descriptions Act (1968): According to this Act, it becomes unlawful to mislead
consumers by providing them working information about the products and services of
consumers.
Consumer Credit Act (1974): This Act was established for the protection of consumers
concerned with the provision of credit by creating policies related to the interest charged by the
moneylenders and brokers.
Auto-Enrolment Pensions legislation (2008): According to this act, it laid down some provisions
related to the pensions provided to the workers after their retirement from the job.
Tax and Employment (1976): According to this act, company needs to follow taxation
guidelines prescribed by the government of that particular country or state. This legislation
possess direct impact on the overall functioning and performance of the company (Skolud and et.
al., 2016).
Health and Safety Act (1974): Under this act, health and safety measures are need to be
undertaken by company for their employees. Providing healthy working environment motivates
workers to accomplish organisational objective in cost effective and timely manner.
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Data Protection Act (2018): In accordance with this act, it becomes illegal to leak the data
related to the customers of any organisation, hospital or any other service provider. Further it
also has laid down some rules as well and also makes alteration in them from time to time.
Recently, it has also applied the EU's GDPR Standards in their provisions of Data Protection
Act.
Minimum Wages Act: As per this act, company is liable to provide minimum wages to its
employees defined by the government of that particular country. Moreover, company's are
required to pay wages as per the skills and knowledge of employees (Stanciu, 2015).
CONCLUSION
As per the above mentioned report it can be concluded that for smooth running of
business it is essential to allocate resources in an optimum manner. There are various ways
which are discussed above that help in managing available resources in an effective way. Also it
is important to maintain healthy relationship with target customers. Moreover this report also
interpret financials of current year of chosen organisation that depicts its overall performance
throughout the year.
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