Performance Improvement and Management in Health and Social Care

This report discusses the concept of performance management in the health and social care sector, including strategic planning models and the Du Point analysis. It also explores the advantages and disadvantages of these models and their application in the industry.

PERFORMANCE IMPROVEMENT
AND MANAGEMENT IN HEALTH
AND SOCIAL CARE
TABLE OF CONTENTS

INTRODUCTION...........................................................................................................................3
Task 1...............................................................................................................................................3
Strategic planning models............................................................................................................3
Task 2...............................................................................................................................................8
a. Du point analysis..................................................................................................................8
B. Ratio interpretation...............................................................................................................10
TASK 3..........................................................................................................................................12
Critical evaluation of performance management.......................................................................12
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Performance management is a term that defines analysing the company’s performance in
market. This report is based on the case study of BME Luxury Care Hone ion respect to its
performance measurement. Henceforth, report will emphasis on advantages and disadvantages
associated with some strategic direction of company. This report will also discuss some financial
terms. Performance management will also discuss in this report.
Task 1
Strategic planning models
Strategic planning is referred to the process of identifying the goals and objectives of the
business while resources are used to gain defined objectives over the time. while model is a the
systematic process that directs business how to use appropriate resource along with right action
which leads success on time and reduces risk on time. the strategic planning frameworks plays
essential role such as it develops a strong alignment between resources and mission of the
company (Bergmann and Strecker, 2018). In addition, it is essential to determine aspects of the
business-like resource (employees) are working well and understand needs of further adjustment
which is required to meet desired objectives. There are two strategic planning models that helps
director of care home to promote business growth effectively. Models are described as follows:
VRIO Framework
It is a strategic analytical tool that is designed to support business to determine it’s
capabilities, resources and risks which gives them long-term competitive advantage. The
framework is a strategic tool that helps to understand elements of the business which gives
sustainable competitive advantage from the competitors. It creates foundation to mapping out
that which resource can lead more success and provide competitive advantage or which one can
be applied as an instructor in decision-making process and sets priorities of resource according to
requirement in the company (Gregor, Weidner and Raw, 2016). This model stands for valuable,
rarity, imitability and organized which helps to determine effective resources that leads long-
term competitive advantage in company. The model concept is basically dependent on elements
firm resource and sustainable competitive advantage.

Valuable resources
A resource is considered valuable resource if it adds perceived value to the organization
weather it can help company to take advantage of the given opportunity or can create threats.
While in Swot analysis model valuable resource is considered into strength, opportunities and
threats. As per the concept if resource is valuable then it offers the business with some sort of
benefits. Moreover, a resource that is more valuable for the company but does not fit any of the
other dimension of the model as result does not lead any competitive advantage. A company can
take competitive advantage, only in one state when resource is valuable and it is not rate and not
hard to imitate by others.
Rare
A resource that is judged based on the rarity. It is often easiest and least subjective part of
the VRIO model. It is gathered by competitors easily and easy to replace completely. In other
word. A resource that is not possessed by most of the company due to rarity. When a resource
keeps both type traits valuable and rare then it gives competitive advantage. A company can easy
to gain competitive advantage and growth of the business when it has rare but valuable resource.
This resource can easily imitate by competitors when they realize quickly So it is not big deal to
imitate rare resource. That’s why it is considered temporary competitive advantage.
Inimitable
It is valuable and rare resources that supports corporations to engage in strategies while
other companies cannot pursue further till companies has shortage of relevant resources. It does
not have guarantee for long-term competitive advantage (Immordino and et.al., 2016). The
reason behind is that other companies can intimate these resources to win the competition and
leads high profitability in the company. This resource is highly focused on company and helps to
gain competitive advantage but competitors always try to imitate or copy of the resource when
they feel. As per the concept of RBV organization must chose such kind resources which must
be hard and expensive to imitate or substitute for others. The resources can be imperfectly
imitable due to few reasons according RBV concept such as unique historical condition, social
complexity and casual ambiguity. Social complexity denotes that if company has mots important
resource such as strong organization culture and it’s brand image among suppliers and customers

then it quite hard for the competitors to establish identical social network which is dependent on
numerous factors.
Organization
If a company has numerous resources that does not mean it develops any advantage on by
own. Only a well-organized company can take advantage of the resource by aligning them
effectively across the business. So, it is mandatory for the organization it must well-organize
itself so that easy to capture values for them. The organization component encompasses a
company’s formal reporting structure, strategic planning, management control, budgeting system
and compensation policies. These component helps company to align resource effective and
make them well-organized as result leads sustainable competitive advantage. As per the RBV
concept when an organization possess valuable, rare and imperfect imitable resource that cannot
enable to take competitive advantage for long period of time.
Advantage
The major advantage of the model is this it helps company to determine it’s resources
such as valuable, rare, inimitable and organization and aligns them effectively with the vision of
the company so that easy to leads high profitability in the company. VRIO model is the part of
resource-based view (RBV) which determine links between a businesses’ characteristics and it’s
financial performance. Thus, VRIO model helps company to take competitive advantage from
the competitors prolong time.
Disadvantage of the VRIO analysis framework
It is quite difficult framework to apply for the small-scale business and new start up
business because these kind business does not have sufficient resources and capabilities to
influence brand image and create sustainable competitive advantage in the competition market.
another drawback of the model is this most of the time companies loses it’s business when it’s
operation is broken out (Romero and et.al., 2016).
Porter’s five force model

It is also an essential framework to analyse organization’s competitive environment. It
also supports company to determine its brand position in the business market. it dives five forces
that identify the competitive intensity and successfulness of firm in term of profitability and sales
revenue. It is powerful tool to understand the competitiveness of the business environment and
determine it’s strategy’s potential profitability. Numerous corporations follow this model to
evaluate it’s competitive environment and it’s competency level in the industry (Silvestrov and
et.al., 2019). The model helps to determine strengths or weaknesses that can exploit to strengthen
that position. It is important for creating fruitful business’s strategy which helps gain sustainable
competitive advantage in the company. There are five forces that are encompassed in the model
which supports to determine business’s strategy as well as leads high profitability in the
company.
Threats of new entrants
It is primary force of the model that brings new opportunity and desires to capture high
market share by the company on it’s products. The threat of new entrant is dependent on certain
barriers of the company (Sims, Powell and Vidgen, 2016). A Exiting player can face threat when
it does not have potential to over industrial barriers such as high customer loyalty for the existing
brand, financial scale, large investment requirement in R&D department, governance policies
and limited distribution channels to access customers. In that state existing player can get threat
of new entrant in it’s business sector.
Bargaining power of the suppliers
This force highlights that bargaining power of the suppliers can become high when
market has high shortage of skilful suppliers as result, they require high cost and sells product on
expensive cost the organization. Supplier bargaining power reduces when high turnover of
suppliers or people is available in the business market and has willingness to work in lower
wages due to high unemployment rate. Based on the two conditions can be analysed profitability
of the company in the business market.
Bargaining power of buyers

This force develops two type conditions such as when buyers have the power to demand
high quality products at lower cost from the corporation then it can interpret that buyer’s
bargaining force is too strong in the business market. the reason behind is that when customers
get high availability of the similar products on more stores then demand of the buyer influences
at lower cost. The lower price declines revenue of the product while standard quality goods
raises production cost as result leads loss in the organization’s profitability.
Rivalry among existing competitors
It is another important force that helps to determine competitors forces in term of market
share, sales revenue and product portfolio that creates tough competition for other firm as well as
reduces profit of the company. The rivalry condition can occurs in some consequences i.e. when
company has low customer loyalty and has equal market size and other that leads competition
among exiting rivalry.
Threats of substitutes
The force is generally threatened when customers gets substitute products along with
attractive cost or standard quality then it become easy for the customer to switch it’s preferences
from one product or service to another products with attractive cost (Wang and et.al., 2018).
Advantage of model
It is helpful for the company because it helps to determine competency level of business
with it’s existing rivalry so that easy to apply effective strategy to lead profit from the
competitors. Bargaining power of the buyers and suppliers supports company to analyse external
environment of the company which can impact company positively and negatively. thus, model
helps company to plan strategically so it can gain sustainable competitive advantage from the
business market.
Disadvantage of the model
The major drawback of the model is this it focuses only five forces while other factors are
ignored by the model which causes company unable to take change successfully in the business.
this model is not applicable for all type industries effectively.

Porter’ five force model is effective strategic model for the care sector perspective that is located
in England because there has large number of competitors i.e. NHS and other health and personal
care sectors which are highly competent and can give negative impact on the business. so, by the
model company can analyse business environment of company in England, UK. It helps to
formulate business’s strategy as per the situation as result leads high business growth in the
market and maintains sustainable business performance in the care sector (Willis, Cave and
Kunc, 2018). BME company must follows this model for leading business growth in the England
market.
Task 2
a. Du point analysis
Du point analysis is a model channelizes to understand the financial stability of the
company. This analysis gives emphasis to Return of Equity of a company. The concept of Return
of Equity is about to measure the financial performance of the company. It is calculated by
comparing net income with shareholder equity. Shareholder equity is further indicated to
company’s assets reduced with its debts (Frösén and et.al., 2016). Return of equity can be more
specifically demonstrate as return on net asset of company. In simple term return on equity
projects about how efficiently company is utilising its assets to entertain profits for company.
The concept of Du point analysis is a useful technique that projects about different drivers
associated with return of equity projected in financial performance. This concept involves three
major drivers associated with return of equity which projected as operating efficiency, net profit
margin and asset turnover ratio. This is an important concept which clearly projects the
company’s performance. Shareholder associated with the company also monitors the company’s
presence over Du Point Analysis as this model give detail about the financial performance of
company. Company’s shareholder deeply observes the financial position of company with the
support of this model. As it clearly project the financial performance and stability of company
with the use of formulas which also ensure the efficiency of this model. Following components
are a part of the Du Point Analysis.
Profit margin

Profit margins are defined as the net profit percentage of company as compare to the total
revenue of organisation. BME Luxury Care has total revenue worth £3,269,404 and company’s
net profit is worth £57,881. Profit margin of the organisation will calculate by comparing net
income of organisation with total revenue (Caraiani and et.al., 2018). Net income in the profit
margin is calculated by reducing total sales revenue with different indirect nature expenses like
light bill and other expenses that do not have any direct role in catering services to customers.
Profit margin = Net Income / Total revenue * 100
£57,881 / £3,269,404 * 100
1.77 %
The net profit margin is not appropriate as compare to industry average profit margin.
The industry average profit margin is given as 3.5%. It can be stated that the organisation needs
to control its indirect expenses to improve its profit margin. This is an effective indicator project
about company’s presence in market.
Total asset turnover ratio
Total asset turnover ratio indicates how well company has channelized its assets to
entertain profits. This ratio indicates how effectively company has used its assets to improve its
profits. This analysis involves sales of company and total assets of company to calculate the
outcome of the analysis.
Total asset turnover = Sales revenue / Total asset
£3,269,404 / £2,502,992
1.31
Company total asset ratio is less than the industry average which projects that the
organisation is utilising its assets in the best manner (Davydenko, Sai and Shcherbakov, 2019).
More effective utilisation can be conducted of the assets of company so that more profitable
outcomes can entertain by organisation.
Return on equity

This is an analysis which includes net income and shareholder equity. Shareholder equit
is calculated by reducing total liabilities of company from total assets.
Return of equity = Net income / shareholder equity * 100
£57,881 / £357,842 * 100
16.18%
It can be stated that the company’s return of equity is better than the industry average
which is only 13.1%.
B. Ratio interpretation
Return on asset (ROA)
This is the comparison between net revenue and total asset of organisation.
ROA = net income / total asset * 100
£57,881 / £2,502,992 * 100
2.31%
This is less than the industry average. Company can generate more effective revenues by
applying more proper operational planning.
Current Ratio
Current ratio is a comparative analysis between current assets of company and current
liabilities (Pasupathy, 2019). All such assets that can be utilises for the next one year are
considered as the current asset. All such liabilities that need to repay within one year are
considered as current liabilities of BME Luxury care home.
Current ratio = Current asset / current liability
£608,992 / £445,150
1.37

Days cash on hand
This is a comparison between cash in hand and cash operating expenses in a year. This
analysis brief for how many days company carried its cash in hand without utilising the cash for
different functional activities.
Days cash in hand = Cash on hand ÷ [(Operating expenses - Noncash expenses) ÷ 365]
£105,737 / [(£3,180,356 - £195000) / 365]
12.92
Non cash expense = provision of bad debt and depreciation
This is lesser as compare to industry average which indicates that company is utilising its
liquidity in a more effective way than the industry average.
Average collection period
Average collection period is the term defined as the number of days on an average basis
that is required to collect the dues from the debtors of company. This is the time needed to
collect due amount from company’s debtors.
Average collection period = Account receivable / (Annual sale / 365)
£215,600 / (£3,163,258 / 365)
24.87 days.
The average collection period of company is more than the industry average. This
indicates that company is taking more time to recover the dues.
Debt ratio
Debt ratio also known as debt to asset ratio. This is a comparative analysis between total
debts and total assets of company (Pidun, 2017). Total debt indicates with the total long term
debt associated with organisation. This ratio indicates that how stable the company is in term to
its financial capability.

Debt ratio = Long term debt / Total asset * 100
£1,700,000 / £2,502,992 * 100
67.9%
Company’s debt ratio projects that the company is in a better position as compare to
industry average. Industry average is showing at the rate of 69%.
Debt to equity ratio
Debt equity ratio is defined as the comparison between total liability of company and
total shareholder equity. Shareholder equity is defined as total assets of company reduce to total
liability of company.
Debt equity ratio = Total debt liabilities / Total shareholder equity
£ 2145150 (£1,700,000 + £445,150) / £357,842
5.99
Fixed asset turnover ratio
Fixed asset turnover ratio project about the position of fixed asset as compare to
company’s total sales turnover. This ratio includes total sales revenue of company and total fixed
asset of company.
Fixed asset turnover ratio = Net sale / Fixed asset
£3,163,258 / £1,894,000
1.67

TASK 3
Critical evaluation of performance management
Performance management is a process to assess the company’s presence in target market.
These are the tools used to analysis about company’s performance in the target market by
comparing with other key competitors available in market. BME Luxury care houses are
associated with service sector. In case of service care sector quality of service play an important
role the organisation to deliver success in market. In order to assess the company’s performance
in market different factors like financial tool and non-financial tools are analysed to assess the
company’s performance in market.
Non-financial analysis: This is an effective analytical tool used to assess the company’s
presence in market. In this analysis performance of company is measured on the basis of non-
financial factors. Different key performance indicators such as goodwill of company, brand
value, market demand, customer satisfaction and other key factors are analysed to assess about
the company’s presence in market (Puliafito and Trivedi, 2019). This is an effective performance
measurement tool but it can be stated as the reliable method to analyse about the company’s
performance in market. There is not any specific technique to measure the company’s goodwill,
brand value and other factors.
Multidimensional model: Multidimensional model is also a tool used to analyse about the
company’s presence in target market. This is a well-diversified model which includes different
aspects like customer satisfaction rate, service quality and other key factors to address about the
company’s presence in market (Wolf and Floyd, 2017). This is an effective tool but companies
cannot totally rely on this tool to measure performance in target market.
Performance pyramid model
The performance pyramid model occurs through the idea that company operates at
numerous level and each has different focus. The major benefit of the model is that these
different level helps each other and assists to achieve common goals. It links the business
strategy with day to day business operations. The main goal of the pyramid to measure individual
performance effectively so that they meet organization’s objectives in minimum time. This is
another key model used to address the company’s performance in target market. This model

involves the following tools to measure performance. The performance pyramid is classified into
four levels that are described as follows:
Level 1
At the top level of the company aligns vision or mission by which supports business to
describe how it will gain long-term success as well as competitive advantage.
Corporate vision: The main vision statement of the organization is to achieve the highest level
of personal centred care so that individuals feels home like environment. While mission
statement of the company is to “a commitment to excellence in long-term support and care”.
these statement helps to guides other operations effectively in the organization. Company’s
performance is measured in this tool based on the corporate vision of company. Every company
conduct operations based on its objectives. On the basis of the set objectives company’s conducts
its operations. On the basis of the vision of company its performance is measured in this tool.
Level 2
In this level focuses on the success of a company’s CSF in the form of marketing related
measures and finance related measures as well. The marketing and finance are the major element
of the success proposal which is initial focus for the organization’s vision.
Marketing: marketing helps company to understand customer preferences and their needs for
the care service then organization enable to give desirable services to the customer which leads
satisfaction in them.
Financial: This is an effective tool used to measure the company’s performance in market. This
factor involves financial factors like net profit, sales revenue and other financial terms to assess
the company’s performance in market (Wollenburg and et.al., 2018).
Level 3
The marketing and finance strategies are set by level two of performance pyramid which
is specifically linked to the achievement of service users’ satisfaction. But this level supports to

influence flexibility, productivity and self-actualization level of customers in the company. The
elements of third level considers guiding forces which drives corporate objectives effectively.
The elements are described below as follows:
Customer satisfaction: It is important element for the organization because it helps company to
build brand image and in return generate lifetime loyalty of them on the brand ad it’s product. it
is quite easy concept when customer has high satisfaction level from the organization’s service
then switching power of customer reduces as result helps company to gain sustainable
competitive advantage from the competitors. To measure customer satisfaction level uses
feedback strategy which helps to gather reviews of the customer for the service. Based on the
review measures satisfaction level of the customer for the product and service.
Flexibility: It is another element of business operating system that is aligned in the performance
pyramid model. Organization offers flexible working hours to the staff which maintains their
wellbeing in the company and inspires them give high quality in their working at the workplace.
Company follows flexible pricing strategy for the customer so they can take care sector as per
their budget. Thus, flexibility plays essential role to guide corporate vision effectively.
Productivity: It is another element of business operating system that also helps company to gain
it’s objective over the time. High turnover of the staff at the workplace is important for the
company because when it has high productivity of the staff then individuals can offer high
quality service to the customer which meets their objectives and leads satisfaction in them for the
employees as well as organization. Productivity can be measured through availability of
resources when a organization has sufficient resource which one can use by individuals
effectively to give care service to the patient as result leads satisfaction in service users.
Level 4
This level includes three driving forces that can be supervised and uses by lower level of
department indicators such as quality, cycle, time and waste. This level helps company to
measure performance of company through its elements.
Quality: It is another important factor of the level four that helps company to measure all
operation effectively and improves level of services. For example, performance management

team examines quality of performance of individual at the workplace so that can analyse
individual performance meets with requirement a not. Thus, performance management helps
company to maintain quality of service and performance in the company.
Delivery: It is another factor that denotes employees must have activeness in their working so
that they can easy to deliver effective service to the customer on time and develops good brand
image in their mind.
Waste: Performance management team measures wastage of products that are offered to
the customer so that tit make them feel good. It is internal efficiency of the company.
Thus, all the above levels are measured effectively by the performance management team
so that they can meet corporate vision on predefined time.
CONCLUSION
The brief study provided understanding about two strategic models i.e. value chain
analysis and porter’s five force model which has been critically evaluated in the report. It can be
summarized non-financial and multidimensional models of performance management. It has
been concluded performance pyramid in the report.

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