Performance Improvement and Management in Health & Social Care

This assignment focuses on the performance improvement and management in the health and social care sector. It discusses strategic planning models, such as PESTLE analysis and SWOT analysis, and their advantages and drawbacks. It also explores the usefulness of Du Pont analysis to shareholders and applies it to BME Luxury Care Home. The assignment concludes with a critical evaluation of non-financial models of performance management.

Performance Improvement and Management in
Health & Social Care

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Internal memorandum..................................................................................................................3
TASK 2............................................................................................................................................8
a. Discussing the usefulness of Du Pont analysis to shareholders and applying the same to
BME luxury care house...............................................................................................................8
b. Calculating and interpreting ratios for analyzing company’s performance...........................10
TASK 3..........................................................................................................................................14
Critically evaluating the use of non-financial models of performance management................14
CONCLUSION..............................................................................................................................16
REREFENCES..............................................................................................................................18

INTRODUCTION
Care homes can be defined as small institutions that focus on providing care to people
who are unable to take care of themselves. Today, demand for such care homes is increasing
continuously especially in aging population (Martin, Richards and Gunn, 2017). Due to this
increasing population it has become important for such Health and social care homes to focus on
enhancing their overall performance, bring improvement within their management and
performance in a better and appropriate manner as it will help them to provide much better and
appropriate service to the ones who require it. This assignment will lay emphasis on BME
Luxury Care Home who has registered business operating in England. They are considering
viability of investing in a privately owned and managed nursing home because of ever increasing
demand of such services within aged people. This assignment will lay emphasis on internal
memorandum for the directors of the care home that discuss advantages and disadvantages of
two strategic planning models appropriate for care sector in England with recommended model
that can be used for business growth, usefulness of a Du Pont analysis to shareholders and
calculations associated with it, and use of non-financial and multidimensional models of
performance management for discussion with management team.
TASK 1
Internal memorandum
Internal memorandum is also known as internal memo is used for spreading information
or is used to make mass requires of all the people within a company. It helps in bringing
attention to a problem so that it can be resolved in an appropriate manner (Willis, Cave and
Kunc, 2018). It can be prepared by an organization for all of its shareholders especially top
management such as director of care home so that an appropriate strategic planning tool can be
chosen and implement at BME Luxury Care Home for growth of their business. There are
various kinds of strategic planning models that can be focused on and implemented at care home
which will be much suitable and appropriate for BME Luxury Care Home and growth of their
overall business. Two most commonly used strategic planning models that can be used by
organization are PESTLE analysis and SWOT analysis. Both the model are suitable for strategic
planning because PESTLE analysis model helps an organization to analyze of macro

environmental factors and impact of those factors upon an organization, whereas, SWOT
analysis can be used for analyzing internal and external capabilities of an organizations like
Strengths, weakness of an organization, opportunities and threats of an organization. Both the
selected models are appropriate and effective to propose business growth.
SWOT Analysis
SWOT analysis can be defined as a strategy formulation and selection instrumental tool that
can be used by organizations for proposing business growth. It also helps an organization to
understand strategic position of an organization within their current environment so that an
appropriate strategy can be formulated that align an organization’s resources and capabilities in
an appropriate manner. Thus, it may be presented as the most renowned tool that is used by the
business unit for audit and analysis purpose. Moreover, it gives information about internal as
well as external aspects and thereby helps in assessing strategic position. In this, internal factors
highlight company’s strength and weaknesses. On the other side, external factors include
opportunities and threats related to the business operations and functions. Thus, referring the
outcome of such evaluation manager of BME can take decision about how to leverage
opportunities and minimizing existing threat level. Along with this, it also offers opportunities to
take suitable actions so that weaknesses can be converted into strengths.
Advantages
 It may be served as s source of strategic planning as it provides deeper insight about
company’s strength, weaknesses, opportunities and threats. Thus, by identifying and dong
evaluation of such four aspects business unit can ensure strategic planning. Moreover by
assessing this company can develop competent strategies BME that helps in converting
weaknesses into strength. In addition to this, firm can also take measures through this
opportunities can be grabbed by minimizing the level of threats.
 In addition to this, SWOT analysis facilitates comprehensive data integration to the
significant level. Moreover, it provides firm with both qualitative and quantitative
information which in turn helps in improving planning, communication and decision
making aspects.

 Simplicity and lower cost is one of the main benefits associated with SWOT analysis. By
doing analysis of the firm from all the perspectives financial as well as non-financial
BME can identify its strengths, weaknesses, opportunities and threats. Further, by co-
coordinating with staff members BME can conduct SWOT analysis easily.
 Assists company in taking decision pertaining to playing as offensive or defensive.
Moreover, it highlights company’s specific aspects and thereby helps business unit in
taking benefits from the opportunities available (SWOT Analysis - Definition, Advantages
and Limitations, 2020).
Drawbacks
 SWOT analysis does not prioritize weaknesses and threats which in turn limits its
significance level. Moreover, it does not entail about the extent to which particular
weakness and threats will affect business operations adversely.
 Further, there is the absence of solutions or alternative decision that can be undertaken
for business growth or success. As, it only entails areas where business units are not
performing well however there is absence of strategies that firm should undertake for
gaining competitive edge over others (Benefits and limitations of SWOT analysis, 2020).
 In addition to this, SWOT analysis is recognized as a subjective process which in turn
results into biased results. Thus, lack of objectivity also has significant impact on the
effectualness of SWOT analysis tool adversely.
 SWOT analysis tool also provides with several information but not all information’s are
appropriate for the purpose of business decision making.
PESTLE Analysis
It may be served as a valuable strategic model which provides assistance in identifying
and analyzing the attractiveness of both existing and potential market. Moreover, now high level
of competition takes place in each and every sector. In this regard, it becomes vital for the firm to
explore business operations in overseas market. In this situation, it is one of the most effectual
tool which helps in developing understanding about external business environment. Moreover, it

presents the situation of macro business environment from several perspectives such as political,
economic, social, technological, legal and environmental. Political factors entail tax and other
business policies setting down by government authority. Further, economic factors present
information about inflation, interest rate which in turn helps business entity in making estimation
about customer’s purchasing power. Now, needs, wants and requirements of the customers are
hanging with the very high pace. Social factors exhibit information about education, lifestyle and
cultural aspects etc. Referring this, business units can develop suitable marketing mix in line
with the customer’s demand an choices. In order to ensure smooth functioning of business
activities government formed and presented several laws & legislation with which firms need to
comply. Thus, by conducting PESTLE analysis BME would become able to know laws that
associated with and must for the care sector.
Advantages
 This model helps in getting deeper insight about wider business arena because it includes
all the aspects which have significant impact on business operations.
 PESTLE analysis model encourages business unit to take initiative pertaining to strategic
thinking and thereby gets desired level of outcome or success.
 It develops awareness among BME about the aspects which impose threats in the context
of organization’s profitability.
 Besides this, it offers opportunity to the firm in relation to anticipating future difficulties.
Hence, with the help of this BME can make estimation about future difficulties and
thereby would become able to take measures with regards to minimizing the effect of
same (The Advantages of PESTLE Analysis, 2020).
 By this, BME can identify opportunities available at marketplace and meanwhile become
able to appropriate actions or measures for exploiting the same.
Drawbacks

 In the recent times, changes are taking place in the business environment with the very
high pace. Thus, it is highly difficult for the firm to make appropriate anticipation about
future activities.
 Simplicity of the model also limits its significance to a great extent because information
gathered through this is not sufficient and comprehensive. By doing evaluation of articles
it has found that strategies formulated on the basis of PESTLE analysis are not highly
effectual in long run.
 Further, it is criticized on the basis of high cost and time due to the accumulation of data
on regular basis. In other words, in this model, managers are required to gather, evaluate
and analyze data set on regular basis (The Advantages of PESTLE Analysis, 2020).
Hence, regular evaluation and gathering of data set limits the significance of PESTLE
analysis model.
 It furnishes information about only external environmental factors and avoids internal
factors completely. Due to this, information gathered through this model is not highly
useful and complete. Moreover, both internal and external factors have significant impact
on company’s decision making.
Referring above evaluation, it can be depicted that both the models contain benefits and
drawbacks as well. Thus, at the time of model selection manager of BME should keep in mind
all the aspects associated with it.
For the purpose of business growth and success, BME is advised to employ PESTLE
analysis tool. Moreover, it helps in evaluating business areas from several aspects and thereby
contributes in the development of strategic or competent framework. Moreover, SWOT analysis
only provides insight about aspects that are related to the firm. However, it does not presents
competitors position and the conditions taking place in market and actions In the globalized
business environment, business units are planning to explore business operations at global level.
Thus, in this regard by applying PESTLE analysis tool BME can ascertain opportunities that
available in the proposed market. For instance: Economic factors clearly exhibit country’s
condition and purchasing power of the customers as well. Through using such information BME
can take appropriate decision about pricing.

Further, political factors help company in ascertaining the amount of tax associate with
the particular business operations. Along with this, getting information about laws and legislation
related to care home activities manager can develop suitable policies. Moreover, brand image of
the company is affected negatively when it does not follow specific rules and regulations.
Further, it also gives indication to the care home about technologies that should be undertaking
for building and sustaining competitive position. In this way, by undertaking PESTLE analysis
model BME can do evaluation of business environment for different perspectives. It can be
entailed from overall evaluation that PESTLE analysis model will aid in the effective decision
making of BME.
TASK 2
a. Discussing the usefulness of Du Pont analysis to shareholders and applying the same to BME
luxury care house
Du Pont analysis
It is the most effectual performance assessment tool which is used by the shareholders for
analyzing the returns which they receive from organization. Moreover, it clearly presents income
or returns generated by the firm using funds invested by the investors or shareholders (Soliman,
2008). In other words, it focuses on analyzing company’s ability in relation to increasing returns
on equity. This analysis mainly includes three components such as NP margin, financial leverage
and assets turnover ratio (Chang, Chichernea and HassabElnaby, 2014). Thus, by conducting
such analysis shareholders or investors can identify whether ROE can be raised by BME through
increasing such three components. Du Pont analysis or return on equity can be calculated using
the following formula:
Return on Equity= Net Profit Margin x Asset Turnover Ratio x Financial Leverage
Net profit margin = net profit / sales * 100
This ratio provides information about the returns (after deducting both direct and indirect
expenses) generated from sales.
Particulars BME Luxury Care Home

Net income 57,881
Sales 3,269,404
NP ratio 2%
Asset turnover ratio = Net sales / average total assets
It shows company’s ability with regards to generating sales using total assets such as
property, equipments, cash etc.
Particulars BME Luxury Care Home
Net sales 3269404
Average total assets 2,502,992
Assets turnover ratio 1.31
Financial leverage = total assets / total equity
It depicts ratio of company’s total assets in against to equity pertaining to the specific
time period (Botika, 2012).
Particulars Figures
Total assets 2,502,992
Total equity 357,842
Financial leverage 7
Du Pont analysis

Particulars Figures
NP ratio 0.02
Asset turnover ratio 1.31
Financial leverage 7
Du Pont analysis (ROE) 0.02 * 1.31 * 7 = .18 or 18%
From assessment, it has found that ROE of BME implies for 18% which in turn
comparatively higher as per industry averages. Moreover, average ROE of leading companies
operating in similar sector was 13.1% significantly. Thus, for investment purpose BME will
prove to be more beneficial for the shareholders. Accordingly, higher ROE shows that company
is using shareholders funds in business operations prominently. Thus, from the investment point
of view it can be stated that BME proves to be more beneficial for the firm. Moreover, company
is placing high level of emphasis on generating more returns with the help of competent
strategic framework.
b. Calculating and interpreting ratios for analyzing company’s performance
Ratio analysis may be served as quantitative tool which assists in analyzing company’s
financial position and performance from several aspects such as profitability, liquidity, solvency
& efficiency (Ehrhardt and Brigham, 2016). This is highly prominent which enables firm to do
comparison of firms in against to the competitors and take strategic measure for the achievement
of organizational goals and objectives. In this way, ratio analysis tool helps BME in developing
suitable goals and objectives for the upcoming time period.
Ratio analysis of BME Luxury Care Home for the period of 2017 is enumerated below:
Return on assets

It helps in ascertaining the return generated through using total assets including both
fixed and current.
Particulars Formula BME Luxury Care
Home
Industry average
Net income 57,881
Average total assets 2,502,992
ROA Net income / average
total assets
2.31% 5.2%
Current ratio
CR implies for the extent to which company is able to meet its obligations from current
assets.
Particulars Formula BME Luxury Care
Home
Industry average
Current assets (CA) 608,992
Current liabilities
(CL)
445,150
Current ratio CA / CL 1.37 2
Days cash on hand
It helps in ascertaining the time period to which company is able to pay its operating
expenses with the given amount of cash available.
Particulars Formula BME Luxury Care Industry average

Home
Cash available 105,737
Operating expenses 3,180,356
Depreciation 85,000
Days cash on hand Cash and its
equivalents /
(Operating
expenditure –
depreciation) * 365
12 days 22 days
Average collection period
This shows time period within which company is receiving dues from debtors and
thereby helps in doing further planning.
Particulars Formula BME Luxury Care
Home
Industry average
Accounts receivables 215,600
Sales 3,269,404
Debtors collection
period
Bills receivable *
365 / sales
24 days 19 days
Debt-equity ratio
It entails ratio pertaining to the extent to which funds generated by the company through
equity and debt sources.
Particulars Formula BME Luxury Care Industry average

Home
Long-term debt 1,700,000
Shareholders’ equity 357,842
Debt to equity ratio Long-term debt /
Shareholders’ equity
4.8 2.5
Fixed assets turnover ratio
It presents the level to which business organization used its current assets for revenue
generation.
Particulars Formula BME Luxury Care
Home
Industry average
Sales revenue 3,269,404
Fixed assets 1,894,000
FA turnover ratio Sales / fixed assets 1.7 1.4
Overall interpretation: Outcome of ratio analysis clearly exhibits that financial
performance and position of BME Luxury Care Home is lower in comparison to industry
averages. Moreover, in the period of 2017 business unit failed to make optimum use of assets
specifically current. Moreover, as compared to leading companies BME Luxury Care Home used
fixed assets effectually for sales generation. However, current ratio of the care home is lower
from ideal framework such as 2:1. Thus, for improving company’s ability in relation dealing
with quick liabilities focus need to be placed on maintaining current assets. In addition to this,
capital structure of the care home is not optimal. Moreover, BME Luxury Care Home raised
more funds via debt rather than equities which in turn creates financial burden in terms of
interest and thereby adversely impacts profitability. Thus, in the upcoming time period business

unit should focus on generating funds from equity for ensuring optimal capital structure. Further,
in 2017, BME was not able to pay its operating expenses more than 12 days. However, as per the
industry averages it should be near or in line with 22 days. Further, care home received dues
from debtors in 24 days. On the other side, in the case of other firms debtors collection period
accounts for only 19 days. Hence, in order to attain success care home is required to develop
competent strategic and policy framework with regards to current, dent and efficiency ratios.
TASK 3
Critically evaluating the use of non-financial models of performance management
Balance scorecard
It may be served as a strategy performance tool which in turn used by the managers for
analyzing, evaluating, controlling and monitoring the performance of personnel. In other words,
balance scorecard is a framework which is employed by the business unit for implementing and
managing strategies. Moreover, BS is directly associated with organizational objectives, targets
and initiatives. Thus, balance scorecard mainly includes for aspects or goals in relation to
financial, customer, process and people (Tan, Zhang and Khodaverdi, 2017). Hence, such four
main indicators assist higher management in analyzing departmental or company’s performance.
By this, business organization can monitor whether all the companies are performing in line with
the organizational vision, mission and objectives or not. Referring this, it can be stated that BS
model helps in tracking performance and gives indication in relation to taking corrective
measures for the attainment of future goals.
Perspectives of balance scorecard mainly includes following:
Learning & growth: It mainly emphasizes of human resources, culture and infrastructure
as well as technological aspects. As per this, business unit focuses on creating prominent culture
where employees are encouraged to share their knowledge. In addition to this, company also
focuses on monitoring employee’s performance in against to industry trends and benchmarks.
Thus, by assessing loopholes organization conducts training & development session for
personnel. Along with this, now technological advancements are taking place with the very high
pace. Thus, for fulfilling organizational objectives with regards to offering new and innovative

products company is required to undertake advance technologies (Syahdan, Munawaroh and
Akbar, 2018). In the context of BME, this can be measured through the means of manager’s
initiatives in relation to developing employee’s capabilities and reduction in employee turnover
rate.
Internal business processes: This measure helps firm in ascertaining the extent to which
business is running or operating smoothly. It is one of the main perspectives which provide
information about undesirable activities take place within an organization. On the basis of input
management team can take significant measures which help in avoiding wastage and thereby
ensures speedy operations (Ibrahim, Yulianti and Christian, 2018). This encourages business unit
to undertake or employ practices in line with the customer needs and requirements so that
desired level or outcome or success can be attained. In this, performance can be measured
through evaluating the level of R&D activities, manufacturing cycle times etc.
Customer: According to this, company lays high level of emphasis on introducing new
products in line customer’s needs, wants and requirements. Thus, attainment of customer
satisfaction and loyalty is the main motive of firm. Hence, this perspective includes evaluation of
aspects pertaining to delivery time, customer feedbacks etc. The main focus of the firm is to gain
high market share by introducing innovative products and services (Cheng, Humpreys and
Zhang, 2018). In this regard, BME can evaluate performance by referring aspects such as order
size, demand level, quality level in against to the industry standards, defects level etc. Thus, by
evaluating all such aspects care home can set suitable direction for the near future.
Financial: It includes formulation of objectives in relation to maximizing productivity
and profitability, reducing the level of expenses etc. The main motive of this measure is to
monitor whether financial resources are used in business activities effectually or not (Siadat,
Abdollahi and Garshasbi, 2017). Hence, for this purpose, sales growth and operating income
level is evaluated as per division or department. Thus, by doing cash flow analysis or evaluation
company can take significant action and thereby ensures high market share as well as ROE.
Benefits
 BS presents visual picture or framework of strategy and thereby helps in doing
comparison of performance. Thus, referring BS care home can assess whether business

activities and operations are in line with the vision, mission & objective or not. Thus, by
identifying loopholes effectual measures can be undertake for the attainment of goals.
 It is the most effectual communication tool which BME can employ for persuading
employees about care home’s policies and strategic framework.
 Further, BS facilitates alignment within different departments and division because all are
making efforts for the attainment of common goals and objectives (10 Advantages and 9
Disadvantages of the Balanced Scorecard Framework, 2020).
 BS is recognized as highly effectual over traditional system because it considers both
financial and non-financial aspects while evaluating business performance and goals.
 BS ensures management focus on vision, mission and organizational objectives to a great
extent. As per this, manager’s action and initiatives never deviate from main strategic
formulation.
Drawbacks
 BS mainly focuses on four aspects, whereas there are several other factors which affects
business growth and performance such as managerial development, social responsibility
etc. This aspects limits significance BS model with regards to performance evaluation to
a great extent.
 In addition to this, BS is highly time intensive exercise because it leads changes in the
whole framework when there any discrepancy in particular area. Along with this,
successful implementation of BS requires prominent leadership. Moreover, it is highly
difficult for the firm to keep all employees on the same page.
 Concept and approach of BS is vague because it lacks standard goals and performance
level with regards to financial, customer, learning & growth and business process aspect.
 Further, this model or tool only presents casualties but it does not entail or reflects actions
that need to be taken for performance improvement.

By doing evaluation it has assessed that balance scorecard model helps manager of VBME in
taking decision as per both financial and non-financial aspects. Moreover, both the factors have
significant impact on company’s growth and success. Thus, referring different factors company
can take suitable decision and thereby attain success.
CONCLUSION
By summing up this report, it can be concluded that PESTLE, SWOT and balance
scorecard is the most effectual tools which assists in analyzing growth and development
opportunities. Hence, by applying these models BME can set strategic direction for future
growth and thereby would become able to gain competitive edge over others. It can be
summarized from the report that Du Pont analysis is highly significant and meaningful from the
perspective of shareholders. Moreover, it furnishes information about ROE and thereby assists
investors in decision making. Besides this, it can be inferred from ratio analysis that BME is
required to do modifications in the existing strategic and policy framework. Moreover, in the
accounting year 2017, liquidity, solvency and efficiency position of BME was not good. Thus,
by assessing and considering associated reasons firm should take suitable measures for
improvement purpose. Along with this, it has been articulated that balance scorecard tool helps
in measuring and managing performance to the significant level. Moreover, it emphasizes on
measuring performance from both monetary and non-monetary aspects. Thus, using this BME
can take effectual measures or actions in accordance with the organizational vision, mission and
objectives.

REREFENCES
Books and Journals
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Chang, K. J., Chichernea, D. C. and HassabElnaby, H. R., 2014. On the DuPont analysis in the
health care industry. Journal of Accounting and Public Policy. 33(1). pp.83-103.
Cheng, M. M., Humpreys, K. A. and Zhang, Y. Y., 2018. The Interplay between strategic risk
profiles and presentation format on managers strategic judgments using the balance
scorecard. Accounting, Organization and Society. 30. pp.1-14.
Ehrhardt, M. C. and Brigham, E. F., 2016. Corporate finance: A focused approach. Cengage
learning.
Ibrahim, N., Yulianti, D. T. and Christian, A., 2018, October. Supplier Performance
Measurement for Online Travel Agent Using Balance Scorecard: Case Study: Klikhotel.
com. In 2018 International Conference on Advanced Computer Science and
Information Systems (ICACSIS) (pp. 45-50). IEEE.
Martin, A.B., Richards, E. and Gunn, E., 2017. Comparing the efficacy of linear programming
models I and II for spatial strategic forest management. Canadian Journal of Forest
Research. 47(1). pp.16-27.
Siadat, S. H., Abdollahi, A. and Garshasbi, L., 2017. Evaluating the Impact of Information
Technology on Knowledge Management Performance with Balance Scorecard
Approach. International Journal of Knowledge-Based Organizations (IJKBO). 7(2).
pp.27-42.
Soliman, M. T., 2008. The use of DuPont analysis by market participants. The Accounting
Review. 83(3). pp.823-853.
Syahdan, S. A., Munawaroh, R. S. and Akbar, H. M., 2018. Balance Scorecard Implementation
in Public Sector Organization, A Problem?. International Journal of Accounting,
Finance, and Economics. 1(1). pp.1-6.
Tan, Y., Zhang, Y. and Khodaverdi, R., 2017. Service performance evaluation using data
envelopment analysis and balance scorecard approach: an application to automotive
industry. Annals of Operations Research. 248(1-2). pp.449-470.
Willis, G., Cave, S. and Kunc, M., 2018. Strategic workforce planning in healthcare: A multi-
methodology approach. European Journal of Operational Research. 267(1). pp.250-
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