Factors to Consider for Small Business Resource Selection and Customer Relationship Management
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This report discusses factors that small businesses should consider when selecting resources, the significance of customer relationship management, ways to expand business internationally, break-even analysis, assessing financial performance, and laws affecting small businesses.
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Unit 29
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TABLE OF CONTENT INTRODUCTION...........................................................................................................................3 MAIN BODY..................................................................................................................................3 1. Factors small business needs to consider when choosing the right resources to complete their objectives and goal..............................................................................................................3 2. Customer Relationship Management and areas within customer research management........4 3. Defining transactional development, ways to expand business internationally and benefits & drawback of each way.................................................................................................................5 4. Break-Even analysis................................................................................................................8 5. Assessing the financial performance of business by interpreting financial statements...........9 6. Legislation and different laws that affect small businesses...................................................11 CONCLUSION..............................................................................................................................12 REFERENCES..............................................................................................................................14
INTRODUCTION In the current times, small business units are encouraged to attain success by offering innovative products or services to the customers. With the motive to boost economic growth and development government also offers financial support and assistance to small & medium sized firm. This in turns motivates individuals to capitalize their idea and thereby gain competitive advantage within competitive business arena. For this project, NISA has been selected, small sized firm, which offers retail products & services to the customers. In this, report will provide deeper insight about the factors that small business should consider at the time of resource selection. Further, it entails the extent to which customer relationship management (CRM) is significant for business. Report also highlights ways or modes through which business unit an expand internationally. It will develop understanding about the concept of break-even analysis (BEP) and ratio analysis. In this way, report depict how financial statements can be interpreted and analysed using ratio analysis technique. It furnishes information about laws and legislation which need to be followed by business units while performing business activities and functions. MAIN BODY 1. Factors small business needs to consider when choosing the right resources to complete their objectives and goal Nature of the business:It is one of the important factors must be considered by the organization to meet its objectives (Chams and GarcÃa-Blandón, 2019). The organization must
decide the business activity and then decide the right resources to achieve the organization. The small business can be proprietorship or it can be partnership business. The nature and size of the business makes the human resource to choose the best resources. Capital requirement:This is the another crucial factor which makes the organization to decide to choose the right resources for their business. The business check that they must have adequate capital in order to bring new resources. Choosing of right resources must consider the availability of the capital in the business. Without availability of the capital business will not able to buy the resources needed by them in order to achieve the objective. Degree of risk and liability:The business must check the risk involved in order to choose the correct resources for their business. The risk and liability depends on the size and business activities. The risk involved in sole proprietor is less than compared to partnership because in sole proprietor less resources are required in order to meet the objectives. The risk and liability is also depending on the machines and equipments used by the business. Availability of the resources:Before choosing the resources the business must check that there is availability of the resources in that particular season. The resources chosen by the business must be in accordance with the particular season. As some resources are not available in the particular season so this may affect the objectives of the business (Apornak and et.al., 2021). By considering the proper resources on the particular season the business can be run easily. This helps the business to have proper management of the resources in order to meet its goal. Government regulation:It is one of the major factor which can affect the goal of the business. The resources used by the business must be legal and valid. The small business must not use illegal resources in their business which makes their business unlawful and invalid. As using illegal resources, the government can close the business. The business must consider the law and regulations of the government to have the good profit. 2. Customer Relationship Management and areas within customer research management Customerrelationshipmanagementisthecollectionofstrategies,practicesand technologieswhichhelpsthecompanyto manageandanalysetheinteractionswiththe customers. It aim is to improve the customer service relationship and retain the customers in order to buy the product as this increases the sales and growth of the business (What is CRM?, 2021). It makes to have information about the customers like past purchases which provides faster customer services to the customers. It has many benefits like it can have information about
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the past purchase of the customer which helps them to provide better and faster services. The another benefit can be that it can identify the new trends and services in the market for their customers. Areas within the customer research management withy advantages and disadvantages are as follows: Technology:It includes the new applications and infrastructure. In customer research management the use of new technology is very important as it helps to interact with their potential customers. Advantage-It makes the better interactions with the customers in order to clarify their problems. Disadvantages:Lack of new technology will affect to provide customer services. Strategy:It includes the objectives and achievements of the business in order to provide the best customer services (Soltani and et.al., 2018). There should be clear goal and objective to have the best strategy for the customer research management. Advantages-Helps the business to be more clear and specific about the achievements of the objectives. Disadvantages-Sometimes strategy did not work and leads to loss in the business. Processes:It includes the rules of the business and set procedures. For customer research managementtheproceduressetmustalwaysberelatedtothecustomers(Dewnarain, Ramkissoon and Mavondo, 2019). Advantage- Proper procedure is made in order to provide better customer services. Disadvantage-The made procedure may not be followed which results in not providing good services. People:It consists of structure of the organization, skills and incentives. There must be proper and skilled staff in the organization which helps them to give the better services to the customers. Advantages-It creates the trust and loyalty with the customers and staff by having trained staff in the business. Disadvantages-Lack of proper structure and staff did not provide the better services to the customers.
3. Defining transactional development, ways to expand business internationally and benefits & drawback of each way. In the recent time, organizations are facing varied challenges and deal with each in order to run their ventures in effective manner. They may consider the best approach and suitable concept that is transactional development, which define as process of transferring key products andofferingservicesacrossnationalboundaries.Thisprocedureisquitebeneficialfor companies that are running and managing their varied operations whether it is related to local or international level. It is one of those strategic decisions that drive their attention toward business expansion, which in return contribute to enhance performance and increase profitability of firms whether it is small or large. In the world of business, there are varied ways accessible that has been utilized or may use by a company to take pleasure of increasing consumer base and generating sales, more than other brands or enterprises that are sustaining in same market from longer time. BasisInternetJoint ventureFranchise DescriptionMost of the companies in today's era are using thisapproachto expandtheirventure globally,whichis quiteessentialfor them to so as it may help to increase profits marginandalso contribute to enhance consumersatisfaction. By using internet, they maycollaborateand communicatewith international consumers easily. It is one of the best andhighlyutilized businessexpansion techniquethatdrive theattentionof companytoward makingagreement withotherpartiesor companiesthatare effectivelyrunning theirbusinessesin specificmarketor sector. Itisamethodof distributingquality goodsandoffering servicesincludingan franchisor,whomay effort to establish their brand's name, image or trademarkinanother nation effectively.
Benefits1.The key benefit ofthis approachis thatitmay provideuser wide demographic orgeographic area,where they may reach withoutusing numberof human resource as it is not required. 2.It may provide them chance to gain competitive edge. 3.Theanother benefit is that it isnottime- consuming. 4.Itmayeasily giveaccessto enter into new market. 5.Itmaygive accessto utilizegreater orwide resource. 6.Offer innovative way tocompanies toexitfrom non-core ventures. 7.Itoffershigh rate of growth andsuccess morethan start-up ventures. 8.Itprovides benefitof less failure. 9.It encompasses lowriskas compareto other approach ofglobal expansion. Drawbacksï‚·Technical issues may lead todecrease productivity and performance. ï‚·Require ï‚·Lackof limitationsto takedecision independently. ï‚·Poor integration. ï‚·Theworst thing about this method that put negative impacton companyis maydonot
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strategic management skills. ï‚·Consumetime andeffortto develop understanding aboutpeople needsinnew market. ï‚·High complexities regardingtax arrangements. providefull control in term oftaking decisionsand implementing strategies. ï‚·It can be said that implementation and development of abetter training plan is neededthat requireskey resourceand time,when companyenter into new nation or market. ï‚·Increasing cost and risk. 4. Break-Even analysis Break-Even analysis is the calculation of the point at which the cost of goods sold by the business is equal to the revenue. It is also said as the analysation of the point at which the business is earning neither profit nor loss. Break-Even analysis is also the analysation of the calculation of the examination of the margin of safety which is helpful for the business for an entity which is based on the revenue collected and associated with the costs (Matakena, 2021). This information generated from this business is considered to very influential for the business in the management as it used by them for setting the price of the product. This is because the
business is always able to sell its products in profit the products are sold at a higher price than the break-point. In this method all the business determines the relationship which is between the costs, revenue and the profits which is essential for the output of the organization. It helps the business in the determination of the point of production which is considered to be the output. This is useful for a business as it then understands how many units it needs to sell for avoiding loss. For the calculation of the Break-Even units of an organization first the contribution per unit is calculated which is calculated by deducting the selling price per non-variable cost per unit. This is important because the variable costs of the organization changes due to the increase or decrease of production. Therefore, the BEP in units is calculated with the help of dividing the fixed costs with the total contribution per unit. Multiplication of these units with selling price per unit will help the business in calculating the total sales of the organization. 5. Assessing the financial performance of business by interpreting financial statements Financial statements may be served as a formal record of business activities in quantities terms. With regards to assessment of company’s monetary position and performance financial statements are highly significant. Hence, ratio analysis tool has been used for assessing the extent to which company is performing well: ParticularsFormulaFigures (in £)Figures (in £)
20212020 Gross profit184885152267 Net profit10948(8790) Net sales16075611423066 GP ratioGP / Net sales * 10011.5%10.7% NP ratioNP / Net sales * 1000.7%-0.6%
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The above depicted evaluation clearly shows that GP and NP ratio of Nisa has been increased but not to the higher level. Irrespective of increasing sales revenue company’s profitability is lower. Hence, firm need to undertake budgetary control tools & techniques which in turn helps in making control on unnecessary expenses and thereby improves profitability. 6. Legislation and different laws that affect small businesses Legislation is the process of enacting and enrolling laws made by the legislature in order to govern the body. These laws are prepared by the state legislature, local legislatures and national legislatures. These are basically rules and regulations made by the government in order to have smooth flow in the country. There are various purpose of legislature are: to outlaw,to grant and sanction the plan, to declare any new law or to restrict any previous law. . Different laws that affect the small businesses are:
Employment Act 1996:This law is made for the employees in order to protect them from the job. It givesthe rightsto the employeesin the situationslike parentalleave, redundancy, unfair dismissal or dismissal. There must be agreement between the employer and employee in writing before the beginning of the employment (Nightingale, 2021). This also provides benefits to the employees at the time of retirement, health and safety. This helps the employees to have safety regarding their job. This right provides the employees benefits related to the health and safety needs, statutory rights and working hours of the staff. This act provides that there must be proper and set working hours for the employees. Data Protection Act 1998:This act provides the individuals to have a right and access the information about themselves and to keep that information protected. This law is very helpful for the business in controlling the personal data for the protection of the data for the customers, employees, suppliers, partners and also clients. This is considered to be a very fairly lawful process which helps the business with the protection of the data of the customers which is consideredtobeusefulfortheorganizationinthemanagementoftheorganizational performance. Not following this law can be considered to be a criminal activity in the terms of the business or its managers which can misuse the information. Company Law Act 2006:The company act is the wide range of reforms which were made towards the ways in which the company is governed (Fan, 2021). It is said to affect the duties which the company has towards the directors that effects the simplification of the same elements which the company has incorporated as a process for summarizing the ways in which the key elements of the business can be governed or directed for the essential part of the organizational success. This law has allowed shareholders to get involved in the practices of the business. In many ways this law has providing relevancy to the way in which most of the business companies were ran. CONCLUSION By summing up this report, it has been articulated that aspect pertaining to goal & objectives attainment affect from several aspects. Accordingly, at the time of resource evaluation and selection small sized firm should keep in mind laws & legislation, availability of capital and other resources etc. Besides this, it can be inferred from the evaluation that by managing aspect of CRM firm can get competitive advantage. Besides this, it can be inferred from the evaluation that BEP helps organization in doing effectual planning about sales and profitability as well. It
can be seen in the report that business unit can enhance brand image and attract stakeholders by complying with laws & legislation.
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REFERENCES Books and Journals Apornak, A. and et.al., 2021. Optimizing human resource cost of an emergency hospital using multi-objective Bat algorithm.International Journal of Healthcare Management.14(3). pp.873-879. Chams, N. and GarcÃa-Blandón, J., 2019. On the importance of sustainable human resource managementfortheadoptionofsustainabledevelopmentgoals.Resources, Conservation and Recycling.141.pp.109-122. Dewnarain,S.,Ramkissoon,H.andMavondo,F.,2019.Socialcustomerrelationship management: An integrated conceptual framework.Journal of Hospitality Marketing & Management.28(2). pp.172-188. Fan, Z., 2021. Unfair prejudice in United Kingdom Company Law. Asian Journal of Humanities and Social Studies. 9(1). Matakena, S., 2021. Value Added Analysis, Break Even PointAnd Profit Of Tofu Industry In District Of Nabire Regency. Turkish Journal of Computer and Mathematics Education (TURCOMAT). 12(12). pp.3477-3484. Nightingale, M., 2021. Part-time employment and the gender gap in low pay for UK employees: what changed over the period 1996–2016?.Community, Work & Family.24(3). pp.272- 290. Parackal, M., Parackal, S., Mather, D. and Eusebius, S., 2021. Dynamic transactional model: a framework for communicating public health messages via social media.Perspectives in Public Health.141(5). pp.279-286. Soltani, Z. and et.al., 2018. The impact of the customer relationship management on the organizationperformance.TheJournalofHighTechnologyManagement Research.29(2). pp.237-246. Online What is CRM?.2021. [Online]. Available through: <https://keap.com/product/what-is-crm>