Why Enterprise Strategy Matters

Running Head: STRATEGY AND ENTERPRISE
Case Study – Giant Eggplant
Name of the Student
Name of the University

1STRATEGY AND ENTERPRISE
Table of Contents
Introduction........................................................................................................................2
Issues Faced by Giant Eggplant and Analysis of Solutions..............................................3
Data Flow Diagram of the Revenue Cycle.....................................................................3
Data Flow Diagram of the Expenditure Cycle................................................................4
Analysis of Physical Internal Control Weaknesses........................................................4
Description of IT Controls for Giant Eggplant’s Systems...............................................6
Conclusion.........................................................................................................................9
Recommendations...........................................................................................................10
References.......................................................................................................................11

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Introduction
Giant Eggplant is a fruit and vegetable market store operating in Rowville,
Victoria, Australia. The store contains a large amount and variety of fruits and
vegetables and the customers walk in to the store, take the items of their choice and
add them in the card and forward the cart to the cashier for billing. Once the bill is
ready, the customers can pay through card or cash and in case of cash, they will take
the change and walk out with their purchased items. While these processes seem
reasonably straightforward, there are multiple issues arising resulting in decreasing
sales and profit margin for the company.
In this report, the main issues have been analysed and discussed and suitable
recommendations to solve the issues have been provided.

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Issues Faced by Giant Eggplant and Analysis of Solutions
Data Flow Diagram of the Revenue Cycle
Figure 1: Data Flow Diagram for Revenue Cycle
(Source: Created by Author)

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Data Flow Diagram of the Expenditure Cycle
Figure 1: Data Flow Diagram for Expenditure Cycle
(Source: Created by Author)
Analysis of Physical Internal Control Weaknesses
Giant Eggplant’s internal processes is significantly long and done manually
entirely. In the initial days of the company, this was not much problem but as the

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business was small and easily manageable manually. However, with the gradual growth
of the company, the entire manual process became slow and error prone. Before
identifying the main physical internal control weaknesses, the revenue and expenditure
cycles are discussed in detail as follows.
Revenue Cycle – As per the information provided in the case study, the revenue
cycle includes various processes includes collection of cash drawers, providing float for
change, billing, cash acceptance and providing change, processing of online payment,
counting cash balance at the end of the day and others. It is evident from this
information that the entire process is very long and prone to various manual errors
(Cheng, Felix and Indjejikian 2019). Moreover, the process also does not guarantee
highest efficiency as the manual counting of cash and updating records manually are
not efficient and mostly error prone. As a result, the company is experiencing financial
losses although the purchases of the products for resales have increased considerably.
The company urgently needs to fix these errors so as to ensure the main problems
regarding accounting and revenue collection are mitigated.
Expenditure Cycle – Similar to the revenue cycle, the expenditure cycle also
contains a long chain of processes that are handled manually. These processes
including updating inventory, placing orders for items to the supplier, receiving the
items, developing financial record for the items purchased, updating the electronic
register, processing the monthly payments for the suppliers and others (Sun 2016).
Similar to the problem of the revenue cycle, the processes in this cycle are also slow,
error prone and lack efficiency. There are often huge numbers of errors in the records
that result in wrong amount of payments and orders once the stock of a particular

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product is empty. These errors are having considerable negative impact on the
business of Giant Eggplant as either there are direct financial losses or indirect losses
due to lack of sufficient amount of items in inventory or wastage of items due to stock
being full.
All these errors and issues mentioned occur when a fully established business
organisation relies too much on the manual processes (Chenet al. 2016). The company
store has electronic systems like the computer, card payment device and others but
they are not fully utilised or lack functionalities of proper IT systems. Implementation of
IT systems can solve these problems highlighted that are further discussed below.
Description of IT Controls for Giant Eggplant’s Systems
Following the analysis of the revenue and expenditure cycles above and the
internal control weaknesses, it can be said that information technology (IT) needs to be
implemented by the company in sufficient capacity in order to get rid of the weaknesses.
It is clear from the analysis that the manual controls and processes are not enough and
they need to be replaced by a faster and more efficient process (Costaet al. 2016). This
can only be done by IT system if implemented in sufficient capacity. For this purpose,
hardware like computer needs to be installed along with various software based support
like cloud computing services, accounting software, inventory management software
and others need to be implemented. Once the hardware and software systems are
implemented, an Enterprise Resource Planning (ERP) system can also be
implemented. The benefits of the ERP system are discussed as follows.

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Integrated Process – With the implementation of ERP system, it will be possible
to integrate all the different features like accounting and inventory management so that
all of them can be controlled from one specific platform.
Business Portal – The implementation of the ERP system will also essentially
require the development of an online business portal that will have various functions like
inventory update, billing, accounts update and others. Using the business portal, the
accountant / store manager or any other staff can check or update any information with
just one click.
Inventory Management – One of the benefits of the proposed ERP system is the
inventory management system. Instead of updating the inventory record manually, the
initial inventory stock can simply be updated once and it will automatically update itself
based on the sales record (Shen, Chen and Wang 2016). For instance, if at the start of
the day, the stock of tomato in the store is 100 and one customer purchases 2
tomatoes, the inventory will automatically adjust the stock of tomato to 98.
Accounting Management – Another benefit of the ERP system is the accounting
management process. With the automated accounting update process, the balance and
other details will be automatically updated by the system based on the data entered
during the billing process (Altamonyet al. 2016). There will be no further requirement for
manual processing and verification of the accounts at the end of the day or the month.
This system will work for cash payments as well since the billing will be automated and
the values will be calculated by the accounting system.

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Data Security, Accuracy and Efficiency – In addition to the overall features, there
are other benefits of the ERP system as well. The first of these other benefits is the
security of the data. Currently, most of the data is noted down and recorded in the form
of paper documents that can be easily damaged or destroyed (O'Sullivan and Caiola
2016). Some of the accounts related data are stored in the hard drive of the computer
that can also be damaged at any point of time. On the other hand, ERP system utilises
cloud computing services that provide virtually unlimited space for storing data online.
As a result, no paper documents or any physical storage spaces are required and thus
the data cannot be destroyed. Another benefit is the accuracy of the data managed and
stored by the system. The current manual process results in huge amount of inaccurate
data that contain large number of manual errors, which are natural due to the hectic
work duties of the store staff. The computerised process will ensure there are no errors
in the data entered and stored into the system. Finally, the data management and
processing are much more efficient and faster than the manual process. It has been
already discussed that the entire revenue and expenditure process follows a long chain
of activities and sub-processes that make the entire process very slow and inefficient.
The computerised system will speed up the processes and will be able to store, manage
and process data very easily and efficiently.
In addition to the benefits of the ERP system, it is also recommended for the
company to implement Customer Relationship Management (CRM) system that will
help the company to provide better quality services to the customers. Using this system,
the customers can have their own profiles within the business portal of the company
that will enable various features like virtual cash balance and others (Shen, Chen and

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Wang 2016). For the virtual cash, the customers can pay upright to increase their virtual
cash balance in their profile and when they purchase items from the store, the total
amount can be automatically deducted from their profile during billing instead of paying
cash or online payment several times. This process will also increase the efficiency of
the overall operations conducted in the system.
However, in order to realise full benefits from these systems, it will be essentially
required to train the staff for managing and using IT. With the advanced and more
efficient system, all the staff do not need to involve themselves in all the activities. The
staff can be divided into different departments like IT department, customer service
department, store attendants department, cashier and others (Altamonyet al. 2016).
With specific duties assigned to the staff, all the processes will be much more efficient,
faster and convenient for both the staff and the customers. The staff can be provided
specific training based on their departments to further enhance the efficiency of the
processes in Giant Eggplant’s store.
Conclusion
In this report, the main internal control weaknesses of Giant Eggplant have been
reviewed and analysed. For operations in the store of the company, the entire sales and
revenue generation process is very long and prone to various manual errors. The
processes also produce very low efficiency as the manual counting of cash and
updating records manually are not efficient and mostly error prone. Due to these
problems, the company is experiencing financial losses although the purchases of the
products for resales have increased considerably.Similar to the problem of the revenue

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cycle, the expenditure cycle processes are also slow, error prone and lack efficiency.
There are often huge numbers of errors in the records that result in wrong amount of
payments and orders once the stock of a particular product is empty. These errors are
having considerable negative impact on the business of the company.
Recommendations
It is recommended that the company should implement IT with specific focus on
ERP and CRM systems so as to provide best quality services to the customer and
ensure error free and efficient processes for the internal operations of the company. It is
important to solve the existing manual errors and take suitable actions so as to increase
the efficiency of the processes and remove the errors that occur due to the manual
handling of the systems. It is also recommended for the company to train the employees
to manage the new automated systems so as to ensure they are able to handle the
systems and maximise the benefits of the proposed systems.

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References
Altamony, H., Al-Salti, Z., Gharaibeh, A. and Elyas, T., 2016. The relationship between
change management strategy and successful enterprise resource planning (ERP)
implementations: A theoretical perspective. International Journal of Business
Management and Economic Research, 7(4), pp.690-703.
Chen, Y., Knechel, W.R., Marisetty, V.B., Truong, C. and Veeraraghavan, M., 2016.
Board independence and internal control weakness: Evidence from SOX 404
disclosures. Auditing: A Journal of Practice & Theory, 36(2), pp.45-62.
Cheng, S., Felix, R. and Indjejikian, R., 2019. Spillover effects of internal control
weakness disclosures: The role of audit committees and board
connections. Contemporary Accounting Research.
Costa, C.J., Ferreira, E., Bento, F. and Aparicio, M., 2016. Enterprise resource planning
adoption and satisfaction determinants. Computers in Human Behavior, 63, pp.659-671.
Ji, X.D., Lu, W. and Qu, W., 2017. Voluntary disclosure of internal control weakness and
earnings quality: Evidence from China. The International Journal of Accounting, 52(1),
pp.27-44.
O'Sullivan, J.A. and Caiola, G., 2016. Enterprise Resource Planning Concepts:
Understanding the Power of ERP for Today's Businesses. DMMSI, Associates.

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Prabowo, R., Christy, H. and Nitasari, B.D.A., 2017. What Determines Internal Control
Weakness? An Empirical Analysis of State-owned Enterprises Audited by State Audit
Agency. JurnalAkuntansidanBisnis, 8(2).
Shen, Y.C., Chen, P.S. and Wang, C.H., 2016. A study of enterprise resource planning
(ERP) system performance measurement using the quantitative balanced scorecard
approach. Computers in Industry, 75, pp.127-139.
Sun, Y., 2016. Internal control weakness disclosure and firm investment. Journal of
Accounting, Auditing & Finance, 31(2), pp.277-307.
Thiruvadi, S., Huang, H.W., Wheatley, C.M. and Thiruvadi, S., 2016. Free Cash Flow
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Disclosure. Journal of Forensic and Investigative Accounting, 8(1).