Resource Allocation Techniques for Business Success

This report discusses various resource management strategies for business success, including break-even analysis, to help managers make informed decisions. It also covers key legislation and regulations that impact small businesses and social enterprises, such as the Tax and Employment Act (1976) and the Health and Safety Act (1974). The report provides an overview of a fictional company's financial performance, including gross profit ratio and net profit ratio, and offers insights into maintaining healthy relationships with target customers.

Unit 29
Managing and
Running Small
Business

Table of Content

INTRODUCTION
Small business is independently owned and operated company with its limited size and
revenue. Managing a small business, a quite a challenging task for ever small business owners.
In order to operate business efficiently owner of the small business should make best and proper
utilization of resources and should promote positive work environment culture within the
organization.(Brulin, 2016) The company which is been taken into consideration in this
assignment is Unicorn Groceries which is one of the small but successful business operating
store in retail sector. It is located in UK and was founded in 1996. In this assignment brief
explanation is being given about how small business or social enterprise plans and allocates
resources so as to achieve objectives. In addition to this evaluation of the process of customer
relation management for small enterprise is also being explained in this file. Moreover, this
project explains about the analysis of a cash flow forecast, budget and about the break event
analysis is being interpreted. Lastly, implication of regulation and legislation on a small business
or social enterprise is also been explained in this file.
TASK 1
P1: Main considerations a small business or social enterprise needs to address when planning and
allocating resources to achieve business objectives.
Unicorn grocery is one of corporative grocery store which is situated in England. This
company is controlled by its owners who carry out the business by following flat management
structure and with equal rate of pay.(Burns, 2016.) Unicorn company is engaged in selling fresh,
dried and processes drinks and foods much of its organic nature type. In addition to this it also
focuses on fair trade and local sourcing as well as on body care and on general grocery items.
Moreover, it is one of the largest wholefood groceries in UK with its annual turnover around £7
million. It was founded that in 2017 this company has won the BBC farming and food awards for
being best food retailer.
Planning of resources may include premises, equipment’s, peoples and skills. Manager of
Unicorn grocery should consideration all this aspect of resources while making any plans or
while allocating resources in order to achieve certain objectives. In addition to this planning of
activities may include capacity utilisation and management as well as identification of skills and
resources should also be included while planning and allocating resources so as to develop

appropriate job specifications. Moreover, Manager of Unicorn company should also establish
proper organizational culture by rendering good working conditions and by providing flexible
working environment to the workforce. Apart from this manager of the company should also
take into consideration the needs, preferences and viewpoints of the employees so as to
accomplish target objectives of an organization.( Crane 2016.) Furthermore, the company can
achieve its aims and objectives only if the manager of the company will recruit and retain the
best suitable candidate for the organization by rendering some king to motivational techniques
like by giving promotion, appreciation, bonus, incentives etc. In addition to this manger should
also consider performance management and team building aspect and this can be done by
continuous appraisal of performance of the organization and of individual by adopting various
performance appraisal techniques like quantitative evaluation,360degree feedback, balance score
card method etc. Whereas team can be developed by rendering them proper training and
development session to the individuals on a timely basis. Apart from this manager of Unicorn
should also understand the key aspect of employment legislation which is relevant for a small
business concern for example equality employment legislation Act should be taken into
consideration while allocating resources to the organization. It means that each employee
working in an organization should be treated equally without discriminating among each other.
In addition to all this manager of Unicorn organization should make effective articulation of
business plan which include vision, mission and objectives.
Thus, overall it can be concluded that manger of the Unicorn company should consider
all the above mention detail so as to address planning and allocating of resources in order to
accomplish organizational objectives.
TASK 2
P2Processes of customer relationship management for a small business or social enterprise.'
Customer relationship management
It is a process which refers the technologies and strategies which a company use to
manage its relationship with the customers related to products and services. In small business or
social enterprises, it use to manage its customers.( Deresky, 2017) Unicorn grocery use this for
managing its employees and make communication with them so that it can know about its
products and services. It can use different sources to get response towards the products and

services, these sources can be telephone, chats, mail, and others. For knowing more about the
customers, the organisation uses a process that known as CRM process which is used for
improving the market productivity.
Customer Relationship management process
The goal for every business organization is to earn maximum profit from its customer
base. The CRM describe about the process which the business must adopt to gain profitability
from its customers.(Donnelly, 2015.) There are five major steps which are necessary in order to
implement successful Customer relationship management strategy and they are explained below: Customer portfolio analysis: In order to achieve organization target customer base the
very first step which the manager of Unicorn should consider is to determine what group
or what kind of customers will be more profitable for the organization. Customer intimacy: It is a process of getting familiar with the one-on-one customers
within the organization's target consumer base. In this stage manager of Unicorn
company predict relationship and behaviour of customers towards their products and
service. (Epstein, 2018 )As good relationship with the customers will help the
organization to improve customer intimacy and acquire in depth knowledge about the
target market. In addition to this it is the step which specifically consist of building
customer database so as to store gathered information. Network development: Under this step manager of the Unicorn must develop a tongs
network relationship with, peoples and organizations so as to achieve success in
rendering better service to the customers. In addition to this it may include relationship
with investors, suppliers, investors, employees and other internal partners. For example:
Unicorn can make use of social media apps Facebook, Instagram etc. so as to develop
strong customer relationship management as well as it will also help firm to get
immediate feedback from their customers. In addition to this firm should also take into
consideration the interest of suppliers, and investors so as to develop good network
relationship with them as it will help business to earn maximum profit. Value proposition development: This step refers that strong customer intimacy helps in
generating value to the organization which result in the development of an organization.
Once the company have identified its target customers it can easily create tailored value
for its customers. For example in order to develop value preposition among customers

management of Unicorn first carry out research analysis so as to acknowledge the
preferences of customers in respect of products and services, so that accordingly product
can be manufactured by firm by taking customer prospective in t consideration. Thus, it
will help in increasing the level of customer satisfaction as well as help in increasing the
value preposition of customers that they will receive from the product.
 Customer life cycle management: It specifically refers to the ideal customer journey
right from potential client to product/service ad vacate.(Legg, 2015) It is the prime
responsibility of the manager of Unicorn to determine how to manage customer
relationship effectively and efficiently so as to retain customer for long period of time.
For example customer life cycle can be managed by the Unicorn company by properly
analysing the market which related to acquisition, conversion , retention and loyalty from
the customers. By focusing on this four core elements the company can manager their
customers and keep their satisfaction level to the highest. In addition to this company can
also need to focus on changes taking place in the preferences of customers from time to
time by focusing on continuous research on customer preferences so that consumers
demand are being meet. Thus, it will also help business to maintain its customers life
cycle.
Thus, overall it can be concluded that manager of the Unicorn company should take into
consideration all the necessary five steps of customer relationship management so as to achieve
target goal on specified time period.
P3Explaintion about how a small business can develop transnationally and determine the benefits
and drawbacks.
Transactional operation: It can be defined as the operation which is carried out across
international boundaries.(MacDonald, 2015) The transactional model is invested in operational
activities, foreign assets so as to make them effectively tied to each nation in order to carry out
business globally. Such operations are totally distinct from international, multinational and
global business models.
Benefits: Some of the important benefits of transactional sale for Unicorn company is
explained below:
 Operation handling: One of the benefits for the Unicorn company in order to
carry out transaction operation is that it is help full for carrying out several

transactions at once. A good transaction system can be helpful in coordinating and
attracting thousands of purchases and even process customers’ orders. In addition
to this it is beneficial in order to make selling process much easier for the
customers.
 Untapped markets: Another important benefit of transaction operation is that it
helps in reaching and gaining large number of customers all over the world.
Specially for Unicorn organization such operation will allow people all over the
world to access and to make purchase of goods and services. If the company
implement the transaction processing especially an online system then it will help
in enhancing potential to reach new and large number of audience and to achieve
successful growth in the market place.
 Online transaction system: One of the major benefits of carrying out online
transaction operation is that it helps in creating optimal and easy solution for
online shoppers. This system is proved to be efficient and render excellent
response times. In addition to this transaction operation helps in saving times and
cost of the customers. As in modern era people mostly rely upon online shopping
instead of interacting face to face
Drawbacks: Some of the drawback faced by the Unicorn organization while developing
business transaction ally is explained below(Pakroo 2018):
 Security and hardware problems: Transaction operation system refer to the
combination of hardware and software which is used to handle huge quantities of
business and consumer data. So, there may takes place viral security breaches
because customers private information is helps within the database. In addition to
this hardware malfunction like electrical outage could damage. Moreover, it can
damage integrated system which helps in serving millions of consumers. So, it’s
the prime responsibility of the manager of Unicorn company to make investment
in rendering high quality computer security so as to secure consumer protection.
 Too much consolidation: One of the other drawbacks of transaction operation for
Unicorn company is that it is too much consolidation as much investment need to

be made in order to carry out transaction processing system. In addition to this it
also requires technical people who can handle out transaction 24hrs a day and
seven days a week. Moreover, there is a requirement of flawless integration with
other management department like shipping, payroll, inventory and accounting.
So, the manager of unicorn organization will need to create new department like
informational technology department, international shipping department etc.
Thus, it can be said that transaction operation is too much consolidation and
which is the major drawback of adoption of transactional operations.
TASK 3
P4Annual itemised monthly cash flow forecast showing fixed and variable costs set against
income for a specific organisation.
Cash flow statement: It can be defined as the statement which is prepared by the business
enterprise in order to determine cash generated and incurred over a fixed period. It mainly
consists of cash inflow and outflow.(. Peppers,2016) In addition to this it excludes only those
transaction which directly impact cash receipts and payments like depreciation.
Benefits of cash flow: One the benefit of cash flow statement is that it helps in providing
information in respect to company's liquidity and solvency.(Polonsky, 2018) In addition to this
it helps in depicting the need to change the cash flow statement in the future due to some
circumstances.
Classification of cash flow statement: Cash flow statement is categorized into 3 types
namely:
 Cash flow from operating activities
It mainly includes interest payment, interest received on loan, payment to
suppliers for products and services, payment rendered to workers etc.
Unicorn Grocery Limited
Statement of cash Flows
Year ended 31 December 2017

Cash flow Statement
Cash
distribut
ed
Jan Feb March April May
June July
Aug
ust
Sept
embe
r Oct. Nov. Dec
Cash
distribut
ed
Variable
cost
Direct
material 1500 1250 1250 1300 1450 1580 1650 1458 1589 1685 1985 1785 1500
Direct
labour 1250 750 500 500 1350 1400 1435 1445 1474 1458 1568 1589 1250
Overhead 1000 500 500 700 2700 2850 2950 2987 2250 1850 1650 1250 1000
Fixed
cost
Selling
and
distributi
on
750 750 750 800 850
950 850 650 720 715 785 795
750
Total
cost use 4500 3250 3000 3300 6350 6780 6885 6540 6033 5708 5988 5419 4500
Cash
surplus/
deficit
28000 26250 24250 21950 18020
13190 8355 3915 32 -3426
-
7114
-
10580
28000
 Cash flow from investing activities
It mainly includes cash inflow and outflow of investing activities. Cash
inflow of activities consist of receipts from sale of investment and receipt from sale of land,
plant, machinery. Whereas cash outflow from investing activities mainly include payment to
purchase of property, plant or equipment and payment given to purchase an investment.
 Cash flow from financing activities
It mainly consists of cash inflow and outflow of financing activities. Cash
inflow of these activities consist of receipt from bank loan and receipt from issuing share of
member. Whereas cash outflow of financing activities covers payment rendered to redeem share
of member and repayment of bank loan.
Fixed cost: This cost is also known as direct or overhead cost. It is defined as the
expenses or the cost which doesn't changes with the increase or decrease in the level of goods
and services sold.
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Variable cost: It is that cost which varies with the level of output. In addition to this it
can be said that it is a corporate expense which changes in proportion with the output production.
P5Explaination about how break- even analysis could be applied to an organisational situation.
Break even analysis: It is the tool which is used by the business enterprise so as to
determine the level of target sales mix.(Senderovitz, 2016) It is very much essential for the
Unicorn company to figure out the breakeven point where there is no profit or loss for the
company so that company can take necessary step required to make an improvement in
operational activities. Thus, it will help the company in achieving maximum profit for the
organization. It is the most important technique or tool used by the business enterprise so as to
identify the profitability level of an organization.
(Source: Break-even Analysis, 2018)
(Source: Break-even Analysis, 2018)
(Source: Break-even Analysis, 2018)
Basic assumption of Breakeven point is mentioned below(Trevino, 2016):
 It classifies total cost into variable and fixed cost. In addition to this it ignores the
concept of semi-variable cost.
 The revenue and cost function will remain linear and the price of the goods will
remain constant. In addition to this volume of sales and production will be equal.
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Illustration 1: Breakeven point

 There must be constant increase in variable cost and the factor price remain
constant
 It assumes that is no improvement in labour inefficiency.
 In case of multi product firm the product mix is stated to be stable.
P6. Interpretation on key financial statements for an organisation for contribution in successful
management.
Financial Account
Financial accounts includes profit and loss a/c, balance sheet, cash flow statements etc.
which represents the accurate and reliable financial position of an organisation. It assist their
stakeholders to decide whether to continue to invest in an organisation or should withdraw on
time so as to prevent any bad debts. Thus, it is compulsorily required for an organisation to
prepare these accounts on specific time period. Some of them which are use by respective
company are explain below:-
Income Statement of Unicorn Grocery for the year ended 13th February, 2019
Balance Sheet of Unicorn Groccery as at 13th February, 2019
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Cash Flow of Unicorn Grocery for the year ended 13th February, 2019
Interpretation of financial accounts by using ratio analysis:
(1) Current Ratio: Current Assets / Current Liabilities
2017-18
40200 / 17800
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2.26
Comment: The standard ratio is 2:1 and in respective organisation, current ratio is more
than idea ratio. It shows the company;s liquidity position is better.
(2) Quick Ratio: Quick Assets / Current Liabilities
2017-18
31700 / 17800
1.78
Comment: Quick ratio is consider as more appropriate then the current ration in order to
analysis liquidity. The ideal quick ration is 1:1 and company's respective ratio is 1.78:1 which
means respective company quick ratio is good.
(3) Gross Profit Ratio: Gross Profit / Sales * 100
2017-18
34500 /200000 *100
17.25%
Comment: This shows that this company will earn good net profit ratio. It shows
percentage of net profit in order to represent sales. An organisation can increase its gross profit
by comparing it with last year ratio. The gross profit ratio of cited company is 17.25% which
shows good financial position of company.
(4) Net Profit Ratio: Net Profit / Sales * 100
2017-18
26800 / 200000 *100
13.40%
Comment: This shows that this company will earn good net profit ratio. It shows the
percentage of net profit in order to represent sales. The net profit ratio of cited company is
13.40% in the year 2018-19.
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TASK 4
P7Key legislation and regulations that have implications on small businesses or social
enterprises.
There are various key legislation and regulations which are framed by the government
and they have implication on Unicorn groceries and on social enterprises and some of them are
explained below:
 Tax and Employment Act(1976): As per this Act company need to follow guidelines
prescribed by the government in respect of taxation. Thus, this legislation possesses
direct impact upon overall performance of an Unicorn organization.
 Health and Safety Act(1974): This Act specifies about the health and safety measures
which the Unicorn company need to adopt in order to keep their workforce safe.
(Winterhalter, 2016) As providing safety of health to workforce will motivate them to
work for the organization. Safety in the form of their job security, health insurance etc.
 Data protection Act(1974):This Act specifies that employees of a Unicorn organization
should not be liable to share of their confidential data with the any of the third party or
outsider.
 Minimum wages Act: This Act specifies that there should not be any kind of biases
while rendering wages to the workforce. The unicorn company should follow minimum
wage act and accordingly should render wages to the employees so as to keep retaining
them and motivating them to work for accomplishing organizational aims and objectives.
CONCLUSION
From the above-mentioned report, it can be concluded that it is very essential to allocate
resources in the optimum manner in order to run business smoothly. Various techniques are
discussed above which helps the manger to make proper and effective utilization of resources .
In addition to this it can be concluded that it is very much essential to maintain healthy
relationship with the target customers so as to increase the level of revenue. Moreover, it can be
concluded that manger of the company should make an analysis at breakeven point of an
organization so as to known whether the organization is running as per framed policies or not if
not then necessary actions need to be taken. Lastly, in this report brief interpretation of the
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current year of the given organization is been done so as to acknowledge the overall
performance of the organization.
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