Detailed Strategic Analysis of Bell Studio's Business System Processes

This report provides a strategic analysis of Bell Studio, an Adelaide-based wholesaler of art supplies, focusing on its purchase, cash disbursement, and payroll systems. The analysis utilizes data flow diagrams and system flowcharts to illustrate the processes involved in each system. The report identifies various weaknesses within these systems, such as the complexity of the purchase system, the lack of decision-making elements in the cash disbursement system, and reliance on employee-filled time cards in the payroll system. Furthermore, the report details the risks associated with these weaknesses, including inaccuracies in inventory, increased costs, potential misrepresentation of financial statements, and employee performance issues. The report aims to offer insights to improve Bell Studio's financial statements and market position by addressing identified weaknesses and mitigating associated risks. The report suggests improvements such as hiring skilled employees, updating systems, and implementing better data verification methods.

Strategic Analysis

EXECUTIVE SUMMARY
This report concise about the process which are involved in the process of purchase
system, cash disbursement system and payroll system. Managers uses the flow diagrams to
analyse the process of these system in order to formulate strategies and take competitive edge
over its competitors. It shows the various flow charts which are prepared by the managers of Bell
Studio to analyse their business operation's efficiency. Every system is associated with certain
risks and weaknesses. It is important for the managers of Bell studio to consider all its
weaknesses and the various risk which is associated with it in order to form strategies to improve
its financial statements and its market position.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Purchase and Cash Disbursement System...................................................................................1
Payroll system..............................................................................................................................6
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Strategic analysis is the process in which managers research its organisation's business
environment in order to identify the weaknesses and formulate strategies to overcome those
weakness and take competitive advantages over its competitors (Gaupp and Kuhn, 2016). In
order to analyse managers uses data flow process and flow charts to identify the various steps
which are involved in a particular process. To understand the importance of these flow charts and
system flow diagrams, the purchase system, cash disbursement system and payroll system of
Bell Studio is analysed. Bell Studio is an Adelaide based wholesaler which supplies art, it
procure its inventories from various countries like, Australia, China, Japan and New Zealand.
The Following report contains the detailed analysis of the flowchart of purchase, cash
disbursement and payroll system and identifies its weakness and the risks which is associated
with it.
MAIN BODY
Strategic analyst of Bell Studio an Adelaide based wholesaler which deals in the art
supplies is asked to analyse the process and step which are involved in the purchase and cash
disbursement system and payroll system of the company. It procures its inventory materials from
various countries which includes Australia, Japan, China and New Zealand. It also has a
networked terminals associated with the centralised accounting system. This report will be
presented to the chief operating officer and it covers the flow charts and data flow diagrams
showing various steps involved in each process, it also covers the internal control weaknesses of
these system and the risk which is associated with it (SHAHNAZI, 2017).
Purchase and Cash Disbursement System
Data flow diagram of purchase and cash disbursements system: Following is the
purchase and cash disbursement system of bell studio which states various process which are
involved:
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From the above given data flow diagram of cash disbursement and purchase system it can
be seen that there are various steps involved in the purchase and cash disbursement system. All
the steps are followed in a sequence which is, at first a purchasing clerk identifies the
requirement of inventories that how much quantity is to be ordered as from where it is to be
ordered (Kumar, 2018). After all this purchasing clerk analyses the ledger of its inventory
subsidiary if the ledger shows the quantity which is deemed to be low then purchasing clerk
selects the vendor form its valid vendor file which can provide it with the required inventory in a
given specific time, once the vendor is identified it places a digital purchase order from which
two receipts are generated from which one is sent to the vendor and second one is sent to the
purchasing department of Bell Studio. Once the goods reaches the receiving department clerks
working in that department reconciles and inspect it against the information given in the digital
purchase order. After the inspection and reconciliation is done it prepares two hard copies of
receiving reports from which one is sent to the warehouse along with the goods and the second
one is sent to the accounts payable department where clerk waits for the supplier's invoice, when
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the invoice is received the clerk compiles invoice, hard copy of the digital purchase order and
receiving report which is sent to the cash disbursement department (Dunne and et.al., 2017).
System flow chart of purchase system: Following is the flow chart of purchase system
followed in Bell Studio:
The flow chart given above states the various steps which are followed in the purchase
system (Weining, Jingyu and Yuan, 2015). The process starts with the valuation of its
inventories if the quantity is not low no decision is taken and the process stops but if the quantity
is low decision taken to procure the inventory by selecting a most suitable and reasonable
vendor, once selected purchase order is placed using a digital order from which two receipts are
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generated on is sent to vendors and second is given to the purchase department. Once the goods
are revived in the receiving department and after all the necessary inspection and compilation
two hard copy of report is prepared and one is sent to the warehouse along with the goods and
the invoice, second hard copy and purchase order are sent to the cash disbursement department in
order to settle the amount.
System flow chart of cash disbursement system: Following is the flow charts which
shows the cash disbursement system and its various steps involved in the settlement of payment
of Bell Studio 2018:
The above flow chart states the various steps which are involved in the process of cash
disbursement system which starts from the submission of all three documents from account
payable department, then clerk in this department files the document until the payment date is
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due. On the date of payment clerks prepares the cheque for amount mentioned in invoice, after
the cheque is prepare it is sent to the treasurer who signs the check and mails it to the vendor
from which the goods are procured and the necessary documents, registers and ledgers are
updated as per the need.
Weaknesses of purchase system: The above flow chart of purchase system states that
the process of purchase system in Bell Studio is very complex and is very difficult for a manager
to properly coordinate amongst all the employees working in these departments. Regular and
repetitive checking of every steps again and again makes this system complex (Malan, 2015).
The hard copies for vendors and purchase department increase the cost for the company. Due to
the complexity of the work employee working in these departments can not focus on the
operational activity. In order to overcome this weakness it is important for Bell Studio to hire
skill employee who have proper knowledge about the computer system and can determine the
inventory.
Risks associated with purchase system: There are several type of risks which are
directly associated with the weaknesses in the purchase system. Following are the risk identified
by Bell Studio:
 As the process which are involved in the purchase system is very complex which is very
difficult for the staff to understand and take necessary action. This misunderstanding can
affect the accuracy of inventory.
 Cost which is related to the hiring of skilled labours will be high as they demand high pay
than the regular employees.
 The printing of hard copies for purchase department and vendor may increase the
additional cost in office and administration expenses.
 For the use of computer in different terminals Bell Studio need to hire new technical staff
who can monitor the inventory which can result in the additional cost and less profit.
Weaknesses of cash disbursement system: The above flow chart which represents the
various steps which are involved in the process of cash disbursement system (Dennis and
Wixom, 2018). The flow chart above stated that there are no decision elements in the system
which makes it difficult for the employees to keep a detailed track its operation. It is important
for Bell Studio keep their system updated from time to time and update every transaction
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occurred in time. Due to the lack of proper knowledge about computers it is difficult for the
clerks working in this department to timely update every information.
Risks associated with cash disbursement system: The weaknesses of this cash
disbursement system is associated with various risk which are as follows:
 Due to lack of decision making process it is very difficult for the clerks to analyse the
requirement of cash and take strategic decisions to improve the operational efficiency.
 It is difficult for clerks to update every transaction on time which result in the
misrepresentation of financial statements (Valacich, George and Valacich, 2017). After
successfully completing the transaction clerks has to record that particular transaction in
many books such as cheque register, accounts payables subsidiary ledger and accounts
payable control account.
 Amount of work which is assigned to the clerks in this department is very high which
affects the performance and nature of the work. As the clerks working in this department
has to update different ledgers, file up documents related to the purchase system.
 As the clerks working in this department does not have proper knowledge about the
computer and every transactions performed has to be updated in the computer system
which is a risk for the company and may result in the improper representation of Bell
Studio's financial position for the year.
Payroll system
Data flow diagram of payroll system: Following is the data flow diagram of payroll
system which is being followed in Bell Studio:
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The above flow diagram of payroll system states that the employee's working in Bell
Studio has to record their worked time in their respective employee's card every day when they
finish their work. The supervisors review their time cards and submit it to the payroll department
at end of each week. With the help of computer terminal which is connected to the central
payroll system located in the data processing department, clerks working in this department
inputs the time card of employees and print the hard copies of the cheque, two hard copies of
payroll register and then posts it to the digital employee record. Then pay check of an employee
is verified by various superiors, after this inspection supervisors send the check to respective
departments and on copy of the payroll register is sent to the accounts payable department. Once
he received the register is received by the accounts payable department, clerk working in there
again reviews the register and prepares the disbursement manually and it writes a check for a
whole payroll and later deposits it in imprest account in the bank (Gallien and et.al., 2017).
System Flow chart specifies the various task which are performed in the payroll system
of Bell Studio. Following is the diagram which states the system flow chart:
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The flow chart given of payroll system which is given above indicates that the employees
who form time card of working hours. These time cards are cross checked by the supervisors to
check that the information provided is appropriate or not. If the information are found
appropriate then these card are sent to the data processing units located in the central payroll
system through computer terminals (Tetteh, 2014). After the data is process to the central payroll
system the hard copies of cheques and payroll registers are printed and check are send to various
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supervisors in order to cross check the amounts entered in the cheque. Once the cheques are
verified by supervisors the payroll register are sent to the accounts payable department where
clerk reviews the data entered in the register and manually prepare the disbursement vouchers,
once it is prepared cheques along with the disbursement vouchers are sent to the general ledger
department. The additional copy of check is kept by the accounts payable department and are
filed by the clerks.
Weaknesses of payroll system: The weakness which can be identified from the above
payroll system of Bells Studio are that it is mainly depended upon the time card which are filled
in by the employee's itself which may lead to false data. Company must have automated system
to record to the working hours of the employees working in Bell Studio. The time card are check
twice which increases the time involved in the process and also the hard copies of payroll
register will attract the additional cost for the company. The process which are involved in the
this system consumes additional time due to which the salary may get delayed resulting in the
dissatisfaction in the employees. The time cards are received every week which makes it difficult
for the clerks to properly manage the time cards.
Risks associated with payroll system:
 The manual preparation of the disbursement voucher can affect the accuracy of the
information which is provided by the clerk. It may happen that by mistake the amount
can differ the actual amount due to the error of commission of the clerk which will lead
to the misrepresentation of financial statements.
 The processes which are involved in the steps of payroll system is very time consuming
which may incur additional cost. The steps involved various unnecessary process which
can be removed to save time and money.
 The time cards are received every week which increase the paper work and consumes
additional space to store the relevant data card and if by chance any card is lost it will
create the confusion in the minds of the clerks and employees working in that
department.
 Time card are filled manually by the employee working to add their working hours daily.
The system which is followed in Bell Studio is totally depended upon these data, this data
can be manipulated by the employee who is adding it which will result in the addition
salaries paid to that particular employee.
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