Performance Improvement and Management at BME Luxury Care Home Report

This report provides a comprehensive analysis of performance improvement and management strategies applicable to BME Luxury Care Home, a health and social care provider. It begins with an internal memorandum discussing the advantages and disadvantages of strategic planning models, specifically PESTLE and SWOT analyses, recommending PESTLE for business growth. The report then delves into the usefulness of Du Pont analysis for shareholders, including its application to BME, and calculates and interprets relevant financial ratios. Finally, it critically evaluates the use of non-financial models for performance management. The report aims to provide a detailed framework for improving performance and management practices within the care home setting, covering both financial and non-financial aspects of organizational success.

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