Business Report: Bunga Bunga Restaurant - Specialist Unit Analysis

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This report provides a comprehensive analysis of the Bunga Bunga restaurant, a small business operating in Covent Garden, London. It delves into critical aspects of business management, including resource allocation, setting organizational goals, and establishing an effective business structure. The report evaluates various customer relationship management (CRM) processes, such as customer-facing, customer-oriented, cross-functional, and macro-level CRM, highlighting their significance in attracting and retaining customers. Furthermore, it explores how a small business can expand transnationally through branches, joint ventures, and franchising, while also considering the associated advantages and disadvantages. The financial analysis includes an annual itemized monthly cash flow forecast, an explanation of break-even analysis, and a review of key financial statements. The report concludes by examining the key legislations and regulations impacting small enterprises, such as the Equality Act 2010 and the Protection from Harassment Act 1997.
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Managing and
Running a Small
Business
(Specialist Unit)
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Important elements that are to be reasoned before planning and allocating resources ........1
TASK 2 ..........................................................................................................................................2
P2. Evaluating various processes of customer relationship management for a small business 2
P3. Explaining how a small business can create transnationally and determine the benefits and
drawbacks. .................................................................................................................................4
TASK 3............................................................................................................................................6
P4. Annual itemised monthly cash flow forecast showing fixed and variable costs set against
income.........................................................................................................................................6
P5. Explanation of break- even analysis could be applied to an organisational situation........8
P6. Key financial statements for bunga bunga .........................................................................10
TASK 4..........................................................................................................................................11
P7. Key legislations and regulations that have implications on small enterprises. ..................11
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................15
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INTRODUCTION
Entrepreneur skills play crucial role in establishing new business, as it motivates
businessman to undergo risky situations to enhance productivity and revenue (Din Anuar and
Usman, 2016). This project discusses about all important factors that are essential for achieving
the goals and objectives of business. This report explains about Bunga Bunga restaurant, which
is situated in Covent Garden, London.
This offers wide range of foods and beverages, to satisfy demands of client. Assignment
covers about small businesses that can create transnationally and determine the benefits and
drawbacks, explaining break-even point in relation with various other situation, etc.
Transnationally is characterised as dealing which occur between national geographical region,
small business tends to widen its business activities to different countries and spread awareness
about the brand name globally. Break-even point is useful in identifying level of inventory that
need to be managed and controlled. It emphasis on controlling both variable and fixed cost which
is incurred while production process, business can accomplish desired gross sales target within
the particular time frame.
Further, this report emphasis on important rules and regulations like Equality Act 2010,
Protection from Harassment Act 1997, to assure protection of employees from unfair practices at
work place.
TASK 1
Important elements to be reasoned before planning and allocating resources
It is significant to consider all the elements related to business environment to achieve
desired goals and objectives (Biraglia and Kadile, 2017). Entrepreneurs must be motivated and
determined towards achieving long term objectives of an organisation.
Some of the main considerations of Bunga Bunga as follows:
Setting up of goals: Organisation must be specific while deciding goals and objectives of
business, which must be effectively communicated to its stakeholders. Bunga Bunga
management designs a plan to achieve goals within prescribed time, where performance of
employees will be measured with a bench mark set. Superiors monitor goals of an organisation
and keep track of achieved targets to enhance the productivity of business. Prior decision of
goals make easier for business to chive it with plans and policies.
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Correct business structure: It is important to establish accurate structure of business, as
it has a direct impact on all activities of business. Bunga bunga follow functional structure,
which means that management group is similar in work nature in one division. This structure
leads to specialisation of work and avoid mis-management.
Financing business: Entrepreneur must make tax effective investments to reduce
liabilities of tax and claim benefits under the Company Law. Bunga Bunga must create an
effective financial planning to protect asset from the claims of creditor to maintain stability and
its capability to arrange funds depend upon its credit record. Entrepreneur selects effective
opportunity from where funds can be arranged in order to minimise the borrowing cost (Botha,
Van Vuuren and Kunene, 2015). Funds can be arranged from various sources like banks,
financial institutions, etc.
Cash-flow: Business must have proper management in terms of inflow and
outflow that help in sustaining themselves. This is significant in understanding profitability and
measuring financial performance of Bunga Bunga. It is essential for making decision related to
payment of expenses and balancing it with income.
Employing workforce: Selection of staff is an expensive and complex procedure, so it is
important to select capable employees. Ineffective workers can actually cause damage to
business which can decrease overall profitability and productivity. Management of Bunga Bunga
must assure that workforce get rewarded for their performance and right amount of salary is
offered to them.
Delegation of work: It is crucial for business to delegate work between various staff
members, to reduce work load and carry out every process effectively. Work with similar nature
must be grouped in one department, it is responsibility of Bunga Bunga to maintain coordination
between various department to accomplish the desired objectives and goals.
TASK 2
P2. Evaluating various processes of customer relationship management for a small business
Customer Relationship Management is a technique which is used by organisation to
maintain relationship with its potential buyers (Bullough and et.al., 2015). This procedure helps
in retaining existing customers and attracting new ones and render valuable services with the best
possible outcomes.
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Different processes of Customer Relationship Management within Bunga Bunga are
given below:
Customer-facing level CRM processes: It is used to start, manage and terminate
relations with customers. It is designed to deliver valuable and effective services to clients;
Bunga Bunga address the problems and quires of customers and provide them with effective
solutions. Company can collect feedback from client by using social media and official website,
this help in improving the techniques and products.
This is an important strategy implemented by organisation to increase customer base and
enhance its revenue generation. If customers’ issues are resolved properly this will attract the
attention of new potential buyers. As clients are satisfied they will purchase more of services and
it will result in income generation. In this process, the management maintain direct relations
with its potential buyers and offer them with valuable services. It emphasis on holding back of
strong relations across distribution channel like wholesaler, retailers, etc. and manage to maintain
effective coordination with potential clients (Burns, 2016). Customer uses general and simple
ways while initiating relationship with clients and managing it till end so that the company can
retain customers.
Customer-oriented CRM process: This technique consists of all activities like
collecting feedbacks etc, are required to solve customers’ problems and make them satisfied with
their services. Bunga Bunga give chances to customers to give feedback on their social media
and official websites that they are satisfied with their services or not. This technique is essential
for developing personalized relations and treating them equally. CRM identifies needs and
necessities of potential buyers. Management maintain balance between time used to fulfil
requirement of customers and provide them systematic way to deal with it.
Cross-functional CRM process: This process of CRM is a strategic approach to create
superior and adequate value for shareholders in the market. Value of business depends upon the
response which it receives from the targeted market segment regarding products and services
(Chen and et.al., 2015). Cross functional management helps Bunga Bunga to enhance its
productivity by developing products and services on the basis of clients’ requirement. This
strategy focuses on minimising queries by providing them with valuable services and help
business in understanding clients. Management effectively allocate resources on the basis of
availability to achieve desired goals and target valuable customers. This is the most
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comprehensive and detailed process, which is required to fulfil all the aspects of customers’
satisfaction.
CRM Macro-level process: This technique focuses on maximising profits and undertake
various activities to build up strong bond with their potential buyers. Strong relations can be
developed by treating clients in an appropriate way and showing their concerned towards them.
Effective communication is use to build up good bonds with clients. Bunga is concerned towards
all activities like taking regular feedback from clients’ preference which aim at enhancing market
intelligence and profitability. Customer relations can be strengthened by effectively
communicating all reliable information about products and services.
From the above mentioned process, it can be said that, customer relationship management
is essential for interacting with consumers and prioritize services which are being provided to
them.
P3. Explaining how a small business can create transnationally and determine the benefits and
drawbacks.
Transnationally is defined as transaction which occur beyond national boundaries; small
business tends to extend its commercial activities to different countries and spread awareness
about the brand world-wide (García Peñalvo, 2015).
Given below are certain ways from which Bunga Bunga can become a multinational
company.
Branches
This is a more effective way to spread out its activities to other countries by setting up
branch in a foreign country, but the organisation need funds, license to work and capable
workforce. Bunga Bunga want to expand into other countries, and for the same, they must
critically evaluate business environment of a country and develop expansion plans to enhance
overall revenue.
Advantages
It can help in attracting potential buyers form other countries thus by increasing overall
sales and revenues of business. Expanding of branch can result in economies of large scale
operations, division of its activities in different departments for better functioning.
Disadvantages
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Increasing numbers of branches can result in mismanagement, and it will be difficult to
control and supervise activities. Also delay in decision making process because of long
hierarchical channel for communicating messages and information.
Joint venture
It is defined as two or more companies working together on a specific project, where
business collaborates its operations with a foreign company (Gundry, Ofstein and Kickul, 2014).
This can be termed as an attractive measure for both local and international companies as it
provides opportunity to host company to utilise developed technology, resources and capital to
create a brand image to capture market share.
Advantages
This will help Bunga Bunga to access new market and distribution channels which will
increase customer’s base. When two partners are working collectively as they will share cost and
liabilities between each other. It will lead to growth and expansion of business, by borrowing
funds from outside vendors.
Disadvantages
Joint venture can lead to duplication of work if information and message are not clearly
communicated between both the partners. Every country has different management and culture
style which has resulted in poor level of integration and cooperation (Kassean and et.al., 2015).
There are high chances of disputes because partners have different point of views and objectives.
Franchise
It is an authorization granted by the government to use company’s name in other
countries to carry out commercial activities effectively. This technique is termed as the fastest
and cheapest way of expanding operations with minimum risk involved. Foreign franchise is
closely monitored and controlled because of cultural and geographical divisions.
Advantages
Small business enterprise is supported by big organisational brand name, which will
enhance sales and revenues. Franchise provide employees with effective training, essential to
carry out every activity of business in desired manner. This has higher chances of success
because of positive brand reputation of other organisations.
Disadvantages
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Franchising deals with signing of formal agreement between both parties which make this
procedure complex and time consuming (Kucel and et.al., 2016). Agreement consists of detailed
guidelines which suggest about working, so there are fewer chances of using innovative and
creative ideas.
TASK 3
P4. Annual itemised monthly cash flow forecast showing fixed and variable costs set against
income
Cash flow statement is defined net amount of funds which has been transferred in and out
of an organisation (Botha and et.al., 2015). It important for business to keep records of all cash
which is generated as revenue and expenses which is incurred by performing all activities of
business. This statement helps to identify financial capabilities required in expanding
commercial activities, to develop new products and services.
Table 1: Cash flow for the year 2017
Particulars January £
February
£ March £ April £ May £ June £
Cash inflows
Opening cash inflow 4500 10900 16250 21050 25300 30000
Sales revenue 9500 7500 6500 5600 5800 5600
Other income 1700 1700 1700 1700 1700 1700
Total cash inflows 15700 20100 24450 28350 32800 37300
Cash outflows
Material 1500 1400 1100 900 700 800
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Labour 1400 950 800 750 800 750
Other expenses 1100 700 700 600 500 500
Administration expenses 800 800 800 800 800 800
Total cash outflows 4800 3850 3400 3050 2800 2850
Cash deficit / surplus or
closing cash balance 10900 16250 21050 25300 30000 34450
Table 2: Cash flow for the year 2017
July £ August £ Sept £ Oct £ Nov £ Dec £
34450 39020 44090 49560 54630 59440
5800 6200 6300 6100 5900 6000
1700 1700 1700 1700 1700 1700
41950 46920 52090 57360 62230 67140
750 600 550 700 670 560
680 570 680 600 570 690
700 860 500 630 750 840
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800 800 800 800 800 800
2930 2830 2530 2730 2790 2890
39020 44090 49560 54630 59440 64250
From the above table, it can be said that cash flow statement is essential in identifying
income and expenses of organisation. It has been observed positive growth in the overall inflow
of cash, starting from January 2017, where it was 15,700, which gradually increased to 67,140 in
December 2017.
It can be said that company is operating effectively to increase income and minimise all
expenses thus by enhancing over all cash surplus of organisation. Operative utilisation of
resources has minimised the expenses, for example in January 2017 it was 15700 and in end
month, it was 2890. Cash flow is an effective tool used to manage and control inflow and
outflow of funds. Bunga bunga has positive cash flow which indicates that organisation has
liquidity to settle all liabilities and debts (Bullough and et.al., 2015). This company has financial
flexibility that means they can make profitable investment in projects and business
P5. Explanation of break- even analysis could be applied to an organisational situation
Break-even is the point where sales amount covers the total cost which comprises of both
variable and fixed cost. It is a circumstance where profit of business is zero to enhance
profitability as well as sales should be maximised. Entrepreneur uses this technique for financial
analysis. This is defined as an analytical situation where business becomes successful in covering
its cost of operation and to make business successful. This an effective technique used by
business to maintain balance between selling price of a product and cost of business operations.
Given below are some organisational situations which deals with break-even point.
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(Source: Break-even analysis, 2017)
Avoiding loss and minimising sales volume: Break-even point helps entrepreneur in
determining quantity of sales which generate revenue to meet out expenses of business (Kwong
and Thompson, 2016). Loss of Bunga Bunga can be avoided by identifying the number of unit to
be sold.
Targeting profit level: This helps to identify profits which can be earned within the
prescribed time or by selling of any product or service above the break-even point. By
identifying sales, an entrepreneur can decide amount of profits generated in each transaction. For
example, Bunga Bunga set sales target to enhance profits and productivity of their business.
Deciding optimum price: Break-even point help in setting up of various level of prices
by relating it to the customers' affordability (Lobo and et.al., 2016). It plays crucial role in
managing inventory by minimising cost of operations Setting the price of product is an important
factor which indicates success and failure of a firm that depends upon the cost of services
delivered and revenue earned from it. Bunga Bunga decides the price by analysing its effect on
profitability and productivity.
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Illustration 1: Break even analysis
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Planning of inventory requirement: Break-even point is useful in identifying level of
inventory to maintain desired level of sales for a specified period of time. It helps in categorizing
the quantity of stock to be made available to customers for future management. For example:
Bunga Bunga prepare an initial level of stock and draft a schedule for restocking it, on the basis
of this analysis.
Thus, from above situations, it can be said that break-even point emphasis on controlling
both variable and fixed cost. (Nabi and et.al., 2018). It helps organisation to achieve desired sales
target within the prescribed time frame.
Break-Even analysis
Particulars Formula Figures
Selling price per unit 12
Variable cost per unit 4
Contribution per unit
Selling price per unit - variable
cost per unit 8
Fixed cost 3000
BEP (in units)
Fixed cost / contribution per
unit 375
BEP (in value or monetary terms)
BEP (in units) * selling price
per unit 4500
Units need to sell for attaining desired profit margin
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