Financial Analysis of Ferry Acquisition for Zylla Limited

Desklib provides past papers and solved assignments for students. This report analyzes Zylla Limited's ferry acquisition and employee motivation.

INTRODUCTION TO BUSINESS STUDIES
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Contents
Task3. Case Study- Motivational Techniques at Jack stores...........................................................3
Task4. Business Scenario for individual report...............................................................................8
1 Short term and long term sources of finance to fund the acquisition of the ferry and for the
company’s working capital needs................................................................................................8
2. An evaluation of various investment appraisal techniques and recommending the viability
of the acquisition and operation of the new ferry based on one suitable investment appraisal
technique using the data above..................................................................................................11
References......................................................................................................................................13
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Task3. Case Study- Motivational Techniques at Jack stores
Introduction
This report is about the importance of different motivational theories that will be used in the new
discount store of Tesco named “Jack”. It also describes the advantages and disadvantages of
these motivational theories to Jack discount store.
The new discount store is to be opened by Tesco; Jack new discount store, which is the strategy
of the Tesco to compete with Aldi and Lidl. The pricing strategy of these stores will compete
with Aldi and Lidl. Funding for the new Jack store by the management will be just like other
stores of Tesco. The success of this store will be affected by the employees working in it. The
employees of the Jack store must be motivated which will increase their productivity. They will
have high job satisfaction, and absenteeism problem will be reduced resulting in providing
benefits to the Jack discount store. For motivating the employees of the store, different
motivational techniques must be adopted by the management.
For every business, it is a crucial factor to motivate employees of their organisation. Every
aspect of business gets affected by this. There are different theories of motivation which include
Maslow's Need Hierarchy Theory, Vroom's Expectancy Theory, Hertzberg's Motivation-Hygiene
Theory, Urwick's Theory Z, Porter and Lawler’s Expectancy Theory and McGregor’s
Participation Theory (Akers, 2018).
1. Hertzberg’s two-factor theory-
This motivational theory was developed by Frederick Irving Hertzberg consisting of two factors
that influence the satisfaction and motivation of employees.
i. Hygienic Factors- In the absence of these factors the employees of Jack new discount
store will be dissatisfied, and there will be a lack of motivation among them. This
includes the factors such as the relationship with the co-workers and managers, salary,
policies of the company.
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ii. Motivational Factors-This factor will motivate the employees of Jack store to do more
hard work and will lead to their high-level satisfaction including achievement, growth,
personal investment, recognition (Hammond, 2018).
Image- Hertzberg's two-factor theory
Source- By Author, 2019
Advantages of Hertzberg's Two-factor Theory-
There are various advantages that Jack store will get by applying this theory to its management.
It includes the following-
1. It is easy for management to distinguish between Demotivators and motivators.
2. It can be applied easily in a different workplace.
3. It will provide opportunities for superior accomplishments.
4. It focuses on job enrichment.
5. The work quality of employees can be strengthened.
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Hertzberg's Two
factor theory
Hygienic
factors
Motivational
factors

Limitations of Hertzberg's Two-factor Theory-
1. The situational variable is overlooked.
2. Blue collar workforces will be overlooked.
3. It will become difficult for the management to distinguish between the motivation and
hygienic factors.
4. Worker’s characteristics cannot be taken into account.
5. Managers of Jack store will be held responsible for the motivation of workers or any lack
thereof.
6. The reliability of this theory is uncertain.
7. There is no comprehensive measure of satisfaction.
8. An assumption is made of the connection between productivity and satisfaction, but this
theory will mainly focus on satisfaction, but the other main factor, i.e. productivity will
be overlooked ( Yew and Manap, 2012).
Hence while applying this theory, the management should ensure to make employees feel that
they are treated in the right way by making them available the fair pay and good working
environment. Feedback should be given to employees and make them understand how their
growth can be affected by the company. The management of Tesco should focus on improving
hygienic and motivation factors for developing a productive and happy workforce.
2. Maslow’s Hierarchy of needs -
The most commonly adopted theory is Maslow’s need Hierarchy theory. There are different
needs for human beings which include social, esteem, physiological, self-actualization, and
safety. According to this theory, an individual will not be able to satisfy his higher level needs
until his lower level needs are satisfied. As per this theory, there is a definite dominance
sequence of the needs of human. Human needs are unlimited and the second need is not satisfied
until the first need is not satisfied reasonably. It is believed in this theory that once a need is
satisfied, it will no longer motivate the employees of Jack store.
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Image- Maslow’s Hierarchy of Needs
Source- By Author, 2019
Advantages of Maslow’s Hierarchy of needs-
1. The social needs of the employees of Jack store can easily be identified.
2. Human nature is taken into account demand for the satisfaction of lower level needs.
3. It is relevant in all fields.
4. Interpretation of human behaviour and motivation of employee of Tesco can be made by
applying this theory. This theory is relevant in applications of modern day.
5. Advantageous summary of needs of human can be provided which can be used in doing
the planning of product; it's pricing, positioning, and designing of sales channels.
6. Increase the productivity of employees ( Petri and Govern, 2012).
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Self
-
Act
uali
sati
onEsteem Needs
Social Needs
Safety Needs
Physiological Needs

Limitations of Maslow’s Hierarchy of needs–
1. It will be difficult for the mangers of Jack store to identify the level of needs of
employees. This will result in curbing the employee’s motivation.
2. The validity of the different cultures will lack as this theory is too culture-bound.
Assumptions may be restricted towards the western culture only.
3. It is not important that the fixed hierarchical order will be followed. Need hierarchy may
be overlapped (Noltemeyer.et.al, 2012).
4. Level of motivation can be permanently lower down by applying this theory.
5. Measuring the satisfaction level will be difficult. No measure to verify how much one
level of needs must be satisfied before operating the next higher needs.
Flexible working hours can be given to employees of Jack store so that they can focus on
their family and fair payment should be made to make the employees financial stable.
Conclusion
This can be concluded from the whole analysis of this case that management of Tesco should
adopt the motivational theory in its new Jack discount store so that the employee’s
productivity can be increased; there will be a reduction in the problem of absenteeism. The
motivated employees will be highly committed and will benefit the store.
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Task4. Business Scenario for individual report
1 Short term and long term sources of finance to fund the acquisition of the ferry and for
the company’s working capital needs
Introduction
Zylla limited company do the business of providing services of river crossing of people, vehicles,
and goods by operating the ferries. The management of Zylla has decided to expand its business
by buying a new ferry for catering the increased demand. In this project report, short and long
term sources of finance have been described that can be sued in funding for the ferry’s
acquisition and the working capital needs of the company. Various investment appraisal
techniques have also been invested, and recommendation has been made regarding the
acquisition’s viability and the new ferry's operation.
To acquire the new ferry finance manager of Zylla limited will need to finance the fund from the
long term and short term sources of finance. For a successful business, working capital’s
constant flow is an intrinsic component. The long term and short term financing for the working
capital will be used by the finance manager of Zylla limited for acquiring funds for the working
capital. This includes the following-
Short-term financing-.
1. The non-banking financial institutions and banks provide accounts receivable financing-
Discounting facilities of the invoice. In this, Zylla limited will take to the commercial bank bills
which will make the payment after deducting the small fee. Then, the money will be collected by
the bank from customers (Kumaran, 2015).
2. Overdraft Agreement- Bank will allow the Zylla limited for borrowing without any further
discussion; up to a particular limit. This financing source is valuable and will be used by Zylla
limited for meeting the temporary fund shortage (Leonard, 2018).
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3. Customer Advances- Zylla Limited may call the customers for the advance payment before
providing the service.
Long-Term Financing-
1. Long-term loans from banks- The working capital requirement of two, three or more years
can be allowed to Zylla limited by opting for a full-fledged loan which is of the long term from
the bank.
2. Issues Equities and Debentures- In case of shortages of funds, Zylla limited can decide on
issuing bonds or debentures to the general public, or equity stock can also be issued. The
commitments related to cash flow the equity financing is less risky. Common and preferred stock
is included in this (Picincu, 2018).
3. Corporate Bond- With the purpose of expanding business corporations issue this kind of bond
for collecting money. A call option is also associated with some of the corporate bonds
permitting the issuer to redeem it before reaching the maturity.
4. Retained Earnings- This is also known as profit’s plugging back, self and inters finance. Zylla
limited’s finance manager can use this financing source in which some part of the profit is
transferred to different reserves namely replacement fund, secret reserve, reserve fund, general
reserve, etc.
5. Venture Capital- This is provided in the projects involving a high degree of risk.
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2. An evaluation of various investment appraisal techniques and recommending the
viability of the acquisition and operation of the new ferry based on one suitable investment
appraisal technique using the data above.
There are various investment appraisal techniques.
1. Net present Value- This is the strongest appraisal technique. It changes which is potential
in the wealth of investor caused due to the project while accounting for the time value of
money. Where a conflicting decision is given by IRR and NPV, then the decision of NPV
should be preferred. An initial investment of the project is deducted from the net cash
inflows of the project. This is the most reliable measure which is used in the capital
budgeting due to its accounting for time value of money (Breese, 2012).
Year
Cash Inflows
(£ 000)
Discounted factor
(3%)
Total PV of Cash
Inflows (£ 000)
1 55230 0.971 53,628.33
2 70045 0.943 66,052.44
3 88375 0.915 80,863.13
4 79870 0.888 70,924.56
5 57555 0.863 49,669.97
5 45000 0.863 38,835.00
359,973.42
(£ 000)
Total PV of cash
inflows 359,973.42
Less: Initial Investment 150,000.00
Net Present Value 209,973.42
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2. Pay- Back Period – This is the simplest form of technique out of the other techniques. It
shows how long a project will take for generating sufficient cash inflow for recouping
and break even the outlay of cash which is needed to initiate the project. This technique is
easy to calculate and to understand.
3. Accounting Rate of Return (ARR)- From this technique relationship between the
expected generation of accounting profits and investment needed for undertaking the
project is shown. The comparison is then made with the minimum benchmark level of the
percentage calculated. The investment is said to be attractive if the ARR of the project is
higher (Akkoyun, 2012).
4. Internal Rate of Return- This is similar to the Net present value technique. It involves
the project’s cash flows discounting. The cash flows are discounted twice in this
technique, and then interpolation and extrapolation of resulting net present value are done
for calculating the final answer.
Zylla Limited should use NPV technique as this technique is easy to use and calculation
can also be done easily.
Conclusion
It can be concluded from the report that there are various investment appraisal techniques which
can be used by Zylla Limited for calculating the acquisition and operation of a new ferry. Net
present value, internal rate of return, accounting rate of return and payback period are few
techniques among them. There are different short terms as well as long term financing sources
which Zylla limited can use for the acquisition of ferry and meeting the working capital needs of
the company.
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References
 Akers.H., 2018. What Motivational Theory Can a Manager Use? [Online].Chron.
Available at: https://smallbusiness.chron.com/motivational-theory-can-manager-use-
32856.html. [Accessed on: 16 January 2019].
 Akkoyun, O., 2012. Simulation-based investment appraisal and risk analysis of natural
building stone deposits. Construction and Building Materials, 31, pp.326-333.
 Breese, R., 2012. Benefits realization management: Panacea or false dawn? International
Journal of Project Management, 30(3), pp.341-351.
 Hammond. K., 2018.Pros and Cons of the Motivational Theories.[Online].Bizfluent.
Available at: https://bizfluent.com/info-8467189-pros-cons-motivational-theories.html.
[Accessed on: 16 January 2019].
 Kumaran.S., 2015.Sources of Short-Term and Long-Term Financing for Working
Capital.[Online].Invensis. Available at: https://www.invensis.net/blog/finance-and-
accounting/sources-of-short-term-and-long-term-financing-for-working-capital/.
[Accessed on: 16 January 2019]
 Leonard. K., 2018.Sources of Finance for Working Capital.[Online].Chron. Available at:
https://smallbusiness.chron.com/sources-finance-working-capital-14472.html. [Accessed
on: 16 January 2019].
 Noltemeyer, A., Bush, K., Patton, J. and Bergen, D., 2012. The relationship between
deficiency needs and growth needs: An empirical investigation of Maslow's theory.
Children and Youth Services Review, 34(9), pp.1862-1867.
 Petri, H.L. and Govern, J.M., 2012. Motivation: Theory, research, and application.
Cengage Learning.
 Picincu.A., 2018.Sources of Long-Term Finance.[Online].Bizfluent.Available at:
https://bizfluent.com/facts-5509084-sources-longterm-finance.html. [Accessed on: 16
Januqary 2019].
 Yew. T. L and Manap. A. M., 2012. A critical assessment of Herzberg’s theory of
motivation.[Online].Borneo Post Online.Available
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