Improve Business Practice LO 3

1
IMPROVE BUSINESS PRACTICE
LEVEL III
Major General Mulugeta Buli Technical College

Holeta Genet
LEARNING OUTCOMES
2
At the end of this module the trainees should be able

to:
 Diagnose the Business
 Benchmark the Business
 Develop Plans to Improve Business Performance
 Develop Marketing and Promotional Plans
 Develop Business Growth Plans
 Implement and Monitor Plans

3
LO3
Develop Plans to Improve Business
Performance
Developing Consolidate Improvements
4
 Many companies are re-evaluating their activities in light of

changing business practices and economic demands.
 Business consolidation is seen as a strategic response to
these issues.
 It encompasses a range of activities, from physical
consolidation and centralization of a company’s IT servers
to the integration of data and applications.
 Achieving the benefits of consolidation means overcoming
a number of obstacles, including the risks of inadequate
planning, provisioning, and execution.
Conti…
5
 Achieving the benefits of consolidation means:

 What are the major drivers for consolidation in your
organization?
 Are you satisfied with the progress of your consolidation
efforts?
 What do you see as obstacles to the consolidation process?
 Would it help to have more accurate information to guide
your consolidation efforts?
 Are you able to measure the success of your consolidation
process?
Determining Cost-Benefit Ratios
6
 The benefit-to-cost ratio is a financial term that

describes the comparison of the amount of money
made through the production of an item versus the
costs incurred during the production process.
 Benefit cost analysis is a technique for evaluating an
activity by comparing the economic benefit with the
economic cost of the activity.
 If the costs outweigh the benefits, then it is no longer
profitable for a company to produce.
Conti…
7
 Cost-benefit analysis assesses the profitability of a

financial endeavor by considering the present value
of each cost and benefit.
 Present values are used under the assumption that
money available now is worth more than money in
the future. Because of the following reasons that
money for tomorrow will have less advantage than
money today. Those are risk, inflation ,theft,e.t.c.
Conti…
8
 Step 1 Discount the value of each cost and benefit

using the following net present value formula:
NPV = value / (1 + r)^t
 In the formula, "r" is the discount rate, such as the
rate of inflation, and "t" is the number of
compounding periods, such as years into the future.
 As an example, say you want to lease a piece of
equipment for 20,000 that is expected to increase
yearly profits by 11,000 for the next two years.
Conti…
9
 If the rate of inflation was 8 percent, each value is

discounted as follows:
NPV (20,000 initial cost) = 20,000, because it's
already a present-day expense NPV (11,000, year
one) = 11,000 / (1 + 0.08)^1 = 10,185 NPV
(11,000, year two) = 11,000 / (1 + 0.08)^2 = 9,431
Conti…
10
 Step 2
 Add each present value cost and benefit.
 In the example, total cost is just the initial 20,000
investment, but benefits are calculated as 10,185
plus 9,431 for a total of 19,616.
 Step 3 Divide the present value of benefits by the
present value of costs.
 Continuing with the example, 19,616 divided by
20,000 calculates a cost-benefit ratio of 0.98.
Conti…
11
 Step 4 Assess the cost-benefit ratio.

 If the number is less than 1.0, then the cost-benefit
analysis is negative. If it's greater than 1.0, then
there's a positive return. In the example, a 0.98 cost-
benefit ratio means you make 98 cents for every
dollar you spend, which means you lose money. Had
you not adjusted for inflation, the unadjusted total
benefits would total 22,000. Dividing by 20,000
results in a positive cost-benefit ratio of 1.1.
12
Example:
 Consider a project with initial investment of Birr 50,000 and the following Cash
inflows. Discounting rate is 12%

A) CBR
Year Cash inflow
1 12500
2 10000
3 30000
4 25000 b) NCBR = 1.13 –1 = 0.13
PV 12500 10000 30000 25000

BCR  (    )  50000
I (1.12) (1.12) 2 (1.12) 3 (1.12) 4
 1
11160  8000  21428  15924 56512
 2  1.13
50000 50000
 3
 4
Determining Work Flow Changes
13
 Workflow can be described as the movement of documents

and tasks through a business process.
 Workflow is fundamentally about the organization of work.
 It is a set of activities that coordinate people and / or
software.
 Organizations use workflows to coordinate tasks between
people and synchronize data between systems, with the
ultimate goal of improving organizational efficiency,
responsiveness and profitability.
Conti…
14
 Why Workflow?
 Most commonly, the business process is not recorded as
machine-readable information at all. Rather, each of the
humans participating in the business process interacts with
business systems that are not aware of the semantics of the
process as a whole, such as a customer information
system, and with other human participants through
content-neutral communications channels such as e-mail.
 Each human participant uses a mental model of their part
in the overall business process to determine their behavior.
Cont…
15
The following examples demonstrate workflows in

various industries:
Human Resource: Workflows which govern HR-related
procedures such as Starter, Leaver, Annual Review.

Banking: A workflow for a new client account, an
approval cycle for an investment decision, an approval

cycle for a mortgage or loan request.
Manufacturing: Quality Assurance workflows such as
non-conformities, complains, preventive maintenance.

Conti…
16
 Customer Service: A workflow which assigns tasks

to agents who handle customer requests.
 Defence/Emergency: A workflow which manages a
situation in a situation room.
 Travel: A workflow which manages a client
vacation, hotel reservation, flight reservation, etc.
for a travel agency.
Workflow Types
17
There are three different types of workflows:

Sequential Workflow -Typically Flow Chart based,
progresses from one stage to next and does not step back.
State Machine Workflow -Progress from ‘State’ to
‘State’, these workflows are more complex and return to

a previous point if required.
 Rules-driven Workflow -Implemented based on a
sequential workflow. The rules dictate the progress of

the workflow.
Developing action plan
18
What is action planning?

 Action planning is the process that guides the day-to-day
activities of an organisation.
 It is the process of planning that:
 what needs to be done,
 when it needs to be done, by
 whom it needs to be done, and
 what resources or inputs are needed to do it.
 That is why it is also called operational planning.

Conti…
19
 Plan of action designed to achieve your stated

business mission and goals.
 This is achieved by breaking down the strategies
you developed into small, achievable steps and
then identifying the actions you need to take for
each step.
 An action plan identifies the business goal (what
you would like to achieve) and the strategies that
can be implemented to reach that goal.
Organizational Structures
20
One of the key decisions you’ll make when starting

a business is its structure.
 It helps to top management identify talent needed to
be added to the business
 Ensure there are enough human resource within the
business to accomplish goals
 Each person has job description that out line duties,
and each job occupies its own position on the business
 Responsibility are clearly defines
Why should you develop a structure for
your organization?
21
 Structure gives members clear guidelines for how

to proceed.
 A clearly-established structure gives the group a
means to maintain order and resolve disagreements.
 Structure binds members together. It gives meaning
and identity to the people who join the group, as
well as to the group itself.
 Structure in any organization is inevitable -- an
organization, by definition, implies a structure.
Conti…
22
 The best structure for any organization will depend

upon who its members are, what the setting is, and
how far the organization has come in its
development.
 Regardless of what type of structure your
organization decides upon, three elements will
always be there.
Conti..
23
 They are inherent in the very idea of an

organizational structure.
 They are:
 Some kind of governance
 Rules by which the organization operates
 A distribution of work
 Governance-The first element of structure is
governance - some person or group has to make the
decisions within the organization.
conti…
24
 Rules by which the organization operates- Another

important part of structure is having rules by which
the organization operates. Many of these rules may be
explicitly stated, while others may be implicit and
unstated, though not necessarily any less powerful.
 Distribution of work -Inherent in any organizational
structure also is a distribution of work. The
distribution can be formal or informal, temporary or
enduring, but every organization will have some type
of division of labor.
Business Legal Structures
(Forms of Business Ownership)
25
 Your choice of structure will depend on the size and type of business, your
personal circumstances and how much you plan to grow the business.
 You can change your business structure as your business grows or your
circumstances change.
Your business structure can determine your:
 Tax liabilities
 Responsibilities as a business owner
 Potential personal liability
 Asset protection
 Continuity of existence
 Transferability
 Expense and formality
Conti…
26
There is several business structures, the first four are the most widely
used in Ethiopia:
Sole trader - an individual trading on their own.
Partnership - a number of people or entities running a business
together, but not as a company.

Company - a legal entity separate from its owners.
Co-operative - member-owned business organisation with at least five
members
Trust - an entity that holds property or income for the benefit of others.
Association - an entity usually established for recreational, cultural or
charitable purposes.
Reward scheme
27
 Decide what your goals are for setting up an

employee recognition scheme, so you can evaluate if
it is achieving what you want it to do.
 The most common criteria will be to recognize your
staff members’ individual efforts, or maybe to
improve staff morale or teamwork.
 When people feel appreciated, they’re more positive
about themselves and the work they do, and can
potentially become some of your best employees.
28
Thank you for your time.

Improve Business Practice LO 3

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Improve Business Practice LO 3

Uploaded by

Copyright:

Available Formats

1

IMPROVE BUSINESS PRACTICE

Major General Mulugeta Buli Technical College

At the end of this module the trainees should be able

 Benchmark the Business

 Develop Plans to Improve Business Performance

 Develop Marketing and Promotional Plans

 Develop Business Growth Plans

 Implement and Monitor Plans

 Many companies are re-evaluating their activities in light of

 Achieving the benefits of consolidation means:

 The benefit-to-cost ratio is a financial term that

 Cost-benefit analysis assesses the profitability of a

 Step 1 Discount the value of each cost and benefit

 If the rate of inflation was 8 percent, each value is

 Step 4 Assess the cost-benefit ratio.

inflows. Discounting rate is 12%

PV 12500 10000 30000 25000

 Workflow can be described as the movement of documents

The following examples demonstrate workflows in

procedures such as Starter, Leaver, Annual Review.

approval cycle for an investment decision, an approval

non-conformities, complains, preventive maintenance.

 Customer Service: A workflow which assigns tasks

There are three different types of workflows:

‘State’, these workflows are more complex and return to

sequential workflow. The rules dictate the progress of

What is action planning?

 when it needs to be done, by

 whom it needs to be done, and

 what resources or inputs are needed to do it.

 That is why it is also called operational planning.

 Plan of action designed to achieve your stated

One of the key decisions you’ll make when starting

 Structure gives members clear guidelines for how

 The best structure for any organization will depend

 They are inherent in the very idea of an

 Rules by which the organization operates- Another

Partnership - a number of people or entities running a business

together, but not as a company.

Co-operative - member-owned business organisation with at least five

Association - an entity usually established for recreational, cultural or

 Decide what your goals are for setting up an

Thank you for your time.

You might also like