2. Investigate the role of management in improving business performance.

2.1

In this part of my report I am going to investigate the second learning outcome –

“Investigate the role of management in improving business performance.”

To do this I must investigate the deployment of human resources, the use of organisational structures in a business, strategic and tactical direction and finally the outcomes of effective and ineffective management. When all of these aspects have been investigated I will have fulfilled this second learning outcome.

Firstly I am going to investigate the deployment of human resources to achieve organisational aims an objectives. Boots state that their aim is –

“To be the place for health and beauty customers. We want to secure market leadership in the UK and build on our brands' growing success internationally."

Therefore their objectives would be derived to try and achieve this aim. Some of the objectives that Boots are likely to have include –

To make a profit
Surviving
Increasing sales or market share
Be Market leaders
Providing a service to the community
Producing high quality products or offering high quality service
Fulfill charitable or non-profit objectives such as caring for the
environment

All of these aims and objectives would need to be completed by different areas of the business. It is essential that the right functional area is chosen to complete the right objective. If not then there is a risk that the objective may not be completed at all. Some of the things that human resources need to ensure are completed include - .

What the staffing needs are and whether to use independent contractors or hire employees to fill these needs
Recruiting and training the best employees
Staff are a major resource in any business. This is particularly true in a business like Boots, which has a very large amount of employees which they need to keep happy which will hopefully result in them being retained.

Deploying human resources effectively is vital to Boots for several reasons:

The business needs to employ the right number of staff. If it has too many employees it is not cost effective and if it has too few then it will not be able to carry out all of its work
The business needs to have a stable workforce. It is costly and inefficient if there is a high labour turnover of staff
The business needs to recruit the most appropriate staff for vacancies
The business must make sure its staff are properly trained in order to carry out their work in the most effective way
Pay levels should be appropriate. Paying too much is costly, but paying below the minimum wage is demotivating.

As said before, it is not just getting the right staff for the right job. it is using the right resources to do different things within the business. As an example I have created a table that shows some objectives and the functional area that is likely to help achieve it.

For the purpose of this assignment Boots have recruited internally because they feel the needed the experienced of already qualified Boots staff from other Boots stores. These internally recruited staff will then be able to use their knowledge of things such as Boots systems and products knowledge to train externally recruited staff that are likely to be part time.

2.2

This is a preview of the whole essay

2.2

All companies have organizational structures. Aims and objectives need to be communicated, the way that the organisation is structured depends on the methods and channels used. There are three types of organisational structure; higherarchical, matrix and flat. The term ‘hierarchy’ translates as ‘a system whereby grades or classes are ranked one above another’. The structure also goes in an upwards direction leaving the head at the top of the structure all of the time. This is an example of a hierarchical structure –

(Diagram Taken from Heinemann GNVQ business - Author – Carol Carysforth, Mike Neild)

Flat structures tend to be relatively small as they are made for use in a small business. A business that uses a flat structure usually have good communications as it is a smaller business with less people to spread news more and communicate quicker. It is also usually more informal than a larger business such as Boots as everybody knows each other more and are usually on first name terms as there are less people to know. This is an example of a flat structure –

(Diagram Taken from Heinemann GNVQ business - Author – Carol Carysforth, Mike Neild)

Matrix structures tend to be associated with businesses that deal with one-off projects such as building work. For example if a building company had 3 projects such as building a tower, a bridge and a café they could name them A,B and C with each project having a manager. These managers would all need constant support and be in communicate with the necessary functional areas such as finance and human resources. Therefore a matrix structure for this building company could look like this –

(Diagram Taken from Heinemann GNVQ business - Author – Carol Carysforth, Mike Neild)

The organisational structure for Boots as a company would be a hierarchical structure as it has many functional areas that all need their own managers and staff. These functional areas include –

Administration
Finance
Sales
Production
Marketing
Human resources
Research and development
I.T
Warehousing and distribution

However in terms of the new venture, the best structure would be a matrix. This structure is best for projects and will hopefully allow for the aim of opening the store within 6 months easily achievable. Some of the typical features of a matrix structure include –

Encourages team working between areas as the structure is small
Project leaders for each separate operation in the project
Team members are made up of people with expertise. These people provide their own area of expertise within their team.

Here is a matrix structure for the new venture of opening a Boots store at Discover Trentham.

Disadvantages and advantages of organisational charts

2.3

Strategic planning is the process of determining a company's long-term goals and then identifying the best approach for achieving those goals. They are Long-term plans based on the organizations overall business objectives. Strategic plans typically last for many years. However it can not be assumed that there is a strategy for achieving the aims and objectives of Boots, because aims and objectives constantly change therefore the strategy to help do this will consequently change as well. It is essential that every employee is on board and aware of any strategy in place to ensure that the strategy is fulfilled. Here are some examples of strategic planning and how it helps a business plan for the future –

Competitive Advantage – seeking to identify sources of competitive advantage
Adding Value – looking at ways to add value, this way the consumer will shop with your store and not the competitor
Mass or niche markets? – Which is the best route? Whichever brings in the most revenue and is appealing to the desired audience.
Cost based strategies – focus on reducing costs to compete and grow
Market based strategies – focus on satisfying consumer needs as the means to growth. The more customers that are buying products, the more demand there is for your business.

Strategies can be long term or short term. They are in place to give direction to the business and give them something to aspire to. Boots long term strategy is to open 25 out of town stores within the UK. Slowly but surely Boots will be able to do this. They are already opening one new out of town store in Discover Trentham. By following the strategy they have been able to open one new store already. Here are some of the factors that would have been in the strategy –

Find best site for a new Boots store
Discover ease of access
Investigate other attractions that are likely to attract new customers
Research the local and surrounding area to Discover things such as average age, income etc.
Get quotes for fixtures and fittings
Begin work on building and fitting the store
Recruit new staff internally and externally
Train staff
Prepare store for opening
Open the store for business.

This strategy as been made upon the decisions made using sound judgement. The manager has used experience and knowledge of the market place to decide on things such as where to have the store. The store is going to be situated in an out of town Retail Park in Trentham. This decision has been made on sound judgement and the knowledge of the following things –

Shoppers are moving out of the highstreets and into the out of town retail parks.
Out of town parks like Discover Trentham have the advantage of free parking in close proximity to the store allowing for ease of carriage of any products bought.
Good for mothers with young children who would benefit from the ease of shopping somewhere with good parking and not having to carry much to the car.
Good for disabled people who would find it hard to traipse around a city centre high street.
Good for old people who struggle to walk much; they don’t have to walk everywhere.
People prefer to shop at a site where basically everything is available for them ‘under one roof’. It allows them to save on petrol and time because they can get everything all at once.

2.4

When managing a business it is essential that the success is measured. If human resources have deployed the wrong functional areas to the wrong business activity then it may result in aims and objectives not being completed. In terms of management, a manager needs to have good people skills, good communication skills, able to direct a team, have knowledge of the business etc. if they haven’t got these skills then it could lead to ineffective management. Effective management can change how a business is perceived and its popularity. If Boots is an effectively managed corporation then it is likely to affect things such as –

The reputation of the store – it will have a good reputation for a well kept store who offers high quality goods to the consumer
Share price – share price is likely to increase as people see it as a store likely to grow and gain a higher market share
Improved performance – an effective manager will have the knowledge of the market they are working in. As a Boots manager, I am aware of how my store works, I know the things that work and the things that don’t. Some promotions and offers are not as popular in my store as they are in others. Therefore I know what works and is good for my store which will hopefully lead to improved performance.
Growth – if Boots doesn’t grow as a company then they wont increase market share which is crucial in the pharmaceutical market that Boots is in when there is so much competition from the likes of superdrug and other similar stores.
Market standing – if Boots has a good reputation or market standing then they will be ‘sought after’ which means that people will choose to shop there over other stores. In other words if the store is desirable then more people will shop, thus increasing sales, profit and market share.

There are numerous ways that effective management can be achieved. In terms of the new venture for the opening of a new Boots store in an out of town location, there are incentives for employees that will lead to the company being effectively managed. They include –

Negotiating finish times for the venture, it will give an aspiration for the finish line and will effectively allow the workers to see a light at the end of the tunnel in terms of finishing the job
Using incentives such as prizes and bonuses if the job is finished early - these early finish bonuses will give employees and managers a good reason to get the job finished quickly because they benefit themselves from doing the job early or at least on time.

2.5

It could be that management within the business is ineffective. This may occur because something somewhere in the business is going wrong and the workforce isn’t being effectively controlled. If the business is being ineffectively managed then it may result in decline within the business unless things are put in place to turn around the way that the business is being managed. Some of the things that could occur if the business was ineffectively managed include –

Sales targets not being reached – less sales means less profit which can ultimately result in the business not surviving within the market as the competitors will fill the gap that Boots would leave if they were to begin a decline within the market.
Share price may decline – if the business is reported to be doing badly within the market i.e. bad profit margins, losses etc. then share prices are likely to decrease because people wont want to invest in a declining business.
Gain a bad reputation – if a business gains a bad reputation then it can be detrimental for its future existence. Even if the reason for the bad reputation is no longer there they still have that stigma around them that discourages people to shop there.
Insolvency – Boots could become insolvent if it doesn't have enough assets to pay its debts. An insolvent company goes into administration or liquidation which means that they are at risk of being taken over, they would have no choice other than someone to buy out the business which they could then run as they wish.
Bankruptcy – although this is unlikely as Boots is a major international organisation they could become bankrupt. If this should happen the company must cease trading.

Ultimately it is essential that a business ensures that its business is effectively managed. if human resources have deployed the correct functional areas to fulfil the right objectives, if the organisational structure is correct for the functions within the business, if the right strategies are in place to help the business to progress, if all of these points are considered then it will lead to an effectively managed business that will help improve business performance