Business management principles and practices

Section A: Question 1

Cross-Functional Map of The Process of Servicing a Bicycle

P-bicycle specializes in the service and manufacture of custom bicycles in Ashmore. With booming business, P-bicycle is experiencing business process challenges that have resulted in delayed deliveries of orders. Figure 1 shows a cross-functional map that illustrates the business process at the company. Different departments and the processes that they conduct and how they are interdependent.

Figure 1: P-bicycle functional map of the process of servicing a bicycle

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Figure 1 shows the workflow at P-bicycle for the service of a bicycle. The process begins with the placement of an order by a customer. The service work with the placement of an order with the sales team and specifications by the customer. The sales team prepares a work order that is forwarded to the service section or engineering department, where the order is verified with the order and specifications are verified. Additionally, the service section confirms that all the parts required for the service are available in the inventory, prepares a job schedule, and proceeds to begin servicing the bicycle. Suppose some parts are not available in the inventory. In that case, the service section informs the purchasing department that proceeds to coordinate with the suppliers as service of the bicycle proceeds to be serviced.

The service section proceeds with the work despite missing some parts using the concurrent-engineering approach. If some critical parts are not available and limit the ability to proceed with the work, the bicycles are set apart to continue once they are available in the inventory. Once a bicycle in service is complete, the distribution department is informed then contacts the customer for a pickup or delivery. After the customer verifies the product, an invoice is prepared, and when payment is made in full, the bicycle is made available for collection by the customer

The improvements made on the cross-functional map were the addition of the direct inquiry for services with the service section and the customer. The improvement aims to prevent customers from failing to confirm the service once complete and notified for collection. This improvement aims to alleviate the return of the product for more service to meet the needs of the customer. Notably, the sales team may not be familiar with the technical requirements required by customers, and giving the engineers an option to address these differences makes it possible to lower the time spent servicing a bicycle. The elimination of the distribution department and allocation of the responsibilities for collecting the fee charged and the notification of customers for collection to the sales department is essential since the company only works with customers’ orders using a just-in-time production approach. It will also eliminate the time taken with the reorientation in the clint-company relationship with the customer already established by the sales department. Figure 2: Improved P-bicycle functional map of the process of servicing a bicycle

Question 2

In the purchases department, the firm could potentially source materials of a lower quality than the customer’s needs for the company’s gain by saving on service costs. This could create a challenge of customer dissatisfaction with the company services and seek services with another company, ultimately lowering the demand for P-bicycle services. The Moral standpoint would be to be fair to the customers and uphold the ethical precepts in the interest of the long-term benefit to the organizations with growing demand.

Figure 3: Challenges in the lack of fairness to customers when ordering parts

The case stated where the organization sources cheap bicycle parts and charges a fee for standard parts would be considered immoral management. Immoral managerial ethics are informed by the selfish approach by the management to maximize the benefit of the organization but at the expense of the other stakeholders in the company. The core facets of organizational ethics are a code of ethics, ethics training, availability of situational ethical guidance, and confidential reporting systems. The intrinsic organizational rewards for adopting national immoral organizational ethics are saving on costs and charging for standard prices to increase the organization’s profit margins.

The lack of the ethical foundation elements that are informative on the employee’s and other stakeholders’ conduct facilitates the realization of higher margins. In an immoral approach to organizational ethics, rules are perceived as an obstacle the organization has to overcome to accomplish its goals. The strategic approach is to exploit its customers for company profit. The management’s decisions, actions, and behaviors imply a positive opposition to what is typically moral or ethical. Consequently, the management decisions are discordant with the accepted ethical principles and an active negation of the implied moral requirements.

Question 3

Competitive benchmarking is a tool used by organizations in the same industry to explore their performance in different areas and identify areas of improvement in process, product, customer relations, or services. The most suitable performance measurement for the comparative benchmarking of P-bicycle is process performance metrics and customer metrics. The measurement of the customer metric benchmarking will examine the total amount of money that the customer is expected to spend on the services offered by P-bicycle during the entire business relationship. This measure is referred to as the customer lifetime value (CLV) (Krishnamoorthy et al., 2014). The calculation of CLV is obtained by multiplying the mean value of the purchase by the number of times the client will purchase per year multiplied by the average length of the customer relationship (in years).

CLV = mean value of purchase X times the customer purchases yearly X mean length of customer relationship (in years)

Process the performance metrics objective is to measure and monitor the operational performance across the organization. P-bicycle is experiencing challenges with delayed deliveries and requires optimizing its service process to avoid the backlog of customer orders. The measurement of the process performance is obtained by dividing the number of defective products by the total products produced (Barrows et al., 2016). Typically, the core objective of this process is lower the result as low as possible to get a throughput that indicates the efficacy in the amount of time that it takes to complete a particular process.

Section B

Question 4

A business line of visibility is the ability to accurately and completely view the processes, transactions, other company activities in the generation of value. The line of visibility ensures that the organizational activities are aligned to the organizational objectives and helps control the costs among other organizational resources to avoid wastage (Hoeven et al., 2019). Consequently, some of the organization’s core objectives are increased efficiency with increased visibility in the business process to continuously examine and optimize the business process to achieve higher operational efficiency.

This process helps the organization identify the core areas of wastage and alleviate areas of wastage in the form of time, material, costs, or transportation. Establishing a visibility line also results in greater transparency in the business process. The process execution is visible to all the people in the corporation since they are readily monitored (Hoeven et al., 2019). The consistency accomplished results in improved quality leads to higher profitability since the process implemented is standardized in a manner that reduces costs. Increased agility creates full visibility and enables the organization to respond with ease to the changes in business conditions and adapt to the new business environment.

Question 5

Benchinchmarking performance of a fast-food performance involves evaluating the restaurant services and products and products and products against the industry standards to gain insights into the strengths and weaknesses of the business. The selected business measures are the internal turnover ratio that examines how quickly a restaurant sells and replenishes its inventory for a specified period, day, week, or monthly. The internal turnover ratio is acquired through the sales division with the average inventory. The management of the restaurant’s food stocks is critical is it a core determinant of the restaurant’s financial health. It also helps monitor the food in the inventory since some foods are highly perishable, and holding a large inventory might lead to losses.

The other benchmark of performance is the cost of goods sold (COGS) is used to examine the profit margins generated by the restaurant. The COGS is obtained by adding the beginning inventory to the purchased inventory and subtracting the ending inventory. To increase the restaurant’s bottom line, the restaurant needs to keep a lean inventory in increase the use of the available stocks on their menu items to lower the cost of production for each product (Barrows et al., 2016). Keeping track of food costs in the inventory is essential to determine the pricing of meals and adjust the services to the business environment to remain competitive.

Question 6

The importance of the value chain for competitive advantage lies in creating a supply chain that is optimized to lower costs in transactions, processes, and integration of the supply chain. The concept of value chain refers to accomplishing customer satisfaction and managing costs in the production process in effective ways. Conducting value chain analysis enables an organization to identify areas of wastage, from the sourcing of supplies to the delivery of the finished product to the customer. As such, the internal value chain analysis at a company involves evaluating the production, design, marketing, and distribution. To achieve a competitive advantage, large corporations are employing the development of a value chain to transition their supply chain to a value chain. Notably, while a value chain and supply chain have similarities, they differ in that the value chain takes into consideration the contributions of all the stakeholders involved in the production process as well as the befit that can be generated by liaising with competitors to solve supply chain challenges in the industry collectively.

The global chain restaurants have been the leaders in developing value chains in their operations across the globe to standardize products and services and retain a consistent brand image. For example, McDonald’s has an integrated value chain that employs technology to enhance communication among stakeholders with centralized storage located strategically to their restaurants to ease the supply of materials. The use of technology creates agility in its supply chain, making it easy to respond to market forces, such as vegetable shortages, and take timely actions to avoid interruption in its operation (Herden, 2019). Further, the use of data-driven decisions makes it possible to forecast the changes in the market and prepare for changes in trends in the market in advance. For example, the use of integrated information systems helps organizations predict changes in demand trends and adjust the sources of their material in advance to accommodate the expected changes. As such, value chains are critical in the organization of companies in a manner that limits the degree to which businesses are affected by unforeseen events in the business environment.