my project 4 sem
TRANSCRIPT
-
7/30/2019 MY Project 4 Sem
1/61
1
- INTRODUCTION
FINANCIAL REENGINEERING
Thanks giving seem to be the most pleasant of all jobs but it is none the less difficult when
one tries to put them in words. Can these humble words and expressions or gratitude really
convey the heart felt acknowledgment that are due to the weak words and the expressions
fainter than what it should be. I am thankful to all our faculty members who has inspired and
guided for completion of the project. His teaching us has been a milestone for us to complete
this project work in a very limited time.
Last but not least I am thankful to my friends who directly and indirectly co- operate,
encouraged and inspired me to achieve my target.
-
7/30/2019 MY Project 4 Sem
2/61
2
The business environment of the present day has become so complex that organizations are
necessarily to be alert to respond to the new challenges and opportunities. This involves a
continuous process of managing the change. The idea that the change is essential, desirable
and constructive within the established pattern of organization is realistic. The view that the
change has the beginning and an end is no longer tenable in this continuum. Top management
in its endeavor of reorienting the organization must recognize the need and set the tone for a
change. This kind of change compels either innovation or improvement or both. In such an
intricate situation many organizations tend to focus their attention in identifying innovations
rather than improvement. However, the latter is considered to be more appropriate in
accomplishing the task. Recently, a new concept called Business Process Reengineering
(BPR) has emerged as a conspicuous tool for restructuring the organization. In fact, the
process of reengineering not only fosters a favorable climate supportive of desirable change
but also improves the organizations probability of success
Business Process Reengineering:
DEFINITION:
The Business Process Reengineering is a complete life cycle approach. This provides the
scope for problem identification and also solutions to implement the successful business
operations. There are many new elements in BPR such as extensive use of IT and new
perspectives on organisational structure. There is also more about process redesign, quality
improvement and so on. It is a comprehensive method of assessing the current business
process planning and redesigning the methods and implementing them for business solutions.
Hence, the BPR is defined as The fundamental rethinking and radical redesign of the
-
7/30/2019 MY Project 4 Sem
3/61
3
business systems to achieve the dramatic improvements in critical and contemporary areas
such as cost, quality, service and speed. It is a comprehensive and complete method,
addressing such activities of organizing the project, assessing the current business process,
designing the reengineered business process, and planning and implementing the solution.
The origin and scope of BPR is derived from the concept of innovation. While the BPR
recognises the process innovation, the innovation concept lays more stress on the product
innovation. But, the reengineering efforts on business processes, which will improve the
customer service quality, the product value, etc. It is notable that redesigning the processes
improve the working life of employees which in turn lead to indirectly improved quality and
responsiveness to customers. BPR is done for various business reasons and those could be
What is reengineering:-
Re-engineering is the fundamental rethinking and redesign of business processes to achieve
dramatic improvements in critical, contemporary measures of performance, such as cost,
quality, service and speed.
Michael Hammer and James Champy
Re-engineering is a rapid and radical re-designing of processes, services, policies and the
organizational structure of an organization.
The purpose of reengineering is to make all processes the best possible.
It is an effort to enhance the administrative effectiveness and efficiency.
Reengineering is an effective tool for organizations striving to operate as effectively and
efficiently as possible
Examination and modification of a system to reconstitute it in a new form Financial
Re-engineering is the radical redesign of business processes and organisational structure
-
7/30/2019 MY Project 4 Sem
4/61
4
in order to achieve significant improvements in performance, such as productivity, cost
reduction, cycle time, and quality
According to Michael Hammer and James Champy (1993).
The fundamental rethinking and radical redesign of business processes to achieve dramatic
improvements in critical contemporary measures of performance, such as cost, quality,
service, and speed.
Maximizing customer value and minimizing consumption of resources while delivering the
products andservices.
According to Thomas H. Davenport (1993).
Encompasses the envisioning of new work strategies, the actual process design activity, and
the implementation of the change in all its complex technological, humanand organizational
dimensions.
Business Process Reengineering involves changes in structures and in processes within
the business environment. The entire technological, human, and organizational
dimensions may be changed in BPR. Information Technology plays a major role in
Business Process Reengineering as it provides office automation, it allows the business to
be conducted in different locations, provides flexibility in manufacturing, permits quicker
delivery to customers and supports rapid and paperless transactions. In general it allows
an efficient and effective change in the manner in which work is performed
What is the Business Process Re-engineering
The globalization of the economy and the liberalization of the trade markets have
-
7/30/2019 MY Project 4 Sem
5/61
5
formulated new conditions in the market place which are characterized by instability and
intensive competition in the business environment. Competition is continuously
increasing with respect to price, quality and selection, service and promptness of delivery.
Removal of barriers, international cooperation, technological innovations cause
competition to intensify. All these changes impose the need for organizational
transformation, where the entire processes, organization climate and organization
structure are changed. Hammer and Champy provide the following definitions:
-
7/30/2019 MY Project 4 Sem
6/61
6
NEED OF THE STUDY
A business involves the interest of various stakeholder who either support it or contradict it.
The stake holder in the process of maximizing their wealth, try to get a leverage on every
possible front by rewarding the other Each interest group tries its level best to grab
maximum possible returns from the business.
A win-win situation cannot be expected to turn up every time although attempts are made to
bring such a situation about all the time. Inspite of being having a conservative approach to
cost control leads to the loss of a good opportunity for making future profit there might be
some uncertainty due to which promoters or the owners have to think for the reengineering
of all the strategies of the business.
The organization will have to use tactics in the short run and strategies in the long run to
manage its finances if the ultimate result is to be favourable.for this cost and benefits from
every corner must be looked into in the value chain of the organisation.For achieving such a
goal there must be a flexible approach for achieving the desired results, with sustainable
success .
For such a reason the organization should have to use the reengineering processing which the
organization creates the new innovative ides to redesign the processes of the organization to
get the objective.
Each organisation must determine itself when it is appropriate for them to reengineer.
Reengineering should be done only if it can help in achieving an enhanced strategic position.
Some strategic indicators that require reengineering include:
-
7/30/2019 MY Project 4 Sem
7/61
7
1. Realization that competitors will have advantage in cost, speed, flexibility, quality or
service
2. New vision or strategy: a need to build operational capabilities.
3. Need to reevaluate strategic options, enter new market or redefine products/services.
4. Core operating processes are based on outdated assumptions/technologies
5. Strategic business objectives seem unreasonable.
6. Change in market place in the form of - Loss of market share
New basis of competition/new competitors
New regulations
Shorter product life cycles
New technologies in play.
So, if the company is at the cutting edge of an industry that has just undergone major
changes reengineering might not be appropriate. However, if the organisation operates with
old models instead of new technologies and approaches used by others, reengineeing may be
urgently needed. Even if technical performance is adequate, other improvements may be
needed
such as training, organisational change, leadership development etc. In such circumstances
also reengineering is required.
-
7/30/2019 MY Project 4 Sem
8/61
8
SCOPE OF THE STUDY
In this project, the objective was to establish a confirmed database as per the data requirement
for the RE Finance Team which created a base for comparison and preparation of new
Agenda packs.
. The implications of this practice would be as follows:
1. To make available capital expenditure information for all 3 formats.
2.
To make available information useful in post audit analysis.
3. To make available information useful in trend analysis of commercials such as rental,
maintenance
4. To make available information useful in trend analysis of financial such as capital
expenditure, sales.
5. To make available easy accessibility of information to the team for reporting higher
management
The scope of the project stands valuable for the long lasting the only thing needed is the
updating the Database. The database will be directly helping in
1. Estimation of capital expenditure requirement for opening of new Stores in all 3
Formats.
2. To take decision on rentals and maintenance on the basis of past records.
3. To make estimation of sales, gross profit margin & Pre-opening expenses.
-
7/30/2019 MY Project 4 Sem
9/61
9
With these criteria in focus, we move on towards the methodology that was adopted for this
particular project.
The Status stands valid for a period till the project is being approved from the date it is being
put forward for approval.
Along with living standards the consumption pattern also changes so if the project is hold for
long duration the demographics may change during the period.
-
7/30/2019 MY Project 4 Sem
10/61
10
OBJECTIVE OF THE STUDY
Market Comparison is the process which decides the location of the stores. On the basis of
City, Trade Area, and Total Retail Sales population.
Status of Project Submitted Database represents number of stores operating, number of
Stores Approved to be opened & Pending Projects
Determining the target market.
Estimation of sales density.
Determining the profit percentage.
Determining the current status of the project.
Classifying pending for the project.
Help the team in reporting to the top management
-
7/30/2019 MY Project 4 Sem
11/61
11
RESEARCH AND METHODOLOGY
The primary step was to understand the business model for this help of Real Estate policies &
procedure guide (called as Bible for Real Estate) was taken. This guide illustrates what
exactly is to be followed in accordance with Wal-mart International policies & procedures.
The guide illustrates the site acquisition process as follows.
1. Selection of site on the priorities basis by Real Estate & Development team.
2.
Once the site has been selected going for checking financial feasibility of the site by
calculating IRR of the project. This IRR is also known as hurdle rate & currently the
hurdle rate is 14%, if the project IRR is less than 14% than the project will be dropped
& new site will be selected.
3. After financial feasibility approval estimation of Pre development expenditure is
done. This expenditure includes all the paper works, training & development of
employees who are going to be employed at the stores after its opening.
4. Once the Pre- Development expenditure is calculated than the project is represented
for approval at different stage of Real Estate Committee (REC)
Indian Real Estate Committee: The Project is first represented to Indian REC.
The meeting of Indian REC is held at Gurgaon.
Asian Real Estate Committee: Once the project is approved at Indian REC it is
represented to the team of Asian REC. The meeting of Asian REC is held at
Hong Kong at the Headquarter. The project upto the budget of $5000000 is
approved by Asian REC.
-
7/30/2019 MY Project 4 Sem
12/61
12
International Real Estate Committee: The project budget exceeding $5000000
need Approval of International REC. The headquarter of International REC is
in ventonvilla U.S
5. Once the project is being approved at the different stage of Real Estate Committee
Acquisition of Real Estate Site is done by fulfilling all the legal requirements in
Accordance with In-Country Legal Laws.
6. Allocation of excess land. Sometime the seller is ready to sale whole lot of land only
so in this case the company needed to purchase whole land &after purchasing it is sale
the excess land within a year in order to prevent capital blockage.
7. Design and Construction services contract procedure. For Design & Construction of
stores company prefer to outsource this activity through the process of bidding.for the
purpose of bidding following is being done:
Financial verification of contractor.
Licensing verification of contractor.
Verification on past performances on similar projects.
Invitation for Bidding.
Receiving of Bid from contractors.
Bid Award.
8. Complying with the guidelines of Facility Planning & Management.
Comply with all facility related to laws and regulations.
-
7/30/2019 MY Project 4 Sem
13/61
13
Maintain safe environment for associate and customers.
Meet customer expectations.
Meet associate expectations.
Create sustainable retail centers.
9. Budget Reconciliation
This Budget is to be prepared on monthly basis once the site has been
approved.
This budget includes the expenditure like (Land cost, Building construction
cost, Capitalized lease value, Fixtures & Equipments)
In case of Budget overruns it requires Re-Approval
From 5% to 10% Approved by Country CEO.
Above 10% New Agenda is required for re-approval by the Regional
Committee.
Above 25% the project need to be re-approved by the IREC.
In this way complete information about the business model & Real Estate acquisition process
was gained that helped a lot in undertaking this project.
5.2 FORMAT DETAILS
For understanding all three operating formats help of team member is taken and comparative
study of all three formats were made to make it more clear.
-
7/30/2019 MY Project 4 Sem
14/61
14
BASIS SUPER MARKET
(SM)
COMPACT
HYPER
MARKET(CHM)
Cash & Carry
(Best Price)
Size Size of the store
varies from 2k to 5k
sq.ft.
Size of the stores
varies from
30k50k sq. ft.
(Existing)
20k sq. ft. (New)
Size of the store
varies from 40k -60k
sq. Ft.
Location Basically these
Stores are Stand
Alone.
Basically these
Stores are the part of
Mall. They can be
Stand Alone also
Basically these
Stores are Stand
Alone.
Prototype Metro-Meat
Metro-Non Meat
Non Metro-Meat
Non Metro-Non
Meat
32K sq. ft. (32k &
-
7/30/2019 MY Project 4 Sem
15/61
15
Sub Lease Area
(SLA)
Sub Lease Area
(SLA)
Office space
Loading area
Rent Generally Base Rent
is Applicable.
Base rent + CAM
Charges
Generally Base Rent
is Applicable.
Lease period Minimum Lease
period required is for
15 years.
Minimum Lease
period required is for
30 Years.
Minimum Lease
period required is for
30 Years.
Operating stores Presently we have
139 Operating &
Approved Stores in
different parts of
Country.
Presently we have 10
Operating Stores in
different parts of
Country.
Presently we have 6
operating stores in
different parts of
country.
Now, the information about all three formats is available which created a base for the project.
Following information about the stores is now available.
Size of the stores which is helpful in calculating per sq. Ft. Rent
Division of total area of the stores.
Prototype of the stores
-
7/30/2019 MY Project 4 Sem
16/61
16
Number of stores currently operating
Minimum lease period which is useful in calculating capitalise lease value.
Market Comparison is the process which decides the location of the stores. On the basis of
City, Trade Area, and Total Retail Sales population.
Status of Project Submitted Database represents number of stores operating, number of
Stores Approved to be opened & Pending Projects
Determining the target market.
Estimation of sales density.
Determining the profit percentage.
Determining the current status of the project.
Classifying pending for the project.
Help the team in reporting to the top management
-
7/30/2019 MY Project 4 Sem
17/61
17
LIMITATION OF THE STUDY
MYTH
It is not rightsizing or downsizing .
It is not about reorganizing the organization .
It is not the effort of a single leader .
Empowered Team members, use of groupware & coexist .
REALITY
Cost cuttings often lead to Layoffs, outsourcing & downsizing.
Identification of focused business process clusters reorganized the organization
Reengineering is often found to be a strategy of a narcissistic style of leadership
In fighting communication challenges, survivors management & the resistance for
reengineering by the professionals are often underestimated .
A database holds all of the information about a record a flat database is very easy to manage.
All the information is stored in one source.
The limits of a database are not in the number of records you can put in, but in how much
information you can track per record. As your organisation grows, and more people need to
track a great deal of different information about each record, you may want to change to
using a relational or shared database. This allows one of your staff to track meeting
attendance and program involvement in detail, while another may search detailed information
about each record's donation history. But you do not need this when you are starting up. Go
with a simple, reliable data base program.
Performance is reduced, due to increased I/O on the source database resulting from a
copy-on-write operation to the snapshot every time a page is updated.
-
7/30/2019 MY Project 4 Sem
18/61
18
Files cannot be dropped from the source database or from any snapshots.
The source database must be online, unless the database is a mirror database within a
database mirroring session.
If a source database becomes RECOVERY_PENDING, its database snapshots may
become inaccessible. After the issue on the source database is resolved, however, its
snapshots should become available again.
Excel worksheet as a database has a limited number of rows or records that you can
store. But when you reach the 65k lines limit, you can convert it easily to Access and
the rest of the application is can still be used.
-
7/30/2019 MY Project 4 Sem
19/61
19
2-DISCRIPTIVE
WORK ON
SUBTOPIC OF
STUDY
-
7/30/2019 MY Project 4 Sem
20/61
20
DISCRIPTIVE WORK ON SUBTOPIC OF STUDY
Financial Re-engineering is done for various business reasons and those could be...
Poor financial performance,
External competition,
Erosion of market share, or
Emerging market opportunities
Financial Re-engineering is not limited to, but also includes
Organizing Around Processes:-
- Formation of teams to perform an entire process
- Eliminate/minimize hand-offs
Process Improvement:-
- Opportunity Driven
- Incremental
Product and Service Opportunities:-
- Customer:- How can the customers wants and needs be better understood?
- Product / Service:- What improvements or added value cabe made to products and services?
Operational Goals:-
- Quantify the redesigned business process
- Address The process as a whole as well as Individual activities
Business Process Goals:-
- Set performance levels for the entire business process in term of:
-
7/30/2019 MY Project 4 Sem
21/61
21
(1)Financial:- How much does/will the process cost to perform?
(2)Organization:- What will the organizational structure look like?
Deliverable Goals:-
Set performance levels for interim and ultimate process deliverables
in terms of:
(1)Quality
(2)Efficiency
(3)Cost
Types of financial Re engineering
Corporate Re structuring;- Acquisition
Financial Re-structuring:
The cementing of products, system, people, brands and technology has to be done with
financial structuring, financial control system, financial benchmarking and financial
quantification of every qualitative business variable .such cementing is called Financial
Engineering. And the process to change the financial strategy to reconstitute the organization
is known as the Financial Reengineering.
The fundamental rethinking and redesign of business processes to achieve dramatic
improvements in critical, contemporary measures of performance, such as cost, quality,
service and speed in financial aspects is known as financial restructuring
Corporate Re-structuring:
-
7/30/2019 MY Project 4 Sem
22/61
22
Corporate Re-structuring refers to the job-cuts, divisional closures, focus on core
competence, geographical concentration, product identification and strategic business units
etc. it also refers to the repositioning.
It basically deals with the redefining or researching of the purpose of doing business. It may
also be defined as the conscious effort to restructure policies, programmes, products,
processes and people.
Corporate re-structuring may be held in any of the following situations:
1. Mergers /Acquisitions:when one company acquire or buy the majority share of the other company. That company
which acquire the share, is called as holding company and to whom the holding company
buy, is called as subsidiary company and all this procedure is called as acquisition.
When two company have equally merge together and work out with each other having the
same objective, this is called as merger.
e.g. TATA has acquire the corus group plc(steel company) situated in U.K the deal value
was 12000 million dollar
2. Divestitures3. De-mergers:Reengineering the Financial Platform
Summer 1998 - The timeshare industry, or as it is now referred to, the vacation ownership
industry, continues to be one of the hottest segments of the hospitality industry. Almost every
day, one of the major opportunity funds, Wall Street investment houses, or major hotel
companies is looking toward acquiring one of the timeshare companies. By combining the
existing infrastructure with high growth opportunities emanating out of their deal pipelines,
the companies hope to create a large synergistic component to their hospitality offerings.
-
7/30/2019 MY Project 4 Sem
23/61
23
Once acquired, these companies need to be able to transition from an entrepreneurial
structure to one with much stronger corporate disciplines.
Nowhere is this more important than in the financial components to the "new" company
business. Unfortunately, this is precisely where most vacation ownership companies are
deficient. Most developers are long on sales and marketing know-how, but have always
treated the financial systems as a corporate stepchild. Most bankers and other financial
players are amazed at the un sophistication and inaccuracies which occur as a result of this
underdeveloped corporate component. These deficiencies are manifested in the inability to
accurately report on the companies financial condition, and also are directly responsible for
millions of dollars in annual expenditures resulting from inefficiencies, in
both manpower and information systems.
Vacation Ownership - A Complex Business Model
Anyone who has engaged in or studied vacation ownership companies understands that they
are complex business models which are very capital - intensive in their early years, yet throw
off considerable cash in the later years. These companies initially start out as real estate
development companies; they have all of the depth of those organizations, including
feasibility, development and construction, design, etc.
Once the resorts are developed, the companies step into high gear and become sales and
marketing entities. Not only is this a complex area, but it represents the single greatest
corporate expenditure for the company. In order to properly evaluate programs, the systems
and financial tie - ins must be in place for management to make crucial day - to - day
decisions on marketing and lead generation programs. Such programs need to track hundreds
of variables throughout the marketing and sales process. Once the properties are sold, these
-
7/30/2019 MY Project 4 Sem
24/61
24
organizations then need to handle the large amount of mortgages which are generated in the
sales generated process.
This complex business environment requires sophisticated management and information
systems to not only keep track of the data. but to present it to management in the most
efficient and useful fashion. Reengineering the company is the way to accomplish such a
task.
Value Capture
The deal value of $ 2.3 b is almost equal what Ford paid for the brand of Jaguar alone(approx
$ 2b). The opportunity to buy brands like Jaguar and Land Rover ,which are rated among the
top luxury brands in their respective segments, for cheap doesnt come knocking every time.
Fast Growing Market Segment
With about 30% growth rate, the luxury car segment is the top growing segment in India
and has already seen the entry of biggies like Audi and Porsche. With established
distribution network in India, Tata Motors can offer top-rated products for these
segments. Though the absolute numbers may be small and would reduce due to the
current downturn, the gains would be huge when the economy turns around and the
salaries rise.
Deal Financing
Tata Motors financed the deal through a bridge loan of $ 3 billion arranged through a
consortium of 8 banks. It intended to refinance that loan though a mixture of domestic
and international equity issues and debt. However because of the liquidity crunch, a deal
now will be more expensive than they'd initially planned for.
Key Risk Factors
-
7/30/2019 MY Project 4 Sem
25/61
25
The key risk after this acquisition would be the performance of JLR. Any drop in
profitability would have an impact on Tata Motors consolidated financials.
A prolonged downturn in commercial vehicle demand would stretch domestic
profitability and cash flow.
Further downturn in the global auto industry.
Increasing cost of capital and liquidity crunch can hit bottom-line of Tata Motors much
more severely.
Tata bought the companies because they believed that these two brands have a lot of growth
potential in terms of revenue and sales.
In the first 10 months of 2008 Land Rover's US sales fell by 37 per cent to 25,377
compared to the same period in 2007. Jaguar's sales in the same period helped by the new
XF sedan were not as badly hit but its sales still fell 3.6 per cent to 12,575.
At the same time while Jaguar's UK sales rose 11 per cent against last year's same period,
Land Rover's sales fell almost 27 per cent to 30,241 units.
Not surprisingly then like GM, Ford Motor, Mercedes and BMW suffering the downturn
in the West, China, Russia and India seem bright spots for JLR also.
Tata's confidence in JLR may not be misplaced. This year in Russia, Land Rover has
turned out to the leading premium brand. Its sales grew 79 percent to 17,439 in the first
10 months of 2008 while Jaguar saw a more than 60 per cent growth to 1,423 units.
Tata expects China to be Land Rover's No. 5 market this year and Jaguar's seventh
largest, while Russia likely to be Land Rover's No. 3 and Jaguar's No 2 market.
JLR's immediate priority is to set up a distribution network in India for both brands and
the company feels that it can sell 2,000 to 3,000 units here to come on level with other
premium brands such as BMW and Mercedes within two to three years.
Process of the reengineering:
-
7/30/2019 MY Project 4 Sem
26/61
26
First organization have to recognize the each and every steps of the organization which had
been taken earlier to get the objective but was not appropriate to achieve the goal.
Second they will have to take some modification in the steps i.e process, technology ,
structure and the strategy of the firm in order to constitute the organisation into the new
form.
MOTIVATION FOR REENGINEERING
The motivations for reengineering are many, including: Reduce costs/expenses (the most
cited business-driven reengineering project goal) Improve financial performance Reduce
external competition pressure Reverse erosion of market share Respond to emerging market
opportunities Improve customer satisfaction Enhance quality of products and services.
Basics of reengineering:
The business environment of the present day has become so complex that organisations are
necessarily to be alert to respond to the new challenges and opportunities. This involves a
continuous process of managing the change. The idea that the change is essential, desirable
and constructive within the Established pattern of organisation is realistic. It is the
examination and change (reform) of five components of the business: that is,
1. Strategy
2. Processes
3. Technology
4. Organization
5. Culture
-
7/30/2019 MY Project 4 Sem
27/61
27
Change in strategy:
A strategy has to keep thinking innovatively as an old strategy would be known to be
unuseful. It will be necessary to formulate a new business formulae either they are new or
old ones with moderate variation. Strategy must have to think of the following innovative
concept or formulation:
1. Incremental cost-benefit analysis of every marginal change in the decision or situation.
2. Costing of the product, brands, employees and the enterprise, for long-term strategy
formulation
3. Leveraging sunk costs by innovatively using such costs or commitments in future
negotiation
4. To arrange for the discounted cash flow analysis of the alternate projects to be supported
by multi-angle performance parameters so that the comprehensive assessment of the
decision is possible
5. ERP would be possible if internal benchmarking of cost performance is built up.
6. To make national costing for a true application of profit center concept is a must.
7. Combining value chain analysis with segmentel ROI and enterprice portfolio mix
theories
8. Forming a U curve relationship with both the vendors and dealers to create a strategic
base for a long-term, sustainable and profitable partnership.
9. Making economic value added more meaningful.
10.Innovating network mix
-
7/30/2019 MY Project 4 Sem
28/61
28
Change in process:
Realise the potential of your Finance Department. We can map out your processes enabling
us to find anything preventing your department from working to its full potential. We can
streamline processes to improve the efficiency of your Finance department and help the
department become more than just an overhead in your profit and loss, but to start adding
value! We can also help you develop controls and standards.
In the reengineering of an organization there is need to change the business processes, which
will improve the customer service quality, the product value, etc. It is notable that
redesigning the processes improve the working life of employees which in turn lead to
indirectly improved quality and responsiveness to customers.
To improve the cost, quality, service and speed, companies are developing new processes to
produce the results important to customer. They are looking for ways to become more
flexible and responsive Change in the processes causes success in many organisations and
has fueled the growth of the Business notables, for e.g.- Ford Motor Company.
Reengineering improved its invoice processing so that the process was accomplished by 75%
fewer people and more accurate financial information was produced.
- IBM Credit Corporation. A credit issuance process that used to take two weeks to complete
now takes only hours with a 100- fold increase in productivity
- Taco bell. They reconfigured their restaurants to increase peak capacity for a top unit from
$400 per hour to $1500 per hour. At the same time they lowered prices; their average pricing
today is about 25% less than nine years ago.
In short the change in the processes are designed to be simpler to those they replace, several
jobs might be combined into one and the number of checks and controls reduced. In the right
-
7/30/2019 MY Project 4 Sem
29/61
29
sense, more frequently, it is the result that work is performed where it makes most sense, and
workers can make more decisions themselves.
Change in technology:
In the process of reengineering of an organisation there is need to change the technology if
that are not providing a satisfactory performance to implemented such a change new
information technology (such as knowledge based, expert system and sophisticated
telecommunications equipment) is frequently employed in the design of these processes.
The ultimate success of any activity expansion plan depends upon the quality of the system-
processess-equipment used at various level of functioning a perceptual and automatic
mechanism of technology review and upgradation should be an integrated part of the
organization culture
Technology refers to the core technical details of both the main assets and operations because
only high quality medical equipments do not make a hospital successful, without efficient
doctors and staff handling them with efficient system. therefore technology refers to both
core and support activities.
Changes in the technology basically refers to the following:
1. Technology upgradation collaboration: it refers to the innovative financial instrument
and technology leasing and subleasing
2. Collaboration for technology funding : it refers to the long term bonds
3. Technological consortium : it includes cost- benefit analysis of alternate combination
4. In house R & D: it includes capital & revenue budgets
5.
Employee training budget
-
7/30/2019 MY Project 4 Sem
30/61
30
Change in organization:
Transition is a time of "passage", when people are apt to carry around some of the baggage of
their past, as well as feel the first stirrings of their future. It is also a time when employees
have to face a number of challenges as old processes and ways of doing business make way
for the new.
Steps involved in the change of organisation:
1. Profiling the Existing Organization
2. Profiling the Future (Re-engineered) Organization
3. Analyzing the Gap
Results of the gap analysis should include the...
Gap between current and future organization structure, gap between current and future
geographic locations, gap between current and future staff levels, staffing and deployment
requirements, potential workforce adjustment impacts, organizational and employment
adjustment, costs training and re-training requirements, career development requirements
backfill requirements and replacement costs target groups and language requirements .
Change in Culture:
Change in culture provides a vehicle to open up communication and improve management
practices. It changes the way people work and can create an environment that encourages
innovation and change. It provides opportunities for employees to develop and improve their
client-oriented approach. Middle managers will be impacted as the role of coach and
facilitator takes on greater importance. This will in turn will improve client service, practical
and pragmatic business approach management style of openness and consultation continuous
-
7/30/2019 MY Project 4 Sem
31/61
31
learning organization employee participation and consultation client and quality service
oriented employees continuous performance measurement value-added service and results
orientation cross-functional integration
Poor financial performance:
In an organization if the performance of the various department is not upto the satisfactory
level i.e. if they are giving poor performance or not according to the expectation of the
organization then there would be a need to use the BPR process so that the objective of the
firm could be achieved.
External competition:
If the strategy of the organization is providing such an output which is not up-to the mark so
that it can cope-up with the existing external competition provided by the competitor then
there would be a need to change the strategy so that it would be beneficial to stay in the
market with the appropriate benefit which would be best drien by the help of BPR .
Erosion of market share:
One of the greatest threat for the organization is the erosion of the market shares and if that
happen than the firm will be in a great trouble and than would have to think of how to rise the
market shares .for that purpose the organization would have to use the process of
reengineering.
Emerging market opportunities:
Every of the organization wants to get the opportunity Provided by the market so that it
would be beneficial to the organization to spread the way to get the maximum profit and to
satisfy the needs of the customer and it is not possible to get the market opportunity in the
-
7/30/2019 MY Project 4 Sem
32/61
32
best possible manner without the help of the business process reengineering.Prerequisite
essentials for Innovative Financial Engineering are :
Needs strategic understanding of benchmarking
Creative Thinking
Courage to challenge the Traditional thinking
Shrewdness to locate and discount individual interests of different stakeholders
High ability to use business arithmetic and economical thinking together
A strategic approach to combine the intellectual and the Emotional Quotient
High ability to relate strategies, notional parameters and financial benchmarks in a
holistic manner
Maturity in selecting the most reasonable solution to a given problem
Ability to work at both the levels of analysis macro and micro
Quick grasp of the end result
Reengineering - The Critical Components
When refining processes, the working assumption is that the process is valuable and only
requires minor evolutionary changes to achieve peak efficiency. In the case of reengineering,
there is no such assumption. Reengineering involves a critical development of the following
key components:
Developing a Jointly Committed Team:
Consultants are an invaluable resource throughout the reengineering process, but change
-
7/30/2019 MY Project 4 Sem
33/61
33
won't become a permanent part of the client culture without a project sponsor, employee
consensus on the need for change, and involvement from all levels of the client organization.
Strategy Assessment:
Process reengineering should be done with a contextual understanding of the client's strategy
and critical needs. Many vacation ownership companies are cash - constrained due to timing
differences among construction expenditures, commission payments, and cash collections.
Reducing mortgage banking cycle time is an effective way to improve the velocity of the
cash cycle.
Baseline Diagnosis:
An objectiveperformance baseline serves several purposes: it identifies gaps between
current performance and best-in-class performance, pinpoints problem areas, and helps build
client consensus on the need for change. It also establishes cost, quality, and cycle time
targets for the reengineered processes.
Determining Scope and Priority:
When the strategy assessment and baseline diagnosis are completed the project team selects
and prioritizes the financial processes to be reengineered.
Process Design:
In this phase, the project team develops a future state design hypothesis based on best
practices from inside and outside the industry.
Impact Assessment / Implementation Planning:
Reengineering often entails radical organizational, skill set, process, and technological
change. Identifying the impact of chance on the client's organization and developing plans to
address potential resistance gives the change process a greater chance of success.
-
7/30/2019 MY Project 4 Sem
34/61
34
Implementation:
During implementation, the client must assume primary responsibility, with guidance from
the consultant. This institutionalizes the change process and empowers employees to seek and
drive future change opportunities.
Integrated financial systems such as SAP, Oracle, PeopleSoft, or Lawson play an important
role in the reengineering process. By replacing non-integrated legacy applications for General
Ledger, Purchase Order, A/P, Travel & Entertainment, Human Resources, Payroll, and
Inventory, companies can substantially reduce the time spent on manual journal entries,
intercompany accounting, accruals, closing, consolidation, and report generation.
-
7/30/2019 MY Project 4 Sem
35/61
35
Data Analysis &
Interpretation
-
7/30/2019 MY Project 4 Sem
36/61
36
Data Analysis & Interpretation
Who: Big Schools with Financial Challenges
Total Tuition Prior to Scholarship 8,346,873
Scholarship( 15% of Net Tuition) (1,255,297)
Net Tuition Income 7,091,576
Less Uncollectible Tuition(1% of Net Tuition) (70,916)
State Reimbursements 280,000
Net Fund Raising 1,150,000
Donations/Grants 850,000
Other Income 54,000
Total Income 9,354,660
Expenses
Total Salaries 6,911,818
Total Salaries/ Salaries related Expenses 8,066,231
Total School Related Expenses 289,430
Total Office Expenses 233,810
Total Building Expenses 463,500
Total Other Expenses 187,460
Total Flexible Expenses 1,174,200
Fixed Expenses
Total Rent 985,857
General Insurance 107,100
Transportation(Net) 199,500
Total Fixed Expenses 1,292,457
Total OTPS Expenses 2,466,657
Total (PS and OTPS)Expenses 10,532,896
Net Profit/(Deficit) (1,178,236)
-
7/30/2019 MY Project 4 Sem
37/61
37
Small Schools With Challenges
540
550
560
570
580590
600
610
620
630
2005/6 2006/7 Budget 2007/8 Projected 2007/8
Budget
SUMMARYHard Income $1,485,500
Annual Fundraising $550,000Grants $101,250
Total Revenue $2,136,750
Expenses
Personnel $1,691,853
Other than Personnel - Facilities $381,252
Other than Personnel - Other $224,234
Total Expenses $2,297,339
Operating Surplus (Deficit) - hard income ($811,839)
% hard income coverage of expenses 64.66%
Operating Surplus (Deficit) - all income ($160,589)
% all income coverage of expenses 93.01%
cost per student $22,745.93
Surplus (deficit) per student - all income ($1,589.99)
2007-2008
-
7/30/2019 MY Project 4 Sem
38/61
38
Foundation=Know What Your Schools Positioning Is and Program and Process
Performance Implications
0
20
40
60
80
100
120
140
Act.2005/6 Act.2006/7 Budget 2007/8 Actuall 2007/8 Projected 2008/9
Enrollment
-
7/30/2019 MY Project 4 Sem
39/61
39
OperationalExcellence
CustomerIntimacy
ProductLeadership
X=Our School
A=School AB=School BC=School CU=UnservedPopulation
C
B
U
Must BeStrong on
1-2And
BallparkOn the
3rd
X
A
-
7/30/2019 MY Project 4 Sem
40/61
40
The Schools Processes
What is desired investment posture for each process?
Taking Control
THE WORK OF THE SCHOOL
Recruit
StudentsRecruit Staff
Teach
Students
Develop
and
Evaluate
Teachers
Develop
Curriculum
Manage
FinancesCommunicate Raise Funds
Manage
Facilities
Tuition Setting
Financial Aid Process
Expense Mgt
Cash Flow Management
3-5 Year Investment Posture (Compound Annual Average Growth in Spending)
StrategicInvestment
Candidate (+8-10%)
Maintenance
Candidate (+4-5%)
ReducedInvestment
Candidate (0-3%)Overall Faculty
Compensation
Target Departmental
Compensation (e.g., Hebrew
Language, Math and Science)
Overall Process Investment
Target Process Investment
Total BudgetTuition SettingFinancial Aid
Process
-
7/30/2019 MY Project 4 Sem
41/61
41
-
7/30/2019 MY Project 4 Sem
42/61
42
In Summary
Know your schools value proposition
Understand the implications of that value proposition for process and program
spending
Take a long term prospective to financial planning
Utilize creative budgeting: Process and Program budgeting to shape a more
positive future
Respect the Virtuous Cycle wisdom
-
7/30/2019 MY Project 4 Sem
43/61
43
11.1 creation of sample structure for Market Comparison
A sample structure is created as per the requirements of the RE-Finance team for market
comparison containing following information:
Contains Following Information:
Average of INB. INB. INB. INB. INB. INB.
Sl. No. Comp Stores 1 2 3 4 5 6
Site Name
Store Number
DEMOGRAPHICS
City Population
Trade Area Population
Total RETAIL SALES (000's)
Retail Sales/capita TA
Total Income (000's)
Avg. HH Income
Income per capita
% Market Share
Economic Levels AB
C
D & E
2008 Sales
2008 Sales Increase %
2008 Profit %
2nd Year Projections of Approved Agenda Pack
2010 Sales
PSF
% Increase
Gross Profit %
Other Income %
Total Expense %
Profit %
-
7/30/2019 MY Project 4 Sem
44/61
44
Site Name
Store Number
City Population
Total Area Population
Total Retail Sales
Total income
Average House Hold Income
Income Per Capita
Total Sales
Profit Percentage
These informations were taken from Agenda Packs
-
7/30/2019 MY Project 4 Sem
45/61
45
11.2 Final Database for Market Comparison
Sl. No. Comp Stores 1 2 3 4 5 6
Site Name
Dugri Gole Market Bhadson Road Cheema Nagar Simlapuri Leela Bhavan
Store Number 1 1002 1003 1020 1021 1022 1025
2
DEMOGRAPHICS 3
City Population 4 21,20,020 21,20,020 3,75,727 11,42,517 21,20,972 3,75,727
Trade Area Population 5 1,72,640 1,93,357 71,077 69,691 1,76,891 81,700Total RETAIL SALES (000's) 6 11,50,000 48,40,000 11,57,400 9,74,844 18,91,501 10,75,020
Retail Sales/capita TA 7 6,661 25,031 16,284 13,988 10,693 13,158
Total Income (000's) 8 66,70,116 1,15,50,000 48,90,949 42,74,420 58,93,685 39,90,000
Avg. HH Income 9 2,17,242 3,36,012 2,97,261 2,81,905 1,83,250 2,10,000
Income per capita 10 38,636 59,734 68,812 61,334 33,318 48,837
% Market Share 11 3.85% 1.34% 3.48% 4.83% 2.10% 4.16%
Economic Levels A 12 23.10% 13.45% 18.00% 17.00% 11.00% 17.00%
B 13 23.10% 13.45% 24.00% 29.00% 15.00% 27.00%C 14 20.80% 31.30% 33.00% 20.00% 39.00% 28.00%
D & E 15 33.00% 41.80% 25.00% 34.00% 35.00% 28.00%
2008 Sales
2008 Sales Increase %
2008 Profit %
2nd Year Projections of Approved Agenda Pack
2010 Sales 4,34,65,074 4,42,89,834 6,49,84,985 4,02,76,800 4,70,64,172 3,98,04,000 4,47,12,960
PSF 18055.4 21661.0 14540.4 12824.0 10552.5 14025.4
% Increase 31.36% 14.00% 14.00% 20.00% 20.00% 20.00% 20.00%
Gross Profit % 11.74% 17.14% 17.14% 18.17% 18.73% 17.34% 17.64%
Other Income % 0.23% 0.20% 0.20% 1.49% 1.17% 1.17% 1.49%
Total Expense % 19.69% 18.73% 19.05% 22.80% 21.46% 22.54% 22.31%
Profit % -7.71% -1.39% -1.71% -3.14% -1.56% -4.03% -3.19%
-
7/30/2019 MY Project 4 Sem
46/61
46
11.3 creation of sample structure for Status of Project Submitted
A sample structure is created as per the specifications of Team for maintaining a Database for
Status of Project Submitted:
Sno. Zone Site Name City State Team Leaders BDM'sFormat
(EZD/EDM/BP/HM)
Merchandise
Planner
Drawing / Custome r
Movement Completion
Date
PPt Date
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Store Layout StatusProjects Details
Sna shot of Sam le Structure
-
7/30/2019 MY Project 4 Sem
47/61
47
Contains the following information:
Zone
Site Name
State
City
Team Leader
Business Development Manger
Format of Store
Agenda Pack Status
Capex Status
-
7/30/2019 MY Project 4 Sem
48/61
48
11.4 Final Database for Market Comparison
Sno. Zone Site Name City State Team Leaders BDM'sFormat
(EZD/EDM/BP/HM)
Merchandise
Planner
Drawing / Customer
Movement Completion
Date
PPt Date
1 NORTH Raj Nagar Ghaziabad UP Ajay Sharma umit Ahluwalia EZD
2 NORTH Sector-3 Vasundhara UP Ajay Sharma umit Ahluwalia EZD
3 NORTH Gomati Nagar Extension Lucknow UP Ajay Sharma umit Ahluwalia EZD
4 NORTH Rohtak Road Bahadurgarh HR Ajay Sharma Manu Bansal EZD
5 NORTH Hansi Gate Bhiwani-1 HR Ajay Sharma Manu Bansal EZD
6 NORTH Aggarsen Chowk Bhiwani-2 HR Ajay Sharma Manu Bansal EZD
7 NORTH Bank Road Rampura Phul PB Ajay Sharma Manu Bansal EZD
8 NORTH Hospital Road Maur PB Ajay Sharma Manu Bansal EZD
9 NORTH Ambala Road ehowa (Old Site HR Ajay Sharma Manu Bansal EZD
10 NORTH Thana Road Nazafgarh DL Ajay Sharma Kirti Sharma EZD
11 NORTH Sohna Road Dharuhera HR Ajay Sharma Kirti Sharma EZD
12 NORTH Rajapuri Dwarka DL Ajay Sharma Kirti Sharma EZD
13 NORTH Yamuna Colony Dehradun UT Ajay Sharma Pawandeep EZD
14 NORTH Saharanpur Road Dehradun UT Ajay Sharma Pawandeep EZD
15 NORTH Pillibheet By Pass Road Bareilly UP Ajay Sharma Pawandeep EZD16 NORTH Bareilly By Pass Road kichha UT Ajay Sharma Pawandeep EZD
17 NORTH Dasua Dasua PB Ajay Sharma rminder Randh EZD
18 NORTH Mukerian Mukerian PB Ajay Sharma rminder Randh EZD
19 NORTH Chhani Himmant Jammu J&K Ajay Sharma rminder Randh EZD
20 NORTH Roop Nagar Jammu J&K Ajay Sharma rminder Randh EZD
21 NORTH Udhampur Udhampur J&K Ajay Sharma rminder Randh EZD
Store Layout StatusProjects Details
Snapshot of the Database for Project Submitted
-
7/30/2019 MY Project 4 Sem
49/61
49
5.3 REQUIREMENTS OF DATABASE
After A database allows you to manage and use an incredible variety of information
easily. Databases are easy to set-up, easy to manipulate and easy to use. A database
allows you to maintain order in what could be a very chaotic environment.
There may not be the resources to hire a full-time database manager or a short-term
consultant. Initial data base structure can be very basic, easy to use and to maintain.
Databases can be expanded and manipulated as your organisation grows and your
resources increase.
Database is basically a brief information & Reporting of all the stores that are
operational & approved to be opened throughout the country.
It is easy to access information from the Database because all the information is
available at single sheet
It is reliable because information in each cell is linked with the original source.
The informations that is needed to the team of Real Estate Finance was available in
Agenda Packs but the size of one Store Agenda pack is more than 40 pages of excel
sheet so it was not easy to access information from there & make comparative study
of the stores.
A base was needed to be created for preparation and comparison of New Agenda
Packs.
5.4 UNDERSTANDING THE AGENDA PACKS
Agenda pack is something that is prepared for every store before its opening by the team of
Real Estate Finance. Agenda pack contains all the information regarding the stores and these
-
7/30/2019 MY Project 4 Sem
50/61
50
Agenda packs are represented at different level of Real Estate Committee for Approval. The
understanding of agenda pack is needed, as all the information was to be picked from the
Agenda pack & information in the Database is needed to be linked from the Agenda pack.
Agenda pack contains all the information such as:
Store Number
Store Name
City & State of Store Location
Agenda Pack IRR
Agenda Pack NPV
Type of Lease
Rent Escalation after number of years
Controllable & Non Controllable Expenses
Capital expenditure
Real Estate & Non Real Estate Expenses
Along with these informations many other information is used from the Agenda Pack as per
the requirement of Database. The Agenda pack contains hundreds of information in around
40 pages of excel sheet so the Database requirement was to pick information from this
Agenda Pack as per the requirement of RE-Finance Team.
-
7/30/2019 MY Project 4 Sem
51/61
51
5.5 PREPARED A SAMPLE STRUCTURE OF DATABASE
Wal-Mart India Private Limited
Real Estate Portfolio_ Easy Day MarketIREC Approved Financials
Sl. No. Site Name
Office
space
Land
Area in
Acres
Store
NumberCity State
Agenda
pack IRR
%
Agenda
pack NPV
( Rs.'000)
Approval
Date
Exchg
Rate
NSA (Sq.
ft.)
Backroo
m (Sq.
ft.)
Sublease
(Sq. Ft.)
Box Area
(Sq. Ft.)
Loading
Area (Sq.
Ft.)
Super
Area (Sq.
Ft.)
Applicab
le area
for
Rental
Sqft
-
7/30/2019 MY Project 4 Sem
52/61
52
Database contains Following:
1) Store number
2) Site Name
3) City of store
4) State Of Store
5) Prototype of Store
6) Agenda Pack IRR
7) Agenda Pack NPV
8) Exchange Rate
9) Net selling Area
10)Backroom Space
11)Sublease Area
12)Rent Rs/sq.ft/month
13)Approved occupancy cost
14)Actual Occupancy Cost
15)Security Deposit No. of Months
16)Advance Rent no. of months
Sample structure for Database
-
7/30/2019 MY Project 4 Sem
53/61
53
17)Rent Escalation rate
18)Rent Escalation After no. of years
19)Capitalise Lease Value
20)Sales Density Rs/sq.ft/month
21)Sales Per Day
22)Gross Profit
23)Controllable Expenses
24)Capital Expenditure
25)Capital Expenditure Rs/sq.ft/month
26)Yearly Sales
27)Non-Real Estate Expenses
28)Security Deposit No. of months
29)Advance Rent No. of Months
30)Total Rental on Box Area
-
7/30/2019 MY Project 4 Sem
54/61
54
5.6 CALCULATIONS IN DATABASE
In preparation of the Database several calculations were required & also simple
applications of mathematical & Financial Formulas for Calculation of following:
1. NPV
2. IRR
3. Rent Rs./Sq.ft./month
4. Sales Density Rs./Sq.ft./month
5. Sales Per Day
6. Net margin
7. Controllable expenses percentage to sales
8.
Total Capital Expenditure
NPV =
Where,
NPV = net present value
CF= cash flow occurring in several years
K= the discount rate
N= life of project in year
-
7/30/2019 MY Project 4 Sem
55/61
55
IRR= L+ (H-L)
Where,
L = lower discount rate, at which NPV is positive,
H = higher discount rate, at which NPV is negative,
A=NPV at lower discount rate
B = NPV at higher discount rate
Rent Rs./Sq.ft./month= Yearly rent/Super
Area/12
Where,
Super Area= Net Selling Area + Backroom +Loading Area
Sales Density Rs./Sq.ft./month = Yearly
Sales/NSA/12
Where,
NSA= Net Selling Area
Sales per Day = Total Sales * 10^6 / 365
-
7/30/2019 MY Project 4 Sem
56/61
56
Where,
10^6= for converting from million to Rupees
Net Margin = Gross MarginShrink
Controllable expenses percentage to sales
= * 100
Where,
Controllable Expense = salary + Repair & Maintenance + Utility + outside Services +
Merchant Fees + Logistic
Total Capital Expenditure = Building +
Refrigeration + Fixtures + General Equipments
+ Signing + Loss & Prevention + ISD
-
7/30/2019 MY Project 4 Sem
57/61
57
QUESTIONAIRE
NAME: ______________________________
OCCUPATION: Business
Service:--
Private employee
Government employee
Retired
RESIDENCE LOCALITY: ______________________________
ANNUAL INCOME:
2.5-5.00 lakhs
5.00-7.5 lakhs
7.5-10.00 lakhs
Above 10.00 lakhs
Presently you are having a:
a. An apartment
b. A home of yours
Q1.> where are you planning to invest your savings now?
a.
Real Estate
-
7/30/2019 MY Project 4 Sem
58/61
58
b. Fixed Deposits
c. Commodities Market
d.
Any other
If in real estate sector then:
Q2> Preference of opting the sector is due to:
a.
Lack of time
b. Land prices are increasing
c. Wants to live in an organized manner
d. Facilities available like 24/7 electricity power and water supply, parking, etc.
e. All the above
Q3> In which type of city do you prefer to buy?
a. Tier 1(metros)
b. Tier 2(developing cities)
c.
Tier 3(underdeveloped cities)
Q4> Your preference would be to buy a:
a. A land and build a house
b. An apartment for better living environment
c. Anyone (depends upon income)
-
7/30/2019 MY Project 4 Sem
59/61
59
Q5> If your reply is an apartment, then what are the parameter that you will go for?
a. Finance Availability
b.
Brands
c. Society
d. Time duration
e. Location
Q6> Would you be preferring to involve a mediator?
a. Yes
b. No
Why (for either of the reply)?
(__________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
_________________________)
Q7> What are the factors that effects your decision in buying an apartment.
a.
Proximity with education and the health care institution.
b. Facilities available
c. Society and physical evidence available
d. Either of the combinations (mention:____)
e.
All of these
-
7/30/2019 MY Project 4 Sem
60/61
60
Q8> From where do you raise the finance for buying the same?
a. Financial Institutions
b.
Loan from relatives and colleagues
c. Adequate savings
d. Any other (________)
Q9> Do you think that proximity with educational and health care institute and other
facilities effects the buying behavior.
a. Strongly disagree
b. Disagree
c. Not disagree nor agree
d. Agree
e. Strongly agree
Q10> Do you think that proximity with the market place effects the buying behavior.
a. Strongly disagree
b.
Disagree
c. Not disagree nor agree
d. Agree
e. Strongly agree
-
7/30/2019 MY Project 4 Sem
61/61
Conclusions
The vacation ownership business today is rapidly becoming far more integrated into
traditional real estate, hospitality, and financial environments. New participants and industry
veterans are reaching the same conclusions regarding the complexity of the business and,
more importantly, the inefficiencies which abound. These inefficiencies are most apparent
initially in the finance and accounting areas of the vacation ownership organization.
Through self-diagnosis and candid assessments of the current position of the business, as well
as its strategic direction, management can assess whether the business is a suitable candidate
for reengineering of its finance function. Reengineering can lead to large - scale
improvements in the operations of a company, improving its overall cash positions, cycle
times, and productivity. All of this leads to substantial increases in profits in a high-growth
environment.
The most direct benefit that companies derive from reengineering is significant in the process
improvement (50 to 100%). Costs are lowered while speed, quality and service are
dramatically improved. Unfortunately, reengineering seldom makes a significant impact on
the organizations bottom line (only 20% of the time.) Reengineering has a greater chance of
success if it is viewed as leading to growth and value creation. In addition, there are costs to
reengineering that must be considered before deciding for such a right strategy for an
organization. Wayne Code, President of Vallen Inc. explains, These changes may be
traumatic, but the pain is outweighed by the gains made in the move towards the significant
goals set. Change occurs when the pain of change is less than the pain of staying the same.