Sample2 Report Business Assessment

ABC
Marketplace

BUSINESS AND HUMAN RESOURCE
ASSESSMENT REPORT

Volume 1
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Prepared
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By Shirley
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ABC MARKETPLACE
BUSINESS AND HUMAN RESOURCE
ASSESSMENT REPORT

Content Page(s)
Title Page 1

Table of Content i-iii
Introduction 2
Intent of Report 2
Format Used 3
Actual, Theory, and Best Practices 4

The Company 5
Philosophy 5
Business Strategy 8
Exhibit 1 – Balance Scorecard Method 13
Exhibit 2 – Balance Scorecard Elements 14
Goals and Objectives 15
Products and Services 19
Exhibit 3 – Products and Proportions 19
Resources Available 24
Organizational Structure 27
Exhibit 4 – Laurel District Store Organization Chart 30
Exhibit 5 – Dimond District Organization Chart 31
Exhibit 6 – Employment Data 37

Market Environment 38
Local Demographics 38
Exhibit 7 – Ethnic Population 39
Exhibit 8 – Age and Income Demographic Information 39
Exhibit 9 – Miscellaneous Demographic Information 39
Customer Profile 40
Exhibit 10 – Characteristic and Traits 40
Sales and Marketing 41
Exhibit 11 – Marketing Process 43
Exhibit 12 – Activities in Marketing 44
Exhibit 13 – Components of a Marketing Plan 46
Exhibit 14 – Types of Performance Analyses 50
Exhibit 15 – Planning Process 52

Risk & Security 53
Risk 53
Exhibit 16 – Definition of Risk Management 57
Exhibit 17 – Sample Human Resource Risk Mitigation Form 62

2

Content Page(s)
Security 65
Exhibit 18 – Sample Elements of Security Management Plan 68
Exhibit 19 – Sample Vulnerability Report 69
Exhibit 20 – Sample Computer Security 70

Contract and Procurement Management 73
Exhibit 21 – Purchases and Acquisitions 77
Exhibit 22 – Contracting 78
Exhibit 23 – Invitation to Sell 79
Exhibit 24 – Select Seller 80
Exhibit 25 – Contract Administration 81
Exhibit 26 – Contract Execution 82

Recordkeeping 83
Payroll System 83
Accounting System 83
Personnel Records 84
Exhibit 27 –Sample List of Personnel Data 88

Quality Assurance 90
Exhibit 28 – Sample Quality Improvement Method - CMMI 95
Exhibit 29 – Sample Quality Improvement Method – Six Sigma 96

Human Resource Program 97
Human Resource Program – All Other Sections 97-179

Policies and Practices 99
Exhibit 30 – Sample Employer Policies 103
Exhibit 31 – Sample Policy on Bereavement 109
Exhibit 32 – Illustration of a Federal Act Covering Employers 110
(Family and Medical Leave Act)
Job Definition 112
Exhibit 33 –Cashier Job Description and Announcement 115
Exhibit 34 –Bakery Team Member Description and 117
Announcement
Exhibit 35 –Sample Career Description for Cashier 119
(for prospective applicants)
Compensation 122
Exhibit 36 – Sample Compensation Plan 125
Exhibit 37 – Sample Compensation Program 127
Exhibit 38 – In-Hire Compensation Roster 130
Hiring and Selection Process 134
Exhibit 39 – Essential Components of Hiring and Selection 135
Exhibit 40 – Hiring and Selection Flowchart 137
Job Description 138
Exhibit 41 – Job Description Form 144
Exhibit 42 – Sample Job Description for Human 149
Resource Assistant
Recruitment Plans 150

3

Content Page(s)
Exhibit 43 – Convention and Group Selection Process 154
Exhibit 44 – Sample Job Description for Recruitment 155

Selection Process 157
Exhibit 45 – Types of Interviews 159
Exhibit 46 - Sample Interview Questions for Managerial 162
Positions
Exhibit 47 – Sample Comparison Rating Form – 168
Managerial Candidates
Exhibit 48 – Sample Individual Rating Form – 169
General Positions
Post-Selection Activities 176
Exhibit 49 - Sample Letter to Unsuccessful Candidate 179

Human Resource Program - Performance Management 180-206

Exhibit 50 –Staff Evaluation Process 186

Progressive Discipline 190
Exhibit 51 –Sample Progressive Discipline Letter 191

Termination Process 192
Exhibit 52 –Sample Termination Letter 198
Exhibit 53 –Sample Layoff Letter (Abbreviated) 199
Exhibit 54 –Sample Layoff Letter (Extended) 200

Employee Appeals Process 202
Exhibit 55 –Sample Letter from Employee for Appeals Hearing 204
Exhibit 56 –Sample Letter from Hearing Officer After Hearing 205

Human Resource Program – Summary of Assessment 206-208

Training & Development 209

Career Progression 213

Feedback Program 216
Grievance Program 217
Exhibit 57 – Sample Grievance Letter from Employee 219

Notes 245
Caveat and Disclaimer 245

4

Introduction

Intent of Report
It is the intent of this report to methodically strengths and weaknesses of ABC.
evaluate and assess the general health of However, due to distractions and other
ABC Marketplace (ABC) with regard to its pressing issues, companies often do not
business operation and then its human take a methodical approach to definitively
resource program within the context of that identifying those strengths and weaknesses
business operation. Observations, nor to create implementation plans to
analyses, and evaluations of ABC have address them. This is especially true for
been collected and organized by specific small business where employees have
descriptive and functional business areas multiple responsibilities. Consequently these
(e.g., market environment, procurement, businesses do not exploit their strengths and
quality assurance, etc.). Where data was take advantage of their opportunities. More
not available, business theory and best problematically, they do not shore up their
practices was utilized or offered in order to weaknesses thereby exposing themselves
make the report more robust and to higher risk.
comprehensive. The business sections are In spite of this, ABC is to be commended for
outlined under the heading of “Format recognizing a need to be more “proactive” in
Used”. their efforts to improve their business
During the course of this assessment, it operation; especially in terms of mitigating
was found that many of the principles within their risk and in the human resource area.
the company were “intuitively” aware of the By commissioning this report, they are

5

Introduction (con’d)
Human Resources as a critical
part of the business strategy . . .
definitively signaling a desire to exploit smaller business operation, it is important
opportunities and to minimize or mitigate for the principles at ABC to understand that
their weaknesses. the administrative component and
associated requirements have dramatically
As is the case in any personalized report, it
changed. The business model, therefore,
is highly dependent on the data available
must change. Simply working harder, for
during the course of this assessment.
example, will not work. Only when the
Complete and accurate information
necessary attention and resources are
provided by the principles at ABC, including
allocated to incorporate the necessary
the Owners, is influential to the integrity
programs, processes, and systems will
and comprehensiveness of this report.
ABC achieve an effective and “sustainable”
It is the intent of this report to make a fair
organization
assessment while providing a “working
roadmap” to ABC. This roadmap will Format Used
assist them in their efforts to improve their The following is a description of the format
business operations and, in particular, their utilized throughout the report to address
human resource program. Because labor each of the functional areas at ABC
cost is the highest, ongoing expense in Marketplace.
ABC’s business, increased efficiency and Under each business area, a “Description,”
productivity in the human resource area is of ABC’s current situation is provided along
key to increasing profit for the business. with information pertaining to that business
This report, if applied, will help guide ABC area. This is followed by an assessment of
in aligning its human capital with goals and the “Strengths” and “Weaknesses” of ABC
objectives within its business operation to within that functional area. Then
achieve better efficiency and productivity. “Opportunities” and “Threats” are
Moreover, while it is more convenient to run discussed, where applicable. Under
a substantially “scaled-up” business with “Threats”, a risk rating is offered based on
the same business model used in their

6

Introduction (con’d)
ABC’s current situation. Risk rating will be based on both probability and impact. The
ratings are high (H), moderate (M), or low (L). For example a risk rating of P=H and I=L
means that the probability of risk is high, but the impact on ABC is low. For more detailed
information, see section on “Risk and Security”. “Recommendations” then follow to facilitate
improvements at ABC. Finally, “Implementation Samples and Plans” are offered which
would help realize those improvements.

Actual, Theory, and Best Practices
In order to make this report more comprehensive, theoretical and “best practice” research
information was interwoven throughout the report to augment those business areas that
ABC has yet to address in their business operation. Because of the depth and breath of
the “holes” in ABC’s business operations, a considerably amount of time was spent on
researching solutions to fill these holes. Recommendations and implementation samples
outlined in this report were developed with the idea that they would be relatively “timeless
solutions” and helpful in guiding ABC when these functional areas are ultimately addressed
by ABC. In this way, this report would retain its relevancy over time.

7

The Company
ABC Marketplace (ABC)

The Company,” section covers the topics of ABC’s philosophy, business strategy, goals and
objectives, resources, and organizational structure.

Philosophy

“

Description of Philosophy
The over-arching philosophy with respect to ABC’s business operation is “provide the best
quality at affordable prices within a good product mix”. They are committed to maintaining
the warm and friendly atmosphere common in smaller stores, where you feel that you know
the Owners. Their operation is designed to project a personal, caring image to customers,
employees, and the local community. Consistent with this image are the products they carry
in the store (e.g., environmentally sustainable) and the approach they take in their buying
efforts (e.g., buy from local farms to reduce fuel cost and pollution). To illustrate, ABC’s
supports the notion of sustainable growth by maintaining a balance between themselves and
the goods that they sell. They offer a wide variety of organic, all natural, and hormone-free

8

The Company
Philosophy (con’d)

products, many of which are environmentally sustainable. For example, their seafood is
responsibly fished, harvested in areas free from pollution, and in alignment with sustainable
growth quotas.
ABC’s personal commitment extends to encouraging their customers to use eco-friendly
products. The earth-friendly products, ranging from toothpaste to laundry detergents, help
to promote a biologically healthier future for the environment.

ABC sustainable theme carries over on a personal level. By running a “legacy” business,
which will be taken over by future generations, ABC is keenly aware of the benefits of taking
a longer view in their decision-making and operating in a way that is sustainable.

Strengths of Philosophy
Under this philosophy, ABC has operated the smaller store in the Berrydale District for over
thirteen years and the larger store in the Applecreek District for three years. The strength of
this philosophy is reflected in the “good will” garnered by ABC within the local community.
Their customer base is loyal and projections for growth in sales seem justified. ABC make
continuous efforts to reinforce their philosophy by being an active member of the local
community, in which they do business. For example, they regularly sponsor charities,
organize neighborhood events, and donate to local schools, churches, and homeless
shelters. Even as ABC has expanded and scaled up their operation, they continue to
project a “neighborly and accessible” image through their business philosophy.

Weakness of Philosophy

The ABC philosophy is defined by the personalities of the Owners, Joe and Diana Tam and
as a result intimately linked to them. As such, absent the current owners, there is no
guarantee the current philosophical approach would be continued.

Opportunities Presented by Philosophy

There is an opportunity to strengthen ABC’s business operation by incorporating the

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The Company
Philosophy (con’d)

philosophy throughout the business model in a more formal
way. This is achieved by articulating the philosophy
repetitively in all written material and incorporated within the
operational processes and systems (e.g., procurement,
training and development, etc.).

Threats Presented by Philosophy
There are no threats associated with having a sustainable
business philosophy.
Risk Assessment
Probability: Low
Impact: Moderate
Comment: Impact moderate because of affect on ABC
Brand

Recommendation for Philosophy
Convert ABC’s business philosophy from an “owner specific” philosophy to more tangible,
formal business values and embed them into the business model and articulate it in writing
and in all systems and processes.

Implementation Samples or Plan

Review all current ABC systems and processes and find formal ways in which to embed this
philosophy in those systems. Also review companies with similar sustainable, green
philosophies and emulate how they incorporate their philosophy formally, in writing, and
throughout their systems and processes.

10

The Company
Business Strategy (con’d)

Description of Business Strategy
While the emphasis of this report is on the human resource program (HRP), it must be
reviewed within the context of ABC’s business strategy and
operation. With respect to business strategy, ABC does not
have a strategy formally articulated. Until this assessment
was commissioned, ABC had not given much thought to
developing such a strategy.
Typically, there are 4 main components to a business
strategy; namely:
1. Establish a vision
2. Set goals and objectives
3. Perform a resource assessment
4. Design implementation plans

A business intelligence strategy should look to define and accomplish the following:
1. Improving business performance with an integrated application for monitoring,
analytics and planning.
2. Driving alignment and accountability across the entire organization.
3. Enabling more decision-makers to impact the performance of the business.
4. Ensuring transparency, security and audit capability through a variety of solutions.

During the course of this assessment, ABC generally identified some of the components
associated with a business strategy. The most important aspects of the business
strategy, however, are non-existent (i.e., resource assessment and implementation plans).
The following are some of the details associated with two of the four components that was
articulated by ABC’s, which can be incorporated into a business strategy:
1. Vision – Create a successful business that can be passed on to children – geared
primarily towards owner’s personal goals.
2. Goals and Objectives – General goals and objectives identified:
- Increase Sales Annually
- Increase Productivity of Staff
- Improve Quality of Business (e.g., presentation)
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The Company

- Improve Customer Service
It should be noted that none of these goals above have been articulated to staff so
they could help implement them.
3. Resource – No resource assessment (which would realize the vision or meet the
goals and objectives) has been done.
4. Implementation Plans – None developed or available.

Strength of Strategy

A business strategy has not been formally articulated within ABC.

Weakness of Strategy
In the absence of a comprehensive strategy, ABC is
is operating primarily on a day-to-day basis. Other
than to “make money and keep up with expenses”,
there is no over-arching strategy or goal-driven
milestones. The flaw in this situation is that this
leaves the business without a defined “destination,”
“destination,” which is highly inefficient. Moreover, it
it leaves the business in the hands of the Owners alone to achieve success instead of
mobilizing the staff to help make the business successful. As stated above, two of the
main components (resource assessment and implementation plans) typically associated
with a business strategy are non-existent. Of the two components that ABC has
informally articulated (Vision and Goals), both need major improvements. The following
highlights the weaknesses in all of these components.

Vision – The vision articulated is limiting and primarily involves familial relationships.
While it is okay to articulate a vision of creating a business for legacy purposes, a stronger
vision statement may be one that involves both the employees and customer base.

12

The Company

Goals and Objectives – The goals and objectives identified have not been communicated
to staff. In order to achieve the goals and objectives even informally articulated, ABC
must begin the process of developing their managerial staff and getting them to involve
the staff to help drive performance to meet established goals and objectives.
Resource – Resources have not been identified or directed towards achievement of goals
and objectives.
Implementation Plans – No plans have been developed which would help meet these
goals or objectives.

Opportunities Presented by Strategy
There is an opportunity to deploy the human resources at ABC’s business to make the
business more successful. By establishing a business strategy and aligning the human
resources to that strategy, ABC can operate at a much more effective and productive
manner. Conversely, in the absence of a solid business strategy, the human capital
within ABC retains a lot of waste as employees defined what they prefer to do as opposed
to having their work effort defined for them in alignment with ABC’s business strategy.
Expected results with a strong business strategy include: improved efficiency in use of
human resources; better alignment of human resources to tasks which can generate
income; and the freeing up of monetary resources which can be re-allocated to areas not
currently covered (e.g., hiring efforts, buying more modern equipment, etc.).

Threats Associated with Strategy
In the absence of a business strategy, companies tend to be chaotic and inefficient. Such
inefficiencies are wasteful and often detrimental to the growth of the business. More
damaging is the failure to deploy staffing properly and in a way to maximize benefits to the
business itself. Having all staff members moving in one direction towards the goal of
improving sales or developing the business is much more efficient than having staff all
move in different direction attending to their individual aspirations and vision as opposed

13

The Company

to the business’ needs or direction. This threatens the business’ “bottom line” by diverting
resources away from profitability.

Business, by definition, is unpredictable and often filled with factors that cannot be
anticipated. Because a business strategy is fundamental to the management of a
business, failure to have a sound strategy would be an unnecessary “self-inflicted” wound.
The threat is often one of “running faster to stand still” because there is no roadmap or
sound managerial leadership.
Risk Assessment
Probability: Low
Impact: High
Comment: Impact high because of human capital waste

Recommendations to Improve Strategy (What?)
Establish a strong business strategy for ABC and articulate it to staff (especially
managerial staff) so they can be deployed to have “all hands on deck” to make business
successful. Make sure all main components are addressed.

Implementation Sample or Plan to Improve Strategy (How?)
Vision – Articulate a vision that involves the betterment of both employees and customer
base.
Goals and Objectives – Add more details to the Goals and Objectives (be more specific
about how much and by when).
- Increase Sales Annually
- Increase sales by 10% by end of 2010
- Increase Productivity of Staff (e.g., by implementing a training program for cashiers,
deli workers, and producer workers).
- Improve Quality of Business (e.g., by establishing a checklist in all departments and

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The Company

Exhibit 1
Balance Scorecard Method

The Balanced Scorecard Method can help make vague aspirations to practical application
at every business level. This method helps to coordinate all of the departments so they
operate as one unifying unit, thereby increasing efficiency.

The following elements are needed to use this method (step-by-step):

Macro Reviews
• Company’s mission statement (Purpose)
• Company’s vision and strategic plan (Where Is Company Going and How Does it Plan to Get There)

Financial Review
• Assessment of Company’s Financial Status

Independent Reviews and Assessments:
• Review of How Company is Currently Structured and Operating (Review of Internal Business
Processes)
• Assessment of Staffing Deployed to Achieve Purpose and Realize Vision (Human Resource
Alignment Assessment)
• Review of Customer Satisfaction Level (Customer Survey of Company)

The Exhibit 2 below highlights some of areas, which should be covered when performing
some of these reviews and assessments.

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The Company

Exhibit 2
Elements of
Balanced Scorecard

Department Areas

Finance Return On Investment (ROI)
Cash Flow
Return on Capital Employed (ROCE)
Financial Results (Quarterly/Yearly)

Internal Business Number of activities per function
Processes Duplicate activities across functions
Process alignment (is the right process in the
right department?)
Process bottlenecks
Process automation

Human Resource Is there the correct level of expertise for the job?
Employee turnover
Job satisfaction
Training/Learning opportunities

Customer Delivery performance to customer
Quality performance for customer
Customer satisfaction rate
Customer percentage of market
Customer retention rate

16

The Company
Goals and Objectives

Description of Goals and Objectives
The following are the short-term and long-term aspirations of ABC over the next five
years.
• Increase productivity of staff – ABC would like to increase the
overall productivity of the staff. This may be facilitated with
better efficiency within their operation by avoiding duplicative
efforts, need for repetitive instructions, and clearer
instructions.
• Increase level of professionalism – A major majority of the staff are in entry-level and
semi-professional positions with limited skills and abilities. Staff can be better
developed to assure uniformity in use of processes and practices. They can also be
better developed to adopt a more professional demeanor when in the public view or
when dealing with the public. Managerial and the lead staff are more experienced,
specialized and professional, but could use some developmental training to assure
uniformity in application of policies, practices, and processes.
• Develop managerial team so Owner can be less involved – Get the managerial team
to the point where they can operate independently while conforming to a universal
standard of practice will be extremely beneficial towards this goal. The Owners are
looking for really good professionals who can “carry on” in their stead and allow them
more personal “down time”.
• Keys areas for improvement include:
Quality – General overall appearance and quality of goods have to be maintained
at all times. Their “brand” is based on the “freshness” of their products and on using
products that are “environmentally friendly”.
Customer Service and Satisfaction – ABC brand is also about customer
satisfaction and care so more emphasis needs to be given in this area.
Increased Overall Sales over next 3 years of 34%
• 2010 - 10%

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The Company
Goals and Objectives (con’d)

• 2011 - 12%
• 2012 - 12%

How?
• Enhance Product Mix
• Market Products with Higher Profit Margins (e.g., Alcohol)
• Increase productivity and professionalism of staff

 How?
• Managerial Training and Development on Supervision
• Education of Staff

• Improve quality (e.g., presentation)
 How?
• Managerial Training and Development on Store Presentation
• Staff Training on Their Role in Appearances
• Improved Customer Service to Address Concerns

Strength of Goals and Objectives
The goals and objectives outlined by the principles are modest and achievable.

Weakness of Goals and Objectives
The weakness in these goals and objectives is that these have not been incorporated into
an overall business strategy. Also, they have not been communicated to those that are
responsible for realizing these goals and objectives nor have detailed implementation plans
been developed to achieve them.
Opportunities in Goals and Objectives
The Company has a real opportunity to facilitate real growth in their business by identifying
more goals and objectives and setting realistic timetables to achieve them. This is also an
opportunity to establish a stronger performance evaluation program at ABC and to develop
the managerial staff against established “targets”.
Threats Associated with Goals and Objectives
The only threat to setting goals and objectives is if they are not realistic, periodically
updated, or properly communicated.

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The Company

Risk Assessment
Probability: Low
Impact: High
Comment: Impact high because it creates a poorly
focused and directed effort thereby wasting
money

Recommendations for Goals and Objectives (What?)
• ABC needs to set more refined goals and objectives for increasing the productivity of
the ABC staff; increasing the level of professionalism and expertise of the staff;
developing its managerial team and holding them accountable for both the
development of plans and for achieving results; and for improving the quality of its
products (including customer service). ABC may want to apply methods that make
goal achievements more possible (e.g., pre-set milestones and dashboards).

Implementation Samples or Plan for Goals and Objectives (How?)
With respect to existing goals and objectives, the following suggestions may be helpful.
• Increase Productivity of Staff - Increase productivity of staff by increasing efficiency
within their departments. Find ways to avoid duplicative efforts. Provide clearer
instructions. Eliminate situations that necessitate repetitive instructions.
For example:
1. Review all documentation generated by ABC between period January 2008 and
December 2009 and look for redundancy.

2. Develop a better flow system between delivery and receiving to catch duplicate
efforts and repetitive motions.

3. Clean up written directions by providing for more simplicity and clarity in
instructions.

4. Develop a time management system for activities and establish tolerance ranges
of time for achieving those activities and track.

• Increase level of professionalism – A major majority of the staff are in entry-level
and semi-professional positions with limited skills and abilities. They can be
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The Company

developed to assure uniformity in use of processes and practices as well as be
developed to adopt a more professional demeanor when in the public view or when
dealing with the public. This requires on-the-job away from assigned workstations.
The managerial and lead employees are more experienced, specialized and
professional, but could use some developmental training to assure uniformity in
application of policies, practices, and processes. More training in sales, marketing,
and in human resource functions (e.g., hiring, firing, motivation, training, etc.) would
also be helpful to achieve a higher level of professionalism.
• Set a goal to specifically identify those positions within ABC, which would enable the
business to keep running in the absence of the Owners. Then develop or hire the
necessary talent to greatly reduce the Owners’ day-to-day activities and which would
allow them more personal “down time”. This would involve a better hiring and
selection process; a better training and development effort of existing staff; and a
better performance evaluation system to hold staff accountable for results.
• Other keys areas in need of improvements and suggestions are:
Product Mix and Quality – A goal to improve overall appearance and quality of
goods. Their “brand” is based on the “freshness” of products. The product mix
can be reviewed to assure that “environmentally friendly” are also selling; not just
collecting dust.
Customer Service and Satisfaction – ABC brand is also about customer
satisfaction and care. Recommend that ABC focus on Company as a brand and
align employees to that concept. Employee services are a critical part of the
product mix being sold to customers. Poor customer service taints the quality of
the overall products being offered.
More Sales. Develop an annual plan to achieve these goals and results.
•2010 - 10%
•2011 - 12%
•2012 - 12%

Alcohol Sale - Use other presentation methods (e.g., hold tasting events; pair
wines with cheeses, etc.)
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The Company
Products and Services

Description of Product and Services
ABC’s original focus was on freshness in their fruits and vegetables with groceries being
secondary. With the opening of their flagship store in the Appletree District, ABC became
equally focused on fruits and vegetables and their grocery product mix. A delicatessen
and floral section was added to round out their offerings and to provide a more complete
“one-stop” shop experience for customers.

While not as widely publicized, a key ABC product is their “brand”, which denotes a
community-oriented business with products that are part of the sustainable cycle (i.e.,
either organic or hormone-free, eco-friendly, harvested responsibly or humanly breed and
treated). A “positive” shopping experience is also part of their brand and ABC is
dependent on its workforce to convey the message that ABC cares and is responsive to
the needs (and wants) of their customers. ABC offers the following products in the
approximate proportion listed below:

Exhibit 3
ABC Products and Proportions

Product/Services Share ~ Share

All other food 5%

Meat, fish, poultry and
15%
delicatessen items

All other non-food (including
5%
customer service)

Drugs and health products 5%

Fruit and vegetables 20%

Dairy (including cheeses) 15%

Beverages (includes alcohol) 20%

Frozen foods 15%
Note: Estimate Only 21

The Company
Products and Services (con’d)

Strength of Products and Services Offered
The selection of produce is one of the highlights of the products and services offered by
ABC. Responses from the internal survey among ABC employees indicate that they
believe that ABC has a good product mix and that customers have a wide choice at a
good value. They also commented on the uniqueness of the products offered and ABC’s
focus on bio- and eco-friendly products and its products and services being consistent
with the philosophy articulated by ABC.

Weakness of Products and Services Offered
The employees’ view of the product mix is not shared by the managerial side of ABC.
They view the product mix as poor and consider the produce and service end, in
particular, as weak. It is noted that the method for selecting products is not particularly
methodical and at times random and subject to personal whims. What products are
offered and discontinued are sometimes based on the buying behavior of the customers
rather than on quantitative data (e.g., historical sales data or based on analytics which
might give clues to customer buying patterns) tied to both internal and external factors.
This contradiction of views is problematic and needs reconciliation.
Another weakness is that the products and services offered are not supported by a strong
marketing effort. For the most part, ABC simply brings products in and hope customers
buy them. Other than sale signage to encourage purchases of certain products while
customers are in store, there is no effort to systematically influence customer purchases.

One area that repeatedly comes up is “presentation”. Although this has been addressed
numerous times, there are instances where the freshness of the products is questioned
(e.g., due to existence of rotting fruits or produce in bins). Cashiers have also commented
that customers often complain that certain items are missing even after returning
numerous times to find them. More serious is the absence of items that are considered
standard (i.e., not ‘exotic’ items). During the employee survey, comments like, “shelves

22

The Company

and bins are not fully stock all the time,” demonstrated concerns internally for both the
appearance and the availability of products to customers for sales. This, of course, can
seriously hurt the “brand” of ABC for freshness and its image as a professionally run
company.

Another area of weakness is ABC lack of “affirmative response” to the notion hat
employees are ‘part and parcel’ of the products and services being offered. In the same
way that a bad physical product (e.g., an apple, a quart of milk, etc.) may be viewed as an
inferior product, so too can the service provided by ABC employees. It could be argued
that the customer experience with respect to the interaction between buyer and seller and
between employees and customers will determine the level of product sales and whether
there is “repeat” business. Repeat business, of course, is absolutely essential to have a
sustainable business. The language barrier and lack of initiative by many of the cashiers
was often cited as examples of poor customer service.

Opportunities in Products and Services Offered

ABC has an opportunity to improve its products and services offering and influence the
trajectory of sales upwards. It is a well-known fact that
customers who are engaged with ABC staff and who are
delighted by them tend to stay longer and buy more products.
Getting the staff to engage its customer at the point of contact
(e.g., when they are cashing out) can improve sales. By
making these improvements in an affirmative rather than
reactive way, ABC has an opportunity to create a well-
supported and sustainable business even in the midst of direct
competition. ABC continues to have an opportunity to be a “niche” business; unique in
service (and in shopping experience) and in product offerings.

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The Company

Threats in Products and Services Offered

One of the main threats associated with products and services is the development of a
reputation for poor quality, spoiled products, or the inability to provide desired products.
Because ABC’s brand is associated with freshness, good variety, and at a fair price point,
anything that undermines that would hurt its business. It does not matters that the product
is organically growth if it is absent from the bin. It does not matter if the product was
bought from local farmers thereby saving gas consumption, if the product is poorly
handled or is left rotting along side of fresh products.

The presence of other stores (e.g., Trader Joe’s, Whole Food, etc.) in the City of Mayfield
is a constant and direct threat to ABC long-term viability. It is important for ABC to assure
that it can compete “head to head” in all of the standard areas: customer service, product
mix, and quality products. It should also take a serious inventory of what it can offer that
is “not” being offered by its competitors. The inability of ABC to compete in the standard
ways (e.g., to at least match customer service, product mix, and in good quality) and to
find ways to differentiate itself from its competitors can threaten ABC’s long term
survivability.

At present, some of these threats are somewhat mitigated by ABC’s “mom and pop”
image, but such mitigation tend to be temporarily and should not be relied upon especially
if “mom and pop” begins to mean it is an unprofessional operation.
Risk Assessment
Probability: Moderate
Impact: High
Comment: Probability is moderate because of day-to-day
exposure and impact is high because of
perpetual brand erosion

Recommendations for Products and Services
It is recommended that ABC get in the habit of using quantitative data to help make
product selection decisions to avoid waste and to help develop a better product mix. This

24

The Company

requires the development of data that would be useful for decision-making (e.g., inventory
records, sales information, market trends, etc.).

It is also recommended that ABC begin the process of training and developing their
employee; especially as it relates to their understanding of how important it is that they
help protect and preserve the ABC’s brand. More to the point, employees need to
understand the correlation between having excellent product and services and their
continued employment. At present, there are no consequences for not meeting this
fundamental expectation and no performance management system to evaluate employees
and to hold them accountable for improvement. This should be done professionally using
people who have expertise in training staff.

It is further recommended that these training sessions cover an understanding of the
products and services being offered so each employee
can be a “product ambassador” and help encourage sales.
It is noted that most employees seem somewhat
disengaged with respect to the products and service
offered and cannot speak authoritatively about them.
Assisting customers in their product choices is often one of
the most effective ways to promote sales and ABC should teach all of their employees to
become product ambassadors to improve the profitability of ABC.

Implementation Samples or Plan for Products and Services

There are professional services available that can customize and provide the training
needed for ABC. ABC will need to allow these services an opportunity to get to know ABC
and its business operation so it can properly develop a customized training program for
the employees (similar to the interviewing workshop). There are also software companies
that can provide on-line tutorials specifically customized to the grocery business.

25

The Company
Resources Available

Description of Resources
ABC resources for their business is the Owner’s personal monetary equity, Owner’s credit
worthiness (to acquire business loans), Owners knowledge and skills, and ABC’s work
force, capital equipment, and computer equipment (hardware and software).

No assessment was made to the adequacy of the Owner’s personal monetary equity and
credit worthiness. Owners’ knowledge and skills is extensive in the grocery business
especially in the produce area and basic groceries. Their knowledge and skills, however,
on the managerial side of the business including human resource management, business
strategy, operational structure, sales and marketing, product mix and demographics, and
basic recordkeeping and analytics in support of ABC is weak and could be augmented with
either more training or supportive expertise.

The primary resource for generating sales, and ultimately profits, for ABC is the company’s
workforce. It is, by far, the biggest ongoing expense associated with the business. At
present, ABC’s workforce is not adequately managed and, therefore, not deployed
correctly leading to under-performance. This, in turn, creates waste and inefficiencies
throughout the business.

While the workforce is working well together and morale seems high, ABC’s workforce is
not universally applied towards specific goals and objectives. It was noted that ABC’s
hiring practices was weak and does not contribute to ABC’s goal of increasing
professionalism, improving managerial oversight, or improving ABC’s brand. Currently,
employees are managed more on a “crisis” basis and typically in response to Owner’s
personal concerns or due to customer complaints. A preferred model would be to manage
these resources through a defined, performance metrics system and tied to individual
employee performance evaluations.

26

The Company
Resources Available (con’d)

In order to achieve sustained improvements in productivity and efficiency, ABC will have to
convert to a performance-based model and to create the necessary infrastructure, which
would allow it to monitor individual progress against
company-wide goals. There is no other way to
protect human capital and its use.

Capital equipment seems to be well matched to the
business needs. Computer and computer-related
equipment and software could be upgraded to improve recordkeeping, provide for better
metrics and analytics, and to increase accuracy in their accounting, shipping and receiving,
and inventory control. At present, documentation associated with ABC seem more labor-
intensive rather than technologically efficient. Everything is by hand and via paper rather
than through the electronic system (e.g., paperless systems).

Strength of the Resources
Capital equipment appears well matched to the businesses needs. Owners have very
strong background in the grocery business and a solid, positive presence within the
community (good will). Owners are very hardworking and are very engaged in their
business.

Weakness of the Resources
Owners model of success is to work harder rather than work smarter. They are very
“hands on” and consequently will do the work themselves rather than manage more
effectively. ABC’s weak managerial team is a byproduct of the Owners lack of knowledge
and skills in the human resource management arena and their general reluctance at
delegating responsibilities and authorities downward and then holding lead people and
managers responsible for results (as a condition for continued employment).

27

The Company

This situation is complicated by the absence of a strong performance evaluation and
management system and a general lack of understanding of best practices for human
resource management and the inter-relationship and integration of these systems into a
business.
It is noted that the grocery and produce side of their produce has been the Owners’ focus
as they expanded. The human resource side of the business equation, however, has not
been “scaled up” with the same degree of attention and focus.
Also the Owners’ tendency to manage people as opposed to managing their work effort
puts them at a constant disadvantage. There appears to be an over-reliance on “personal
relationships” for their success as opposed to “best business practices” to achieve the
same success. This philosophical tendency hampers their ability to manage effectively and
to make the decisions necessary (e.g., termination of inefficient and unproductive
employees) and to improve the productivity and efficiency within their business.
This situation is further complicated by the Owner’s familial relationships. There appears to
be a bias in favor of these employees even though they may not be performing to the level
needed to meet the “added value” definition. Furthermore, any employee allowed to
subvert the performance standards will ultimately create a lower standard for performance
that management will have to follow to preserve equity. This creates an inferior resource
that is not fully deployed, which is wasteful; especially if the employee’s pay is not re-
aligned to the performance.

Opportunities Presented by Resources
ABC has an opportunity at this point in their business to improve computer-related
equipment to improve productivity directly (purchase of printers, business-related software)
and to take existing resource (workforce) and to re-align or re-train to maximize productivity
and output.

Threats Presented by Resources

28

The Company

A major threat to ABC is the mismanagement of its workforce, thereby, sustaining waste or
worse, enforcing it through poor hiring or performance evaluation practices.

Risk Assessment
Probability: Low
Impact: Moderate
Comment: Impact moderate because of inability to
optimize human capital usage

Recommendations for Resources
It is recommended that ABC start the process of applying “best practices in their human
resource area and to hire more managerial staffing to assume a significant portion of the
“hands-on” activities currently carried by the Owners and to simultaneously put into place a
stronger performance management system to demand performance for continued
employment at ABC.

Implementation Samples or Plans for Resources
Review the Human Resource section or this report for samples and information on best
practices and incorporate into ABC.

29

The Company
Organizational Structure

Description of Organizational Structure
ABC has two stores; namely, the store in the Appletree District (flagship) and the store
in the Berrydale District (original). The Appletree District Store is the larger of the
stores and employs about 100 employees (part- and full-time employees) and is
approximately three times the size of the Berrydale store. The two stores are
approximately 2 miles apart and serve the same demographic groups described below.
The Appletree District Store location was originally occupied by the Safeway’s grocery
chain and when vacated, the Owners renovated the store and created a much larger
space for fresh produce, meats and seafood. A bakery, deli, and floral section was
added to generate foot traffic and to expand their product mix.
The two Owners, Chuck and Pat Wells, are a husband and wife team and are the only
executive staff members in the Company. While there are some overlaps, Chuck Wells
is responsible for the grocery, produce, and dairy operations and Pat Wells is
responsible for the rest including the administrative side of the business (e.g.,
personnel, accounting, etc.).
Both owners are major decision-makers within ABC and are involved at a highly,
detailed level in the management of their business. It is observed that there is not
enough time in the day or week to do everything that needs to be done at ABC and
often things just don’t get done unless it rises to a critical level. Their managerial style
seems to have been historically casual and personable, highly geared towards working
really hard and handling “crisis” as they occur in the workplace, and having
expectations that employees will follow their lead in tone and hard work. It is noted that
while ABC is taking advantage of “economy of scale” to achieve more profitability, their
administrative operation has been insufficiently “scaled up” to support the expanded
operation. Their response to the additional hiring of staffing, increased customer
relations issues, vendor contracting has produced mixed results. ABC has yet to fully
recognize the need to scale up on the human resource management side of their
business operation and to put the necessary resources to respond to this deficiency.

30

The Company
Organizational Structure

Consequently, there remains a level of risk for ABC.
This assessment is ABC’s first attempt at being proactive and having a more efficient
operation that does not respond to crisis after crisis, but rather anticipates them before
they can have a negative impact on their business. At present, many of the sections in
the store are not running as efficiently as desired and ABC lacks the in-house expertise
to make the necessary improvements. This review noted that the responsibilities for
improvement in various areas have been assigned, but the people who hold the
assignments are not sufficiently knowledgeable or positively inclined to perform the
duties (e.g., the Human Resource responsibility is assigned to the Grocery Department
Head, but he has no background in human resource management).

Generally, the administration side of ABC’s operation needs the most help in order to
minimize general risk; have better control over quality, and to better manage their
human resources. The technical aspect of the business operations is in much better
shape (e.g., how much produce to buy, the scheduling and assignment of workers,
etc.). Organizationally, it is the “box” just under the Owners (General Managers) and
the assignment of “real” managers in each of the boxes at the next tier that needs the
most help. The “over-extension” of existing staff and “over-lap” of duties to cover all
of the vacant areas is not a very efficient or sustainable model.

31

The Company
Organization Structure (con’d)

Berrydale District Store (Original)

Description of Berrydale District Store
The Berrydale District Store is the original store and was established over ten years
ago. It is located at the corner of Rosemount Drive and Main Street location and is
staffed by approximately 25 employees (part- and full-time).

The following is the organization chart for the Berrydale District store:

Exhibit 4

32

The Company
Organization Structure (con’d)

Appletree Store (Flagship)

Description of Appletree District Store
The Appletree District Store location was originally occupied by theS afeway’s grocery
chain and when vacated, the Owners renovated it and created a much larger space for
fresh produce, meats and seafood. A bakery, deli, and floral section were added to this
location. There is approximately 70 employees (more part-time, then full-time) at this
store.

The following is the organization chart for the Appletree District store.

Exhibit 5

33

The Company
Organizational Structure (con’d)

Strength in Organizational Structure
ABC has a solid and simplified organizational structure. This structure is separated by
the different departments (e.g., Produce, Grocery, etc.), with the administrative
function supported near the top (just under the Owners/General Managers).

Weakness in Organizational Structure
One of the weaknesses in the organizational structure is the obvious absence of a
strong managerial staff. Most of the people who have managerial responsibilities are
really lead people and do not perform the full complement of duties associated with a
manager (e.g., hiring and firing, performance evaluations, strategic planning, etc.). A
review of the organization chart confirms this. Those who are considered managers
are typically familial relations of the Owners. While this is arrangement is personally
comforting to the Owners, it is probably not the best organizational model because it is
the selection of employees is not based on the job requirements and challenges
associated with each job. Moreover, this arrangement does not lend itself to the
ability to manage managers based on merit since familial employees are seldom
disciplined or terminated for failure to meet organizational goals. According to
interviews with ABC, attempts to develop managers or to bring managers on board
who are qualified to meet the organizational challenges have not been successful.

At present, the human resource area is contained in the Special Projects area on the
organization chart and handled by the Grocery Department Head. The organizational
structure reflects the emphasis (or lack thereof) placed on human resource which may
explain why ABC is experiencing some difficulties in this area.

Also missing in this organizational structure is a strategy unit to create goals and
objectives (e.g., sale targets) or to provide oversight on their achievement. It is not at
the very top or immediately under. At present, it appears the organizational model is
“everybody should work hard” and increased sales will hopefully occur. For example,

34

The Company

there is no department that draws a direct correlation between sale targets and
marketing efforts. No one is assigned to regularly measure sales results and to make
recommendations in marketing efforts, for example, to improve sales. This lack of
planned oversight produces somewhat haphazard and random results and prevents
the proper deployment of resources in one or another direction.

Opportunities in Organizational Structure
ABC has an opportunity to re-structure the organization to be more reflective of the
oversight functions needed within the business. The improved management of human
resources, sales, and marketing, for example, are all functions that contribute to higher
profits and the organization can reflect their importance by embedding it within the
structure.

Threats Associated with Organization Structure

The primary threat to the organization chart is that it is unsustainable and that the
current organization places too heavy a reliance on the Owners to literally “do
everything”. Since the Owners’ cannot possess all of the necessary expertise and be
everywhere, it is important that they seriously consider bringing in experts (at least
temporarily) to help them set up the necessary infrastructures and systems and then to
have the experts train the current and prospective managerial team to maintain them.
The current business organization has lots of managerial “vacancies” and, if not
quickly filled, will overtime result in higher turnover and more human relation problems.
The few staff members who are at ABC are doing “double duty” and the Owners’
expectation that this can be maintained is unrealistic. Moreover, an organization that
has this many vacancies (or holes) not only stifles growth and profit-making, but it
tends to formalizes waste and creates unnecessary risk to the business.

35

The Company

Risk Assessment
Impact: Moderate
Comment: Probability and impact moderate because of
formalized inefficiencies and the over-
extension of existing staff.

Recommendations for Organizational Structure
It is suggested that ABC consider using Business Process Model (BPM) to improve its
business activities. It is a methodology that is increasingly applicable to all sorts of
organizations including small businesses.
The focus of the improvements is typically on 'value added' actions that make the
customer service and experience better and on reducing wasted time and effort.

It is further recommended as part of solidifying the organizational structure that ABC
create and maintain a system by which each employee (past and present) can be
tracked throughout their employment history at ABC. Exhibit 6 below identifies the
headings, which should be used to maintain these personnel records.

Implementation Samples or Plan for Organizational Structure
In deploying the BPM described above, there are two main types of Business Process
Models:
• the 'as is' or baseline model (the current situation)
• and the 'to be' model (the intended new situation)

The aim of BPM is to illustrate a complete process, enabling managers, consultants and
staff to improve the flow and to streamline the process. The outcomes of a business
process modeling project are essentially increased profits which comes from:
• added value to the customer, and

36

The Company

• reduced costs for the company.

BPM is commonly a diagram representing a sequence of activities. It typically shows
events, actions and links or connection points, in the sequence from end to end.
Diagrams - essentially 'flow diagrams' - are a central feature of this methodology.
SWOT Analysis, Balanced Scorecard and Project Management methods are further
examples of “change” management tools, and Business Process Modeling can work
alongside these methods.

Other secondary consequences arising from the successful use of BPM can include
increased competitive advantage, market growth, and better staff morale and
retention.

Before committing lots of resources to BPM, however, proper consideration should
be given to the usefulness and focus of the exercise. The answers to the following
questions would be helpful in making this determination:

• Does the modeling have the potential to produce gains that will justify the time and
effort?
• Will the modeling be structured so that people will understand the outputs (not too
big and complex as to be self-defeating)?
• Do people understand why we are doing it, and "what's in it for them"?

Sequence is significant and essential to most aspects of BPM. BPM identifies where
and when activities are strung together and how to make work flow more efficient.

BPM focuses on processes, actions and activities. Resources are featured within
BPM depending on how they are processed. People (teams, departments, etc) are
featured in BPM in terms of what they do, to what, and usually when and for what
reasons, especially when different possibilities or options exist, as in a flow diagram.
37

The Company

BPM is cross-functional, usually combining the work and documentation of more than
one department in the organization. In more complicated situations, BPM may also
include activities of external organizations' processes and systems that feed into the
primary process. In large organizations operations BPM tend to be analyzed and
represented in more detail than in small organizations, due to scale and complexity.

BPM is to an extent also defined by the various computerized tools or software, which
are used in applying its methods. These methods and the standard features within
them continue to evolve, which means that we should keep an open and curious mind
as to how BPM can be used, and what people actually mean when they refer to it.
The following is a diagram of BPM:

BUSINESS PROCESS MODELING

1. Has a Goal;
2. Has Specific Inputs Goal
3. Has specific Outputs Information Resource
4. Uses Resources
5. Have Activities that are
Performed
6. May Affect
Organizational Units
(Vertical & Horizontal)
7. Creates Value for
Customers (Internal
and External)

Event Business Process Output

38

The Company

Exhibit 6
Headings for Employment Data

ABC Employee ID

Store Location (Laurel or Fruitvale)

Last Name

First Name

Middle Initial

Title

Title Code

Depart. Assigned

Depart. Code

Employment Eligibility Proof

Eligibility Restrictions

Exempt or Non-Exempt (FLSA)

Supervisor (1) or Non-Supervisor (0)

Full or Part-time (% Time)

Hire Date

Employment Status (Active, Past)

Separation Date

In-Hire Pay

Current Pay

% Change since Hired

Job Change Date

Description of Change

Last Date for Performance Rating

Employer Intervention Dates

Employer Intervention Action

39

Market Environment
Laurel and Dimond Districts

Description of Market Environment
ABC’s two stores are located in the Berrydale (original

store) and Appletree (newer store) Districts in the City of

Mayfield. They are in a very culturally diverse

neighborhood on two busy streets; namely, Rosemount

Drive and Sunset Road, which is intersected by another

busy street, Main Boulevard. Both the Appletree and

Berrydale Districts have been in flux for last ten years as

older homeowners move away and younger families

move in with higher incomes. With the renovation of

older homes and more community involvement cleaning

up "troubled" areas, the neighborhood surround ABC is

improving. ABC presence is helping to revitalize and

support this transition.

The Local Demographics

To market ABC’s products and services effectively,

Exhibits 7-9 may be useful. According to the U.S. Census

Bureau's 2006-2008 American Community Survey where

90,000+ respondents participated, Mayfield’s

demographics and population are as follows:

40

Market Environment
Local Demographics (con’d)

Exhibit 7 Exhibit 9
Ethnic Population Miscellaneous Demographic

What Population %

White 46.9%
African American 19.8%
What Households %
Native American .6%
(150,000 Surveyed)
Asian American 15.6% Children(Under18 28.6%
Pacific Islander .5% years old)
Hispanic or Latino 25.2% Married Couples 34.0%
Other Races 12.9% Single Female 17.7%
Two or More Races 3.7% Non-families 42.7%
Individuals 32.5%
Exhibit 8 65+ years old 8.6%
Age and Income 18-24 years old 9.7%
Demographic
25-44 years old 34.0%
45-64 years old 20.0%
Miscellaneous Home Ownership 41.0%
Figures
Unemployment Rate 17.5%
Median Age 33 years old
(as of August 2009)
Median Income $40,055
Median Income for $44,384
Family
Male Median $37,433
Income
Female Median $35,088
Income
Female to Male 100 females (18+
Ratio age) to 93.2 males Source: U.S. Census Bureau’s 2006-2008
American Community Survey (90,000
(18+ years old) Respondents) – City of Mayfield

41

Market Environment
The Customer Profile

Based on its history, ABC has identified its customer profile according to the
characteristics and traits outline in Exhibit 10 below. Accordingly, most of the product mix
and services offered by ABC have been geared towards this customer profile.

Exhibit 10
Characteristic and Traits

Caucasian
Married with children
Professional
35+ years old
Middle to higher income level
Higher Educational level
Community-oriented
Conservation conscientiousness
Environmentally conscientious
Reside in local area (within 10 miles of ABC
stores)

42

Market Environment
Sales and Marketing

Sales within ABC is generally the responsibility of all employees although there are no
specific targets set by the Owners. To date there are no systems or processes for
gathering or disseminating sales information regularly to managers or employees so it
can be used to improve sales.

Marketing is generally the responsibility of one person who does not appear to have
formal training in marketing. This individual is also responsible for running the grocery
department and the human resource function, both of which are being learned “by rote
and by doing”. The marketing function by all measures is highly dependent on the
random availability of the assigned individual.

Strength of Market Environment
The target customer base that has been developed over the years at ABC is consistent
with the demographic characteristics of residents in the City of Mayfield. For example,
35+ years old account for about 65% of ABC’s customer base and ~54% of the city-wide
population is between the ages of 25-65 years old. The median income of Oakland
residents is $44,284, which is consistent with the affordability range of products offered at
ABC. A majority of the ABC customers are Caucasians and Latinos and they
accumulatively account for ~72% of the total population in the City of Mayfield . There
are also a healthy percentage of other demographic groups (e.g., married couples, single
females, homeowners) in Mayfield that can be accessed in the market environment by
ABC. Because ABC is positioned more as a “neighborhood” marketplace as opposed to
a “corporate” marketplace, they have a high loyalty rating, which helps with their
customer retention value.

Weakness of Market Environment
An area of weakness in the market environment is the difficulty with which to access the
rest of the population (e.g., Asians and African Americans) in the immediate, geographic
location where ABC operates. Asians in the immediate vicinity tend to be immigrant

43

Market Environment (con’d)
families with a preference for ethnic foods, which is highly specialized and more easily
serviced in Mayfield’s specialty grocery stores. With respect to the African American
residents in the immediate area, it appears most of them prefer to shop at their local
supermarkets (e.g., Safeway’s). The product mix offered at ABC does not appear to
entice the patronage of this community either.

Another area of weakness in the market environment is whether there are enough
customers to support ABC’s and all the other “like” competitors within the City of
Mayfield. For example, there is “crossover” between the customer base of ABC and
those for Whole Food and Trader Joe’s. The presence of Safeway and the various
weekly produce markets in the neighborhoods also cut into sales at ABC. This presents
a real challenge for ABC to distinguish itself from all of the other offerings in the city.

Opportunities with Market Environment
ABC has an opportunity to differentiate itself from the rest of the competition via its
community involvement, improved professionalism and brand image, and through its
distinctive customer service. The people on the “front line” and critical to making this
distinction will be ABC’s employees.

Threats Associated with Market Environment
The principle threat to ABC will be the migration of their customer base to their
competitors; especially Trader Joe’s, which has a high level of professionalism and
consistency in their brand image. Trader Joe employees are consistently engaging,
friendly, and efficient which goes a long way to providing a positive customer experience.
ABC has some work to do before it can achieve the same positive customer experience.

Part of the problem is the ABC staffing, which does not view itself as part of the product
offering that insures a good quality brand image. Until ABC institutes a program that
trains the staff to view themselves as part of ABC’s brand, the threat of losing customers
and the prospect of having to continuously find new customers will forever be present.
Having a positive customer experience is as important as buying a fresh peach from a
merchant; especially when there are other outlets for fresh peaches.

44

Risk Assessment
Impact: High
Comment: Probability is moderate but Impact is high
because of lack of marketing plan and failure
to aggressively distinguish itself among
competitors.

Recommendations for Market Environment
ABC may want to invest in a good strategic marketing plan covering a 3-5 year period
with a solid implementation plan to go with it. However, before embarking on this, it is
recommended that ABC make a concerted effort to get the staff to recognize that they are
as much a product as the items sold in the store. Improving ABC’s brand should be a
high priority exercise and only after this has been accomplished can ABC and its product
and service be successfully marketed.

Implementation Samples or Plan for Market Environment
Exhibit 11
Marketing Process

A. Define the Aims and Objectives for Marketing Plan
B. Identify all of the Contents of the marketing plan
C. Detail the plan (and sub-plans and programs that go with them)
D. Establish the means by which progress can be measured
(e.g., pre- and post-sales figures)
E. Examine all performance analyses to tweak marketing plan

1. Sales analysis
2. Market share analysis
3. Expense analysis
4. Financial analysis

45

Exhibit 12
Activities in Marketing

1. Review of the marketing environment. A study of the organization's markets,
customers, competitors and the overall economic, political, cultural and technical
environment; covering developing trends, as well as the current situation.
2. Review of the detailed marketing activity. A study of the company's marketing
mix; in terms of the 8 Ps - (see below)
3. Review of the marketing system. A study of the marketing organization,
marketing research systems and the current marketing objectives and strategies.
The last of these is too frequently ignored.
4. Portfolio planning. In addition, the coordinated planning of the individual
products and services can contribute towards the balanced portfolio.
5. 80:20 rule. To achieve the maximum impact, the marketing plan must be clear,
concise and simple*. It needs to concentrate on the 20 percent of products or
services, and on the 20 percent of customers, which will account for 80 percent of
the volume and 80 percent of the profit.
6. 8 P's: Product, Place, Price and Promotion, Physical Environment, People,
Process, Packaging. The 8 P's offer a framework from which to build action
plans.

1. Price - The amount of money needed to buy products
2. Product - The actual product
3. Promotion (advertising)- Getting the product known
4. Placement - Where the product is located
5. People - Represent the business
6. Physical environment - The ambiance, mood, or tone of the environment
7. Process - How do people obtain your product
8. Packaging - How the product will be protected

46

*Ingredients of a Good Marketing Plan

Clear - They should be an unambiguous statement of 'exactly' what is to be done.
Quantified - The predicted outcome of each activity should be, as far as possible,
quantified, so that its performance can be monitored.

Focused - The temptation to proliferate activities beyond the numbers which can be
realistically controlled should be avoided. The 80:20 Rule applies in this context too.

Realistic - They should be achievable.

Agreed - Those who are to implement them should be committed to them, and agree
that they are achievable. The resulting plans should become a working document,
which will guide the campaigns taking place throughout the organization over the
period of the plan. If the marketing plan is to work, every exception to it (throughout
the year) must be questioned; and the lessons learned, to be incorporated in the next
year's planning.

47

Exhibit 13
Components of a Marketing Plan
(Developing the Marketing Plan)

I. Title Page
II. Executive Summary
III. Current Situation – Macro-environment
a. economy
b. legal
c. government
d. technology
e. ecological
f. socio-cultural
g. supply chain
IV. Current Situation - Market Analysis
a. market definition
b. market size
c. market segmentation
d. industry structure and strategic groupings
e. Porter 5 forces analysis
f. competition and market share
g. competitors' strengths and weaknesses
h. market trends
V. Current Situation - Consumer Analysis
a. nature of the buying decision
b. participants
c. demographics
d. psychographics
e. buyer motivation and expectations
f. loyalty segments

Vi. Current Situation - Internal
a. company resources
i. financial
ii. people

48

Exhibit 13
(con’d)

iii. time
iv. skills
b. objectives
i. mission statement and vision statement
ii. corporate objectives
iii. financial objective
iv. marketing objectives
v. long term objectives
vi. description of the basic business philosophy
g. corporate culture
VI. Summary of Situation Analysis
a. external threats
b. external opportunities
c. internal strengths
d. internal weaknesses
e. Critical success factors in the industry
f. our sustainable competitive advantage
VII. Marketing research
a. information requirements
b. research methodology
c. research results
VIII. Marketing Strategy - Product
a. product mix
b. product strengths and weaknesses
i. perceptual mapping
c. product life cycle management and new product development
d. Brand name, brand image, and brand equity
e. the augmented product
f. product portfolio analysis
i. B.C.G. Analysis
ii. contribution margin analysis

49

Exhibit 13
(con’d)

iii. G.E. Multi Factorial analysis
iv. Quality Function Deployment
IX. Marketing Strategy - segmented marketing actions and market
share objectives
a. by product,
b. by customer segment,
c. by geographical market,
d. by distribution channel.
X. Marketing Strategy - Price
a. pricing objectives
b. pricing method (e.g., cost plus, demand based, or competitor
indexing)
c. pricing strategy (e.g., skimming, or penetration)
d. discounts and allowances
e. price elasticity and customer sensitivity
f. price zoning
g. break even analysis at various prices
XI. Marketing Strategy - promotion
a. a. promotional goals
b. promotional mix
c. advertising reach, frequency, flights, theme, and media
d. sales force requirements, techniques, and management
e. sales promotion
f. publicity and public relations
g. electronic promotion (e.g., Web, or telephone)
h. word of mouth marketing (buzz)
i. viral marketing
XII. Marketing Strategy - Distribution
a. geographical coverage
b. distribution channels
c. physical distribution and logistics
d. electronic distribution
XIII. Implementation
a. personnel requirements

50

Exhibit 13
(con’d)

i. assign responsibilities
ii. give incentives
iii. training on selling methods
b. financial requirements
c. management information systems requirements
d. month-by-month agenda
i. PERT or critical path analysis
e. monitoring results and benchmarks
f. adjustment mechanism
g. contingencies (What if's)
XIV. Financial Summary
a. assumptions
b. pro-forma monthly income statement
c. contribution margin analysis
d. breakeven analysis
e. Monte Carlo method
f. ISI: Internet Strategic Intelligence
XV. Scenarios
a. Prediction of Future Scenarios
b. Plan of Action for each Scenario
XVI. Appendix
a. pictures and specifications of the new product
b. results from research already completed

51

Exhibit 14
Types of Performance Analyses
(after Marketing Plan is Implemented)

1. Performance analyses

To track marketing performance, the following analyses are performed and
reviewed:

2. Sales analysis

Most organizations track their sales results. Tracking the sales variances (i.e.,
deviation from targeted figure) provides a more immediate picture of sales effort.
`Micro-analysis' can then be done to investigate the underlining reason (individual
products, sales territories, customers, etc.) for success or failure to those sales
figures.

3. Market share analysis

Tracking market share is an important metric. Though absolute sales might grow
in an expanding market, a firm's share of the market can actually decrease which
bodes ill for future sales when the market starts to drop. Where such market
share is tracked, there may be a number of aspects which will be followed:
a. overall market share
b. segment share - that in the specific, targeted segment
c. relative share -in relation to the market leaders
d. annual fluctuation rate of market share
4. Expense analysis

The key ratio to watch in this area is usually the `marketing expense to sales
ratio'; although this may be broken down into other elements (advertising to sales,
sales administration to sales, etc.).

52

Exhibit 14
Types of Performance Analyses
(after Marketing Plan is

5. Financial analysis

The "bottom line" of marketing activities should at least in theory, be the net profit.
There are a number of separate performance figures and key ratios, which need
to be tracked:
 gross contribution<>net profit
 gross profit<>return on investment
 net contribution<>profit on sales

Performance Analysis

53

Exhibit 15
Sample Flowchart for
Marketing Planning Process

54

Risk and Security
Mitigation and Protection
Risk

Description of Risk Program

Areas which have potential for creating a negative event
with financial consequences to ABC (e.g., lawsuits,
regulatory violations, etc.) is the subject of this section.
ABC does not have a formal risk assessment program.
The Owners seem to be generally aware of some of the
risk associated with their business, but not specifically. In
the absence of a risk assessment program at ABC, this
section will deal primarily with what a risk assessment
program consist of and the risk rating system used in this
report in each of the sections.
We start with a definition of risk measured in terms of the
probability it will happen and the level of impact to the
company if it does happen.
Managing risk is among one of the most important aspect
of managing a business. One way of defining risk is by
defining the likelihood (probability) that a business will
either suffer a negative event or fail to achieve a planned
outcome.

Probability

Probability is the chance that a particular negative event
will occur.

 High – More likely than not that the negative event will
occur. Event has not yet happened, but the statistical
odds are in favor of it happening (particularly true if
55

Sample2 Report Business Assessment

Sample2 Report Business Assessment

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