Question
Which model will be suitable for the Acquisitions Analysis and why? What is the appropriate report to be prepared for the Board for its decision
Which model will be suitable for the Acquisitions Analysis and why? What is the appropriate report to be prepared for the Board for its decision on the Acquisition? What other strategies could be recommended for the Parent company to use and the suitability. Sample of the suitability report.
FUTURE DEVELOPMENT
The company remains very successful not only in terms of market share and profitability but also with respect to its employee relationships, policies, and practices. Bazar has done much to change from its traditional image of the autocratic management style to a vision that encourages a more open approach to people management. All the staff who were interviewed during the research project noted that management had become more approachable and participative in its attitudes over the last few years.
Nevertheless, there are many tensions perceived between new initiatives and old practices. There remains a strong degree of centralized control and precise instructions but also a growing emphasis on the staff showing 'initiative'. This is coupled with the threat of constant surveillance and disciplinary action for those who transgress the rules. Perhaps the tensions and contradictions are best illustrated by the concept of the customer-care programme, which specifies conformance to precise working patterns but includes slogan such as 'We trust you; The customer trusts you'.
There are other practices that could be reformed, for example, there are doubts about the effectiveness of communications between managers and their staff, and some considerations is being given to implementing a formal structured programme of team-briefing. Moreover, given the way in which training is undertaken within the stores, there is little or no opportunity for the managers to engage in any explicit team-building exercises while at work.
While the ethos of customer care is strongly expressed by managers, the actual management of customer relationships is to some degree vague. One might argue that the company's traditional 'plan selling' approach is somewhat at odds with the increasingly sophisticated techniques of its major competitors. It is therefore, making some tentative efforts to catch up. For instance, in the light of other retailers' development loyalty care system, Bazar has invested in an independently owned loyalty card. This card allows users to receive loyalty bonuses from other non-grocery retailers, petrol retailers and restaurants. Non-specific purchases behaviour information is shared between the organisations involved. Each organisation receives precise information on the behaviour of the use of the card in their outlets. Bazar has invested heavily in the development of this card, they are hopping that this advanced loyalty card can be transformed into a smart card system, perhaps combined with credit card in the future providing even more information on the customer's behaviour when the Ghana government digitization programme is completed. Customer feedback on the use of the loyalty has been favorable.
The regular unit rewards offered by the card compared poorly with other sole retailer loyalty card, however most users build up unit rewards and then wait for the regular special promotions that the organisations involved contribute. So for instance, a shopper at Bazar can enjoy a 'buy one get one free' meal at the restaurant that is also party to the card. At the moment however, the company's use of data generated by the card is rather limited.
One advantage that Bazar loyalty card has over those of their rivals is its link with national charities. For every ten unit rewards accrued, Bazars donate 2 pesewas to a national charity. The charity collects their accumulated donation in the form of a cheque at the annual award ceremony. This ceremony attended by a Senior Manager of the participating companies and the Press, is a huge celebration held at the prestigious Accra Hotel and it is at this ceremony that the national charity for the following year is announced.
Finally, and most significantly, the company is considering its operation by purchasing 20 stores located along the middle Savanna Region of Ghana currently owned by Little Bee, a struggling regional supermarket. This represents a move out of Bazar traditional heartland and it represents an ambitious and risky move. In an assessment to the board, the Director of Finance and Operations advised that the acquisition of those 20 stores should be thought of like an investment and should be appraised using appropriate methods when data is available before discussion with the governing board. She also emphasised that the high-risk nature of the strategy should be reflected in any appraisal of the investment with a clear consultant term of reference highlighting the specific deliverables and expectations including timelines.
While the stores would be re-branded, the board's decision will be influenced by the current financial position of the 20 stores and so it has contracted a consultant to support the board with necessary acquisition research information. AB Consult & Associate has been contracted and are expected to report to the board on 5 August 2022. Below is an incomplete records prepared by the Finance Manager:
Appendix I
Bazar Profit and Loss accounts for the year ended 31 December, 2021
Turnover | 2021 GH'000 670,400 | 2020 GH'000 666,198 |
Cost of Sales | (469,280) | (466,339) |
Operating Profit | 201,120 | 199,859 |
Operating Expenses | (103,560) | (95,930) |
Operating Profit/Loss | 97,560 | 103,929 |
Interest Payable (20%) | (14,160) | (11,360) |
Profit before taxation | 83,400 | 92,569 |
Taxation | (20,850) | (27,771) |
Profit after taxation | 62,550 | 64,798 |
Dividends | (12,000) | (18,500) |
Retained profit for the year | 50,550 | 46,298 |
Retained profit brought forward | 83,472 | 37,174 |
Retained profit carried forward | 134,022 | 83,472 |
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