Business Continuity Planning for Boots Limited - Case Study Example

Name : xxxxxxxxxxx Institution : xxxxxxxxxxx Course : xxxxxxxxxxx Title : Business continuity planning Tutor : xxxxxxxxxxx @2013 Table of Contents Table of Contents 2 1.0 Introduction 3 2.0 Boots UK Limited 4 3.0 Background of the company 4 4.0 Critical Activities 6 4.1 Pharmaceutical services 6 4.2 Beauty products 7 4.3 Insurance 8 4.4 Optician Services 8 5.0 General Retail services and products 10 6.0 The legal Framework in which the company operates 10 7.0 Critical Activities and Assessment of Maximum Tolerable Period of Disruption 10 9.0 Strategies for Maintaining Critical Activities/Dependencies 18 10.0 Monitoring and Reporting of Critical Dependency 21 11.0 Application of business continuity plan 22 12.0 Conclusion 23 References 24 1.0 Introduction Every business has the objective of developing a going concern. Business continuity planning is therefore a significant process for all organizations. This is because it involves the identification of the threats that may affect an organization and the implications of these particular threats on the normal operations of the business. If the threats towards the business are effectively identified, a framework can then be provided for dealing with incoming threats. Consequently, the organization may survive for a longer period. The objective of the process of business continuity planning is structuring organizational reliance which is the ability to effectively respond to and safeguard the basic interests of the organizations activities, stakeholders, operations and its reputation. This particular paper presents business continuity plan for Boots Limited. 2.0 Boots UK Limited Boots UK Limited is one of the leading pharmaceutical and beauty product companies. The company has a prolific mission of assisting customers to feel and look better than they ever thought possible. Selecting the boots company as the company of focus was influenced by the fact that the company has demonstrated outstanding performance over the years. In addition the company has impacted on the lives of many due to the services and products it provides. 3.0 Background of the company Boots Limited was originally founded by John Boot in 1849. However after the death of the founder; John Boot, the company has over the years changed ownership to various companies. These include the North American, United Drug Company which acquired the company in 1920. Nevertheless by the1933 the company was sold back to the British management. In 2007 the company was renamed; Boots UK Limited from Boots The Chemists Ltd, after a strategic alliance between Alliance UniChem plc and Boots Company plc. (Viceira & Mitusui, 2003) Economically, the financial performance of the Boots Limited has always been exceptional. As indicated by Figure 1 Below, the company has recorded an increase in trading profits in the last five years. A case in point of exceptional financial performance was in the 2011/2012 financial year. The company recorded a double digit growth in terms of trading and profits. In addition the company generated a solid operating cash flow that was aimed at lowering net borrowings and also funding investment for growth. Figure 1. According to GCI Magazine (2012) the financial results attained by the company can significantly be attributed to expansion in terms of new products and also expansion of the number of stores within the local market and also in key markets like the United States, Republic of Ireland, Saudi Arabia and Norway. Financial performance by businesses outside the U. K were notable, this is because revenue within the divisions increased annually by 0.6% to an estimate of £7,671 million. The trading profits on the other hand rose by 6.0% to an estimated £813 million (Magazine, 2012). In the political context, the company is governed by Board of Directors which comprises of four executive directors and four non-executive directors. The Board of Directors are charged with the responsibility of making corporate decisions for the organization. The organization is also governed by various principle board committees which include: The remuneration committee Audit and risk committee Social responsibilities committee In terms social aspects, Boots Limited has been involved in various Corporate Social Responsibility actives with the objective making the society a better place. For instance the organization is involved in activities such as supporting community initiative to fight cancer, encouraging young people to work. Also environmental conservation the organization has been working towards improving carbon management (Allianceboots.com, 2013). 4.0 Critical Activities Boots Limited provides a wide range of services. Ever since inception, the business has expanded and diversified the services and products it offers. Critical activities usually have huge impacts on the organization within the shortest time. Some of the critical activities that Boots is involved in include: 4.1 Pharmaceutical services Boots offers pharmaceutical services at local levels through local Healthcare-focused community stores. The basic reason why Boots provides pharmaceutical services is to reach out to patients and customers in new and convenient ways. The Pharmaceutical services and products provided by the organization include dispensing prescriptions, medicines, offering advice on family health and general health advice. Alliance healthcare is the major supplier for Boots Pharmaceutical products. The Alliance healthcare makes delivery twice a day in all shops across the U.K. Also in the context of the international market, the Alliance health care also does all the supplies for Boots. One of the major stakeholders of the pharmaceutical services are the customers. Boots has developed a strategy that is aimed at providing the customers with what they need at the right place and with professionalism. Another stakeholder for the pharmaceutical services are the suppliers. The mission of the organization is to be world class pharmaceutical Company. In order to attain this particular mission, the suppliers are very significant. This is because they assist in ensuring that products exist on the self for the customer to purchase. Employees are also significant stakeholders in the provision of pharmaceutical services. This is because there role is to get things done within the organization. For instance attending to customers and selling products. Most the employees working in the pharmaceutical services division are elites who are well trained and can handle the needs of the customers professionally (Allianceboots.com, 2013). 4.2 Beauty products Boots provides various beauty related services and products to its customer. The key stakeholders include the customers, suppers, distributors, employers and insurers. Boots ventured in the beauty products segment in order to supplement the pharmaceutical services it offers. This is because the two ventures can be integrated within a similar operation. Most the employees working in the beauty are well trained and can handle the needs of the customers professionally (Allianceboots.com, 2013). 4.3 Insurance Boots provides insurance services which include: Travel insurance, Boots Health Insurance WellWoman and WellMan cancer insurance and Changes to Child Trust Funds. Venturing into the insurance business option was aimed at expanding the business not only to provide customers with products and services but also to give them protection against emerging risks in society. The major stakeholders for optician services are the customers and employees. The employees working in the insurance department are well trained and can handle the needs of the customers professionally (Allianceboots.com, 2013). 4.4 Optician Services Boots runs a chain of stores for dispensing optician and ophthalmic services. Boots expanded its services to the provision of optical services in order to in order to diversify the kind of health care services it provided. The optician services offered by the company include eye tests, optician advice and information. The products offered by include; contact lenses, contact and glasses. Boots Opticians have closely been working with frame suppliers like Luxottica. In the recent years the company has transferred to Essilor, who supply the company with lenses. The major stakeholders for optician services are the customers, suppers, distributors, employers and insurers (Allianceboots.com, 2013). 4.5 Hearing Services Boots offers hearing services and products which range from hearing tests , hearing aids , accessory shops and hear health advice. The major stakeholders for hearing services are the customers, suppers, distributors, employers and insurers. The employees working in the hearing division are well qualified nurses and doctors, who work to ensure that the customers are well, served (bootshearingcare.com, 2013). 4.6 Boots Photography Boots provides photography services and products which range from on line photo processing, in store photo processing, calendars, photo books, gifts and canvases. The major stakeholders for optician services are the customers, suppers, distributors, employers (boot Digital-Photo-Processing, 2013). 5.0 General Retail services and products General retail activities have also been undertaken by the Boot’s organization such as homeopathy, nutritional advice, facials, and Botox and eye laser surgery. The organization has also diversified its activities into manufacturing and research of drugs. For instance it initiated the pain killer Ibuprofen; in 1994.Furthermore Boots developed Nurofen another brand of drug (Hollinger 1996). The company has also provides retail products such kitchen and electrical appliances and baby and mother essentials. The expansion into general retail services was to attain the objective of growth. The major stakeholders for the general retail are the customers, suppers, distributors, employers and insurers. 6.0 The legal Framework in which the company operates The Boots Company is a private owned company. The shares of the business are not listed or traded on any stock exchange programs in the country. However the Alliance Boots Plc was listed on the stock exchange markets in London , however a withdrawal was made in 2007 June (Allianceboots.com, 2013). 7.0 Critical Activities and Assessment of Maximum Tolerable Period of Disruption The critical activities are backed by resources such as technology, customers, vehicles, suppliers, stake holder’s information and premises. If these resources are exposed to threats and vulnerability the organization will definitely be disrupted (Code of practice for Business continuity Planning, 2006). The process of risk assessment is therefore very vital at this particular stage. Identification of Risks that may affect the critical activities Macro-economic and political environment: The Company can be affected by effects of the political and macroeconomic environment on key customer s and suppliers. For instance political unrest in the country of operations can affected critical activities. Changes in existing regulations could impact on the operations of the company essentially in the Health and Beauty division and the Pharmaceutical Wholesale Division Changes in consumer behaviour trends: The company may be affected by changes in consumer preferences, shopping habits and consumer spending Operational failures : This include failure from the main distribution centers, IT systems and suppliers, and logistics infrastructure Increased operating costs Change in management Competition Risk Matrix Description of Risk Activity Affected Likelihood/seriousness Rank (High/low) Mitigation Action Individual Responsible for mitigation Time Macro-economic and political environment Health & Beauty Division Medium High Rigorous planning process and monitoring of Macro-economic and political environment Audit and Risk Management Committee I year Regulatory Changes Health & Beauty Division Insurance High High Active involvement in policy-making processes Audit and Risk Management Committee 2 Y E A R S Changes in consumer behaviour trends All critical Activities Medium Medium Changing to consumer demand Audit and Risk Management Committee 1 Y E A R Operational failures All critical Activities High High Rigorously audited control Regularly update Test business continuity plans Improving control of core business processes Audit and Risk Management Committee 2 M O N T H S Increased operating costs All critical Activities High High Sophisticated techniques for procurement Audit and Risk Management Committee 6 M O N T H S Competition All critical Activities High High Building brand Enhancing customer loyalty Audit and Risk Management Committee I Y E A R As presented by the risk matrix above all critical activities have the probability of been affected by the various risks. Nevertheless using the risk assessment matrix it can be concluded that the most significant activity is the pharmaceutical services. This is because it is mostly affected by all risk, within the micro- and macro environments. After the pharmaceutical services the beauty product and services take the second place followed by insurance services, optician services, hearing services and general retail services and products, as indicated in the table below: Critical Activities Pharmaceutical services Beauty product and services Insurance services Optician services Hearing services General retail services 8.0 Critical dependencies An organization’s critical dependencies incorporate several necessities that do always enable the organization to operate effectively. In Boots UK Limited, there are several critical dependencies. The following are some of the critical dependencies in the organization, they include; • People such as opticians, delivery drivers, shop assistants, pharmacists and the administration staff • Information technology department which undertakes various functions such as ordering of stocks and general communication within the company • Premises such as administrative centers, warehouses and stores • Vehicles, which are highly employed in delivering the pharmaceutical and beauty products to several branches • Critical suppliers who majorly supply drugs, beauty products and vehicles fuel. • Stakeholders The critical dependencies such as people, technology, premises and supplies are essential for Boots UK Limited sustainable growth. Therefore, by considering their importance, the critical dependencies can be classified according to their role of importance in the company. In Boots UK Limited, People such as opticians, delivery drivers, pharmacists, shop assistants and the administration staff are very essential, in that they assist in easing the company’s operations. With opticians, Boots pharmacy is able to provide optical services effectively. Therefore, in order to provide optical services, Boots UK Limited depends highly on pharmacists. Shop assistants are also helpful particularly in easing the daily workloads in the company’s shops. Delivery drivers on the other hand do always ensure that customers receive the right amount of commodities ordered at his or her convenient location. Administration staff assists in ensuring that the organization runs well and problems within the organization are solved amicably. Technology is also important in ensuring sustainable growth. It is believed that with technology an organization can achieve its major objectives. In Boots UK Limited, technology, particularly in information department, is very important. With technology the information department is capable of ordering stocks and communicating effectively within the organization. By considering their role of importance, it is believed that people and technology can be classified within given classes. Critical supplies are also essential in ensuring sustainable growth. However, their role of importance cannot be compared to that of people and technology. Critical supplies do always ensure that Boots UK Limited has the right amount of products to be sold to customers. Similarly, premises and vehicles are quite essential in development of Boots UK Limited. However, when compared to critical supplies, their role of importance is a bit less. Therefore, according to their role of importance, critical dependencies can be classified as highly dependents, moderately dependents and lowly dependents. Critical dependencies can be classified as highly dependents include people and technology. Those that can be classified as moderately dependents include critical supplies. Lastly, critical dependencies that can be classified as lowly dependents include premises and vehicles. It is quite essential for the organization to evaluate the critical dependencies. Therefore, Boots UK Limited should adopt a traffic light trigger mechanism for continuous review and implementation of business continuity plan. By monitoring the dependencies, Boots UK Limited should create a bench mark for each dependency as follows: • Status Green: everything works well • Status Ember: something is not working well. There is a need to go back to green • Status Red: there is a need to mobilize the crisis planning team 9.0 Strategies for Maintaining Critical Activities/Dependencies For each of the critical dependencies mentioned above, it is important to monitor and provide a report relating to how each dependency operates as follows; Strategies for people Boots UK Limited should identify strategies that are appropriate for maintaining core knowledge and skills. This implementation process needs to extend past contractors specialists and stakeholders, these strategies involve; • Documentation of how activities are done • The use of a third party is also important particularly when the prevailing workforce is not available • A workforce that is multi-skilled is also vital due to the fact that they can handle varied tasks. • A succession plan is also very necessary • Understanding of retention and management Premises Strategies Boots UK Limited needs to ensure that its work sites are not limited. It needs to devise additional working sites. Therefore the following strategies can be devised; • Home working • Remote working • Alternative and additional premises inside the organization • Substitute premises offered by another organization • Alternative place for working given by a third party specialist Strategies for technology • Ensuring that the infrastructure is resilient through establishing a backup system • Outdoor provision • Making the infrastructure resilient through backup systems • The technology should be effective in remote areas Strategies for Suppliers/Stakeholder • Raising the number of suppliers for the organization • Stock levels handed in on time • Ensuring that the supplies maintain the robust BCP’S • Improving contractual agreements and service levels • Procedures for maintain the relationship with of stakeholders should be well formulated • Stock pilling 10.0 Monitoring and Reporting of Critical Dependency Boots UK Limited had once lost one of its premises due to fire attacks. Additionally, the organization once experienced a problem of IT networks distortion due to virus attacks. It is therefore important for Boots Pharmacy to ensure that its critical dependencies are well monitored and reported. By considering the Business continuity management (BCM), it is essential for Boots Pharmacy to undertake risk assessment. Undertaking risk assessment will assist the organization to easily identify the probable available risks. The essential aspect about risk assessment is that the level of risk will be evaluated effectively and understood within the context of the organizations critical activities. As mentioned previously, critical activities of the company are supported by resources such as people, technology, premises and information. The organization needs to ensure that the vulnerability of these resources does not result to the disruption of normal business activities. Risk assessment approaches do always varies among organizations. It is believed that the risk assessment approach assumed by an organization is depends a lot on the organization’s economic stability and activities. It is however essential for an organization to adopt an assessment approach that is appropriate and suitable in addressing its entire needs. 11.0 Application of business continuity plan Boots UK Limited should ensure that business continuity plan is adopted and applied appropriately. The adopted plan should consider any threat to critical functions that constitute a risk to the people, property, vehicles and equipment and information technology and communications. The approach should aim at providing guidance and assistance to service managers if necessary. The plan should be able to deal with emergencies so as to maintain provision of critical services to the public in case of any disruption. Therefore, the plan needs to have information that can be applied in emergency situation. Some of the information that should be incorporated includes: • Key documents and location • Procedures for emergency aurthorisation • Back-up strategies • Recovery plans It is quite essential for Boots UK Limited to constitute a plan that can easily be reviewed and updated. The organization should also constitute a plan that reflects government recommendations and advice. The constituted plan should be in line with North West Regional Fire and Rescue Services, Anytown Resilience Forum and other emergency services. The should be tested periodically so as to ensure that it is implemented successfully in any kind of emergency and that staff understand the role they should play in the plan. In the application of business continuity, the first step that should be taken is the plan indication. This will be undertaken by: • Indicating the Planning Group Team so as to handle the crisis • Deciding the recovery objectives by the team • The team contacting appropriate staff that has the capability and knowledge of solving the crisis The next step is reviewing the plan by: • Employing virgin control system • Assessing and testing, such as table work, documentation review and real scenarios 12.0 Conclusion From the discussion, it is quite clear that Boots UK Limited is one of the leading global pharmaceutical and beauty product companies. It was originally founded by John Boot in 1849. Boots Limited provides a wide range of services. Ever since inception, the business has expanded and diversified the services and products it offers. Critical activities usually have huge impacts on the organization within the shortest time. Boots offers pharmaceutical services at local levels through local Healthcare-focused community stores. The basic reason why Boots provides pharmaceutical services is to reach out to patients and customers in new and convenient ways. An organization’s critical dependencies incorporate several necessities that do always enable the organization to operate effectively. They include people, stakeholders, technology, premises, vehicles and critical supplies. It is important to monitor and provide a report relating to how critical dependencies operate. Critical dependencies should be monitored and reported well so as to assist an organization to effectively deal with probable risks. Appropriate adoption and application of business continuity plan is very essential. It is important for adopted plan to consider any threat to critical functions that constitute a risk to the people, property, vehicles and equipment and information technology and communications. References Allianceboots.com, 2013. Alliance Boots Annual Report , 2012, Retrieved From Boots Annual report for 2009/10, allianceboots.com. Code of practice for Business continuity Planning , 2006. GCI Magazine, 2012, Boots Shows Growth in 2011/2012 Financial Report, http://www.gcimagazine.com/business/marketers/financials/152359655.html Hollinger, P, 1996, “Boots Back on International Stage," Financial Times, October 11, 1996, p. 24. Viceira, L and Mitusui, A. M, 2003, Pension Policy at The Boots Company PLC, Harvard Business Review. Read More