Khaled Decision Making Simon - Assignment 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 Morrisons Chain of Supermarkets 4 3.0 Background of the company 4 4.0 Critical Activities 7 4.1 Retailing services 7 4.2 Manufacturing/processing services 7 4.3 Pharmacy services 7 4.4 Recycling services 8 4.5 Charity engagement 8 5.0 The legal Framework in which the company operates 8 6.0 Critical Activities and Assessment of Maximum Tolerable Period of Disruption 9 7.0 Critical dependencies 14 8.0 Strategies for Maintaining Critical Activities/Dependencies 17 9.0 Monitoring and Reporting of Critical Dependency 18 10.0 Application of business continuity plan 19 11.0 Conclusion 20 References 21 1.0 Introduction In business, the greatest responsibility of the managers /directors is to make sure that the future of the company is secure. The company/business should be able to withstand the challenges and threats that will come up and from these, form a basis of dealing with future challenges without compromising the operations of the company. Threats may be from within the organization (internal) or from outside the organization (external). Therefore the process of Business Continuity Planning is an important step by management to put in place strategies and directions that the organization shall take in case of the aforementioned threats. While it is held accountable for all major company decisions and directions, its responsibility will be guidance to those it will saddle the responsibility of moving the organization forward in the threat situation. A proper Business Continuity Plan is therefore necessary in this scenario. This paper presents a Business Continuity plan for Morrisons chain of supermarkets in the United Kingdom. 2.0 Morrisons Chain of Supermarkets Morrisons chain of supermarkets is one of the leading chains of supermarkets in the United Kingdom. It is UK’s fourth largest food retailer with over four hundred stores. Its products are mainly food and grocery. Selecting to focus on Morrisons was due to the fact that it has been steadily growing and improving over the years. 3.0 Background of the company Morrisons chain of supermarkets was founded in 1899 by William Morrison. It started as an egg and butter merchant in west Yorkshire. The company then developed into market stalls and onto counter service. It grew so rapidly that a small town centre shop was opened in 1958 with three checkouts. It was also the first to offer self-service in Bradford.Morrisons opened its first store ‘Victoria’ in Bradford in 1961 and hence was at the forefront of supermarket development. Due to the need for expansion and continuous growth the company went public in 1967. It then expanded into Lancashire region and begun fresh food production in 1980.It then begun expanding outside Bradford and opened its 100th store in 1999 in Nelson, greater London. It opened its first store in Wales in 2000and joined the share index of the companies listed on the London stock exchange(FTSE 100) in 2001.It branched into Scotland in2004. In November 2005, the company completed the process of converting Safeway stores to the Morrisons format which was the biggest retail conversion exercise ever undertaken in the UK. This created over 11000 jobs (Morrisons.co.uk, 2013). Economically the company performs exceptionally well until it is now the fourth largest supermarket chain in the United Kingdom. This has been proved by the fact that it is included in the FTSE 100 and that it has a share price of 255.00 on the London Stock exchange. Morrisons chain of supermarkets has an annual turnover of fourteen billion pounds (£14 billion). It has a 15.6% share in the UK grocery market and is one of Britain’s fastest growing supermarket chains. 2012(£m) 2011(£m) Profit after tax 690 632 Add back: tax charge for the period 257 242 Profit before tax 947 874 Adjustments for: Net pension interest income (13) (6) Loss arising on property transactions 2924 Underlying profit before tax 935 869 Taxation 274 261 Underlying profit after tax charge 661 608 Underlying earnings per share (pence) 25.55 23.03 Politically, the company is headed by a board of directors that is headed by a chairman. Other members of the board include a chief executive, group finance director, senior independent director, the chair of the audit committee, Chair of the Corporate Compliance and Responsibility Committee and chair of the remunerations committee. The boards function is to make the necessary corporate decisions for the company. Socially, Morrisons has a corporate social responsibility. The company is committed in developing an environment in which everyone can develop. Morrisons does not only buy from farmers, but also supports the farming community. It has also established a research facility to benefit farmers. Marrisons partners with education institutions such as Bristol University to improve research. In fighting the greenhouse effect, the company conducted a survey on levels of carbon in farms to find out how emissions of greenhouse gasses can be reduced. Morrisons also signed up to the Governments Public Health Responsibility Deal in which they committed to take a range of actions to improve customer and colleague health. The deal is expressed through a number of pledges that covers food, health at work, alcohol and physical activity (Morrisons.co.uk, 2013). Morrisons corporate responsibility includes Save the Children Partnership with the International Charity. Save the children aims to raise money for children, their families and schools. Families and Schools Together (FAST) program which brings together around 40 parents and 80 children of between 3-8 years for 8 sessions per week is sponsored by Morrisons. In 2011 Morrisons Save the Children fundraising benefitted around 3520 children through the FAST program. Through these efforts Morrisons aims to help change children lives, their families and build a stronger community base. 4.0 Critical Activities 4.1 Retailing services Morrisons chain of supermarkets opened 37 new stores over the 2011/2012 financial year. It is the UK’s fourth largest supermarket. The supermarket serves over 11 million customers each week. The supermarkets primary focus is groceries, home ware and little electronic items, furnishings and clothing. It also has a chain of petrol stations. Different types of foodstuffs from diverse areas are stocked in the supermarket. Fresh unprocessed beef, pork and lamb, fruits and vegetables, products made from British wheat, over fifty types of fresh sea food sourced from fisheries and their own seafood processing plant, soya products, palm oil products, timber products, fresh flowers from the UK European flower growers and Afriflora company in Ethiopia, are just among the diverse products offered by the chain of supermarkets. 4.2 Manufacturing/processing services Apart from retailing activities, Morrisons diversified into the food manufacturing industry. The chain of supermarkets owns a substantial number of bakeries, packing facilities and meat processing facilities. It owns four abattoirs and a fish factory. To deliver seafood of high quality, the chain of supermarkets launched its own sea food processing business. It is therefore able to get fish directly from the quayside and process it for sell across the country. 4.3 Pharmacy services In enhancing its vision for a broader spectrum of operation, Morrisons venture into the service industry and opened pharmacies in a select number of its stores. As a customer service, the store offer free consultation services. The pharmacy’s products and services include: Health eating advice Smoking cessation General health advice Free repeat prescription collection service Advice on the usage of dispensed and counter medications Weight management Incontinence supplies How to dispose off unwanted medication 4.4 Recycling services Morrisons has under its ownership a number of recycling facilities that recycle energy saving light bulbs, tetra packs, tin foil, paper cardboard, books, clothing, shoes etcetera. This is in line with Morrisons environmental saving campaign. 4.5 Charity engagement As a way of giving back to the community, Morrisons corporate responsibility involves charity in the UK and abroad. The organization provides support to charities, fund raisers and other community development programs. Morrisons Save a Smile is a campaign to give aid to charities all over the world. It offers sponsorships to community groups that meet requirements set by the company (Morrisons.co.uk, 2013). 5.0 The legal Framework in which the company operates Morrisons Company is a public company. In 1967 due to ongoing expansion and the need for growth, the company went public and got listed on the London stock exchange. It is therefore a limited company and its shares are sold and traded to the public. Its share offer is 174 times oversubscribed and has a current average share price of £255.80. The company is led by a board of directors who appoint and fire the CEO of the company. Ownership is exercised with transparency through the shareholders general meeting (Kallevig, 2010). The number of shareholders by 29th January 2012 was 46,410 .The number of shares in issue on the same day was 2,532,312,110. 6.0 Critical Activities and Assessment of Maximum Tolerable Period of Disruption The critical activities of the company are given support by various resources. This include human personnel (employees), vehicles, processing machinery, premises, stores (go downs), suppliers, customers and technology. As these resources are of extreme importance to the running of the company, any impromptu failure will hurt the business. It is therefore important to come up with a risk assessment plan and ways to overcome the disruptions if and when they occur. Risk assessment is the process of identifying a hazard, the probability of its occurrence and its impacts (USGAO, 2000). Risk Identification Striking personnel: The employees are critical part of the enterprise and any move on their part to down their tools in protest will ultimately impact on the sales of the company. It may lead to closure of stores affected leading to no sales and hence no income. Increasing competition: The rise of other establishments offering similar services would lead to a drop in sales. Government policy: as the company deals with critical services like food stuffs and pharmacy services there is always a danger that there will be change in the existing government policies that favor that industry. Changes in consumer preferences: many reasons influence the choice of commodities in use by customers. A shift in preferences by the customers may bode ill for the company. Global Shopping habits are influenced by a changing global perspective of fashion and lifestyle, any change in these preferences will negatively affect the company (Woodman & Hutchings, 2010). National political, social and economic environment: The socio economic political situation of the country affects the customers and the suppliers of the company. Economic recession, social and political unrest greatly affect the performance of the company. Technological fraud: as the company grew, so did its dependency on technology and computers. This exposes the company to malpractices like hacking hence putting company records, employee records and customer records at risk. Increased operational costs: With increasing costs of living, there is an increase in production costs. The demand for higher salaries by staff also puts extra pressure on the company. Management Issues: being a public company, succession in managerial positions causes’ conflict that may negatively affects company performance. At one time, the company was fined £210,000 for failing the Disclosure and Transparency Rules (FSA, 2010). Things like these should be avoided. Risk Matrix Description of Risk Activity Affected Likelihood/seriousness Rank (High/low) Mitigation Action Individual Responsible for mitigation Time Striking personnel All critical activities Medium High Set performance contracts and have signed agreements from the workers trade unions Salaries and remuneration commission 1 month competition All critical activities High High Improvement in services offered Audit and Risk Management Committee 1 Y E A R S Government policy All critical Activities Medium Medium Follow changing government trends Management Committee 2 Y E A Rs Consumer preferences All critical Activities medium medium Implement consumer demands and preferences Audit and Risk Management Committee 2 M O N T H S National political, social and economic environment All critical Activities medium medium Monitoring of prevailing conditions and planning on how to counter them Audit and Risk Management Committee 1 year Competition All critical Activities High High Building brand Enhancing customer loyalty Audit and Risk Management Committee I Y E A R Technological fraud Technical department medium medium Train the IT department on its prevention Information technology 2 years From the risk matrix above it is evident that all the critical activities of the company can be affected by the risks that arise. With the use of this risk matrix the criticality of the activities starting with the most critical is Retailing services manufacturing/processing services pharmacy services Recycling services charity engagements 7.0 Critical dependencies These are the resources that enable the organization to operate effectively. They are to be in the right state of functionality for the company to run at its optimum. For Morrisons, their critical dependencies include the: Workers (employees): these include supermarket attendants, IT technicians, salespeople, marketing personnel, customer care desk, pharmacists, engineers, technicians and drivers. Premises: these are where the most critical activity of the company occurs. They include groceries, stores, go downs, factories and warehouses. Research team: for coming up with better and cheaper ways of operation Manufacturing department: responsible for the supply of needed products conveniently Vehicles: They are important for transportation services for the company. Suppliers: the major suppliers of food stuffs are farmers and fishermen. Stake holders: Anyone with an interest in the company and its operations. Therefore, the major critical dependencies of Morrisons chain of supermarkets are important for the fiscal growth of the company. Supermarket attendants are in charge of setting up the product and directing customers in the supermarkets. The sales department together with the advertisement group and the marketing departments combine to promote the services offered by the company. The manufacturing section of the supermarket has its own personnel of engineers, technicians and craftsmen and they are equally important. They make sure the machinery and processes followed in the processing of food stuffs are strictly adhered to for a high quality end product. The drivers for the company are not useless either, as they involved in the transport of man power, goods and services as planned. Premises rank highly on the scale of company critical dependencies. The buildings that house the goods and services being offered are a significant investment as they offer shelter and security to the goods and its handlers. Another important set up in the organization is the transport department. Goods need to be delivered from the go downs to the super market, from the suppliers to the stores, from the processing plants to the stores and when delivering goods for customers. Vehicles accomplish all these and are therefore an important part of the company. At the core of the company’s operations are its suppliers. These are comprised of farmers and processors. Without their produce, there wouldn’t be anything to sell hence their importance. According to their criticalness, dependencies can be therefore classified as highly dependent, moderately dependent and lowly dependent. Personnel/employees automatically fall into the category of highly dependent. Supplies and premises are moderately dependent while vehicles are lowly dependent By monitoring the dependencies , a business continuity plan can be drafted putting all these in consideration and the business continuity plan is then reviewed on regular basis as circumstances change. An overview of the business continuity plan will be: Green (level 1) everything is in order. No action required Amber (level 2) service management team is advised of the developing situation that is in need of mitigating action to avoid an emergency. Red (level 3) the crisis planning team is convened. The crisis may occur in a number of steps: Green to amber alone Green then amber then Red Green directly to red 8.0 Strategies for Maintaining Critical Activities/Dependencies It is therefore imperative to have a clear objective to deal appropriately with an emergency and maintain the normal operations of the company. Strategies for personnel The company should find ways to make sure this important resource (personnel) remains focused on the ideals and objectives of the company. It should make sure the skills and knowledge for production remains in the organization. Some of these strategies would be: Monitor the level of dedication of the workers Prepare incentives for when there is need to persuade them Train workers in diverse areas, that way they can work in different operation areas of the company Prepare a budget for hiring additional staff Prepare a negotiating committee Premises strategies For consistency and future expansion plans Morrisons needs to have a wide variety of premises therefore the need to have strategies in place: Insurance should be taken on all the premises Alternative and additional premises inside the organization Alternative premises offered by another organization Outdoor provision of services Make the infrastructure resilient through installation of safety features Strategy for Supplier Diversify the suppliers of the company Stockpiling of reserves Tying the suppliers to specific contracts Taking stock samples and acting on them in time Ensure that the suppliers also have working BCP’s Strategy for vehicles Have a motor pool of serviceable working vehicles Contact a vehicle rental company to be always on stand by Repair all damaged vehicles 9.0 Monitoring and Reporting of Critical Dependency Morrisons has suffered from sales decline in recent seasons with management reluctant on taking the normally traditional company into online retailing. It was also forced to close several of its distribution centers because of overcapacity in its depots in 2005.The workers also threatened to strike in the same year. It is therefore imperative for Morrisons to monitor its critical dependencies for appropriate action. The level of risk should be evaluated and analyzed within the confines of the company’s critical activities. Critical activities of Morrisons are backed up by critical resources such as personnel, premises, vehicles and machinery. The company needs to make sure that the weaknesses of these critical activities are not exploited. The risk assessment module adopted by an organization depends on its activities and financial ability. The risk assessment picked should be able to prioritize and deal with the most important thing first. 10.0 Application of business continuity plan Morrisons 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 personnel, premises, vehicles and equipment and information technology and communications. The approach should aim at providing guidance and assistance to service managers if necessary. A typical strategy gives the number of individuals and combined exercises that include training with testing (USGAO, 2000). 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 Hazards in the workplace Evaluation of the risks and their precautions Procedures for emergency procedures Back up strategies Recovery plans It is important that the Business Continuity Plan be regularly reviewed for it to remain current. The most important agenda on the Service management Team meetings will enable departmental problems to be addressed in a timely manner. Business management plans help in reducing disruption of operations (Woodman and Kumar, 2009.) Government recommendations should always be taken under consideration. The BCP should be tested regularly to ensure its implementation credentials in time of an emergency and that personnel understand the role they are set to play. This is because when an emergency occurs, it is important to have a clear aim. In its application, the BCP should: Identify the planning group team to handle the crisis Specify the recovery objectives of the team Ensure the responders have the necessary capability and skill set to solve the crisis. How to implement the strategies (FEMA, 2012) 11.0 Conclusion Morrisons Company is notably one of the biggest organizations in the UK as it is the fourth largest supermarket in the UK. It employs more than 500,000 people and benefits the farmers from all over the region. Its critical activities provide it with a large return in sales. These activities depend on resources that enable the company’s seamless operation. These include personnel, premises, suppliers, technology, vehicles and stakeholders. These critical dependents should always be monitored for the organization to effectively deal with risks to them. At this point, adoption and implementation of a Business Continuity Plan makes a lot of sense. The plan will then analyze and be on the lookout for any threats to the organizations personnel, premises, suppliers, vehicles, technology and stakeholders. References Morrisons.co.uk, 2013, Anytown Fire and Rescue Service (AFRS), 2007, Business Continuity Plan Kumar, V., 2009, A decade of living dangerously: The business continuity management report. National Fire Protection Association (NFPA), 2010, Standard on Disaster/Emergency Management and Business Continuity Programs. Health and safety executive (HSE), 2006, Five steps to risk assessment. Kallevig, M, 2010, Ownership policy and SOE autonomy, OECD Global Network on Privatization and Corporate Governance of State-Owned Enterprises. Financial Service Authority (FSA), 2010, Legal frame work. FEMA, 2012, Business Continuity Planning. United States general accounting office, (USGAO), 2000, Computing crisis: Business continuity and Contingency planning. < http://www.gao.gov/special.pubs/bcpguide.pdf > Woodman, P & Hutchings, P, 2010, Disruption & Resilience: The 2010 Business Continuity Management Survey Read More