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Make decisions on business issues
Submission details
The assessment task is due on the date specified in your timetable. Any variations to this arrangement must be approved in writing by your assessor.
Performance objective
You will demonstrate the skills and knowledge required to make timely decisions on identified business issues.
Assessment
description
Using the simulated business information provided, and in response to a scenario, you will utilise risk management plans, sensitivity and quantitative analysis techniques and consultation processes to determine acceptable courses of action and make a decision. The decisions must be taken within organisational guidelines and be consistent with its values, objectives and standards. A presentation will be made to CoffeeVille’s managers detailing options available for potential courses of action and your recommendations.
Procedure
- Read the scenario information provided under CoffeeVille – your brief in Appendix 1.
- Review CoffeeVille’s organisational chart in Appendix 1 to build an understanding of the business’s reporting and command structure.
- Review, evaluate and analyse information provided about each of the decision options facing Coffeeville in Appendix 2.
- Review risk management and business impact analysis information in Appendix 3.
- Review and analyse City of Melbourne demographic information in Appendix 4.
- Based on the information provided in this and previous assessments, utilise statistical, sensitivity and quantitative analysis techniques to analyse the viability of options 2 and 3 to determine the most acceptable course of action to resolve the business issue or problem. You can use computer software or manual techniques to complete your analysis calculations.
• You can complete as many types and number of analysis calculations as desired to assist in further analysis and clarification of causes of the business issue identified in CoffeeVille – your brief in Appendix 1 and evaluation of potential courses of action to address the issue.
• You must complete a minimum of one statistical (other than trend or correlation), one sensitivity and one quantitative calculation for this assessment. - Update Part 2 of the Decision Analysis Report you started preparing in Assessment Task 3. Clearly document the results of additional analysis processes undertaken in this assessment in the Report.
Assessment Task 4
BSBINM601 - Manage information and knowledge
RTO: 22332 Version: 3.0
CRICOS: 03234B Page 2 of 13 - Complete Part 3 of the Decision Analysis Report based on the information provided and the results of your research and analysis. When listing positive and negative outcomes, consider their impact on the business as a whole and operation of the individual stores. The events and outcomes described in the business’s risk management plans in Appendix 3 should also be considered.
- Review CoffeeVille simulated business documentation, including policies and procedures, relating to decision-making and management and employee responsibilities to assist in understanding and managing change within the business.
- Complete force field diagrams for options 2 and 3 to help you determine which course of action to recommend to Emma and Rufus and assist their decision-making.
- Complete Part 4 of the Decision Analysis Report by making a recommendation and outlining your reasoning why you have come to this conclusion.
- Answer the assessment questions in Appendix 5.
Specifications
Specifications
You must submit:
● a fully completed Decision Analysis Report
● computer printouts or handwritten copies of the results gained the statistical, sensitivity and quantitative analysis techniques used to assist the decision-making process – at least one set of results for each type of analysis technique must be attached to the Decision Analysis Report
● force field analysis diagrams for options 2 and 3 – please attach to the Decision Analysis Report
● your responses to the questions in Appendix 5.
Your assessor will be looking for your ability to:
● organise, evaluate and critique ideas and information
● build and maintain understanding of a problem of issue
● develop and write complex texts using appropriate conventions and writing styles
● use numeracy skills to perform calculations and interpret complex statistical
● use communication skills to:
○ access and share information and build and maintain effective working relationships
○ use appropriate listening and questioning techniques
○ present complex information in formal situations in a format appropriate to the audience and purpose
● gather and analyse data and seek feedback to improve organisational plans and processes
● monitor and review organisational policies, procedures and adhere to legislative requirements in order to implement and manage change
● use digital technologies effectively to manage business operations for strategic and operational purposes
● use management skills to:
○ make high impact decisions
○ plan and manage activities that have implications for the whole organisation
○ work autonomously when making high level decisions to achieve and improve organisational goals.
Assessment Task 4
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A
Appendix 1ppendix 1
CoffeeVille
CoffeeVille –– your briefyour brief
Rufus and Emma Belcastran, CoffeeVille’s owners, have approached you for assistance. The business has been profitable and steadily expanding for the last 4 years but recently, expenses have started to climb and sales drop.
In the last 3 months they have started to address the issue of rising expenses by evaluating and updating procedures and work practices in an effort to reduce costs. So far, their efforts have not had a significant impact on expenditure and their sales revenue continues to be below budget forecasts.
It’s January 2016 and all four stores are closed for a summer break. Emma and Rufus are using this down time to assess their business’s operational and financial status in preparation for the year ahead.
They have asked you to help them determine the best course of action to take and assist in the decision-making process.
There are three courses of action that could be taken. - Do nothing.
- Reduce their prices.
- Provide take-home packaged meals and a meal delivery system.
Initially, you plan to use statistical, sensitivity and quantitative analysis techniques to analyse the impact of Options 2 and 3. The data and information provided in the Appendices of Assessment Tasks 2 and 3 as well as the results of any analysis processes completed in Assessment Task 3 may assist your analysis.
Organisational chart
Rufus and Emma
Rufus and Emma Belcastran Owner/ Belcastran Owner/ ManagersManagers
Store Managers
Store Managers
Baristas
Baristas
Food service
Food service attendantsattendants
Cooks
Cooks
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Appendix 2
Appendix 2
A
Analysis of decision optionsnalysis of decision options
Based on discussions with Emma and Rufus, and further research into economic and business climates, you have prepared the following summary for the three options under consideration. Your brief is to only investigate options 2 and 3 further, however, any information in the summary for option 1 can be used when determining the most acceptable course of action. - Do nothing
Economic indicators and industry analysts forecast a more positive economic environment within the next 12 months with both business and consumer confidence growing.
Business and real estate analysts forecast CBD vacancy rates to drop to 9% within 12 months and 8.5% within 18 months as local and international businesses absorb the current glut of office space.
Aim
● To maintain reputation as provider of quality food and beverages.
● To eventually return to previous levels of profitability within the next 12 months.
Business performance data
● food sales are down 10%, beverages 12% and catering 17%.
● When combined with rising expenses, profits are down for the first half of the financial year by 19%.
● Payroll expenses have risen 10.5% over the last 6 years, 3.2% in the last 12 months.
Concerns
● The current trend will continue, resulting in financial difficulties for the business and the potential closure of non-profitable stores. - Reduce prices for food
The selling price for in-store and catering food menu items will be reduced. Beverage prices to remain the same.
Number of food menu items to be decreased, especially those with more costly ingredients and longer preparations times.
Staff hours to be reduced in the short term to reflect current decreased levels of sales.
Aim
● To price match closest competitors.
● To increase the number of items sold per day by a minimum of 5% with a goal of 15% across all food categories and hot beverages.
● To reduce total expenses to 75% of total income.
Business performance data
● Cost of goods for food is currently 31% of total income.
Assessment Task 4
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● Cost of goods for beverages is 19% of total income.
● These have both increased by 3–4% in the last 12–18 months.
● Total expenses fluctuate between 77–83% of total income.
Questions
● Number of sales required under the new pricing system to achieve current daily revenue figures?
● Impact on revenue if increases in sales figures vary between the minimum (5%) and maximum (15%) goals?
Menu items
Current price range
Average spend
Average No. of sales per day per store
Current average revenue per day per store
Proposed price reduction
Breakfast options
$6–$9
$7.50
76
$570
10%
Sandwiches bar wraps
$8–$10
$9.50
96
$912
10%
Hot items
$9–$11
$10.00
82
$820
5%
Sweet baked goods
$4–$7
$4.50
45
$202.50
10%
Hot beverages
$3–$4
$3.85
330
$1270.50
0%
Milkshakes and iced coffees
$6
$6
15
$90
0%
Packaged drinks
$3–$5.50
$4.50
65
$292.50
5%
Total revenue average per day per store
$4,157,50
Total average revenue per annum all stores
$6,069,950 - Provide home packaged and meal delivery systems
The operational hours of some or all stores will be expanded to provide prepared, pre-packaged, take-home meals to post-work traffic and local residents.
Menu items for take-home meals will consist of chilled fully prepared, heat-and-eat or finish-at-home options. Three to four options will be offered every day with the menu changing daily and will include at least one vegetarian and one salad option.
A limited delivery service for hot and cold meals will be offered to local residential buildings based on the range take-home menu items. These meals will be delivered hot (or cold for salads), ready for immediate consumption.
Business hours of the stores will be extended from 4pm to 8pm.
All daily menu items will be prepared in bulk for all stores by the cooks in their current store locations (stores 3 and 4). Prepared menu items are transported to other stores prior to 5pm each day.
Assessment Task 4
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Aim
● To expand the business into new markets.
● To enter the packaged take-home and residential market and establish their brand before it becomes saturated with competitors.
● To meet the needs of the steadily increasing CBD residential population.
● To offer additional products and services to their existing customers.
Business performance data
● Food wastage is currently 10%. Major category of wastage is hot food not sold during lunch service period.
Additional payroll costs per store for extended hours and delivery service
● Each store selling packaged meals will require minimum one counter attendant for 4.5 hours at $16.50 per hour.
● Each store offering home delivery would require a delivery driver at $17 per hour for three hours.
Questions
● Most cost effective method of providing home delivery service to potential residential destinations from all stores?
● Delivery costs if meals are delivered to all residential areas from Stores 3 and 4 only?
● Potential revenue from the venture?
Delivery costs for home delivery service to targeted CBD and fringe residential areas
Residential Areas within delivery zones
Res Area 1
Res Area 2
Res Area 3
Res Area 4
Ability to supply
Store 1
$3
$4
$5
$4
30
Store 2
$4
$3
$5
$2
20
Store 3
$5
$5
$3
$3
75
Store 4
$4
$2
$6
$5
90
Potential demand
20
40
30
30
Ability to supply = holding capacity of each store, not how many menu items are stocked.
Assessment Task 4
BSBINM601 - Manage information and knowledge
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CRICOS: 03234B Page 7 of 13
Delivery costs for home delivery service to targeted CBD and fringe residential areas
Residential Areas within delivery zones
Res Area 1
Res Area 2
Res Area 3
Res Area 4
Ability to supply
Store 3
$5
$5
$3
$3
75
Store 4
$4
$2
$6
$5
90
Potential demand
20
40
30
30
Res Area 1 = Carlton, Collingwood
Res Area 2 = East Melbourne
Res Area 3 = North Melbourne and Docklands
Res Area 4 = Southbank
CoffeeVille proposed dinner service
Menu item
Selling price in-store
Forecasted average spend
Forecasted demand
Selling price – delivery
Forecasted average spend
Forecasted demand
Hot menu
$10–$15
$12
80
$14–$20
$17.50
120
Cold menu
$9–$12
$10.50
30
$14–$18
$16
30
Packaged drinks
$3–$5.50
$4.50
20
$5–$8
$7
60
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Appendix 3
Appendix 3
Risk management plans
Risk management plans and business impact analysisand business impact analysis
Risk management plans
Extract from CoffeeVille Risk Management Strategy Plan
L = Likelihood I = Impact P = Priority
Lw = Low M = Medium H = High
Risk
Risk assess
Controls
Monitoring
Timelines
Responsible
L
I
P
Emergence of a competitor within very close proximity.
M
M
M
Continuous implementation of marketing strategy to highlight key points of difference between us and competitors.
Increased frequency of promotional campaigns.
Selective discounting.
Adjustment to marketing strategy to ensure differentiation and appropriate positioning of CoffeeVille in order to compete effectively.
Continuous monitoring of competitors’ marketing campaigns.
Monthly
Rufus Belcastran Emma Belcastran
Food poisoning complaint/s from customers.
Lw
H
H
Continuous monitoring of implementation of food safety procedures.
Regular food safety refresher training provided to all staff.
All new employees given food safety training if they do not have a food handler’s certificate.
Continuous monitoring of food safety records and logs.
Weekly
Rufus Belcastran Emma Belcastran Store Manager
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Changes to local customer demographics
M
H
M
Limited ability to apply controls due to lack of ability to influence.
Apply pricing, payroll, inventory and wastage controls to limit negative impact on financial viability.
Expand services if changes are positive for business operation.
Monitor customer formal and informal feedback.
Monitor real estate movements and business statistics in CBD area.
Quarterly
Rufus Belcastran Emma Belcastran Store Manager
Changes to local economic environment
Lw
H
M
Limited ability to apply controls due to lack of ability to influence.
Apply pricing, payroll, inventory and wastage controls to limit impact on financial viability.
Monitor business and economic environment in catchment area.
Quarterly
Rufus Belcastran Emma Belcastran
Assessment Task 4
BSBINM601 - Manage information and knowledge
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Business impact analysis
Business impact
Importance/ impact
Potential losses – per store
Business risks
1 = high
5 = low
Revenue
Costs
Staff
Penalties
Liability
Reputation / good will
Timeframe for impact
Length of impact
Emergence of competitor
3
loss $500–$600 per day
$500 pw marketing
Loss 1–2
NA
NA
NA
Immediate
Permanent
Food poisoning complaint
2
loss $500–$600 per day
$2,000+
Retaining costs
Possible fines
Possible court action
High
Immediate
Minimum 6 – 12 months
Changes to local customer demographics
3
loss $200–$300 per day?
$100 pw marketing + menu changes?
Loss 1–2
NA
NA
NA
2 – 6 months
Dependant on nature of change
Changes to local economic environment
3
Unknown
Unknown assumption higher
Loss 1–2
NA
NA
Medium due to changes in food and service quality
2 – 12 months
Unknown do to lack of control
Reduced profitability due to increasing expenses
1
loss $100–$600 per day
Unknown
Loss 1–2
NA
NA
Medium due to changes in food and service quality
2 – 12 months
Unknown due to lack of control
Assessment Task 3
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CRICOS: 03234B Page 11 of 13
Appendix 4
Appendix 4
City of Melbourne demographics
City of Melbourne demographics
The following information are extracts from City of Melbourne Daily Population Estimates and Forecasts 2015 Update report.1
Population overview
The number of city residents is forecast to grow at around 3.2% annually during the next 16 years (from 2015 on), with more than 202,000 people calling Melbourne home by 2030.
The number of workers is forecast to grow at around 2% annually during the next 16 years, with an estimated 526,000 people travelling to work or undertake work-related activities in the city by 2030.
Weekday daily resident population estimates and forecasts
Living in the city continued to gain momentum over the past two years. It is estimated that more than 122,000 people – including under 15 years of age – resided in the municipality in 2014. This represents a 15.9% growth from 2012 which is an equivalent of 16,788 additional residents in the city. The top five largest growth SA2s (Statistical Areas Level 2) are:
● The Melbourne CBD with 6,979 additional residents (up by 29.2%)
● Southbank with 3,279 additional residents (up by 24.2%)
● Carlton with 1,872 additional residents (up by 12.2%)
● Docklands with 1,713 additional residents (up by 26.6%)
● North Melbourne with 1,703 additional residents (up by 9.9%)
Total daily population estimates and forecasts
Municipality of Melbourne (all areas including CBD and fringes)
Year
Residents
Workers
2011
100,000
376,000
2012
105,000
380,000
2013
116,000
382,000
2014
122,000
386,000
2015
126,000
392,000
1 City of Melbourne, 2015, Daily Population Estimates and Forecasts, City of Melbourne, available online, viewed January 2016, https://www.melbourne.vic.gov.au/SiteCollectionDocuments/daily-population-estimates-and-forecasts-report-2015.pdf.
Assessment Task 3
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2016
135,000
397,000
2017
137,000
407,000
2018
141,000
418,000
2019
144,000
428,000
2020
148,000
439,000
Estimated Resident Population Growth Rates between 2004 and 2014 by SA2
Source: ABS, Resident Population Growth, Australia 2004 to 2014 (cat. no. 3218.0)
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Appendix 5
Appendix 5
Assessment
Assessment questionsquestions - Briefly discuss how you ensure you have sufficient, valid and reliable evidence and information available to support determining the best course of action to take and making a final decision.
- Briefly outline about specialists or other relevant groups or individuals who could assist in your analysis and decision-making process.
- Who has the authority to make the final decision about what course of action to take to address the identified business issue?
- Briefly describe how your recommendation to Emma and Rufus is consistent with CoffeeVille’s values, objectives and standards.
- You have been given this project in early January. Emma and Rufus are aware that, depending on the course of action chosen, it could take some time to implement the necessary changes and have an impact in the business’s financial status.
They would prefer the analysis process and recommendation to be made as soon as possible – by end of February if possible. They have set end of March as the absolute latest timeframe for this project to be concluded.
Develop a basic planning timeline to present to Emma and Rufus, outlining timings for the identification, analysis and decision stages and a completion date for the resolution of the business problem or issue.