Assessment BSBINM601 – Manage information and knowledge Task 4


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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

  1. Read the scenario information provided under CoffeeVille – your brief in Appendix 1.
  2. Review CoffeeVille’s organisational chart in Appendix 1 to build an understanding of the business’s reporting and command structure.
  3. Review, evaluate and analyse information provided about each of the decision options facing Coffeeville in Appendix 2.
  4. Review risk management and business impact analysis information in Appendix 3.
  5. Review and analyse City of Melbourne demographic information in Appendix 4.
  6. 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.
  7. 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
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  8. 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.
  9. 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.
  10. 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.
  11. Complete Part 4 of the Decision Analysis Report by making a recommendation and outlining your reasoning why you have come to this conclusion.
  12. 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.
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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.
  13. Do nothing.
  14. Reduce their prices.
  15. 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.
  16. 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.
  17. 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.
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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
  18. 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.
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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.
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    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
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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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    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.
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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)
    Assessment Task 3
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    Appendix 5
    Appendix 5
    Assessment
    Assessment questionsquestions
  19. 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.
  20. Briefly outline about specialists or other relevant groups or individuals who could assist in your analysis and decision-making process.
  21. Who has the authority to make the final decision about what course of action to take to address the identified business issue?
  22. Briefly describe how your recommendation to Emma and Rufus is consistent with CoffeeVille’s values, objectives and standards.
  23. 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.
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