Bus6012 Business Operations And Systems: Assessment Answers

Answer:

Part 1

Ocado Plc. is a British online grocery retailer which was established in the year 2000. The organisation is listed on the London stock exchange and they are presently catering their services to more than 580,000 customers in the UK. There is a stark difference in the manner in which Ocado Plc. operates its business operations and that carried out by its business rivals in the retail industry. The complete absence any physical stores of Ocado Plc. in the UK market is one major factor which makes the organisation unique in the retail food and grocery industry. The organisation delivers the products and services bought by their customers directly at their doorstep from their different warehouses which are located throughout UK (Ocado, 2017). The direct delivery process helps in minimising the cost associated with advertising and maintaining a distribution channel and this enables Ocado Plc. to provide value for money to their customers in the market.

This operational model has played a vital role in helping Ocado Plc. to create a steady customer base in the market and thus the organisation has succeeded in sustaining their business productivity in the market.  Ocado Plc. is able to keep the cost of the food products low and this helps the organisation to increase the demand for their products in the market. Ocado Plc. has a business arrangement with Morrisons wherein Morrisons operated their online grocery business with the help of Ocado’s online business platform (Yorke and Ashley Armstrong, 2017). But the scenario has changed completely due to Morrisons tie-up with Amazon Prime Now. Under the new business arrangement, the customers of Amazon (who are using Prime Now) would be able to order online their groceries on Morrisons and get them delivered within an hour. This new business deal has really posed a major threat to the business operations of Ocado Plc. and this has brought down the share prices of Ocado Plc. giving sleepless nights to their shareholders. Ocado Plc. has failed in their efforts to strike out a deal by licensing their technology to an international partner by the end of 2015.  

Morrisons on their part have assured Ocado Plc. that their deal with the organisation would remain intact and the organisation would continue to honour their exclusivity provisions as a part of their business arrangement with Ocado Plc. Nevertheless, Ocado Plc. is bound to face troubled times ahead and they would increasingly find it challenging to continue their business operations in a profitable manner (Ocado, 2017). Ocado Plc. needs to change their business operational model in order to tackle the future market challenges in an effective manner. The organisation must incorporate the hybrid business model which will enable them to create a turnaround their falling business fortunes (Thornhill & White, 2007).  The hybrid business model will enable Ocado Plc. to conduct their business as a type of social enterprise which has a profit making objective in the market. The hybrid business model will play a very important role in helping the organisation to balance their commercial enterprise and social mission and this will enable them to enhance their brand reputation in the market (Zott et al., 2011). The hybrid model will enable Ocado Plc. to continue their online ordering and doorstep delivery of goods to their customers and this would enable them to tackle the market challenges which would occur as a result of the business deal between Morrsions and Amazon. While utilising this business model, the Soft System Methodology (SSM) should be utilised and this will help Ocado Plc. to understand the complexity associated with human activity and decision making process (Bocken et al., 2014).

By using SSM, Ocado Plc. will be able to incorporate conceptual models pertaining to the human decision making and apply them to the current real world scenario which would fetch better business outcomes for Ocado Plc., thereby guaranteeing their growth and sustainability in the market. These conceptual models are not an exact replica of the real world situation but they act as a familiar representation of the real world systems which have their own pre-defined logic and follow the principles associated with human activity (Checkland, 2011). The fact that human behaviour is unpredictable and it depends on the circumstances or situations faced by an individual, the SSM will help in proper understanding of the human behaviour.

The SSM will play a very important role in enabling Ocado Plc. to design their business model by aligning it with their business goals and objectives in the market. This will help to promote better coordination and understanding between the decision makers and this will promote organisational efficiency. Ocado Plc. will be able to adopt the most appropriate operations model (customer value) which will help them in addressing their business shortcomings in an effective manner (Checkland & Poulter, 2010). The SSM would play a very important role in helping Ocado Plc. to identify the changing clients’ needs and this will enable them to satisfy the needs of the customers in a more comprehensive manner. The organisation will be able to ensure value proposition to their various stakeholders in the market. They will be able to enhance the buying experience of their end users by offering them with more improved quality of services and this will enable to impart customer loyalty among their clients. Thus, Ocado Plc. will be able to sustain their business operations by realising their business goals and objectives in the market (Sewchurran & Petkov, 2007).

The business competitors of Ocado Plc. are utilising a wide variety of business models which are suited to their business needs and requirements. Amazon for example utilises the service gap model which enables them to identify the various gaps which are affecting their business performance. There are usually five gaps which all business enterprise must try to address and minimise. Gap 1 is the magnitude of difference that exists between the customer expectations and what eventually gets delivered to them. Gap 2 is difference between the perception of the management and the actual measure of customer experience. Gap 3 is the difference which exists between the experience specification and the actual delivery of the experience. Gap 4 is the gap between what has been promised to the customers and what has been delivered to them (Rajasekhar et al., 2009). Finally, Gap 5 is the gap which exist between the client’s perception of the experience and the client’s expectation regarding the service.

The service gap model played a very important role in helping Amazon to further streamline their business activities in the market thus resulting in better organisational efficiency. Amazon has been able to utilise a decentralised inventory which helped them to effectively cater to the product demand among their end users. With this model Amazon is able to maintain a comprehensive distribution and delivery chain in the market and this enables them to reduce the idle time in the product delivery process. Amazon is able to provide timely delivery of their products to their customers in the market and this helps the organisation to foster customer satisfaction (Dimitriadis & Stevens, 2008). By utilising the service gap model Amazon has been able to manage their inventory more efficiently and this enabled them to ensure an optimised customer value chain, thereby resulting in better service quality to their end users.

In comparison Ocado Plc. has utilised the customer value model which enabled them to provide more value for money to their customers. By utilising this model, the organisation has been able to increase the customer perceived value. The customer perceived value is defined as difference which exists between the customer evaluation of the tangible benefits and costs associated with the products offered by an organisation when compared to those that are offered by others in the market (Chan et al., 2010). The customer value model has enabled Ocado Plc. to reduce the gap between the desired value and the perceive value. This has enabled Ocado Plc. to enhance the digital experience of the customers. The customers of Ocado Plc. have been able to receive the same high quality of service which has been provided to them since the beginning of the organisation. Ocado Plc. would utilise the cost leadership model which will help them to sell their products at lower than market prices (which are presently being offered by the other business players in the market).  The customers will be offered more discounts and benefits on their product purchases and this will help them to save their hard earned money (Kimita et al., 2009). The customer value model will play an instrumental role in helping Ocado Plc. to increase the market demand for their product and services. This will help in enhancing the buying experience of the customers and they will be more eager to buy their groceries from Ocado Plc. This will help them to increase their customer base in the market by attract new potential customers. The organisation will be able to sustain their business operations for the long haul by generating more profits and revenues from their business (Smith & Colgate, 2007). This will enable them to reduce their dependence on Morrisons and they will be able to create an effective blueprint and roadmap for their organisational growth and success in the market.

The main USP of Ocado Plc. is that the organisation is that the organisation does not rely on any third party distributors in the market to provide their products to the end users. The organisation has a wide network of warehouses where all their products are stored and whenever their customers order their groceries on their online website, the organisation identifies and locates the warehouse which is situated nearest to the customer’s address and delivers the necessary products from that warehouse directly to the customer’s doorstep. This helps in ensuring the minimum amount of delay in the delivery of the groceries and this helps in increasing the customer satisfaction levels in the market (Cretu & Brodie, 2007). This innovative business model helps the organisation to minimise their business expenses in the market. They do not have to spend any money on the advertising and product distribution channels and this provides cost benefits to the organisation. Furthermore, it helps the shoppers in saving their precious time by helping them to get all products delivered at their house with the click of a mouse button. Customers do not have the compulsion of travelling to the physical stores in order to buy their groceries and this increases the appeal of the organisation and enhances their brand reputation in the market (Smith & Colgate, 2007).

Part 2

Figure: Rich Picture

Rich picture proves to be beneficial in exploring a situation with the help of a diagram as illustrated in the above figure. Thus, it can be said that it provides a simple way of conceptualizing the scope and context of any system that is being analyzed (Krajewski et al., 2013). Moreover, there also does not exist any hard and fast rule in context to what to include and what not to include in the rich picture and thus it also does not have any syntax. This, unrestricted nature of the model provides the opportunity for addressing and highlighting all the key considerations of the system.

In context to Ocado, it has been observed that the business has been significantly impacted by the announcement of Morrison about its closer ties with Amazon and a as a result of the move, the shares of Ocado has tumbled down by around 6% in the early trade (The Telegraph, 2016). Thus, Ocado can be suggested to design and implement a delivery system of its own so that it can deliver the products ordered by the consumers on the same day.

From the above described rich picture, it is observed that Ocado would strive towards implementing its own delivery system and in this context; the business should strive towards undertaking several activities that would include the market research. The market research would facilitate the company in collecting the data to gain an understanding of the specific needs of the customers. The collected data would be analyzed by the top management and strategy makers to determine the resources that would be required for achieving the desired objective (Fitzsimmons et al., 2006). The company would also design a project team in order to carry out the tasks and hire the personnel like IT staff members, delivery executives and web analysts for upgrading their e-commerce website and increase the strength of the delivery system by hiring the delivery executives for the delivery of the orders on the same day on which the order has been placed. The company would emphasize more upon its marketing activities to make the customers aware of their new feature that would add value to their service being offered. The business would approach the current and potential clients to achieve success and market research would be conducted further for making the business better.

Root Definition

Root definition can be looked upon as the first step in the soft system methodology and thus it emphasizes upon identifying and analyzing the main problem that the business is facing at present. So, in this context, it is observed that the root definition of the present report is to analyze the issues that Ocado might face if they implement the delivery system of their own to facilitate the customers with express delivery where the grocery orders placed would be delivered within the minimum time possible.

CATWOE Model

CATWOE model proves to be beneficial in formulating the root definition on the problem that is being faced by Ocado (Siriram, 012). The CATWOE model stands for:

C – Client

A – Actors

W – World View

O – Owner

E – Environmental limitations

This tool helps in checking the root definition and the CATWOE mole in context to Ocado can be illustrated as follows:

Clients

The clients can be considered to be beneficiaries of the system i.e. the customers of Ocado who would be ultimate beneficiary of the new delivery system that would be adopted and implemented by Ocado (Gibbons et al., 2012).

Actors

The actors are the one who are responsible for carrying out the activities and would lead the transformation. For example, the major actors within the new delivery system that would be implemented by Ocado would include the delivery executives, the web analyst and the IT staff members.

Transformation process

The transformation process of the model refers to the activities that would be undertaken by the business to facilitate the transformation. In the present scenario, Ocado after the facing the challenge, has planned to start the express delivery system of its own where the customers would be facilitated with their orders within the minimum time possible ranging from one to two hours after the order has been received.

World View

The newly adopted delivery system on the part of Ocado would prove to be beneficial for increasing the scope of the enhancing its market share through express delivery that would make it easier for the customers to orders their requirements and receive it within the minimum time possible (Basden & Wood?Harper, 2006). So, this would help the customers in receiving their required products in real time.

Owners

Owners are referred to as the individuals who possess the ultimate power of carrying out the system. So, in context to the implementation of the new delivery system at Ocado, the owners of the business would possess the ultimate power of taking all the decisions in context to the newly implemented delivery system.

Environmental limitations

These factors are the constraints that possess the ability of limiting the business operations and decisions (Montevechi & Friend, J2012). So, in context to Ocado, the legal requirements, the taxes, the technological constraints and the prevailing competition in the business environment would prove to be limiting factors that need to be paid attention by Ocado to successfully implement new express delivery system.

Business (AS IS) Process Plan   

The process plan is referred to as the planning process that facilitates the business with the action that need to be undertaken while designing and developing a business plan. For example, the development of business plans for implanting a new delivery system by Ocado.

• Ocado operates as online and the business no chain of stores and all the deliveries are done by the business from its warehouse.
• The company has to pay rent for their warehouse.
• The company pays transportation cost for transporting the goods from the manufacturers and the suppliers to the warehouse (Ocadogroup, 2017).
• The business has traditional delivery system where delivery of the ordered groceries is delivered within the normal delivery time of two days.    
• The e-commerce website of the business is mainly based upon the grocery items of Morrisons.

Business (To Be) Process Plan

• Ocado need to start a delivery system of its own for express delivery to facilitate the customers with their ordered grocery products within the minimum time possible.
• Ocado would have to pay transportation costs in shipping the products to the customers and would also have to bear costs of implementing a new express delivery system.
• The company can cater to the real time needs of the customers that would prove to be beneficial in increasing its business scope.
• The new delivery system i.e. the express delivery system adopted by Ocado would facilitate the company in delivering the products to the customers within a range of one to two hours.
• The business instead of delivering grocery products of other companies like Morrisons would also strive towards selling its own brands.   

Part 3

Ocado in context to the implementation of the new delivery system would strive towards hiring a new operations manager. The operations manager would be responsible for carrying out the tasks that would be required for implementing the new express delivery system thereby delivering the products to the customers without any delay and at time promised. Since, the business does not have any physical store, it would directly deliver the order from the warehouse, it woudl prove to be beneficial for the business to reduce the time that is involved in transferring the product to the store from the warehouse and then handling it over to the delivery executives to deliver the products (Chaffey, 2007). The orders would be received and the products would be packaged and delivered right from the warehouse.

The main aim of the business is to facilitate its customers with unique shopping experience and earn profits. The business might face various challenges in context to costs, volume, delivery speed and competition; however it would be beneficial in meeting the real time needs of the customers that would increase its business scope.

Thus, in this context, it would be important on the part of Ocado to make arrangements for various resources and they are:

Physical resource

Ocado in order to enhance its delivery system would emphasize upon upgrading its e-commerce website, its warehouse and its delivery system. In this context, the business would also emphasize upon promoting its own brand rather than delivering the brand of other grocery retailers (Chesbrough, 2007).

Financial Resource

In order to develop a new delivery system, Ocado would have make huge investments in increasing the strength of the delivery system by hiring more delivery executives. The website need to be development that would also cost to the company, the business would also emphasize upon prompting its own brand for which it would have to produce its own brad products that would again demand investment (Cascio & Boudreau, 2010).

Human Resource

Ocado would have to hire operations manager, web analyst, delivery executives and IT staff members to enhance its delivery system and implement the new express delivery system.

The performance of the business after the implementation of the strategies and allocation of resources can be evaluated and measured with the help of the Balanced Scorecard. It facilitates in measuring the planning and the management of the business and monitoring the performance of the business activities (Armstrong & Taylor, 2014). The balanced Scorecard of Ocado can be illustrated with the help of the following figure:

[Source: Kaplan & Norton, 2007]

Financial Perspective

The financial perspective involves both the short and the long terms growth of the business in context to the return on capital and sales and revenue. The revenue of the company in the year 2015 has increased by 16.7% to reach the figure of £1107.6 million rising from the figure of   £948.9 million in the year 2014. The cash generated from operations by the Ocado in the year 2015 was observed to be £92.5 million and in the year 2014, the figure was £85.2 million (ocadogroup, 2015). So this reveals a significant increase. Thus, it can be that business is successful in capturing the growth opportunities by developing and implementing a new express delivery system and it would also enhance the cost structure of the business since the cost involved in transporting the products from warehouse to the stores for delivery would be eliminated since the business would strive towards producing its own goods.  

Customer perspective

The customers of Ocado have facilitated the company with enhanced response since they experienced the value provided. The customers are facilitated with the products that can satisfy their real time needs of the grocery items. The customers are developed through word of mouth marketing and the company has also emphasized upon adopting aggressive advertising and promotion, however the costs of advertising has not been passed on to the customers (Kaplan & Norton, 2007).. The business emphasized upon facilitating its customers with good quality products and services for enhanced customer loyalty and repeat purchases.

Internal business process perspective

The management has been successful in efficiently managing the micro environment of Ocado that involves the supply chain and innovation and these factors important for the success of the business organization. Ocado has efficiently analyzed the specific needs and wants of its customers and emphasized upon facilitating its customers with value added services (ocadogroup, 2015). So, this has led to enhanced financial performance of the business.

Learning and Growth perspectives

This aspect emphasizes upon the development of a team that proves to be beneficial in achieving the objectives of the organization (Atkinson, 2006). So, in this context, it can be said that Ocado was characterized with highly efficient project management team that worked hard in implementing the new express delivery system that in turn facilitate the business in achieving its objectives.

Conclusion

From the above discussions, it can be concluded that for effective operations of a business can be achieved with the help of various business models like the CATWOE Model, Root definition model that helps in identifying the problem and developing the solutions to the problem as in the case of Ocado.

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