Question

Congratulations! You have been promoted to a senior leadership role and have been charged with improving financial performance in your organization. To do this, you will work with your team to create an environment of sustainable excellence – an environment which is committed to driving a shift from pay-for-service to pay-for-value.

In the coming months, you will take a closer look at operating and capital budgets. You will also examine how costs are allocated and charged, and how the revenue cycle is managed. Initially, however, you want to ensure that your colleagues have a clear understanding of the current state of affairs. You recognize that without clarity and alignment around what the organization should aspire to and why, there is a risk that financial decisions will not be grounded in the Mission and Values of the organization.

You have decided it would be helpful to draft a brief Organizational Snapshot to share with your team. This document will provide an overview of how your organization is structured, its mission and its financial performance in a few key areas. Your Organizational Snapshot will also identify where there may be opportunities for improvement.

Answer 1

For the purpose of evaluation let us take the case of an organization which is working in in health food industry and serves fresh fruit and vegetable smoothies and plant based eatables. We will call this Organization A.

An organizational snapshot with clear emphasis on its mission and financial performance to bring clarity on current state of affairs and alignment around the goals of organization so as to ensure that the organization is grounded in its core mission and values shall be as follows :

Structure of Organization - the business model of the organization is centered around creation and sale of fresh organic smoothies and plant based eatables for customers as a healthy option with multiple benefits of nutrition sufficiency, detoxification and reduced dependence on animal based products which is also healthy for environment. The offerings are competitively priced as compared to other options available in market which are only centered around taste, animal based eatables and carbonated sugar rich drinks but not designed specifically to cater to nutritional requirement of customers in a healthy way. Thus there is a clear advantage in terms of nature of product to engage health conscious people who shall become repetitive customers.

Hierarchy of the Organization - The top down hierarchy within the organization is a pyramidal structure with chief executive officer at the top followed by supporting operations finance supply chain heads. A chain of regional managers working in his various locations report to these who in turn are reported to by individual facility managers. The individual facility managers intern have a mix of front office executives dealing with customers in terms of taking orders, serving food, billing and cash collection as well as backend executive as cooks, cleaning staff, security personnel and helpers. Additionally a backend team of supply chain executives, finance and accounts executives, planning executive, legal executive and auditors works directly at the corporate head office.

Mission of the Organization - The mission of the organization is to serve healthy, cost effective, easy to access and environment friendly food to health conscious people and engage more and more people in this healthy food culture.

Financial performance of the Organization - At customer's end the organization provides organic plant based smoothies of five types each priced at $5 and eatables of 5 types each priced at $10. The cost of sourcing processing and serving both smoothies and solid food is $2 and $5 respectively with a gross margin of $3 on smoothies and $5 on eatables and net profit of $1 on smoothies and $3 on eatables. Usually customers order both items as a healthy breakfast or lunch option. Therefore for a $15 order value the gross profit it is $8 and the net profit is $4. At the current footfall increasing at a C.A.G.R of 25% there is traction in terms of gaining customers.

Opportunities for Improvement - At the macro scale the organization has in the last one year had a sale of $300000 with the net profit of $80,000. Other metrics being proportional. it has been found that the cost of sourcing and processing of smoothies is excessive by 50 pence and the cost of sourcing and processing eatables is excessive by $2. Thus improvement in sourcing through a mix of tactical and strategic sourcing for perishable and long-lasting items respectively as well as improvement in warehousing of these raw items can lead to cost savings. Additionally use of renewable energy in food processing stage can reduce processing cost as well. Effectively $2.5 can be saved per order increasing the organizational net profit to $130,000. Additionally improvement in marketing by highlighting nutritional content per meal as well as encouragement to rotate between offerings for overall health and increased outreach to nearby offices will help in increasing customer constituency e as well as proper utilization of all types of sourced of raw materials for smoothies and eatables without anything going to waste which will also increase the net profit margin. 10 value based inputs are key to increasing financial performance of the company buy better management of supply chains, inventories and marketing. Linear inputs for growth will not be helpful in squeezing out the last drops


If you found the above content useful please given up vote. Thank You.