MY Project 4 Sem

7/30/2019 MY Project 4 Sem

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- INTRODUCTION

FINANCIAL REENGINEERING

Thanks giving seem to be the most pleasant of all jobs but it is none the less difficult when

one tries to put them in words. Can these humble words and expressions or gratitude really

convey the heart felt acknowledgment that are due to the weak words and the expressions

fainter than what it should be. I am thankful to all our faculty members who has inspired and

guided for completion of the project. His teaching us has been a milestone for us to complete

this project work in a very limited time.

Last but not least I am thankful to my friends who directly and indirectly co- operate,

encouraged and inspired me to achieve my target.


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The business environment of the present day has become so complex that organizations are

necessarily to be alert to respond to the new challenges and opportunities. This involves a

continuous process of managing the change. The idea that the change is essential, desirable

and constructive within the established pattern of organization is realistic. The view that the

change has the beginning and an end is no longer tenable in this continuum. Top management

in its endeavor of reorienting the organization must recognize the need and set the tone for a

change. This kind of change compels either innovation or improvement or both. In such an

intricate situation many organizations tend to focus their attention in identifying innovations

rather than improvement. However, the latter is considered to be more appropriate in

accomplishing the task. Recently, a new concept called Business Process Reengineering

(BPR) has emerged as a conspicuous tool for restructuring the organization. In fact, the

process of reengineering not only fosters a favorable climate supportive of desirable change

but also improves the organizations probability of success

Business Process Reengineering:

DEFINITION:

The Business Process Reengineering is a complete life cycle approach. This provides the

scope for problem identification and also solutions to implement the successful business

operations. There are many new elements in BPR such as extensive use of IT and new

perspectives on organisational structure. There is also more about process redesign, quality

improvement and so on. It is a comprehensive method of assessing the current business

process planning and redesigning the methods and implementing them for business solutions.

Hence, the BPR is defined as The fundamental rethinking and radical redesign of the


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business systems to achieve the dramatic improvements in critical and contemporary areas

such as cost, quality, service and speed. It is a comprehensive and complete method,

addressing such activities of organizing the project, assessing the current business process,

designing the reengineered business process, and planning and implementing the solution.

The origin and scope of BPR is derived from the concept of innovation. While the BPR

recognises the process innovation, the innovation concept lays more stress on the product

innovation. But, the reengineering efforts on business processes, which will improve the

customer service quality, the product value, etc. It is notable that redesigning the processes

improve the working life of employees which in turn lead to indirectly improved quality and

responsiveness to customers. BPR is done for various business reasons and those could be

What is reengineering:-

Re-engineering is the fundamental rethinking and redesign of business processes to achieve

dramatic improvements in critical, contemporary measures of performance, such as cost,

quality, service and speed.

Michael Hammer and James Champy

Re-engineering is a rapid and radical re-designing of processes, services, policies and the

organizational structure of an organization.

The purpose of reengineering is to make all processes the best possible.

It is an effort to enhance the administrative effectiveness and efficiency.

Reengineering is an effective tool for organizations striving to operate as effectively and

efficiently as possible

Examination and modification of a system to reconstitute it in a new form Financial

Re-engineering is the radical redesign of business processes and organisational structure


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in order to achieve significant improvements in performance, such as productivity, cost

reduction, cycle time, and quality

According to Michael Hammer and James Champy (1993).

The fundamental rethinking and radical redesign of business processes to achieve dramatic

improvements in critical contemporary measures of performance, such as cost, quality,

service, and speed.

Maximizing customer value and minimizing consumption of resources while delivering the

products andservices.

According to Thomas H. Davenport (1993).

Encompasses the envisioning of new work strategies, the actual process design activity, and

the implementation of the change in all its complex technological, humanand organizational

dimensions.

Business Process Reengineering involves changes in structures and in processes within

the business environment. The entire technological, human, and organizational

dimensions may be changed in BPR. Information Technology plays a major role in

Business Process Reengineering as it provides office automation, it allows the business to

be conducted in different locations, provides flexibility in manufacturing, permits quicker

delivery to customers and supports rapid and paperless transactions. In general it allows

an efficient and effective change in the manner in which work is performed

What is the Business Process Re-engineering

The globalization of the economy and the liberalization of the trade markets have


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formulated new conditions in the market place which are characterized by instability and

intensive competition in the business environment. Competition is continuously

increasing with respect to price, quality and selection, service and promptness of delivery.

Removal of barriers, international cooperation, technological innovations cause

competition to intensify. All these changes impose the need for organizational

transformation, where the entire processes, organization climate and organization

structure are changed. Hammer and Champy provide the following definitions:


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NEED OF THE STUDY

A business involves the interest of various stakeholder who either support it or contradict it.

The stake holder in the process of maximizing their wealth, try to get a leverage on every

possible front by rewarding the other Each interest group tries its level best to grab

maximum possible returns from the business.

A win-win situation cannot be expected to turn up every time although attempts are made to

bring such a situation about all the time. Inspite of being having a conservative approach to

cost control leads to the loss of a good opportunity for making future profit there might be

some uncertainty due to which promoters or the owners have to think for the reengineering

of all the strategies of the business.

The organization will have to use tactics in the short run and strategies in the long run to

manage its finances if the ultimate result is to be favourable.for this cost and benefits from

every corner must be looked into in the value chain of the organisation.For achieving such a

goal there must be a flexible approach for achieving the desired results, with sustainable

success .

For such a reason the organization should have to use the reengineering processing which the

organization creates the new innovative ides to redesign the processes of the organization to

get the objective.

Each organisation must determine itself when it is appropriate for them to reengineer.

Reengineering should be done only if it can help in achieving an enhanced strategic position.

Some strategic indicators that require reengineering include:


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1. Realization that competitors will have advantage in cost, speed, flexibility, quality or

service

2. New vision or strategy: a need to build operational capabilities.

3. Need to reevaluate strategic options, enter new market or redefine products/services.

4. Core operating processes are based on outdated assumptions/technologies

5. Strategic business objectives seem unreasonable.

6. Change in market place in the form of - Loss of market share

New basis of competition/new competitors

New regulations

Shorter product life cycles

New technologies in play.

So, if the company is at the cutting edge of an industry that has just undergone major

changes reengineering might not be appropriate. However, if the organisation operates with

old models instead of new technologies and approaches used by others, reengineeing may be

urgently needed. Even if technical performance is adequate, other improvements may be

needed

such as training, organisational change, leadership development etc. In such circumstances

also reengineering is required.


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SCOPE OF THE STUDY

In this project, the objective was to establish a confirmed database as per the data requirement

for the RE Finance Team which created a base for comparison and preparation of new

Agenda packs.

. The implications of this practice would be as follows:

1. To make available capital expenditure information for all 3 formats.

2.

To make available information useful in post audit analysis.

3. To make available information useful in trend analysis of commercials such as rental,

maintenance

4. To make available information useful in trend analysis of financial such as capital

expenditure, sales.

5. To make available easy accessibility of information to the team for reporting higher

management

The scope of the project stands valuable for the long lasting the only thing needed is the

updating the Database. The database will be directly helping in

1. Estimation of capital expenditure requirement for opening of new Stores in all 3

Formats.

2. To take decision on rentals and maintenance on the basis of past records.

3. To make estimation of sales, gross profit margin & Pre-opening expenses.


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With these criteria in focus, we move on towards the methodology that was adopted for this

particular project.

The Status stands valid for a period till the project is being approved from the date it is being

put forward for approval.

Along with living standards the consumption pattern also changes so if the project is hold for

long duration the demographics may change during the period.


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OBJECTIVE OF THE STUDY

Market Comparison is the process which decides the location of the stores. On the basis of

City, Trade Area, and Total Retail Sales population.

Status of Project Submitted Database represents number of stores operating, number of

Stores Approved to be opened & Pending Projects

Determining the target market.

Estimation of sales density.

Determining the profit percentage.

Determining the current status of the project.

Classifying pending for the project.

Help the team in reporting to the top management


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RESEARCH AND METHODOLOGY

The primary step was to understand the business model for this help of Real Estate policies &

procedure guide (called as Bible for Real Estate) was taken. This guide illustrates what

exactly is to be followed in accordance with Wal-mart International policies & procedures.

The guide illustrates the site acquisition process as follows.

1. Selection of site on the priorities basis by Real Estate & Development team.

2.

Once the site has been selected going for checking financial feasibility of the site by

calculating IRR of the project. This IRR is also known as hurdle rate & currently the

hurdle rate is 14%, if the project IRR is less than 14% than the project will be dropped

& new site will be selected.

3. After financial feasibility approval estimation of Pre development expenditure is

done. This expenditure includes all the paper works, training & development of

employees who are going to be employed at the stores after its opening.

4. Once the Pre- Development expenditure is calculated than the project is represented

for approval at different stage of Real Estate Committee (REC)

Indian Real Estate Committee: The Project is first represented to Indian REC.

The meeting of Indian REC is held at Gurgaon.

Asian Real Estate Committee: Once the project is approved at Indian REC it is

represented to the team of Asian REC. The meeting of Asian REC is held at

Hong Kong at the Headquarter. The project upto the budget of $5000000 is

approved by Asian REC.


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International Real Estate Committee: The project budget exceeding $5000000

need Approval of International REC. The headquarter of International REC is

in ventonvilla U.S

5. Once the project is being approved at the different stage of Real Estate Committee

Acquisition of Real Estate Site is done by fulfilling all the legal requirements in

Accordance with In-Country Legal Laws.

6. Allocation of excess land. Sometime the seller is ready to sale whole lot of land only

so in this case the company needed to purchase whole land &after purchasing it is sale

the excess land within a year in order to prevent capital blockage.

7. Design and Construction services contract procedure. For Design & Construction of

stores company prefer to outsource this activity through the process of bidding.for the

purpose of bidding following is being done:

Financial verification of contractor.

Licensing verification of contractor.

Verification on past performances on similar projects.

Invitation for Bidding.

Receiving of Bid from contractors.

Bid Award.

8. Complying with the guidelines of Facility Planning & Management.

Comply with all facility related to laws and regulations.


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Maintain safe environment for associate and customers.

Meet customer expectations.

Meet associate expectations.

Create sustainable retail centers.

9. Budget Reconciliation

This Budget is to be prepared on monthly basis once the site has been

approved.

This budget includes the expenditure like (Land cost, Building construction

cost, Capitalized lease value, Fixtures & Equipments)

In case of Budget overruns it requires Re-Approval

From 5% to 10% Approved by Country CEO.

Above 10% New Agenda is required for re-approval by the Regional

Committee.

Above 25% the project need to be re-approved by the IREC.

In this way complete information about the business model & Real Estate acquisition process

was gained that helped a lot in undertaking this project.

5.2 FORMAT DETAILS

For understanding all three operating formats help of team member is taken and comparative

study of all three formats were made to make it more clear.


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BASIS SUPER MARKET

(SM)

COMPACT

HYPER

MARKET(CHM)

Cash & Carry

(Best Price)

Size Size of the store

varies from 2k to 5k

sq.ft.

Size of the stores

varies from

30k50k sq. ft.

(Existing)

20k sq. ft. (New)

Size of the store

varies from 40k -60k

sq. Ft.

Location Basically these

Stores are Stand

Alone.

Basically these

Stores are the part of

Mall. They can be

Stand Alone also

Basically these

Stores are Stand

Alone.

Prototype Metro-Meat

Metro-Non Meat

Non Metro-Meat

Non Metro-Non

Meat

32K sq. ft. (32k &


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Sub Lease Area

(SLA)

Sub Lease Area

(SLA)

Office space

Loading area

Rent Generally Base Rent

is Applicable.

Base rent + CAM

Charges

Generally Base Rent

is Applicable.

Lease period Minimum Lease

period required is for

15 years.

Minimum Lease


30 Years.

Minimum Lease


30 Years.

Operating stores Presently we have

139 Operating &

Approved Stores in

different parts of

Country.

Presently we have 10

Operating Stores in

different parts of

Country.

Presently we have 6

operating stores in

different parts of

country.

Now, the information about all three formats is available which created a base for the project.

Following information about the stores is now available.

Size of the stores which is helpful in calculating per sq. Ft. Rent

Division of total area of the stores.

Prototype of the stores


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Number of stores currently operating

Minimum lease period which is useful in calculating capitalise lease value.

Market Comparison is the process which decides the location of the stores. On the basis of

City, Trade Area, and Total Retail Sales population.

Status of Project Submitted Database represents number of stores operating, number of

Stores Approved to be opened & Pending Projects

Determining the target market.

Estimation of sales density.

Determining the profit percentage.

Determining the current status of the project.

Classifying pending for the project.

Help the team in reporting to the top management


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LIMITATION OF THE STUDY

MYTH

It is not rightsizing or downsizing .

It is not about reorganizing the organization .

It is not the effort of a single leader .

Empowered Team members, use of groupware & coexist .

REALITY

Cost cuttings often lead to Layoffs, outsourcing & downsizing.

Identification of focused business process clusters reorganized the organization

Reengineering is often found to be a strategy of a narcissistic style of leadership

In fighting communication challenges, survivors management & the resistance for

reengineering by the professionals are often underestimated .

A database holds all of the information about a record a flat database is very easy to manage.

All the information is stored in one source.

The limits of a database are not in the number of records you can put in, but in how much

information you can track per record. As your organisation grows, and more people need to

track a great deal of different information about each record, you may want to change to

using a relational or shared database. This allows one of your staff to track meeting

attendance and program involvement in detail, while another may search detailed information

about each record's donation history. But you do not need this when you are starting up. Go

with a simple, reliable data base program.

Performance is reduced, due to increased I/O on the source database resulting from a

copy-on-write operation to the snapshot every time a page is updated.


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Files cannot be dropped from the source database or from any snapshots.

The source database must be online, unless the database is a mirror database within a

database mirroring session.

If a source database becomes RECOVERY_PENDING, its database snapshots may

become inaccessible. After the issue on the source database is resolved, however, its

snapshots should become available again.

Excel worksheet as a database has a limited number of rows or records that you can

store. But when you reach the 65k lines limit, you can convert it easily to Access and

the rest of the application is can still be used.


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2-DISCRIPTIVE

WORK ON

SUBTOPIC OF

STUDY


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DISCRIPTIVE WORK ON SUBTOPIC OF STUDY

Financial Re-engineering is done for various business reasons and those could be...

Poor financial performance,

External competition,

Erosion of market share, or

Emerging market opportunities

Financial Re-engineering is not limited to, but also includes

Organizing Around Processes:-

- Formation of teams to perform an entire process

- Eliminate/minimize hand-offs

Process Improvement:-

- Opportunity Driven

- Incremental

Product and Service Opportunities:-

- Customer:- How can the customers wants and needs be better understood?

- Product / Service:- What improvements or added value cabe made to products and services?

Operational Goals:-

- Quantify the redesigned business process

- Address The process as a whole as well as Individual activities

Business Process Goals:-

- Set performance levels for the entire business process in term of:


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(1)Financial:- How much does/will the process cost to perform?

(2)Organization:- What will the organizational structure look like?

Deliverable Goals:-

Set performance levels for interim and ultimate process deliverables

in terms of:

(1)Quality

(2)Efficiency

(3)Cost

Types of financial Re engineering

Corporate Re structuring;- Acquisition

Financial Re-structuring:

The cementing of products, system, people, brands and technology has to be done with

financial structuring, financial control system, financial benchmarking and financial

quantification of every qualitative business variable .such cementing is called Financial

Engineering. And the process to change the financial strategy to reconstitute the organization

is known as the Financial Reengineering.

The fundamental rethinking and redesign of business processes to achieve dramatic

improvements in critical, contemporary measures of performance, such as cost, quality,

service and speed in financial aspects is known as financial restructuring

Corporate Re-structuring:


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Corporate Re-structuring refers to the job-cuts, divisional closures, focus on core

competence, geographical concentration, product identification and strategic business units

etc. it also refers to the repositioning.

It basically deals with the redefining or researching of the purpose of doing business. It may

also be defined as the conscious effort to restructure policies, programmes, products,

processes and people.

Corporate re-structuring may be held in any of the following situations:

1. Mergers /Acquisitions:when one company acquire or buy the majority share of the other company. That company

which acquire the share, is called as holding company and to whom the holding company

buy, is called as subsidiary company and all this procedure is called as acquisition.

When two company have equally merge together and work out with each other having the

same objective, this is called as merger.

e.g. TATA has acquire the corus group plc(steel company) situated in U.K the deal value

was 12000 million dollar

2. Divestitures3. De-mergers:Reengineering the Financial Platform

Summer 1998 - The timeshare industry, or as it is now referred to, the vacation ownership

industry, continues to be one of the hottest segments of the hospitality industry. Almost every

day, one of the major opportunity funds, Wall Street investment houses, or major hotel

companies is looking toward acquiring one of the timeshare companies. By combining the

existing infrastructure with high growth opportunities emanating out of their deal pipelines,

the companies hope to create a large synergistic component to their hospitality offerings.


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Once acquired, these companies need to be able to transition from an entrepreneurial

structure to one with much stronger corporate disciplines.

Nowhere is this more important than in the financial components to the "new" company

business. Unfortunately, this is precisely where most vacation ownership companies are

deficient. Most developers are long on sales and marketing know-how, but have always

treated the financial systems as a corporate stepchild. Most bankers and other financial

players are amazed at the un sophistication and inaccuracies which occur as a result of this

underdeveloped corporate component. These deficiencies are manifested in the inability to

accurately report on the companies financial condition, and also are directly responsible for

millions of dollars in annual expenditures resulting from inefficiencies, in

both manpower and information systems.

Vacation Ownership - A Complex Business Model

Anyone who has engaged in or studied vacation ownership companies understands that they

are complex business models which are very capital - intensive in their early years, yet throw

off considerable cash in the later years. These companies initially start out as real estate

development companies; they have all of the depth of those organizations, including

feasibility, development and construction, design, etc.

Once the resorts are developed, the companies step into high gear and become sales and

marketing entities. Not only is this a complex area, but it represents the single greatest

corporate expenditure for the company. In order to properly evaluate programs, the systems

and financial tie - ins must be in place for management to make crucial day - to - day

decisions on marketing and lead generation programs. Such programs need to track hundreds

of variables throughout the marketing and sales process. Once the properties are sold, these


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organizations then need to handle the large amount of mortgages which are generated in the

sales generated process.

This complex business environment requires sophisticated management and information

systems to not only keep track of the data. but to present it to management in the most

efficient and useful fashion. Reengineering the company is the way to accomplish such a

task.

Value Capture

The deal value of $ 2.3 b is almost equal what Ford paid for the brand of Jaguar alone(approx

$ 2b). The opportunity to buy brands like Jaguar and Land Rover ,which are rated among the

top luxury brands in their respective segments, for cheap doesnt come knocking every time.

Fast Growing Market Segment

With about 30% growth rate, the luxury car segment is the top growing segment in India

and has already seen the entry of biggies like Audi and Porsche. With established

distribution network in India, Tata Motors can offer top-rated products for these

segments. Though the absolute numbers may be small and would reduce due to the

current downturn, the gains would be huge when the economy turns around and the

salaries rise.

Deal Financing

Tata Motors financed the deal through a bridge loan of $ 3 billion arranged through a

consortium of 8 banks. It intended to refinance that loan though a mixture of domestic

and international equity issues and debt. However because of the liquidity crunch, a deal

now will be more expensive than they'd initially planned for.

Key Risk Factors


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The key risk after this acquisition would be the performance of JLR. Any drop in

profitability would have an impact on Tata Motors consolidated financials.

A prolonged downturn in commercial vehicle demand would stretch domestic

profitability and cash flow.

Further downturn in the global auto industry.

Increasing cost of capital and liquidity crunch can hit bottom-line of Tata Motors much

more severely.

Tata bought the companies because they believed that these two brands have a lot of growth

potential in terms of revenue and sales.

In the first 10 months of 2008 Land Rover's US sales fell by 37 per cent to 25,377

compared to the same period in 2007. Jaguar's sales in the same period helped by the new

XF sedan were not as badly hit but its sales still fell 3.6 per cent to 12,575.

At the same time while Jaguar's UK sales rose 11 per cent against last year's same period,

Land Rover's sales fell almost 27 per cent to 30,241 units.

Not surprisingly then like GM, Ford Motor, Mercedes and BMW suffering the downturn

in the West, China, Russia and India seem bright spots for JLR also.

Tata's confidence in JLR may not be misplaced. This year in Russia, Land Rover has

turned out to the leading premium brand. Its sales grew 79 percent to 17,439 in the first

10 months of 2008 while Jaguar saw a more than 60 per cent growth to 1,423 units.

Tata expects China to be Land Rover's No. 5 market this year and Jaguar's seventh

largest, while Russia likely to be Land Rover's No. 3 and Jaguar's No 2 market.

JLR's immediate priority is to set up a distribution network in India for both brands and

the company feels that it can sell 2,000 to 3,000 units here to come on level with other

premium brands such as BMW and Mercedes within two to three years.

Process of the reengineering:


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First organization have to recognize the each and every steps of the organization which had

been taken earlier to get the objective but was not appropriate to achieve the goal.

Second they will have to take some modification in the steps i.e process, technology ,

structure and the strategy of the firm in order to constitute the organisation into the new

form.

MOTIVATION FOR REENGINEERING

The motivations for reengineering are many, including: Reduce costs/expenses (the most

cited business-driven reengineering project goal) Improve financial performance Reduce

external competition pressure Reverse erosion of market share Respond to emerging market

opportunities Improve customer satisfaction Enhance quality of products and services.

Basics of reengineering:

The business environment of the present day has become so complex that organisations are

necessarily to be alert to respond to the new challenges and opportunities. This involves a

continuous process of managing the change. The idea that the change is essential, desirable

and constructive within the Established pattern of organisation is realistic. It is the

examination and change (reform) of five components of the business: that is,

1. Strategy

2. Processes

3. Technology

4. Organization

5. Culture


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Change in strategy:

A strategy has to keep thinking innovatively as an old strategy would be known to be

unuseful. It will be necessary to formulate a new business formulae either they are new or

old ones with moderate variation. Strategy must have to think of the following innovative

concept or formulation:

1. Incremental cost-benefit analysis of every marginal change in the decision or situation.

2. Costing of the product, brands, employees and the enterprise, for long-term strategy

formulation

3. Leveraging sunk costs by innovatively using such costs or commitments in future

negotiation

4. To arrange for the discounted cash flow analysis of the alternate projects to be supported

by multi-angle performance parameters so that the comprehensive assessment of the

decision is possible

5. ERP would be possible if internal benchmarking of cost performance is built up.

6. To make national costing for a true application of profit center concept is a must.

7. Combining value chain analysis with segmentel ROI and enterprice portfolio mix

theories

8. Forming a U curve relationship with both the vendors and dealers to create a strategic

base for a long-term, sustainable and profitable partnership.

9. Making economic value added more meaningful.

10.Innovating network mix


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Change in process:

Realise the potential of your Finance Department. We can map out your processes enabling

us to find anything preventing your department from working to its full potential. We can

streamline processes to improve the efficiency of your Finance department and help the

department become more than just an overhead in your profit and loss, but to start adding

value! We can also help you develop controls and standards.

In the reengineering of an organization there is need to change the business processes, which

will improve the customer service quality, the product value, etc. It is notable that

redesigning the processes improve the working life of employees which in turn lead to

indirectly improved quality and responsiveness to customers.

To improve the cost, quality, service and speed, companies are developing new processes to

produce the results important to customer. They are looking for ways to become more

flexible and responsive Change in the processes causes success in many organisations and

has fueled the growth of the Business notables, for e.g.- Ford Motor Company.

Reengineering improved its invoice processing so that the process was accomplished by 75%

fewer people and more accurate financial information was produced.

- IBM Credit Corporation. A credit issuance process that used to take two weeks to complete

now takes only hours with a 100- fold increase in productivity

- Taco bell. They reconfigured their restaurants to increase peak capacity for a top unit from

$400 per hour to $1500 per hour. At the same time they lowered prices; their average pricing

today is about 25% less than nine years ago.

In short the change in the processes are designed to be simpler to those they replace, several

jobs might be combined into one and the number of checks and controls reduced. In the right


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sense, more frequently, it is the result that work is performed where it makes most sense, and

workers can make more decisions themselves.

Change in technology:

In the process of reengineering of an organisation there is need to change the technology if

that are not providing a satisfactory performance to implemented such a change new

information technology (such as knowledge based, expert system and sophisticated

telecommunications equipment) is frequently employed in the design of these processes.

The ultimate success of any activity expansion plan depends upon the quality of the system-

processess-equipment used at various level of functioning a perceptual and automatic

mechanism of technology review and upgradation should be an integrated part of the

organization culture

Technology refers to the core technical details of both the main assets and operations because

only high quality medical equipments do not make a hospital successful, without efficient

doctors and staff handling them with efficient system. therefore technology refers to both

core and support activities.

Changes in the technology basically refers to the following:

1. Technology upgradation collaboration: it refers to the innovative financial instrument

and technology leasing and subleasing

2. Collaboration for technology funding : it refers to the long term bonds

3. Technological consortium : it includes cost- benefit analysis of alternate combination

4. In house R & D: it includes capital & revenue budgets

5.

Employee training budget


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Change in organization:

Transition is a time of "passage", when people are apt to carry around some of the baggage of

their past, as well as feel the first stirrings of their future. It is also a time when employees

have to face a number of challenges as old processes and ways of doing business make way

for the new.

Steps involved in the change of organisation:

1. Profiling the Existing Organization

2. Profiling the Future (Re-engineered) Organization

3. Analyzing the Gap

Results of the gap analysis should include the...

Gap between current and future organization structure, gap between current and future

geographic locations, gap between current and future staff levels, staffing and deployment

requirements, potential workforce adjustment impacts, organizational and employment

adjustment, costs training and re-training requirements, career development requirements

backfill requirements and replacement costs target groups and language requirements .

Change in Culture:

Change in culture provides a vehicle to open up communication and improve management

practices. It changes the way people work and can create an environment that encourages

innovation and change. It provides opportunities for employees to develop and improve their

client-oriented approach. Middle managers will be impacted as the role of coach and

facilitator takes on greater importance. This will in turn will improve client service, practical

and pragmatic business approach management style of openness and consultation continuous


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learning organization employee participation and consultation client and quality service

oriented employees continuous performance measurement value-added service and results

orientation cross-functional integration

Poor financial performance:

In an organization if the performance of the various department is not upto the satisfactory

level i.e. if they are giving poor performance or not according to the expectation of the

organization then there would be a need to use the BPR process so that the objective of the

firm could be achieved.

External competition:

If the strategy of the organization is providing such an output which is not up-to the mark so

that it can cope-up with the existing external competition provided by the competitor then

there would be a need to change the strategy so that it would be beneficial to stay in the

market with the appropriate benefit which would be best drien by the help of BPR .

Erosion of market share:

One of the greatest threat for the organization is the erosion of the market shares and if that

happen than the firm will be in a great trouble and than would have to think of how to rise the

market shares .for that purpose the organization would have to use the process of

reengineering.

Emerging market opportunities:

Every of the organization wants to get the opportunity Provided by the market so that it

would be beneficial to the organization to spread the way to get the maximum profit and to

satisfy the needs of the customer and it is not possible to get the market opportunity in the


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best possible manner without the help of the business process reengineering.Prerequisite

essentials for Innovative Financial Engineering are :

Needs strategic understanding of benchmarking

Creative Thinking

Courage to challenge the Traditional thinking

Shrewdness to locate and discount individual interests of different stakeholders

High ability to use business arithmetic and economical thinking together

A strategic approach to combine the intellectual and the Emotional Quotient

High ability to relate strategies, notional parameters and financial benchmarks in a

holistic manner

Maturity in selecting the most reasonable solution to a given problem

Ability to work at both the levels of analysis macro and micro

Quick grasp of the end result

Reengineering - The Critical Components

When refining processes, the working assumption is that the process is valuable and only

requires minor evolutionary changes to achieve peak efficiency. In the case of reengineering,

there is no such assumption. Reengineering involves a critical development of the following

key components:

Developing a Jointly Committed Team:

Consultants are an invaluable resource throughout the reengineering process, but change


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won't become a permanent part of the client culture without a project sponsor, employee

consensus on the need for change, and involvement from all levels of the client organization.

Strategy Assessment:

Process reengineering should be done with a contextual understanding of the client's strategy

and critical needs. Many vacation ownership companies are cash - constrained due to timing

differences among construction expenditures, commission payments, and cash collections.

Reducing mortgage banking cycle time is an effective way to improve the velocity of the

cash cycle.

Baseline Diagnosis:

An objectiveperformance baseline serves several purposes: it identifies gaps between

current performance and best-in-class performance, pinpoints problem areas, and helps build

client consensus on the need for change. It also establishes cost, quality, and cycle time

targets for the reengineered processes.

Determining Scope and Priority:

When the strategy assessment and baseline diagnosis are completed the project team selects

and prioritizes the financial processes to be reengineered.

Process Design:

In this phase, the project team develops a future state design hypothesis based on best

practices from inside and outside the industry.

Impact Assessment / Implementation Planning:

Reengineering often entails radical organizational, skill set, process, and technological

change. Identifying the impact of chance on the client's organization and developing plans to

address potential resistance gives the change process a greater chance of success.


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Implementation:

During implementation, the client must assume primary responsibility, with guidance from

the consultant. This institutionalizes the change process and empowers employees to seek and

drive future change opportunities.

Integrated financial systems such as SAP, Oracle, PeopleSoft, or Lawson play an important

role in the reengineering process. By replacing non-integrated legacy applications for General

Ledger, Purchase Order, A/P, Travel & Entertainment, Human Resources, Payroll, and

Inventory, companies can substantially reduce the time spent on manual journal entries,

intercompany accounting, accruals, closing, consolidation, and report generation.


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Data Analysis &

Interpretation


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Data Analysis & Interpretation

Who: Big Schools with Financial Challenges

Total Tuition Prior to Scholarship 8,346,873

Scholarship( 15% of Net Tuition) (1,255,297)

Net Tuition Income 7,091,576

Less Uncollectible Tuition(1% of Net Tuition) (70,916)

State Reimbursements 280,000

Net Fund Raising 1,150,000

Donations/Grants 850,000

Other Income 54,000

Total Income 9,354,660

Expenses

Total Salaries 6,911,818

Total Salaries/ Salaries related Expenses 8,066,231

Total School Related Expenses 289,430

Total Office Expenses 233,810

Total Building Expenses 463,500

Total Other Expenses 187,460

Total Flexible Expenses 1,174,200

Fixed Expenses

Total Rent 985,857

General Insurance 107,100

Transportation(Net) 199,500

Total Fixed Expenses 1,292,457

Total OTPS Expenses 2,466,657

Total (PS and OTPS)Expenses 10,532,896

Net Profit/(Deficit) (1,178,236)


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Small Schools With Challenges

540

550

560

570

580590

600

610

620

630

2005/6 2006/7 Budget 2007/8 Projected 2007/8

Budget

SUMMARYHard Income $1,485,500

Annual Fundraising $550,000Grants $101,250

Total Revenue $2,136,750

Expenses

Personnel $1,691,853

Other than Personnel - Facilities $381,252

Other than Personnel - Other $224,234

Total Expenses $2,297,339

Operating Surplus (Deficit) - hard income ($811,839)

% hard income coverage of expenses 64.66%

Operating Surplus (Deficit) - all income ($160,589)

% all income coverage of expenses 93.01%

cost per student $22,745.93

Surplus (deficit) per student - all income ($1,589.99)

2007-2008


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Foundation=Know What Your Schools Positioning Is and Program and Process

Performance Implications

0

20

40

60

80

100

120

140

Act.2005/6 Act.2006/7 Budget 2007/8 Actuall 2007/8 Projected 2008/9

Enrollment


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OperationalExcellence

CustomerIntimacy

ProductLeadership

X=Our School

A=School AB=School BC=School CU=UnservedPopulation

C

B

U

Must BeStrong on

1-2And

BallparkOn the

3rd

X

A


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The Schools Processes

What is desired investment posture for each process?

Taking Control

THE WORK OF THE SCHOOL

Recruit

StudentsRecruit Staff

Teach

Students

Develop

and

Evaluate

Teachers

Develop

Curriculum

Manage

FinancesCommunicate Raise Funds

Manage

Facilities

Tuition Setting

Financial Aid Process

Expense Mgt

Cash Flow Management

3-5 Year Investment Posture (Compound Annual Average Growth in Spending)

StrategicInvestment

Candidate (+8-10%)

Maintenance

Candidate (+4-5%)

ReducedInvestment

Candidate (0-3%)Overall Faculty

Compensation

Target Departmental

Compensation (e.g., Hebrew

Language, Math and Science)

Overall Process Investment

Target Process Investment

Total BudgetTuition SettingFinancial Aid

Process


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In Summary

Know your schools value proposition

Understand the implications of that value proposition for process and program

spending

Take a long term prospective to financial planning

Utilize creative budgeting: Process and Program budgeting to shape a more

positive future

Respect the Virtuous Cycle wisdom


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11.1 creation of sample structure for Market Comparison

A sample structure is created as per the requirements of the RE-Finance team for market

comparison containing following information:

Contains Following Information:

Average of INB. INB. INB. INB. INB. INB.

Sl. No. Comp Stores 1 2 3 4 5 6

Site Name

Store Number

DEMOGRAPHICS

City Population

Trade Area Population

Total RETAIL SALES (000's)

Retail Sales/capita TA

Total Income (000's)

Avg. HH Income

Income per capita

% Market Share

Economic Levels AB

C

D & E

2008 Sales

2008 Sales Increase %

2008 Profit %

2nd Year Projections of Approved Agenda Pack

2010 Sales

PSF

% Increase

Gross Profit %

Other Income %

Total Expense %

Profit %


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Site Name

Store Number

City Population

Total Area Population

Total Retail Sales

Total income

Average House Hold Income

Income Per Capita

Total Sales

Profit Percentage

These informations were taken from Agenda Packs


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11.2 Final Database for Market Comparison

Sl. No. Comp Stores 1 2 3 4 5 6

Site Name

Dugri Gole Market Bhadson Road Cheema Nagar Simlapuri Leela Bhavan

Store Number 1 1002 1003 1020 1021 1022 1025

2

DEMOGRAPHICS 3

City Population 4 21,20,020 21,20,020 3,75,727 11,42,517 21,20,972 3,75,727

Trade Area Population 5 1,72,640 1,93,357 71,077 69,691 1,76,891 81,700Total RETAIL SALES (000's) 6 11,50,000 48,40,000 11,57,400 9,74,844 18,91,501 10,75,020

Retail Sales/capita TA 7 6,661 25,031 16,284 13,988 10,693 13,158

Total Income (000's) 8 66,70,116 1,15,50,000 48,90,949 42,74,420 58,93,685 39,90,000

Avg. HH Income 9 2,17,242 3,36,012 2,97,261 2,81,905 1,83,250 2,10,000

Income per capita 10 38,636 59,734 68,812 61,334 33,318 48,837

% Market Share 11 3.85% 1.34% 3.48% 4.83% 2.10% 4.16%

Economic Levels A 12 23.10% 13.45% 18.00% 17.00% 11.00% 17.00%

B 13 23.10% 13.45% 24.00% 29.00% 15.00% 27.00%C 14 20.80% 31.30% 33.00% 20.00% 39.00% 28.00%

D & E 15 33.00% 41.80% 25.00% 34.00% 35.00% 28.00%

2008 Sales

2008 Sales Increase %

2008 Profit %

2nd Year Projections of Approved Agenda Pack

2010 Sales 4,34,65,074 4,42,89,834 6,49,84,985 4,02,76,800 4,70,64,172 3,98,04,000 4,47,12,960

PSF 18055.4 21661.0 14540.4 12824.0 10552.5 14025.4

% Increase 31.36% 14.00% 14.00% 20.00% 20.00% 20.00% 20.00%

Gross Profit % 11.74% 17.14% 17.14% 18.17% 18.73% 17.34% 17.64%

Other Income % 0.23% 0.20% 0.20% 1.49% 1.17% 1.17% 1.49%

Total Expense % 19.69% 18.73% 19.05% 22.80% 21.46% 22.54% 22.31%

Profit % -7.71% -1.39% -1.71% -3.14% -1.56% -4.03% -3.19%


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11.3 creation of sample structure for Status of Project Submitted

A sample structure is created as per the specifications of Team for maintaining a Database for

Status of Project Submitted:

Sno. Zone Site Name City State Team Leaders BDM'sFormat

(EZD/EDM/BP/HM)

Merchandise

Planner

Drawing / Custome r

Movement Completion

Date

PPt Date

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Store Layout StatusProjects Details

Sna shot of Sam le Structure


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Contains the following information:

Zone

Site Name

State

City

Team Leader

Business Development Manger

Format of Store

Agenda Pack Status

Capex Status


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11.4 Final Database for Market Comparison

Sno. Zone Site Name City State Team Leaders BDM'sFormat

(EZD/EDM/BP/HM)

Merchandise

Planner

Drawing / Customer

Movement Completion

Date

PPt Date

1 NORTH Raj Nagar Ghaziabad UP Ajay Sharma umit Ahluwalia EZD

2 NORTH Sector-3 Vasundhara UP Ajay Sharma umit Ahluwalia EZD

3 NORTH Gomati Nagar Extension Lucknow UP Ajay Sharma umit Ahluwalia EZD

4 NORTH Rohtak Road Bahadurgarh HR Ajay Sharma Manu Bansal EZD

5 NORTH Hansi Gate Bhiwani-1 HR Ajay Sharma Manu Bansal EZD

6 NORTH Aggarsen Chowk Bhiwani-2 HR Ajay Sharma Manu Bansal EZD

7 NORTH Bank Road Rampura Phul PB Ajay Sharma Manu Bansal EZD

8 NORTH Hospital Road Maur PB Ajay Sharma Manu Bansal EZD

9 NORTH Ambala Road ehowa (Old Site HR Ajay Sharma Manu Bansal EZD

10 NORTH Thana Road Nazafgarh DL Ajay Sharma Kirti Sharma EZD

11 NORTH Sohna Road Dharuhera HR Ajay Sharma Kirti Sharma EZD

12 NORTH Rajapuri Dwarka DL Ajay Sharma Kirti Sharma EZD

13 NORTH Yamuna Colony Dehradun UT Ajay Sharma Pawandeep EZD

14 NORTH Saharanpur Road Dehradun UT Ajay Sharma Pawandeep EZD

15 NORTH Pillibheet By Pass Road Bareilly UP Ajay Sharma Pawandeep EZD16 NORTH Bareilly By Pass Road kichha UT Ajay Sharma Pawandeep EZD

17 NORTH Dasua Dasua PB Ajay Sharma rminder Randh EZD

18 NORTH Mukerian Mukerian PB Ajay Sharma rminder Randh EZD

19 NORTH Chhani Himmant Jammu J&K Ajay Sharma rminder Randh EZD

20 NORTH Roop Nagar Jammu J&K Ajay Sharma rminder Randh EZD

21 NORTH Udhampur Udhampur J&K Ajay Sharma rminder Randh EZD

Store Layout StatusProjects Details

Snapshot of the Database for Project Submitted


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5.3 REQUIREMENTS OF DATABASE

After A database allows you to manage and use an incredible variety of information

easily. Databases are easy to set-up, easy to manipulate and easy to use. A database

allows you to maintain order in what could be a very chaotic environment.

There may not be the resources to hire a full-time database manager or a short-term

consultant. Initial data base structure can be very basic, easy to use and to maintain.

Databases can be expanded and manipulated as your organisation grows and your

resources increase.

Database is basically a brief information & Reporting of all the stores that are

operational & approved to be opened throughout the country.

It is easy to access information from the Database because all the information is

available at single sheet

It is reliable because information in each cell is linked with the original source.

The informations that is needed to the team of Real Estate Finance was available in

Agenda Packs but the size of one Store Agenda pack is more than 40 pages of excel

sheet so it was not easy to access information from there & make comparative study

of the stores.

A base was needed to be created for preparation and comparison of New Agenda

Packs.

5.4 UNDERSTANDING THE AGENDA PACKS

Agenda pack is something that is prepared for every store before its opening by the team of

Real Estate Finance. Agenda pack contains all the information regarding the stores and these


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Agenda packs are represented at different level of Real Estate Committee for Approval. The

understanding of agenda pack is needed, as all the information was to be picked from the

Agenda pack & information in the Database is needed to be linked from the Agenda pack.

Agenda pack contains all the information such as:

Store Number

Store Name

City & State of Store Location

Agenda Pack IRR

Agenda Pack NPV

Type of Lease

Rent Escalation after number of years

Controllable & Non Controllable Expenses

Capital expenditure

Real Estate & Non Real Estate Expenses

Along with these informations many other information is used from the Agenda Pack as per

the requirement of Database. The Agenda pack contains hundreds of information in around

40 pages of excel sheet so the Database requirement was to pick information from this

Agenda Pack as per the requirement of RE-Finance Team.


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5.5 PREPARED A SAMPLE STRUCTURE OF DATABASE

Wal-Mart India Private Limited

Real Estate Portfolio_ Easy Day MarketIREC Approved Financials

Sl. No. Site Name

Office

space

Land

Area in

Acres

Store

NumberCity State

Agenda

pack IRR

%

Agenda

pack NPV

( Rs.'000)

Approval

Date

Exchg

Rate

NSA (Sq.

ft.)

Backroo

m (Sq.

ft.)

Sublease

(Sq. Ft.)

Box Area

(Sq. Ft.)

Loading

Area (Sq.

Ft.)

Super

Area (Sq.

Ft.)

Applicab

le area

for

Rental

Sqft


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Database contains Following:

1) Store number

2) Site Name

3) City of store

4) State Of Store

5) Prototype of Store

6) Agenda Pack IRR

7) Agenda Pack NPV

8) Exchange Rate

9) Net selling Area

10)Backroom Space

11)Sublease Area

12)Rent Rs/sq.ft/month

13)Approved occupancy cost

14)Actual Occupancy Cost

15)Security Deposit No. of Months

16)Advance Rent no. of months

Sample structure for Database


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17)Rent Escalation rate

18)Rent Escalation After no. of years

19)Capitalise Lease Value

20)Sales Density Rs/sq.ft/month

21)Sales Per Day

22)Gross Profit

23)Controllable Expenses

24)Capital Expenditure

25)Capital Expenditure Rs/sq.ft/month

26)Yearly Sales

27)Non-Real Estate Expenses

28)Security Deposit No. of months

29)Advance Rent No. of Months

30)Total Rental on Box Area


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5.6 CALCULATIONS IN DATABASE

In preparation of the Database several calculations were required & also simple

applications of mathematical & Financial Formulas for Calculation of following:

1. NPV

2. IRR

3. Rent Rs./Sq.ft./month

4. Sales Density Rs./Sq.ft./month

5. Sales Per Day

6. Net margin

7. Controllable expenses percentage to sales

8.

Total Capital Expenditure

NPV =

Where,

NPV = net present value

CF= cash flow occurring in several years

K= the discount rate

N= life of project in year


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IRR= L+ (H-L)

Where,

L = lower discount rate, at which NPV is positive,

H = higher discount rate, at which NPV is negative,

A=NPV at lower discount rate

B = NPV at higher discount rate

Rent Rs./Sq.ft./month= Yearly rent/Super

Area/12

Where,

Super Area= Net Selling Area + Backroom +Loading Area

Sales Density Rs./Sq.ft./month = Yearly

Sales/NSA/12

Where,

NSA= Net Selling Area

Sales per Day = Total Sales * 10^6 / 365


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Where,

10^6= for converting from million to Rupees

Net Margin = Gross MarginShrink

Controllable expenses percentage to sales

= * 100

Where,

Controllable Expense = salary + Repair & Maintenance + Utility + outside Services +

Merchant Fees + Logistic

Total Capital Expenditure = Building +

Refrigeration + Fixtures + General Equipments

+ Signing + Loss & Prevention + ISD


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QUESTIONAIRE

NAME: ______________________________

OCCUPATION: Business

Service:--

Private employee

Government employee

Retired

RESIDENCE LOCALITY: ______________________________

ANNUAL INCOME:

2.5-5.00 lakhs

5.00-7.5 lakhs

7.5-10.00 lakhs

Above 10.00 lakhs

Presently you are having a:

a. An apartment

b. A home of yours

Q1.> where are you planning to invest your savings now?

a.

Real Estate


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b. Fixed Deposits

c. Commodities Market

d.

Any other

If in real estate sector then:

Q2> Preference of opting the sector is due to:

a.

Lack of time

b. Land prices are increasing

c. Wants to live in an organized manner

d. Facilities available like 24/7 electricity power and water supply, parking, etc.

e. All the above

Q3> In which type of city do you prefer to buy?

a. Tier 1(metros)

b. Tier 2(developing cities)

c.

Tier 3(underdeveloped cities)

Q4> Your preference would be to buy a:

a. A land and build a house

b. An apartment for better living environment

c. Anyone (depends upon income)


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Q5> If your reply is an apartment, then what are the parameter that you will go for?

a. Finance Availability

b.

Brands

c. Society

d. Time duration

e. Location

Q6> Would you be preferring to involve a mediator?

a. Yes

b. No

Why (for either of the reply)?

(__________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

_________________________)

Q7> What are the factors that effects your decision in buying an apartment.

a.

Proximity with education and the health care institution.

b. Facilities available

c. Society and physical evidence available

d. Either of the combinations (mention:____)

e.

All of these


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Q8> From where do you raise the finance for buying the same?

a. Financial Institutions

b.

Loan from relatives and colleagues

c. Adequate savings

d. Any other (________)

Q9> Do you think that proximity with educational and health care institute and other

facilities effects the buying behavior.

a. Strongly disagree

b. Disagree

c. Not disagree nor agree

d. Agree

e. Strongly agree

Q10> Do you think that proximity with the market place effects the buying behavior.

a. Strongly disagree

b.

Disagree

c. Not disagree nor agree

d. Agree

e. Strongly agree


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Conclusions

The vacation ownership business today is rapidly becoming far more integrated into

traditional real estate, hospitality, and financial environments. New participants and industry

veterans are reaching the same conclusions regarding the complexity of the business and,

more importantly, the inefficiencies which abound. These inefficiencies are most apparent

initially in the finance and accounting areas of the vacation ownership organization.

Through self-diagnosis and candid assessments of the current position of the business, as well

as its strategic direction, management can assess whether the business is a suitable candidate

for reengineering of its finance function. Reengineering can lead to large - scale

improvements in the operations of a company, improving its overall cash positions, cycle

times, and productivity. All of this leads to substantial increases in profits in a high-growth

environment.

The most direct benefit that companies derive from reengineering is significant in the process

improvement (50 to 100%). Costs are lowered while speed, quality and service are

dramatically improved. Unfortunately, reengineering seldom makes a significant impact on

the organizations bottom line (only 20% of the time.) Reengineering has a greater chance of

success if it is viewed as leading to growth and value creation. In addition, there are costs to

reengineering that must be considered before deciding for such a right strategy for an

organization. Wayne Code, President of Vallen Inc. explains, These changes may be

traumatic, but the pain is outweighed by the gains made in the move towards the significant

goals set. Change occurs when the pain of change is less than the pain of staying the same.

Documents

MY Project 4 Sem