Introduction to Management Science and Systems
Management Science and Systems can be considered as the most important concept that can be used by business entity in order to assess the wide range of problems or issues of organization. It also assists the manager in application of various kinds of tools and approaches for analyzing different aspects of business issues. Management Science and Systems both are interrelated concepts and are very useful to resolve wide range of business problems (Zott and Amit, 2010). The management science influences the use of wide range of mathematical, statistical and economic approaches as per the complex management and related problems. The management systems are based on the use of different kinds of system analysis techniques, quantitative techniques, analytically along with simulation for resolving of management problems.
This report analyses various approaches and models that can be used by the management in order to resolve the issues of business entity. With the respect of this, the present report will evaluate various problems that are being faced by Sainsbury in the management of various business operations (Barnes, 2008). It will also explain different approaches and models such as simulation, linear programming etc. that can be considered by the top managers of Sainsbury for resolving the business issues.
1. Describing a Situation
Sainsbury is the second largest retail chain of UK. The company was found by 1869 and currently, it is operating in more than 1200 supermarkets and convenience stores in different locations of UK and various other markets. Retail organization is having around 161000 employees. Business entity offers wide range of products and services in order to deliver some special experience to consumers (J Sainsbury PLC About, 2015). On the basis of current market conditions, management of Sainsbury identified sale that falls in between 0.4% to 4.4% in the current year. It seems as the major business problem. This is because reduction in overall retail sales of company could lead to several effects such as decrease in profit of organization along with the inflow of funds (Sainsbury's warns outlook 'challenging' as sales fall, 2015). With this regard, management has addressed various causes of fall of sales such as increase in number of local shoppers, price wars with competitors like Asda, Tesco etc. Furthermore; Sainsbury assesses the fluctuation in market conditions which can be termed as an important element of sales reduction.
There is a tough competition in retail industry. It creates huge impact on consumers and their selection of goods and services. These variables are also affecting sales and profitability of firm. Reductions in sales of Sainsbury also lead to various negative implications. First of all, sales fall also decreases the profit of company so that management will have less liquidity and funds to manage the future expansion project (Storbacka, 2011). It also influences the organization in order to pay fewer dividends to shareholders that affect market value of sales. It will increase marketing and other expenditures of business because management has to develop and implement various new strategies along with the reduction in price of products in order to maintain the stable growth in sales. Reduction in profit can lead negative perception in the minds of stakeholders about many kinds of business operations and expansion project (Dent, 2011). So, falling in sales of Sainsbury can be considered as an important management problem.
2.Management Science Methods For Analyzing The Situation And Recommendation
With reference to current management of issues, there are different types of management science methods which are available and that could be used to analyze the business issues. Some most important tactics are explained under this statement:
Mathematical programming: This concept assists the manager in order deal with wide range of models which include an objective as well as a set of constraints. The primary objective of this approach is presentation of mathematical expression in the form of quantity which is to be maximized or minimized (Romero, Ventura and García, 2008). In this aspect, manufacturers make efforts to maximize production or minimize costs and financial analysts always try to maximize rate of return
Linear programming: It is one of the widely used scientific management techniques which are based on the concept of minimization or maximization on the basis of certain number of constraints. The objective element contains certain number of variables and factors. Different types of constraints are linear inequalities that could be used in the objective function (Management Science and Systems, 2015). This technique is closely associated with the linear algebra. A linear programming problem can be termed in three categories, that is, infeasible, unbounded and an optimal solution. In an infeasible problem, different values associated with decision variables are not satisfying constraint condition (Dobkin, 2007). A problem can be considered as unbounded when the constraints are not sufficiently restraining the objective function for any feasible solution. In order to assess optimal solution, the objective element has a unique maximum or minimum value. Different business issues are associated with Linear programming problems that can be solved with the help of graphical analysis method. Furthermore, Sensitive analysis assists manager to assess out effect of parameter changes on the optimal solution. The parameters are termed coefficients (Mönch and et.al., 2011). Linear programming is also use to wide range of business issues in the form of solving the transportation and assigning problems (Lehmann and Joseph, 2012). Linear programming is tool of production planning and scheduling of business operation.
Simulation: It is a very effective approach of management sciences that can be used to solve wide range of business issues. Simulation is used to examine wide range of complex systems by modeling several aspects such as complex relationships between different variables with efficient probability distributions. In this process, Random values are assessed from probability distributions that are substituted into the model and the behavior of the system and scientific process is observed (Management Science Methods, 2012). Repeated executions of the simulation provide in-dept information about business issues. It is considered as two-phase approach that contains a specific model based on real system along with wide range of experiments are formed on particular model. The modelling section increases understanding about structure of complex issues. But, in experimental section, an individuals can asses wide range of information on the basis of interrelationship and temporal aspects of complex situation (March and Storey, 2008). It is very effective approach to analysis real system and explored quick solutions as per the different management issues.
Cognitive Mapping: This approach is useful for wide range of business problems and objective. It is also called Strategic Options Development and Analysis (SODA) that was developed in the late 80's. It is a very effective method that is used for working on complicated problems (Henchion and McIntyre, 2005). It is an approach designed to help different manager and companies in order to manage wide range of business issues and difficult problems. In this process, this approach uses wide range of interview and cognitive mapping to assess individual views on particular problem. In this approach, different group maps are constructed by aggregating different types of of individual cognitive maps. These individual maps are used to facilitate negotiation associated with business systems, key strategic issues as well option portfolios (Management Science Methods, 2012). The primary aims of method is to provide a tool to management team. It is also called as device to aid negotiation that is working with individuality and subjectivity with reference to problem definition and creativity. The approach aims to formulate high levels of ownership for a problem by paying extra attention on problem. In order to apply this concept, a systematic process is followed. First of all, Managers plan a meeting to take interviews from participants then causal maps are created. After that merging maps are formulated (Lehmann and Joseph, 2012). In the next session, outcomes are interrelated on the basis of problem and goal of assessment.
On the basis of above evaluation, it can be stated that Cognitive Mapping is most suitable approach for evaluation of business problem of Sainsbury. So, the management of retail organization should adopt this approach in order to examine various aspects associated with business issues such as reduction in sales. This approach is very effective for the current business challenge which is faced by Sainsbury. It is very effective because this approach determines systematic stages for problem evaluation. With the help of this, company can easily access wide range of data with in very less time period as compared to other medium. This method does not require detail mathematical calculation in which a small error in calculation will change the outcomes of evaluation (Taylor, 2012). In this process, top management of Sainsbury can take views of various participants such as top managers of different department in the context of current issue. On the basis of this information, business entity can take different kinds of management decision for resolving business issues. This approach is also useful to evaluate wide range of data in a stuttered manner that will improve effectiveness outcomes.
3. Building a model of the problem
On the basis of Cognitive Mapping model, the management of Sainsbury has to follow systematic process for analyzing the business issues related with sales fall. In this regards, administration should have to follow mentioned stages:
Planning meeting and conducting interview:
In this section, top management of Sainsbury plans the whole process. In this, top leaders determines number of participants, questions of interviews, position of participants etc. In the context of current problem, administration of Sainsbury can take views from top managers of different department such as marketing, sales, purchase etc (AHajiagha, Mahdiraji and Hashemi, 2013). in order to assess reliable information about causes of sales reduction and its implications. Top leaders take views from 8 managers through systematic interviews. It is great tool to assess wide range of information. In the process of interviews, management uses different questions that provide different kinds of data about causes of sales fall and their impacts on business.
Questions asked in interview:
- What are the major elements that can be considered as most important causes of sales reduction ?
- Do you think that poor market assessment can reduce sales of company ?
- Is inappropriate promotional plan affecting the perception of consumer in negative way ?
- What are the most important methods that could be used by Sainsbury in order to increase sales ?
- Do you believe that creative marketing plan and unique products will increase sales ?
Responses of managers:
- Tough competition in retail industry and business rivalry along with price war are most important causes of sales reduction.
- Poor market assessment provides improper information of needs of consumers and position of other company.
- Lack of efficient promotional plan cannot influence consumer and can develop negative perception towards the products of Sainsbury.
- Cost reduction and product differentiation will assist business entity for sales enhancement.
- Use of creative marketing tools such as online websites, social media and unique products will increase sales.
On the basis of above map, it can be stated huge competition and price wars has created huge impact on sales of Sainsbury. Furthermore, it has been addressed that poor analysis of market conditions along with improper marketing plan have played significant role in sale fall. In addition to that it has been explained that cost reduction strategies along with product differentiation by developing unique products could significantly encourage consumer towards the products of Sainsbury and will improve sales of organization (MANAGEMENT SCIENCE, 2015). Different kinds of creative marketing tools such as social media and online websites will influence sales of company in positive manner. It will assist management to increase profit along with market share of Sainsbury.
Recommendation for management actions
With reference to above evaluation, it can be said that the management of Sainsbury needs to implement various changes in business operations for increasing sales of firm. In this regards, top management should develop strategies and operational plan that would assist manager for controlling of wastage of resources that will reduce cost of products so as business entity can easily manage price wars in tough competition (Arnott and Pervan, 2008). Furthermore, Sainsbury should adopt an efficient market assessment approach that could provide wide range of information to top managers. The assessment of business problems of Sainsbury determines that retail organization should develop new product range with some unique features that will encourage consumers. In addition to that manager needs to adopt new approaches of marketing and promotional that could increase sales of organization.
Limitations Of Cognitive Mapping
There are some limitations identified in the process of Cognitive Mapping of business issue like sales fall. This approach is limited on the views of participants. This is because evaluation of business problem is made on the basis of personal interviews. It neglects various other aspects associated with business problems of Sainsbury (Silberschatz, Galvin and Gagne, 2013). It limits effectiveness of outcomes because information collected by interviewer is not always reliable and accurate because the views of people are greatly influenced by personal understanding and knowledge.
Furthermore, evaluator also faces problems in development of maps because it is not possible to consider each element associated with business issues in Map. In this regards, some time views of one respondent cross the views and feedback of other respondent. It creates difficulties in formulation of map (Management Science and Systems, 2015). Furthermore, it has been identified that cognitive maps are not useful in evaluation of statistical information.
Another difficulty experienced in evaluation is that attempting to write everything determined by participants provides wide range of appearance of single idea and factor. This thing happens when interviewee is elaborating an problem and re-mentioned the issue many times. This approach takes lots of time in order to writing different activities in an appropriate manner. In addition to that mapper also faces issues in merging different kinds of data in a single map. In this process, there are some difficulties identified associated with avoidance of important information or points related to business issues in formulation of map (Romero, Ventura and García, 2008). There are some issues addressed related to accuracy and reliability of information because interviewer collects different information from different individual such as departmental head of Sainsbury and they have made different perception about business problem.
5. Assessing the implication of implementation of recommendation
There have been several recommendations suggested to management of Sainsbury for improving sales. These recommendations are creating huge impact on business. The implication of different recommendation is explained under this statement:
Cost reduction: By adopting this suggestion, business entity can manage wastage of resources with the help of different operational strategies. Furthermore, Sainsbury has to manage optimum utilization of resource by reacquiring new production system and production equipment. All these factors assist managers in order to control cost (Henchion and McIntyre, 2005). By cost controlling, Sainsbury can manage price wars with other competitors without affecting sales. It will help firm for enhancement of profit of company that would increase trust of stakeholders on organization.
Product differentiation: In this, it has been suggested that Sainsbury needs to increase product range with the help of some unique and innovative products and services. By offering new products with some unique features, the management of Sainsbury can encourage consumer towards new products (Storbacka, 2011). It helps organization in developing of some special image of company along with its products. It will increase sales of organization by offering high quality and unique products. Furthermore, products with special features also play significant role in order to provide competitive edge over other organization. It creates huge impact on sales and market share of Sainsbury.
Market assessment: It has been assessed that poor market evaluation creates various problems for organizations such as issues in evaluation of needs of consumers, problems in forecasting future market growth, evaluation of supply and demand accurately and problems in assessment of current market trends (Dobkin, 2007). By adopting appropriate strategies of market analysis, management of Sainsbury can develop an efficient decision support system associated with pricing, development of new products and assessment of market demand. With the help of an efficient decision-support system, business entity could take wide range of decision on the basis of different market conditions with an appropriate manner (Storbacka, 2011). All these elements increase effectiveness of organizational decisions that directly influence sales and growth of firm.
Creative marketing: Marketing is one the most important aspect of business that encourage sales and profit of company with the help of different integrated marketing plan. In application of creative marketing approach in Sainsbury, management has to implement various changes in marketing tools (Dent, 2011). In this regards, company should have to select alternative marketing tools such as sponsorship of events, social media and online marketing tools. Social media and online website are a very effective tools to manage two way communication with consumers. With the help of these tools, retail organization can convey regular information about features of new products, special deals and discount offers to consumers (Zott and Amit, 2010). Furthermore, company also gets reviews and inquires of buyers about different products and services. This information plays significant role in strategic information system so as manager can manage business operations along with product features as per the change in needs of buyers. It enables firm in order to offer best service and products to consumers. It will increase satisfaction of buyers along with loyalty of consumers towards the products of Sainsbury (Dobkin, 2007). All these factors directly influence effectiveness of business operations along with sales.
On the basis of above study, it can be concluded that management science and system provides wide range of effective tools such as liner programming, cognitive map, simulation etc. for examining different kinds of business problems such as production, reduction in sales etc. This report has addressed that Cognitive Mapping is very effective tool to analysis the business issues associated with sales reduction. It has found that cognitive mapping provides systematic structure for assessment of wide range of information about issues of organization through interviews. This study has concluded that price wars and tough competition in retail sector have created negative impact on sales of Sainsbury. It has identified that product differentiation and creative marketing will be considered an effective tool to improve sales.
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