FY021 Introduction to Business Case Study

Introduction 

In the context of business unit HR and financial framework must be competent for fulfilling the organizational goals and objectives. The HR strategies are the road map of the organization to solve the biggest challenges and give solution with the people-centric. The approach always needs the HR input during the policy elevated and creation with the importance of talent management, recruitment and corporate culture. This report is based on The Body shop which manufactures and offers retail products at global level. The organization produced the cosmetic and beauty products, the organization have been founded in the year 1976 by the Dame Anita Roddick in the UK. The report shed light on Human resources strategies for the organization for the better growth. The report delves into the financial management strategies of the organization. 

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HRM Strategies

The Human resource strategy of the body shop is aligned with the approaches. The approaches required the HR input while creating the policies of the recruiting, compensation, talent management and planning for success. The HR strategies are important because it helps in the achieved the goal of the organization. The strategies are aligned with the goals of the organization and it is crucial for the organization to stay stick to the goals. The strategies allow the organization to maximise the potential of the workers with the HR activities and objectives (Bratton et al, 2021). The strategies are designed to improve the transparency and improve the workplace behaviour which is effective for the organization. 

Presenting HRM strategies of the Body Shop along with the strengths and weaknesses 

Recruitment: The Body shop’s goals are to hire the best and talent employees which are launches by the team of HR and via recruiting campaign which attract the top talent. The hiring process is the main goal of the company which is followed by the HR department. The body shop has successful process of recruiting and hiring and recruiting due to which numerous of employees are working with the organization. The organization has open hiring policy, due to it the candidate can apply for any available post to work with the Body shop.

Training and development: The organization focuses on the training and development sessions to improve the skills of the employees and make them skilful employees. The organization emphasis on organise the training and development to improve the quality of work. The training and development improves the confidence of the employees to learn about the new things and work (Pattanayak, 2020). The strategy is planned for resolving the learning needs and link with the goals of the body shop and improves the skills of the employees. The organization is aligning with the eco- friendly procedures and educating the employees about the sustainable practices. The organization designed the training and development sessions according to the mission of the organization and eco-friendly practices. 

Rewards:  By giving the rewards to the employees can improve the quality work of employees. This is essential to give those opportunities and growth to the employees for development. The organization has designed and implemented the practices for the rewarding which results in the effective and motivated work force. The organization pays and rewards the employees for the targeted goals (Armstrong and Taylor, 2020). The rewarding policy encourages the workers to work hard and improve the skills. The rewards policies are depend on the eco-friendly practices within the company by the employees. The rewards motivate the workers to focus on sustainable practices and stay positive. 

Retention: The organization has the endless opportunities for the internal growth. The strategy is planned for the body shop to created and reduce the turnover of the employees, increase the retention, foster the engagement of the employees and prevent attrition. The rewards such as monetary price and organization swag. The Strong retention strategy can create the people stick to the organization longer. 

Professional development: The professional development is a main priority for the workers, the organization provide numerous of opportunities to grow and learn the employees (Mahapatro, 2021). The company develop the regular training for the employees to encourage the skills and develop their positions. 

Organizational culture: The Organization has their own goal to promote the culture and behaviour to help the goals to achieve. The culture of the organization has to be positive and motivated due to it the employees can stay motivated. This can be comes with the positive outcomes of the business. A people centric HR strategy helps in maintaining and shaping the work culture which improves the experience of the organization. 

Alignment with the business goals: In the Body shop, HR can maximise the influence on the company goals and prioritize the actions and initiates to support the employees. The organization invests the money and time where it matters the most (Bratton et al, 2021). The organization works according to the targeted which can be completed by the employees and their hard work. 

FM Strategies

Financial management (FM) refer to the monitoring and controlling the flow of money in and out of company. This includes crucial decisions regarding managing financial resources of company that includes decision regarding dividend distribution and sources of capital (Chasanah and Sucipto, 2019). There are four element of financial management that includes working capital management decision, dividend decision, and Capital budgeting planning and capital structure decision. This is the important aspect as this helps company in managing their expenses and assists in optimum utilization of financial resources of firm. 

Analysing FM strategies of the body shop considering both positives and areas for improvement 

Ratio analysis method will used to determine the effectiveness of sales and marketing strategies of company (Financial statement of body shop, 2023). This analyse will help in determine the overall position of firm that includes profitability, solvency and liquidity aspects of company. The Financial statement analysis of the body shop is as follows:

Liquidity position

Current assets 

Year 2022

Year 2021

Current assets of the company have decreases overall year that indicate company inefficiency in paying its short term liabilities. It has been determined that company will unable to pay its short term obligation as firm is having less current assets than liabilities. Body shop is unable to achieve the ideal ratio that indicates that company’s liquidity position is not optimum. To improve the position, firm should focused analyse its assets and selling off assets that are not generating profits.

Cash ratio

Year 2022

Year 2021

Cash and cash equivalent is reducing over time that indicate negative impact on company’s liquidity position. Cash ratio of company is not attracting which indicate incapability of firm in paying off its liabilities using cash. Company should focuses on taking short term loan and review its payment cycles (Handayani and Hadi, 2019). Company should implement proper inventory management tool that help in not holding excess amount towards inventory and assist in increasing cash in hand.. 

Profitability ratio

Net profit 

Year 2022

Year 2021

Over period of time, net profit of company is increased indicating better profitability position. Body shop is having an adequate amount of profit which indicates company’s ability in managing its cost and increases sales. Firm should focus towards investing in marketing strategies that assists in increasing sales of firm eventually results in improving profitability. 

Return on assets

Year 2022

In 2021, company is getting more return form employing its assets as compare to year 2022. This ratio indicates that body shop is not effectively using its asset in generating income (Sartika, Muin and Sofyan, 2021). It has been identified that company’s assets has not been optimally used by management that leads to reduction in ratio.

Solvency ratio

Interest coverage ratio

Year 2022

It has been determine that company was unable cover its interest obligation in year 2021. In year 2022, it has been identified that company is earning sufficient amount of profit that can be used for paying off it interest liabilities. This indicates that for gaining additional capital firm could select debt sources of finance.

Leverage ratio

Year 2022

Year 2021

Company’s leverage ratio is decreasing over time indicating reduction in amount of risk. This ratio indicates that company has not acquired most of its assets by debt fund (Wijaya and Yudawisastra, 2019). This provides assurances to investors and lenders regarding less risk factors involves in company.

Efficiency ratio

Operating expense ratio 

Year 2022

Year 2021

From the analysis it has been determined that company is having high expenses in comparison to its income. The ratio has been increasing over time which indicates company’s inefficiency in controlling its operational cost. To reduce the ratio company should focus towards hiring employees on freelancing basis and concentrates towards reducing cost of infrastructure. 

Return on equity 

Year 2022

Year 2021

In 2021, company was unable to use its equity fund efficiently leading to low equity ratio. Whereas it has been depict that in year 2022 firm is efficiently and efficiently using its equity funding to generate profits.

Evaluation 

Evaluating HRM and FM strategies of Body shop

After evaluating HRM and FM strategies of body shop it has been determine that company is having effective human resources management strategies (Yuniningsih, Pertiwi and Purwanto, 2019). It has been identified that company is having low employees turnover rate which indicate firm’s capabilities towards attracting and retaining employees. Whereas liquidity, profitability and solvency position of company is not effective as it has been determined that company is not generating effective profits to pay off all its liabilities.

Conclusion

By summing up this report, it has been concludes that human resources and financial managing play an important role in achieving objective of firm. It has been determined that body shop is using effective recruitment, retention and development policies that assists in attracting large number of employees. Company is using open hiring method that aim at selecting individual that has first applied to company. It has been identified that firm’s financial strategies is not optimum that results in reducing profitability and solvency position. Company should focus towards investing on marketing strategies that will assist in improving sales and eventually results in improving overall performances. 

References 

Books and Journals 

Armstrong, M. and Taylor, S., 2020. Armstrong's handbook of human resource management practice. Kogan Page Publishers.

Bratton, J., Gold, J., Bratton, A. and Steele, L., 2021. Human resource management. Bloomsbury Publishing.

Chasanah, N. and Sucipto, A., 2019. Liquidity ratio, profitability, and solvency on stock returns with capital structure as an intervening variable (study on food and beverage sub sector listed in Indonesia Stock Exchange (Idx) period 2013-2017). Ekspektra: Jurnal Bisnis dan Manajemen, 3(1), pp.52-68.

Handayani, H. and Hadi, S., 2019. Effect of activity ratio on profitability in the pharmacy companies listed on idx period 2013-2017. Jurnal Ilmiah Akuntansi, 146(2), pp.146-157.

Mahapatro, B., 2021. Human resource management. New Age International (P) ltd.

Pattanayak, B., 2020. Human resource management. PHI Learning Pvt. Ltd..

Sartika, D., Muin, M.R. and Sofyan, D., 2021. The effect of liquidity ratio and solvency ratio on the profitability of plantation subsector companies listed on the Indonesian stock exchange. Husnayain Business Review, 1(1), pp.69-77.

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Wijaya, J.H. and Yudawisastra, H.G., 2019. Influence of capital adequacy ratio, net interest margin and liquidity ratio against profitability ratio. International Journal of Innovation, Creativity and Change, 6(6), pp.268-277.

Yuniningsih, Y., Pertiwi, T. and Purwanto, E., 2019. Fundamental factor of financial management in determining company values. Management Science Letters, 9(2), pp.205-216.

 Online 

Financial statement of body shop. 2023. Online Available Through: https://find-and-update.company-information.service.gov.uk/company/01284170/filing-history.