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Submitted by Rija Rehman (0320)

Sidra Malik (0345)

Submitted to Sir Ali Farukhh

Date 30th, June 2024

Subject Business communication

University Government University, Lahore

Topic Report writing

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Table of Contents
Introduction 1
Executive summary 3
analysis 5
problem identification……………………………………………………………………………………………………………………………..6

solution 7
conclusion 8
implementation 10
recommendation--------------------------------------------------------------------------------------------------------------12
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Report writing

Memo report

To Hr manager of company (hassan sadiq)

From Finance manger of company (rai bilal)
Subject loss in capital and cash flow due to inflation
Date 30 june 2024

Company

Grocer app which is running in Islamabad, Rawalpindi and Lahore

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Business problem

In 2019, grocer app is facing a business problem of lack of capital and cash flow
in Pakistan due to inflation may cause sticker shock
This problem was identified through the survey conducted
Impact of this problem on business is due to model of storing inventory at large
fulfillment center and bundling orders together for delivery (in cargo rikshaw) is
more sustainable with much better economics than now commerce ,in emerging
market. “We offer the largest assortment prices ,that’s our pitch to the customers”
Executive summary

As capital is important for bussiness to invest in new technologies,equipment,and

infrastructure that can enhance productivity ,improve efficiency,and drive
growth,manage economic downurns , adapt to changing market conditions ,and
capitaliza on bussiness opportunities and bussiness make profit due to this
capital .if we take precautionary measures to avoid inflation and to avoid loss in
our busssiness we may deal with this situation .As Pakistan economy have occur in
debt and other several issues to avoid company loss we proposed such appropriate
solution to make our company stand in economy with current trends

What I want from the receiver

I want that the hr manager would gave importance to this issue due to current
situation of country to tak out the compant from financial loses and inform
investors and stalkholders about this position of the company to solve this issue
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Audience analysis

Identify the receiver

Need informational
Context formal
Expectation to deal with this issue to make our company secure

Introduction

Grocer app is a low-cost online grocery store ,which is started in 2016 ,that allows
customers to order products and have them delivered right to their door.
Grocer app is a mission to help families and individuals get their daily and monthly
groceries at a highest quality and at a lowest prices, that includes freash and frozen
food to daily staples, personal care, OTC and wellness , and home care and
cleaning products.
If the issue of decrease in cash flow for starting new business is not highlighted yet
,customers are enable to save money time, pressure free environment,no impulse
buying keep track of your shopping cart and have coupons on items.
In this report we proposed the problem of lack of capital for staring new business
in Pakistan ,for most small bussiness startups the average cost of launching were
$50k(3%) and between $50k to $100k(11%),as online grocery store is essesntial
The scope of this report is to provide appropriate solution according to the current
situation of the country to run a business to provide customers with basic
necessities of life
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Swot analysis of bussiness

Strength
Distribution and growth : during the pandemic situation faced by the world
today ,grocery store industry has completely revolutioned due to its same day
delivery model and contact less delivery service
Weaknesses
Dependency on retailers and relationships: when retailer stock is
unavailable ,consumers may have to accept a replacement with a higher price tag
or simply do without the shopper getting that item for them
Opportunities
Better recommendation and replacement engines: there are times when customers
get a “not available “ at store screen for certain products ,and gives an option of
alternatives to the product to the customer ,but many times ,these replacements are
not selected by the customers due to extra cost, recommended item doesn’t match
the need, the product brand is not preferred by the customer
Threats
Well established competitors: currently every retail store has started their own
delivery models ,such as amazon buying wholefoods and utilizing amazon
freash,Walmart,or target buying shipt .these companies not only have a strong
customer base , but they are also backed by strong financials
Analysis

This problem is very crucial in Pakistan for businesses to deal with inflation
and make profit in this situation
Inflation rate in Pakistan eased for the fifth consecutive month to 11.8% in may
2024,the lowest since November 2021,down from 17.3% in the previous
month .main downward pressure came from food and non- alcoholic beverages ,
falling by 0.2% compared to a 9.7% increase in april. Additionally, inflation
lowered for all remaining subindexes , notably housing & utilities(33% vs
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35.7%) ,clothing & footwear(18% vs 19.1%) and restaurents & hotels(13.7% vs

19.5%) .On a monthly basis,consumer prices shrank by 3.2% , the sharpest fall .
Cause of inflation in Pakistan :
 Increase in money supply,which leads to excess demand for good and
services .
 Shortage of good and services,which creates a supply –demand gap and
drives up prices
 Increase in production costs,which affects the cost of inputs and outputs
 Currency devaluation ,which reduces the purchasing power of the local
currency and makes imports more expensive
 Government borrowing,which increases the public debt and reduces the
confidence in the economy
Effect of inflation on bussiness
 Reducing their profits and value as their costs increase and their purchasing
power decreases
 Lowering their competitiveness and sales as fewer consumers can afford
their products or services
 Disrupting their supply chains and inventory management as prices fluctuate
and shortages occur
 Increasing their debt and interest rates on loans as the value of money
decreases and borrowing becomes more expensive
 Making their planning and investment decisions harder and risker as
inflation creates uncertainly and instability
Identification of issues contributing to problem
Companies should recalibrate and clean up the portfolio to get rid of inflation ,also
reposition the brand and replace the price model such as avoid firing customers ,
move the customers eye level to a lower price point and satisfy your investors

Causes of Bussiness problem

1. Not having enough cash in reserve: relying on the income of each month
to pay your expenses is a surefire
2. Overspending and high overhead : cash can run out quickly when you
have a a lot of unnecessary and high expenses of your bussiness
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3. Excess inventory : inventory is expensive .you have to pay to purchase and

store it . Overspending on inventory that is not being sold fast enough
4. Expensive debt : high intrest debt can quickly drain a bussiness bank
account
5. Unexpected expenses: Even with great forecasting your bussiness may
encounter unexpected expenses.from changes in weather to changes in laws
to an international pandemic,you can’t plan for everything
6. Late or slow paying invoices : Monthly sales don’t always translate to
same month revenue.invoice with 30 or 90 day payment terms can mean that
your bussiness may not see revenue from a sale for months to come ,this
lead to less money in the bank
7. Lack of proper book keeping : in order to have proper forecasting ,you
need to have proper bookkeeping. Not keeping accurate records and not
looking at your books can lead you down a road to many
8. Enhancing shareholder value : capital reduction can be a way to increase
shareholder value by reducing the number of shares outstanding or by EPS
9. Legal or regulatory compliance : they may be legal or regulatory
requirements for a company to reduce it’s capital, such as to eliminate
accumulated losses or to comply with statutory provisions
10.Facilitating corporate actions : capital reduction can also facilitate other
corporate actions ,such as mergers,demergers,or reorganisations,by
simplifying the company’s capital structure or aligning it with stratergic
objective
Effect of this Bussiness problem
1. Increasing shareholder value
By increasing value of your shareholder and by applying your shares in
stockmarket to sell them is very important to avoid inflation

2. Have more efficient capital structure

Have more investors and stakeholders in a company is essential for this
tough time
3. Damaged customer relationship: it leads to unnecessary stress that when
customers pay your invoice ,as a result you may need to chase them about
payments to make ends meet
4. Stuned growth :preventing your bussiness from success,your bussiness can’t
gow if you don’t have the services to fund it
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5. Poor relationship with suppliers :poor cash flow enable to pay suppliers
and creditors on time ,as a result you might receive poor services or lose the
bussiness
6. Missed oppurtunities to expand your services : when you have a chance to
expand your services offering ,but you can’t afford to buy the equipment
you need ,or a supplier have a limited special offer on their ,highest quality
products, but you don’t have enough money to pay for it .
7. Stress: money problem cause stress for bussiness, unfortunately this may
lead you to make poor decision for your bussiness such as taking an
additional loan and increasing your debt.
8. Desperately trying to improve sales : A good pricing stratergy is key to
maintain a healthy cash flow,after all you need your prices to be low enough
to encourage customers
9. Improved financial health :capital reduction can strengthen the balance
sheet,reduce debt,and improve liquidity
10.Effect the company balance sheet :capital reduction affects company
balance sheet by reducing share and capital and reserves
Solution

Get smarter funding

Many entepreneurs and small business owners think of loans and other funding
methods when considering their access to capital and cash flow need ,but loans can
be heard to secure and strap your business with long term debt .the percentage of
loans approved by the small business administration (SBA) is still relatively low.
Your credit, assests and prior business experience influence SBA loan.

The good news? Other funding stratergies can work well in todays economic
climate .rollovers as bussiness startups allow you to access your 401 (k) and other
retirement funds to finance a bussiness ,also includes home equity lines for credit,
or HELOCS where yo can access existing equity in your home ,you also have other
options of financing and you cannot fit in one situation for all

If other bussiness challenges are stressing your capital and cashflow situation,you
can also get creative with your solution, some industries are even considered
recession proof
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.Prioritize cash flow

Consistent cash flow is especially crucial for small businesses today, and
improving it can be achieved by encouraging clients to pay faster, offering early
payments discounts ,or requesting upfront deposits for large products or services
these stratergies can help small bussiness owners manage inflation and keep their
businesses running smoothly and give them an extra cushion in case of further
economic fallout
Benefits and outcomes of applying solution:
 Price increases grow revenue
 Reduction in unemployment
 Margins improve on existing inventory
 Can make old debt cheaper
 Increased employee costs
Implementation plan

Plan for implementing the proposed solution

 If your customer don’t pay on time,you should send them invoice
immediately ,an d have an efficient organized credit control process in place
and ensure that your customer understand the credit payment terms on your
invoices
 Mainting a healthy cash flow statement buy avoidind your invoices too
quickly without verifying
 Take a good look on your invoices to see when and where money enters
your bussiness and what you typically spend money on or use an accounting
app to records your receipts
By applying these steps you may get rid of decrease in capital and
cashflow for your company
Responsibility of key stakeholder involved in implemention:
To have experienced investors as partners helping us not just with capital ,but their
operational and domain expertise ,making grocer app a leading ecommerce
platform in Pakistan. With the new funding round, we plan to quickly expand our
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offering to strategic cities in Pakistan as well as expanding new bussiness

initiatives in the online grocery retail segment. .
Evaluation and monitoring according to the laws
This agreement is governed by the laws of Pakistan , The Pakistan courts shall
have exclusive jurisdiction and venue over any dispute arising out of or relating to
this agreement , and each party hereby consents to the jurisdiction and venue of
such courts , without regards to its conflict of laws principles.if any provision of
this agreement is found to be invalid in any court having competent
jurisdiction ,this invalidity of such provision shall not affect the validity of the
remaining provisions of the agreement ,which shall remain in full force and effect
he parties shall first attempt to resolve any dispute related to this Agreement in an
amicable manner by mediation with a mutually acceptable mediator. If unable to
agree upon an acceptable mediator, either party may ask a mutually agreed upon
mediation service to appoint a neutral mediator, and the mediation shall be
conducted under the Commercial Mediation Rules of the mutually acceptable
mediation service. Any disputes remaining unresolved after mediation shall be
settled by binding arbitration conducted in Lahore, Pakistan utilizing a mutually
agreed arbitrator or arbitration service. The arbitration shall be conducted under the
Commercial Arbitration Rules of the mutually agreed arbitrator or arbitration
service.

Conclusion

By applying these solution we mat avoid this bussiness problem

Importance of addressing problem
To avoid inflation and its effect on bussiness you need to follow these steps
1. Limit external costs increases
2. Outsource more activities to lower costs and ameliorate labour shortages
3. Improve your understanding of the true cost to serve clients
4. Change pricing stratergy so it is more in line with cost increases
5. Take action to improve capital
6. Improve internal efficiency and cost and reduce waste
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Recommendation

Steps to prevent similar situation in future

 Change your pricing structure
 Invest in technology automations
 Narrow your offerings
 Consider financing
 Prioritise customer loyalty
 Create a passive income stream
Additional recommendation related to problem
o Leverage your employees and encourage buy –in
o Have clear policies
o Use clear communication and training
o Update accounting
o Automate inventory controls
o Use strong deterrents
o Monitoring loss trend
o Adapt

Areas to further research on

 Reassess your prices
 Reevaluate your product offerings or revenue streams
 Outsource work for greater efficiency and productivity
 Diversify your entire supplychain
 Buy in bulk ahead of time
 Be proactive in securing bussiness funding
 Reduce expenses

References

https://profit.pakistantoday.com.pk/2020/08/16/grocerapp-is-expanding-its-
operations-but-can-it-succeed-in-its-market/
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https://grocerapp.pk/faqs
https://www.failory.com/startups/pakistan#9-cheetay
https://limestonedigital.com/grocery-delivery-app-development-a-guide-for-
entrepreneurs/

Appendecis

Cost to bussiness

8
4
0
$250k-$500k(27.3%)

$500k to 1 million (16%)

$100k to $175k

$175k to $250k(15%)

Series1

bussi- second 15%

ness highest re- other
owner re- Series1 bussi-
Series2
survey ported ness
ported startup
2023 startup cost owner
re-
ported