Assignment on Business Decision Making

Introduction

Business decision making is widely critical process which is find in each and every organisation. This is also known with its alternative name entrepreneur decision making. Decision making is the simple process of electing one action out of available different course of action. Whereas business decision making is a strategic decision which requires utmost care and diligence. This Assignment on Business Decision Making discusses the methods, techniques and tools which are used to process data and derive information which helps in the decision making process of a business. It is seen that business decisions in various fields are the key component in the overall success of an organisation. Mostly these decisions are NON-STRUCTURED in nature so that it is usually taken by top level management. Success and failure of and organisation in today’s competitive market are highly dependent upon the business decision making.

Task 1

AC 1.1 Create a plan for the collection of primary and secondary data useful to conduct a research that may provide ways to improve sales in your chosen company?

Data is simply a raw material of information. In order to see the full information management has to collect data from different sources. It could be said secret ingredient of information lies within the data collected. Data analysis and design can be qualitative or quantitative and if it has relevance to the purpose then it becomes information (Olsen, 2012). The Marriott can create a short plan in order to collect the data that may provide ways to improve sales.

AC 1.2 Present, a survey methodology and sampling frame that will be most appropriate in your investigation?

• Survey methodology: it is the process of collecting primary and secondary data from the customers in context of their choice of actions and their preference. This is the best method through which genuine data could be collected from different context of people all over the world.
• Sample survey: The Marriot being in hospitality business can take the sample survey in order to decide the preference and expectation of potential consumers (Roepstorff, et. al., 2015).

AC 1.3 Design a questionnaire that you will use to collect primary data for the research

In order to make increment in sale Mariette has to make survey on large as it is easy to tell that collecting data from public at large is not an easy task therefor sample survey is a very useful technique.

Sample questionnaire:-

1. Have you ever visited to a Marriott Hotel?

• Yes                                  
• No

       2. What is the best thing you feel after availing hotel services which are offered to you?

• Hotel staff services        
• Ambience and culture
• Swimming pool
• Foods served

       3. Which of the following would you like to avail first if it is being offered to you at free of cost?

• Food
• Complementary premium drink
• Spa or head massage
• A game in golf court

 4. How will you rate our hotel as per the services you have availed in business?

• *
• **
• ***
• ****
• *****

       5. What are the core services you like most in our hotel?

• Food services
• Housekeeping services
• Luxurious services
• Accommodation services
• Pick and drop services

       6. Which type of Food do you prefer most in our hotel?

• Vegetarian Food
• Continental Food
• Thai food
• Non-vegetarian Food

       7. How often would you like to visit out hotel?

• Frequently
• Monthly
• Yearly
• Never(De Bruijne & Wijnant 2014)

       8. Which are the best things you see in our hotel?

• 1. Culture
• 2. Ambience
• 3. Services
• 4. Corporative behavior

       9. what is the most appropriate mean you use for booking room in our hotel?

• 1 Directly with the front house of the hotel
• 2 Through our hotel app
• 3 Online
• 4 Tours and travel agency

       10. Where does u come to know about our hotel?

• 1. Travel advice portal
• 2. Online advertisement
• 3. from agent
• 4. Some other places

       11. What would be your feedback with our hotel services you availed in our hotel?

• 1. Good
• 2. Average
• 3. Superb
• 4. Not Satisfactory

       12. In which part of the hotel would you like to make changes in our hotel services?

• 1. Room services
• 2. Accommodation services
• 3. Tours and travel services
• 4. Bars and roof top pool services

       13. Where do you rank our hotel services provided to you in last visit?

• 1Star
• 2Star
• 3Star
• 4Star

       14. In which manner you would prefer us to connect with you?

• 1. Phone Call
• 2. Message
• 3. Email
• 4. via Social Network

Task 2- Part A: Calculations and graph production (evidence for AC 3.3)

AC 2.1 Creation of information using representative values

The sales commission of 20 employees of ALF & Sons Ltd. in £ for the month of Decemberis as follows:

Employees	Sales Commission (£)
1	1087
2	924
3	1265
4	1086
5	1134
6	850
7	1226
8	1028
9	1130
10	1160
11	1084
12	1012
13	1230
14	989
15	1129
16	792
17	1205
18	1182
19	1155
20	1166
Total	21834

Calculation of mean

Mean = Average value of the data
            = £1091.7

Calculation of Median

Median = Middle value of the data
            = £1129.5

Calculation of Mode

Mode = the value from the data which is having the highest frequency
            = Not Applicable

Since all the values of the data are discrete and none of them is being repeated, therefore mode cannot be calculated for the sales planning commission of employees. (Garcia, 2014)

AC 2.2 Analysis of results obtained in AC 2.1 for decision making

The data related to the sales commission of twenty employees of Alf & Sons Ltd for the month of December. The mean of the data so calculated comes out to be £1091.7. This means that the average commission payable to the employees by the company is £1091.7. The median of the data so calculated comes out to be £1129.5 which means that when the values of sales commission of the employees will be arranged in ascending order the most middle value will be £1129.5. On calculation of mode it was observed that figures of sales commission of all the twenty employees are different. No value is being repeated. Since mode represents the value of sales commission that has arrived maximum number of times therefore, mode could not be ascertained for the discrete data. (Merkova, 2013)

AC 2.3 Calculation of Standard Deviation and its usefulness

The profit figures and sales for the past ten years of Alf & Sons Ltd are as follows:

Year	Sales(£)	Profit (£)
2006	200	120
2007	230	150
2008	300	200
2009	270	110
2010	330	220
2011	350	240
2012	300	200
2013	320	180
2014	380	260
2015	350	280

Standard Deviation: It is measure of dispersion which is used to quantify the variation or dispersion of the data values or a range of data values. When standard deviation is low it means that the data is likely to be close to the mean of the data whereas when standard deviation is high it means that the data is far away from the mean. It is useful for the analysis of the data as it is capable to measure the exact value of dispersion in the same units as the units of data is. As a result of measurement of variation, the confidence in the statistical value calculation can be achieved. The standard deviation of sales figures of the company for past ten years is 53.30 and the standard deviation of profit figures of the company is 54. 07. The high standard deviation of the profits and sales of the company suggest that the mean is wider from the data.

AC 2.4 Calculate the quartiles, percentiles and correlation coefficient of profit and sales figures

Calculation of quartiles

Quartile	Sales(£'000)	Profit (£'000)
Minimum value	200	110
1st quarter	277.5	157.5
Median	310	200
3rd quarter	345	235
Maximum value	380	280

Calculation of Percentiles

Percentile	Sales(£'000)	Profit (£'000)
Minimum value	200	110
1st quarter	277.5	157.5
Median	310	200
3rd quarter	345	235
Maximum value	380	280

Calculation of Correlation Coefficient

Correlation coefficient 0.878495215

Usefulness of quartiles percentiles and correlation coefficient: The quartiles, percentiles and correlation coefficient are the measures of dispersion which are used to measure the variation and dispersion of the statistical calculations and help the analyst to gain the confidence about the results of the calculations with quantification of likely variations. The quartiles and percentiles are used to evaluate the quantitative data whereas the correlation is used to evaluate the qualitative aspects of data and operational efficiency. (Francis, 2016)

Task 3

AC 3.1 Production of graphs

Pie Chart

The profit generated by the company Alf & Sons Ltd. by making of cars in the year 2015 is as follows:

Car	Profit £'000
Volvo	50
BMW	70
Golf	30
Mercedes Benz	90
Range Rover	40

It can be observed that the company has generated maximum profits from the sale of Mercedes Benz and BMW cars whereas the sale of Range Rover and Golf cars have resulted in minimum profits out of the five cars.

Line chart

It can be observed that the sales and profits are fluctuating during the period of ten years but both the lines in the same direction suggest that the increase in sales has resulted in increase of profits correspondingly for all the ten years. Although the change in the figures is not at same rate since the correlation between the two values is not perfect although positive. (Forkman, 2012)

Scatter Chart

AC 3.2 Creation of trend line in scatter graph and obtaining linear equation of the line fitted on scatter graph to forecast profit for an estimated sale of £ 400,000.

The linear equation obtained from the scatter graph representing the figures of profit and sales of past ten years of the company is as follows:

Linear Equation y = 0.891x - 74.04

Where, y represents profits of the company and x represent sales. The forecast of profit of the company at estimated sales of £ 400,000 can be made with the help of this linear equation as follows:

Profit (y) = 0.891(400) – 74.4
y = 282

These states at for the sales of £ 400,000, the company will earn profits of £ 282,000. The increase in profit is 0.7% and the change in profit is 14%. (Muntean, 2010)

AC 3.3 Preparation of Business Presentation

AC 3.4 Formal Business Report

To
The Management
Alf & Sons Ltd.
Date – 1^st July, 2016

Subject – To provide information assisting in analysis of data to support sales promotion.

Introduction

This report is based on the calculations and analysis made from the data provided by the management about the sales commission of twenty employees of the company for the month of December, profit and sales figures for the past ten years and profit generated by the company by making of five cars in the year 2015. The calculations and analysis have been made using computer generated software’s and information processing tools.

Analysis

The results of the calculations show that the average commission payable by the company to its employees skills is £1091.7. The standard deviation used as the measure of dispersion for the data related to profit and sales of company during past ten years is 54 and 53 respectively which shows that the statistical calculations from the data related to these figures is likely to be in variance with the mean. There is positive correlation between profit and sales with a correlation coefficient of 0.88. Out of the five cars made by the company in the year 2015, maximum profits were earned from the making of cars Mercedes Benz and BMW whereas minimum profits were earned from Golf and Range Rover cars. The linear equation obtained from the scatter graph of [profit and sales suggest that the forecasted profit at an estimated sales of £ 400,000 is £ 282,000 which is an increase of 0.7 % as compared to the increase of sales by 14% from last year.

Conclusion and recommendations

Thus it can be concluded that the company needs to focus on increase of sales of Mercedes Benz and BMW cars while planning its sales promotional activities. Although there is positive correlation between sales and profit but the efforts shall be made to make them perfectly correlated so that the increase in sales may result in increase of corresponding profit. The average commission is £1091.7 whereas the highest sales commission is £1230 paid by the company during the month of December. Therefore efforts shall be made to motivate the employees increase their sales commission through increase of sales of cars.

Regards
Consultant

Task 4: Prepare a project plan

AC 4.1 Preparation of project plan using network diagram and determination of Critical Path.

The business plan of the company to Alf & Sons to launch a new car part includes the following series of activities:

Task	Activity	Preceding Activity	Duration (months)
A	Conduct a customer research		2
B	Design the product concept	A	4
C	Design and test product prototype	B	2
D	Develop and test production lines	C	3
E	Notify suppliers of requirements	C	1
F	Start Production	D	3
G	Conduct launch promotion of new clothing line	F	1

The network diagram of the given series of activities is as follows:

 

The various paths of the project as contained in network diagram are as follows:

Critical Path

The path of the project which has the highest duration is known as the critical path regardless of whether it has a float or not. It is used to determine the minimum time possible for the completion of the project. It is used for the determination of project plan and its presentation in the form of diagram.

Critical Path = 
                        = 2+4+2+3+3+1
                        = 15 months

AC 4.2 Calculation of NPV and IRR. Reporting on the financial viability of project options and advising on which option to channel the investment.

The company Alf & sons Ltd has to options for its investment as part of launch of new car part. The company has obtained two quotes for the options viz. ABC system has initial cost of equipment and installation of £1 million and XYZ solutions Ltd having initial cost of equipment and installation of £1.5 million. The cost of capital of company is 5%. The projected cash flows of the two options from new production line are as follows:

Year End	ABC Systems	XYZ Solutions
	(£'000)	(£'000)
0	-1000	-1500
1	300	400
2	350	425
3	400	450
4	425	475
5	450	500
NPV	619.95	416.87
IRR	25%	15%

• Net Present Value: It refers to as the difference between present value of Cash inflows and present value of cash outflows for a project in which the present value ions discounted cash flow at the cost of capital which is the discounting rate for the project. The project having a positive NPV is considered as profitable whereas the project having negative NPV is considered as loss making project. It is a method or tool used to evaluate the financial efficiency of a project.
• Internal Rate of Return: It is the rate of return at which the present value of cash inflows of a project is equal to the present value of cash flows other words this rate is the rate which makes the Net Present Value of a project equals to zero if the cash inflows and cash outflows are discounted at this rate to calculate the Net Present Value. Outflows of a project. It is used in capital budgeting decisions to evaluate the profitability of projects having investment potential. The return so calculated is based on the consideration of cash flows only and the environmental factors and other factors affecting the projects are ignored. It is also known as Economic Rate of Return (ERR) because of this reason. (Enrique, 2011)
• Financial viability of project: The net present values of both the projects are positive which means that the projects are capable of generating the cash inflows higher than the cash outflows during the five years. The Internal Rate of Return for the project to be done by ABC systems is 25% and the internal rate of return of project of XYZ Solutions is 15%. Since the projects have higher internal rate of returns therefore both the projects have the potential for generating high returns for the new production line to be launched by the company. Thus, it can be concluded that the project is financially viable since the net present value under both the options is positive and the internal rate of return under both the options is higher than the cost of capital.
• Decision: The higher the Net Present Value, the better is the project and similarly the option of project with higher Internal Rate of Return shall be selected. The net present value of ABC systems is higher than the net present value of XYZ Solutions by £203,080. Therefore on the basis of NPV method Option A is better. Similarly the Internal Rate of Return of Option A is higher than Option B by 10%; therefore Option A is better on the basis of internal Rate of Return. Thus the company Alf & sons is advised to undertake Option A which is quotations received from ABC Systems. Also the initial investment is less in Option A under which cost of equipment and installations quoted by ABC systems is £ 1.5 million. (Canco, 2014)

Conclusion

Business strategy is concerned with long term decision. It is mostly taken by top level department. Usually these decisions are non-structured in nature. Business strategy is critical in nature and highly dependent upon the information collected from various concerned fields I have  studied all the information  given in this Assignment on Business Decision Making and this has helped me very much in order to come with the conclusion that business strategy is the key pillar in performance of organization’s activities.

References

Canco, I. 2014, "THE IMPACT OF THE DECISION-MAKING METHOD IN BUSINESS ACHIEVEMENTS",European Scientific Journal, vol. 10, no. 7, pp. 37.
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Enrique Benjamín Franklin Fincowsky 2011, "Business making decisions", Contabilidad y Negocios : Revista del Departamento Académico de Ciencias Administrativas, vol. 6, no. 11, pp. 113-120.
Forkmann, S., Wang, D., Henneberg, S.C., Naudé, P. & Sutcliffe, A. 2012, "Strategic decision making in business relationships: A dyadic agent-based simulation approach",Industrial Marketing Management, vol. 41, no. 5, pp. 816.
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