Business Decision Making Assignment Help

Introduction

Business decision making is regarded as a very important part of an organization, no matter whether it is a small sized or medium or a large business. The management of Espresso Room has made decisions to launch a new type of coffee drink in the market. In order to do this they have to undertake research in the market the management should collect two types of data; primary data and secondary data.

Task 1

LO1: A

Data collection is procedure of preparing and gathering data. The data is collected for the purpose of acquiring information, to undertake decision and pass the information to the other sources. The data collected for decision making can be divided as primary and secondary data:

In order make proper decision in business and solve the business related issues, it is very important to collect the primary data. The data which is gathered by the effective and direct effort of the customers, it is called primary data.

Advantages of primary data collection

• The primary research is very essential for undertaking business decision because it helps to know about the current market condition.
• Help to acquire a wide range of response
• The collection of primary data will help to record behaviour, opinion, attitude and beliefs of the customers.
• The data collected is suitable to tabulation and statistical analysis.

Disadvantages of primary data collection   

• The collection of primary data requires much effort and is quite time consuming.
• It is also expensive.
• The prone to error
• There is a possibility of misinterpretation depending on how the questions are designed and asked.  

However, the data collected in this procedure will surely help the management of the business organization to undertake proper decision. The primary data can be gathered as quantitative and qualitative data. The data which can be measured is called quantitative data while the data which cannot be measured is called qualitative data (Weinick, 2003). 

The primary data can be collected from the following sources:

• Interview
• Survey
• Experiments
• Case Studies
• Simulation
• Human Observation

In the current scenario, the management of the coffee shop can undertake a survey in order to gather the primary data that will help them to understand the likings, preference and attitudes of the people. These data will help to take proper decision about the launch of new coffee drink. The management of the organization can gather the primary data by conducting a survey. A survey can be defined as the comprehensive research of the market. The data collected in the survey is very vital for the management of the organization. In the given project the survey will be conducted on the people of Liverpool in order to know about their likings and attitudes regarding coffee drinking. For conducting the survey, it is very essential to identify the sample frame and prepare a questionnaire. The questionnaire will consist of all the important questions relevant to the purpose for which the survey is being conducted. However, to conduct the survey, the management should keep in mind the following pros and cons:

Sample Frame: Sample frame can be defined as the set of information which is used to identify a sample population for the purpose of conducting the survey. The sampling must be the representative of the population. In order to select the sample frame it is important to have a clear knowledge about the population (Fowler, 2009). The sampling frame can be done with using several methods like simple random sampling, stratified random sampling, cluster sampling, quota sampling and multi sage sampling.

The quality management of the coffee shop can conduct the survey on 100 people using a questionnaire. The sampling will be done as simple random sampling because people aged 18 or above are free to put forward their view regarding coffee drinking. A set of questions that are framed in order to conduct a survey is called a questionnaire. It is regarded as one of the sources of primary data collection. Framing a questionnaire requires a definite purpose. In using a questionnaire benefits an organization and at the same time involves a disadvantage too. The advantage of using a questionnaire is that over a single topic various questions can be asked to several people and the disadvantage is that it is time consuming. The management of the Espresso room has decided to conduct a survey with the help of a questionnaire and certain questions will be asked to a selected group of people. The questionnaire will be including ten questions in it which will be simple and easily understandable to the people.

The questionnaire is given below:

• Gender
• Male
• Female
• Age
  • 18- 25
  • 26- 33
  • 34- 41
  • 42- 49
  • 49 and above
• Do you like to drink coffee?
  • Yes
  • No
• When do you drink coffee?
  • Morning
  • Afternoon
  • Evening
• How often do you drink coffee?
  • Anytime
  • Rarely
  • Depends upon mood
  • Seldom
• What type of coffee do you prefer?
  • Hot coffee
  • Cold coffee with ice cream
  • Espresso
  • Cappuccino
• How much do you spend in coffee (MONTHLY)?
  • £11- 20
  • £21- 30
  • £31- 40
  • £41 and above
• How will you rate our products in the 5 point scale in which 5 being the highest and 1 being the lowest point?

1	2	3	4	5
Highly Disagree	Disagree	Neither agree nor disagree	Agree	Disagree

• What is the thing you want to add/ change in your regular coffee?
  • Chocó chips
  • Ice cream
  • Caramel
  • Coconut and blueberry
• Do you want to experience a new type of coffee?
  • Yes
  • No

LO1: B

Secondary data

The management for the purpose of effective decision making can also gather the secondary data. The secondary data can be defined as the data which is acquired and recorded by someone before and also for a purpose other than the present project (Trzesniewski, Donnellan and Lucas, 2011). The secondary data requires less time and money.

The advantages of secondary data:

• It requires less time
• It requires less money
• Ease of Access
• Helps to makes the primary data more specific and accurate

The disadvantages of secondary data:

• Often the secondary research is incomplete
• It is not specific to the need of the researchers
• It is important to exercise caution when utilizing information from the past

The secondary data can be collected from internal and the external sources.

• The internal sources include:
• Sales Records
• Distributor reports and feedback
• Information of Cost
• Feedback from the customers
• Marketing Activity

The external sources of collecting the secondary data include:

• Journals- the journals help the management to collect various secondary data. 
• Books- the books also give information regarding the market demand. It includes certain magazines that include the information regarding the companies and the preferences of the customers.
• Newspaper- this also includes the various information and advertisements regarding the companies and its products from where information can be gathered.
• Internet- the external source is the internet which helps in the collection of secondary data.
• Government publication and official statistics- this also helps the company to gather information regarding it.

The management of the coffee shop can collect the secondary data from the magazines, sales records, internet in order to develop a better understanding regarding the behaviour of the customers about drinking. The information thus collected will help the management to analyse the primary data more effectively and undertake proper decision regarding the launch of the new coffee drink.

Task 2

After scrutinizing the data that has been collected from the survey it has been observed that the management of Espresso Room can take the decision of launching a new type of coffee drink. On asking those questions it was found that the sample population was really very excited to taste a new type of coffee. The sample population was mainly comprised of 65% of male and 35% of female. It was also observed that the most frequent coffee consumer belongs to the age group of 26- 33 years and those who are least interested in drinking coffee only 5% belongs to the age group of  more than 50%. Among the total sample population 96% loves to drink coffee and only 4% of them do not like to drink coffee. Of them 50% consumes coffee in the morning, 20% in the afternoon and only 30% favours drinking coffee at evening. It has been found that 45% of the sample population drinks coffee anytime they likes, only 5% consumes coffee very rarely, 35% of the total sample population consumes coffee depending on their mood and only 15% consumes coffee seldom. 

Again, on asking them what type of coffee they mostly prefer to drink, 36% answered that they prefer to drink hot coffee, 28% of the population responded that they like cold coffee with ice cream, 30% said that they likes  Espresso and at last only 6% likes cappuccino. On asking them how much they spend on consumption of coffee in a month 27% of the sample population said that they spend £11- 20, 30% of them said that they spend £21- 30 on coffee, 36% of the population said that they spend £31- 40 and only 7% of the population spends more than £40 in the consumption of coffee. When the sample population was asked to rate the products provided to them by the coffee company it was observed that 35% agreed to the fact that the company provides them good product and 30% said that they highly agree that the company provides them with quality product.  The sample population also responded that that they wanted to experience a new type of coffee. According to the data received it was found that 18% wanted to have a coffee drink with Chocó chips, 27% said that they wanted to drink coffee with ice cream in it, 36% said that they wanted to drink coffee along with some caramel in it and at last only 19% said that they wanted to consume coffee with coconut and blueberry in it. It was also observed that 98% of the total sample population wanted to experience a new type of coffee whereas only 2% don’t want to have any new type of coffee drink.

Analysis: So after analysing the data received it was found that the management of Espresso Room must focus on the age group of 26- 33 years because the people belonging to this age group are attracted to coffee so they will surely love to drink coffee and the management can increase its sales. Again, the most important thing that the management must focus is on the type of coffee. They should also take the spending of the consumers. If the management provides its customers with less price and good quality coffee than it will lead to increase its sale. At last when the population was asked whether they want to experience a new type of coffee the response that came was positive and the management can launch a new coffee based drink.

Age
18	26	34	42	51
19	27	35	45	55
20	28	36	44	56
25	29	37	48	57
21	30	41	49	58
18	26	34	42	34
19	27	35	45	35
20	28	36	44	36
25	29	37	48	37
21	30	41	49	41
18	26	34	42	34
19	27	35	45	35
20	28	36	44	36
22	29	35	48	37
21	30	41	49	41
21	18	33	29	26
18	24	27	30	33
19	20	28	26	28
20	23	29	27	29
21	25	30	28	30

 

Spending '£'
11	21	31	41
20	22	32	45
19	24	35	46
14	25	40	48
16	30	39	50
18	21	40	54
12	22	33	55
15	24	39	37
17	25	37	31
11	30	31	32
20	21	32	35
19	22	35	40
14	24	40	39
16	25	39	40
18	30	40	33
12	21	33	39
15	22	39	37
17	24	40	31
11	25	39	32
20	30	40	35
19	21	33	30
14	22	39	21
16	24	37	22
18	25	12	24
30	17	15	25

Range of age group

Mean	32.42
Median	30
Mode	28

Range of customer expenditure

Mean	28.040404
Median	25
Mode	40

Dispersion: Measures of dispersion are essential techniques for analysing the data in order to make effective business decision (Mahanty and Ninham, 1976). The dispersion can be measured with the help of the three techniques:

• Variance
• Standard Deviation
• Inter-quartile Range

Variance is used to the elements are spread in a data set. They are used to show how spread out these elements is from the mean in a set of data. Standard Deviation is most widely used measures of dispersion. Standard deviation is derived by the square root of the variance. The standard deviation is primarily used for the purpose of outlining the basic trend in the elements in a given sat of data with respect to the mean (Singleton, 2008). The standard deviation is also denoted by  

The standard deviation is calculated by the following formula:

√ (∑fx^2/n-(∑fx/n)^2}

Age group

Standard Deviation	10.11867
Variance	102.3875

Customer Expenditure

Standard Deviation	10.5200675
Variance	110.67182

• Inter-quartile range: nter-quartile range is derived by subtracting the lower quartile from the upper quartile. The inter-quartile ranges are basically used to summarize the accuracy of the data.
• Quartiles: In statistics, the quartiles are basically used in order to divide the data set into four equal groups. The quartiles are basically used for the purpose of benchmarking in a set of data.
• First Quartile: First quartile is the number which is between the lower half and the median in a set of data. The first quartile is also called the 25^th percentile.
• Second Quartile: The median in a set of data is also called the second quartile. The second quartile is also called 50^th percentile.
• Third Quartile: The number between the median and the upper half in a set of data is called third quartile. The third quartile is also called the 75^th percentile.

Quartiles of Age Group

1st Quartile	25.75
2nd Quartile	30
3rd Quartile	38

Quartile of customer expenditure

1st Quartile	20
2nd Quartile	25
3rd Quartile	37

Percentile: Percentile can be defined as the value in series dividing the distribution of the individuals in the data set into one hundred groups of equal frequency. The percentile is used to provide information regarding how the data are spread over the interval from the smallest to the largest value. The percentiles are used in effective business decision making because they let the customers to rate the performance of the relative to the competition. 

• The 25^th percentile is the quartile 1.
• The 50^th percentile is the quartile 2.
• The 75^th percentile is the quartile 3.

Correlation Coefficient: Correlation coefficient is defined as the measure that helps to assess the degree to which the movement of the two variables are connected with each other (Koerts and Abrahamse, 1969). The correlation is calculated by the following:

The correlation coefficient helps the management to make suitable decision whether it is the development of the company or to launch a new product in the market.  The management of Espresso room has decided to launch a new coffee based drink in the market so they have decided to use the above mentioned tools that would help them to make suitable decision regarding launching a new coffee based drink in the market.

Task 3

Introduction: The management of the Espresso Home wanted to launch a new coffee for attracting the consumers. For this purpose, they gathered primary and secondary data and analysed it properly. The analysis will help the management of the organization to take proper decision regarding the launch of their new products.  

Findings

1.

Gender
Male	65
Female	35

The above graph shows the gender comprising the sample population.

2.

Age
18-25	25
26-33	30
34-41	25
42-49	15
<50	5

The above graph shows the age group of the sample population.

3.

Drink coffee
Yes	96
No	4

The graph shows that the sample population drinks coffee.

4.

Time of Drinking coffee
Morning	50
Afternoon	20
Evening	30

The graph shows the time when they drink coffee.

5.

Frequency
Anytime	45
Rarely	5
Depend on mood	35
Seldom	15

The graph shows the frequency of drinking coffee by the sample population.

6.

Coffee type
Hot Coffee	36
Cold Coffee with ice cream	28
Espresso	30
Cappuccino	6

The above graph shows the type of coffee the sample population prefers.

7.

Spending '£'
11-20	27
21-30	30
31-40	36
<41	7

The graph shows the spending of the sample population on coffee.

8.

Ratings            1	2	3	4	5
Highly Disagree	Disagree	Neither agree nor disagree	Agree	Highly agree
5	10	20	35	30

The graph shows the ratings given by the sample population regarding the products offered by the Espresso room.

9.

Changes
Chocó chips	18
Ice Cream	27
Caramel	36
Coconut and Blueberry	19

The graph shows the new type of coffee that the sample population wants to experience.

10.

Yes	98
No	2

The above graph shows that maximum people wants the company to launch a new coffee based drink.

Trends Forecasted: Trend line is considered to be the important tool for the purpose of technical analysis both for trend identification and conformation. A trend line can be defined as the straight line that helps to connect two or more prices points and then continue for the future for the purpose of acting as line of resistance. The trend lines are used by the business organization for the purpose of forecasting the cost, prices, income, sales, customer served and customer satisfaction (Mendelsohn, 2012). The trend line graph contains a R2 equation which is of vital importance. If the value of R2 is closer to 1, then the forecast is reliable and if the value is not closer to 1, then the forecast is not reliable.

The following table shows the Sales Revenue of Espresso Room from 2009 to 2013:

Year	Sales Revenue ('000£)
2009	500
2010	540
2011	620
2012	680
2013	700

The trend line shows the sales revenue of Espresso Room for five years. The trend line is forecasting the revenue for the year 2014 and 2015. The trend line is displaying that the revenue will increase. The value of R2 is 0.969 which means that it is closer to 1. This implies that the forecast is reliable.  Hence the management can undertake the project of launching a new coffee based drink in the market.

• Introduction: The management of Espresso room has decided to launch a new type of coffee based drink in the market. In order to do so the management has to make proper steps to make a research in the market so that it can collect both the primary and secondary data whose analysis would make for them easy to make suitable decisions.    
• Findings: The analysis of the primary and the secondary data showed that the management can launch the new coffee. The company analysed the trend which highlighted that there is a chance of increasing the sales revenue of the company. The analysis also showed that majority of the population showed their preference for Espresso. Hence, the management should take steps to launch Espresso as their new product.
• Conclusion: So, from the above discussion it is clear that the management can undertake the decision of launching a new coffee based drink in the market.

Task 4

Information processing tools is a system that helps to perform some tasks while processing the information. The management of Espresso Room should develop the following kinds of information processing tools:

• Communication Tools: The development of communication tools can be used to for the purpose of working with the data sources. The development of communication tool is essential as it will reduce the communication gap between the consumer and the management of the organization. The management should develop internet browser and email to enhance their communication process. This will help the management to know about the liking, preferences and grievances of the consumers (Bajic? and Tan, 2005).
• System Quality Tools: The management organization should also implement system quality tools like system testing tools and documentation tools in order to review their new products and systems that are introduced.

Developing a new product: For developing a new product, it is important to frame a proper plan which is as follows:

Generating and screening ideas :

At first the management need to implement the idea and then screen it properly in order to find out that the product they will launch will be beneficial or not. The management will conduct a SWOT analysis. Then they will target proper customer segment in the market (Healy, 2008).

• Concept Testing: Then the concept is tested for deriving in depth knowledge about the product.
• Business Analysis: This stage is followed to identify the exact needs of the customers and will help the management to forecast that whether the business will be profitable or not.
• Development of Product: A prototype of the product is produced and then it is presented to the consumers to know about their preferences.
• Market Testing: Some products are lunched in the market to understand the feedback of the customers.
• Commercialization and launch: The product is finally launched in the market and the several promotional activities are done in order to make the product popular among the public.

Project Management:

Forecasts and project appraisal: The investment decision is considered to be very important in an organization. So the management need different tools for calculating and the expenditure as well the time it will need for preparing the path. The important financial tools are:

Net present Value:

The NPV is used for the purpose of assessing all the future cash flow and thus discount them to current value. The NPV helps to assess the profitability of the organization as well as the entire life of the project.  The NPV also considers the time value of money. However, the process of calculation is quite difficult (Laan and Teunter, 2000). If the NPV is greater than 0 then the management should undertake the project. From the new coffee brand the organization is expected to generate a sales of $216978 from the first year and $247975 for the second year. The total costs would be $189583 for the first year and $195782 for the second year. For this project the organization would have to raise $50000 through bank loans and $50000 through equity. The initial start-up cost is estimated to be around $86900 with an interest expense of $3250. With the new coffee brand the organization would be able to reach out to new customers and hence would open new stores starting from year 2. Since the NPV of the project after considering the cost of capital at 50% is positive the project should be accepted (Refer appendices).

Conclusion

The project helped to create an insight into the different types of research methods that will help to the management to undertake proper business decisions in order to solve to launch a new. They framed primary and secondary data collection methods in order to acquire important information about the customer behaviours and attitudes. The used several tools to analyse the data for reaching important conclusions.The project showed that the management of the company can launch the coffee. However, for the purpose of launching it, the management need to follow all the steps as shown in the project.

References

Bajić, V. and Tan, T. (2005).Information processing and living systems. London: Imperial College Press.
Fowler, F. (2009).Survey research methods. Los Angeles (i.e. Thousand Oaks, Calif.): SAGE Publications.
Healy, G. (2008). Strategic marketing analysis. South Melbourne, Vic.: Cengage Learning.
Koerts, J. and Abrahamse, A. (1969).The correlation coefficient in the general linear model. Rotterdam: Econometric Inst., Univ.
Laan, E. and Teunter, R. (2000).Average costs versus net present value. Magdeburg: Otto von Guericke Univ., FEMM.
Mahanty, J. and Ninham, B. (1976).Dispersion forces. London: Academic Press.
Mendelsohn, L. (2012). Trend Forecasting with Intermarket Analysis. Hoboken: Wiley.
Singleton, J. (2008).A standard deviation. New York: Pillar Press.
Trzesniewski, K., Donnellan, M. and Lucas, R. (2011).Secondary data analysis. Washington, DC: American Psychological Association.
Weinick, R. (2003). Researching Disparities: Strategies for Primary Data Collection.Acad Emergency Med, 10(11), pp.1161-1168.