Unit 6 Business Decision Making Assignment Sample

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Unit 6 Business Decision Making Assignment Sample

INTRODUCTION

Decision making is crucial for the success of strategies taken in the course of business. Business decisions are backed by good information and experience and skills to interpret and use it appropriately. In addition to this, organisations are also required to consider all possible alternatives weighing the pros and cons of each and selecting the best one. In context with this, a project has been carried out for World Wide Tobacco (WWT) to understand nature of market structure and consumers. A variety of sources will be targeted for information collection and various techniques of analysis will be used to interpret information. The second case of PPP uses different techniques to analyse data for decision making.

ASK 1 DATA COLLECTION SOURCES

1.1 Plan for the collection of primary and secondary data

The market research report for Marketing Supreme plc is prepared for the objective of understanding features of market structure and consumer using E-cigarettes. A mixed approach is aimed to collect data from primary and secondary sources. For the purpose of primary data collection, a questionnaire will be prepared and filled by consumers to identify different profiles and consumption patterns of consumers. It will also help to understand burying patterns and behaviour of consumers. The data helps to analyse issues related with social and cultural aspects in consumer preferences (Desai, 2008).

Secondary data will be collected from online and published media sources. It aims to target several social and traditional media sources that provide pool of information about consumers and competitors. The research will be performed through desk search and relevant sources will be targeted to understand industry size, leaders, competitors and their respective market share. The secondary data also assists with analysing operational policies, strategies and business performance of competitors (Suttle, 2014).

1.2 Survey methodology and sampling frame

The questionnaire survey for primary data will be collected through following systematic approach and preparation of survey methodology to guide through the whole process. Data collection will undertake random sampling method that aims to assign equal value to each sample and prevent biasness in evaluation. A sample size of 50 respondents will be selected to analyse data. Under this method, each variable have equal and fair chance to get selected for data analysis. Data analysis will undertake qualitative techniques that aim to increase the richness of data beyond numbers. The technique provides in depth and detailed analysis on various business areas. The qualitative analysis displays real sensitivity in social processes from specific backgrounds and set of values instead of situation analysis (Gedik, Liu and Yu, 2007).

1.3 Questionnaire designing

Questionnaire

Age:

Gender:

Location:

Occupation

Email:

  1. What kind of tobacco products you use?
  • Cigarettes
  • Smokeless products (chew or snuff)Others (please specify) _______________
  1. For how long have you been using E-cigarette products?
  • ________ years
  • ________months
  1. How often do you consume tobacco products?
  • Daily
  • Once in a week
  • Once in 15 days
  • Once in a month
  1. How much quantity of tobacco do you consume per day?
  • ___ Cigarettes (1 pack= 20 cigarettes)
  • ___ Dips (Chew or snuff products)
  1. How much do you spend on E-cigarettes products per day?
  • Less than £10
  • £10 to £20
  • More than £20
  1. From where do you shop your tobacco products?
  • Specialized shops
  • Super markets
  • Other (please specify) _________________
  1. With whom do you consume E-cigarette products?
  • Alone
  • With family members
  • With friends
  • With a group
  1. How much do you spend on tobacco products in a month?
  • Less than £150
  • £150 to £300
  • More than £300
  1. Do you face any health issues in consumption of tobacco products?
  • Yes
  • No
  1. Does your family or friends like your company when you consume tobacco products?
  • Yes
  • No

Data analysis

The data collected from primary and secondary sources reveals that E-cigarette industry is at its growing stage and is big factor responsible for slowing down the consumption of tobacco products. It has been considered as the most effective alternative for smoking cessation. Data results also show that E-cigarette does not have any adverse impact on health. Additionally, family and friends do not avoid people consuming E-cigarettes with them which are totally opposite in case of tobacco products. In context with competitive analysis, the major competitors of E-cigarette are BOGE, AW, Imperial Tobacco Group, Cloupor and British American Tobacco. A high percentage of market shares are concentrated with this group. On an average basis, the entities earned £24.3 billion per annum. The organization in E-cigarette industry used internet medium to promote their products and generate awareness in the market. They also make significant efforts to inform people about the ill effects of tobacco products (Hoaglin, 2003).

TASK 2 DATA ANALYSIS TECHNIQUES

2.1 Information for decision making by summarising data using representative values

Table 1: Cumulative frequency table

Age Group

Population (in millions)

Cumulative frequency

Under 10

9

9

10 to 20

8

17

20-30

7

24

30-40

7

31

40-50

7

38

50-60

7

45

60-70

5

50

70-80

3

53

80-100

1

54

2

Table 2: Statistical calculations

 

X

F

XF

0-10

5

9

45

10-20

15

8

120

20-30

25

7

175

30-40

35

7

245

40-50

45

7

315

50-60

55

7

385

60-70

65

5

325

70-80

75

3

225

80-100

90

1

90

   

54

1925

3

Table 3: Statistical calculations

Particulars

Values

Mean

35.6481481481

Median

8

Mode

7

Lower Quartile

7

Upper Quartile

54.5

4

2.2 Analyse results to draw valid conclusions

Mean is computed by adding the observations by the numbers in the data sets. The mean values in above data sets are 35.64 which can also be understood as average of data observations. The median value in above data sets is 8 which divide the data into two parts. The mode value of 7 is the highest repeated value in the whole data set (Bechara, 2003).

2.3 Data analysis using measures of dispersion

  • Range - It is referred to as the difference between the highest and lowest values in data observations. It is less used technique as it takes into account only two values for calculations.

Range = Highest value - Lowest value

= 100-0

= 100

Therefore, by simply using this measure World Wide Tobacco (WWT) cannot be able to analyse properly the sales and growth of E-cigarette. Simply reducing highest value from lowest value cannot give accurate results.

  • Standard Deviation - This represents the square root of variance and quantified variability. The value is expressed in same unit as data is presented. The value of standard deviation in above data observation is 28.81 which is low and reflects low fluctuation in data (Kunc and Morecroft, 2010). Thus, it can be said that by using the method of standard deviation World Wide Tobacco (WWW) company is able to analyse the sales and demand of E-cigarette.

2.4 Quartiles, percentiles and correlation coefficient analysis

  • Semi Interquartile Range

Semi interquartile range = (Q3-Q1)/2

= (54.5 - 7)/2

= 23.75

  • Quartiles - Quartile are used to divide data observations into four equal parts. The first or the lowest quartile represents the top 25% of data whereas upper quartile is the top 75% of data observations.
  • Percentiles - Unlike quartiles, percentiles are used to divide data sets into 100 equal parts.
  • Correlation Coefficient - The measure of dispersion is used to define linear relationship between two variables which are linear and continuous. It assesses the impact of one over another with the change in first variable. The relationship between variables can result into positive or negative. A positive relationship means change in one variable will have similar effect on another variable, a negative relationship suggest that change in one variable will have opposite effect on another variable (Platt and Huettel, 2008).

Recommendations

From the above analysis, it is recommended that future strategies must be organised and based on the information provided. The above techniques support strategic decision making with data segregation.

TASK 3 INFORMATION IN FORMATS FOR DECISION MAKING

3.1 Produce graphs and draw valid conclusions based on the information derived

Kind of tobacco products people are using

The above chart shows percentage of people using tobacco products in various ways. A higher percentage is concentrated with smokeless products while cigarette has taken the second place. There is a third category in which 20% of people are using product other than cigarette and smokeless.

Frequency of tobacco consumption has considerably reduced

Although there are high percentage of tobacco users but it should also be noted that frequency of tobacco consumption is reduced on per month basis. A higher percentage i.e. 50% of users consumes tobacco once a month. There are only 10% of users who consume tobacco on daily and weekly basis.

Comfortable to use E-cigarette products in company of friends and family

The chart shows that consumers of E-cigarettes are able to use such products with family and group which is not the case with tobacco users. Tobacco consumers often consume product when they are alone or when their friends and group are also using the same products.

Severe health issues in consumption of tobacco products

The chart shows tobacco users have experienced severe health issues from the consumption. It states that sooner or later there are some of the other health issues seen in people who consume tobacco products.

Table 4: Financial information of WWT

 

Revenue

Net profit

2009-10

28173

1505

2010-11

29223

1796

2011-12

29974

1878

2012-13

30269

1937

2013-14

32625

2022

5

Interpretation

The above table represents last five year's financial performance of WWT. It can be seen that business has been able to earn higher revenue and profits as more people have started using E-cigarettes in place of smoking and tobacco products. Brand has also made significant efforts through their marketing and awareness program to inform consumers about the ill effects of tobacco products (Tracy, 2009).

3.2 Create trend lines in spreadsheet graphs to assist in forecasting

Forecasting

The consistent growth of revenue and profit in the last five years and data from primary and secondary sources reveals that it will continue to move in the same direction in future time as well. Although the data reflects the past performance but the data analysis shows that marketing efforts of brand will continue to drive positive results. The brand not only focuses on its financial performance but it is also making people aware through marketing campaigns and contest on social media sites. The earlier have resulted into benefiting company with higher market share as it aims to move its effort for social cause (Cavana, Delahaye and Sekeran, 2001).

3.3 Business presentation

Power point presentation

3.4 Formal business report

To,

The management of WWT

Date: 6th February, 2016

Subject: Analyse the behaviour of consumer’s in regard to E-cigarette.

Respected sir,

INTRODUCTION

The market research study has been conducted by the World Wide Tobacco (WWT) to understand users' behaviour of E-cigarettes, its purchase frequency and market structure for the purpose of decision making for future expansion. In addition to the research has been conducted in order to analyse the pros and cons of E-cigarette.

METHODOLOGY

The mixed sources of data collection methods are targeted to collect as much and relevant data to analyse the change in habit of smokers. Data collected is further analysed through qualitative techniques to determine consumer specifics and habits. In addition to this various necessary data has been collected by primary and secondary sources. In case of primary source a questionnaire has been filled up by the target customers and secondary data is collected through books and internet.

FINDINGS

By using various methods and sources in has been found out that data results are positive for the brand as there is considerable decrease in cigarette smokers and increase in users of E-cigarettes. In addition to this, financial data of WWT has also been analysed to judge the efficacy of strategies and marketing efforts taken to benefit the shareholders (Grant, 2003). Furthermore, results also shows as users are also becoming aware of the cons of tobacco products are replacing with E-cigarettes, which will reflect positively in business performance as well. This in turn is moving company towards a growth rate.

CONCLUSION

Therefore, at last from the following report it can be concluded that people have started knowing the drawbacks of tobacco products. In lieu of they have start consuming E-cigarette in order to reduce the use of various tobacco products.

Consultant

TASK 4 SOFTWARE GENERATED INFORMATION TO MAKE DECISIONS

4.1 Project plan for an activity and determine the critical path

Critical path is prepared from the list of activities given in the table. It is used to draw Gantt chart to help track the progress of the project on the basis of standards of time, cost and quality. A network diagram is also prepared to identify critical path which is assumes to be the longest path of the project. The critical path identified is of 12 weeks which can be modified at several levels to reduce the time frame. But it is also equally important to ensure that activities must be performed in accordance with each other and within the specified deadline (Hoaglin, 2003).

Table 5: List of activities

Task

Activity

Preceding Activity

Duration (weeks)

A

Replacement of windows in lounges

 

5

B

Process of rewiring

 

4

C

Re-plaster walls of the lounges

A

2

D

Fitting of lights in lounges

B

1

E

Decoration of bedrooms

B

5

F

Installation of plumbing

B

5

G

Decoration of lounges

C, D

4

H

Decoration of kitchens

F

3

I

Decoration of bathrooms

F

2

Critical path

2+5+8= 4+5+2 = 11 weeks

TASK 5 FINANCIAL TOOLS FOR DECISION MAKING

Play The Game plc is the manufacturer of sports equipment. The firm is planing to expand its business and has chosen two projects to start with. The two processes are automated which will require additional staff to execute the project activities. The firm has also calculated considerable savings achieved by the two projects. The data is provided in the table to generate results and assist with the selection of the suitable project.

Table 7: Investment projects

 

Fitz (in £)

Naushaba (in £)

Initial investment

-40000

-50000

Year 1

16000

17000

Year 2

16000

17000

Year 3

16000

17000

Year 4

12000

17000

6

  • Net Present Value -

Table 8: Calculation of NPV

Year

Fitz

Naushaba

Discount Factor

PV at 14% (Fitz)

PV at 14% (Naushaba)

1

16000

17000

0.88

14035.09

14912.28

2

16000

17000

0.77

12311.48

13080.95

3

16000

17000

0.68

10799.54

11474.52

4

12000

17000

0.59

7104.96

10065.37

Total present value

44251.08

49533.11

Outflow

40000

50000

Net present value

4251.08

-466.89

7

It is the most widely used method to select the best alternative based on present value of the earning to be achieved in future time. The advantage of this method is that it effectively takes into account time value of money while calculating profits generating in future time and discounting it in present time. Here, the given discount rate is 14% at which present value is calculated for Fitz and Naushaba. The sum total of earnings is calculated and outflow is subtracted from the total inflows of each of them separately. The results show that among the two project, Fitz will be able to provide positive earnings while Naushaba will turn into negative earnings. Based on this method, it is profitable to choose Fitz over Naushaba (Melé, 2010).

Internal Rate Of Return -

Table 9: Calculation of IRR

 

Fitz

Naushaba

Initial investment

-40000

-50000

Inflow of year 1

16000

17000

Inflow of year 2

16000

17000

Inflow of year 3

16000

17000

Inflow of year 4

12000

17000

IRR of projects

19.30%

13.54%

8

This is another method used to measure and compare profitability of projects. Also known as Discounted cash flow rate of return, the methods does not undertake external environmental factors for calculation. In this method, the net present value of cash flows is assumed to be zero. The required rate of return as expected by the organisation is 14% and calculation from the above table it shows that Fitz project will fulfil that effectively. It is because the rate of return of Fitz is 19.30% which is higher than Naushaba process and expected return of organisation (Internal rate of return, 2011).

  • Pay Back Period -

Table 10: Calculation of Payback period

 

Fitz

Naushaba

 

Cash Flow

Cumulative

Cash Flow

Cumulative

Investment

-40000

 

-50000

 

1

16000

-24000

17000

-33000

2

16000

-8000

17000

-16000

3

16000

8000

17000

1000

4

12000

20000

17000

18000

Payback Period

 

2.5

 

2.94

9

This method is used to measure the recovery of capital amount invested in the projects. The higher the time taken for recovery, the longer is the time for profits inflow. It can be seen in the table that Fitz will be able to recover capital in 2.5 years while Naushaba will took 2.9 years which is higher (Redman, 2014).

All the three calculation shows that Fitz will be the most profitable and appropriate project for Play The Game plc. All results are in favour of Fitz project as it has the earlier and highest return as compared with Naushaba project. Moreover, the negative net present value of Naushaba project doesn't make sense to select it for any reason. Thus it is recommended for organisation to chose Fitz project (Moyer, 2011).

CONCLUSION

It is thus concluded from the above report that business decision making must always be based on information from relevant sources and past business experiences to ensure success and avoid any potential risk associated with the projects. The above report conducts market research through data collection and analysis from various sources and techniques. Also, mixed methods are used for the purpose of comparison and effective measurement. Further, the report suggests that WWT will be able to continue its profit earning potential, given the rise in consumption of E-cigarettes and effective marketing efforts of brand. The case study of Play The Game plc recommends it with appropriate project section using various capital budgeting techniques.

REFERENCES

Books and Journals

Bechara, A. 2003. Risky business: emotion, decision-making, and addiction. Journal of Gambling Studies. 19(1). pp. 23-51.

Cavana, R., Delahaye, B. L., and Sekeran, U., 2001. Applied business research: Qualitative and quantitative methods. John Wiley & Sons Australia.

Desai, P., 2008. Ethnography for Marketers. Qualitative Market Research: An International Journal. 11(4). pp. 443 - 445.

Gedik, B., Liu, L. and Yu, P. S. 2007. ASAP: an adaptive sampling approach to data collection in sensor networks. Parallel and Distributed Systems, IEEE Transactions on. 18(12), 1766-1783.

Grant, J., 2003. Foundations of Economic Value Added. John Wiley & Sons.

Hoaglin, C. D., 2003. John W. Tukey and Data Analysis. Statistical Science. 18(3). pp. 311-318.

Kunc, H. M. and Morecroft, W. D. J., 2010. MANAGERIAL DECISION MAKING AND FIRM PERFORMANCE UNDER A RESOURCE-BASED PARADIGM. Strategic Management Journal. 31(11). pp. 1164-1182.

Melé, D., 2010. Practical wisdom in managerial decision making. Journal of Management Development. 29 (7/8). pp.637 - 645.

Moyer, R., 2011. Contemporary Financial Management. Cengage Learning.

Platt, M. L. and Huettel, S. A. 2008. Risky business: the neuroeconomics of decision making under uncertainty. Nature neuroscience. 11(4).pp. 398-403.

Tracy, A. J, 2009. How to Read a Financial Report: Wringing Vital Signs Out of the Numbers. John Wiley and Sons.

Online

Internal rate of return. 2011. [ONLINE]. Available through: <http://www.princeton.edu/~achaney/tmve/wiki100k/docs/Internal_rate_of_return.html> [Accessed on 23 February 2015].

Redman, B., 2014. What Are the Objectives of Capital Budgeting? [ONLINE]. Accessed Through: <http://www.ehow.com/info_10024169_objectives-capital-budgeting.html>. [Accessed on 23 February 2015].

Suttle, R., 2014. Key Costs and Benefits in Marketing Research. [ONLINE]. Accessed Through: <http://smallbusiness.chron.com/key-costs-benefits-marketing-research-26311.html>. [Accessed on 23 February 2015].

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