Business Decision Making

BUSINESS DECISION MAKING

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TABLE OF CONTENTS INTRODUCTION..........................................................................................................................1 TASK 1...........................................................................................................................................2 1.1 1.1 1.1 1.2 1.2 1.2 1.2 1.3 TASK

Background..................................................................................................................... 2 Rationale.......................................................................................................................... 3 Objectives of the research........................................................................................ 3 Methodology................................................................................................................... 4 Data Analysis..................................................................................................................5 Time Frame..................................................................................................................... 6 Budget section............................................................................................................... 7 Questionnaire................................................................................................................. 8 2........................................................................................................................................ 11

2.1 & 2.2 Mean, Mode and Median..............................................................................11 2.3 Range and Standard Deviation............................................................................. 15 2.4 25th Percentile (Lower 25th Percentile (Lower Quartile) and 75th Percentile (Upper Quartile) and use of Percentile................................................. 17 TASK 3........................................................................................................................................ 21 3.1 & 4.1 Produce line graph.........................................................................................21 Scatter Plot on Advertising costs and sales.............................................................25 3.2 & 4.1 Trend Lines....................................................................................................... 27 3.3 Business presentation.............................................................................................. 29 3.4 Formal Business Report........................................................................................... 29 TASK 4........................................................................................................................................ 32 4.2 Prepare a network diagram for activities using Microsoft Project........... 32 Calculate Project Duration..............................................................................................32 Clearly mark the Critical Path....................................................................................... 33 Prepare a Gantt chart and state the benefits of using it as a Project Management Tool.............................................................................................................. 34 TASK 4 B.................................................................................................................................... 36 4.3 Calculation of Net present value and internal rate of return.................... 36 Recommendations.............................................................................................................41 CONCLUSION............................................................................................................................42 REFERENCE...............................................................................................................................43

INTRODUCTION In the present business environment, every business entity determines various strategies in order to take different management decisions with an appropriate manner. The is because an efficient decision-making process ensures the success of organization. By taking different strategic decisions with

an

appropriate

manner,

management

can

improve

operational

capabilities and efficiency of business entity with reference to short and long term business goals (Hofmann, 2007). In this process, management examines several factors that are having direct impact on outcomes of business decisions. It also supports management for selection of best alternative from various options as per the distinct business requirement.

The present report is carried out detail evaluation of different case studies and business scenarios and develops appropriate strategies to generate appropriate outcomes. In this process, wide range of statistical tools and techniques are applied for evaluation of distinct kind of data in order to take appropriate decisions. In the context present study, this report also uses different investment appraisal tactics through which an organization is able to select best investment alternative for business expansion that would increase profitability of company and reduces risk related to investment.

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TASK 1 1.1 Background As per the given, it is found that Government of UK is planning to initiate a Crossrail Project through which the public authority of UK will be able to enhance the local transport connectivity within London. This project will increase transportation facilities so as citizen would get quick and high speed mode of transportation. The primary objective of this project is to offer city transport facilities to more than 1.5 million. Furthermore, this project provides significant support to public authorities in the form of employment, leisure and other business operation. As per the case study, it is addressed that the first cross-rail will be started from central London in late 2018 and will carry more 200 million passenger annually. Furthermore, it will reduce the journey time across London with the help of a high speed and affordable mode of transportation.

The project cross-rail will be beneficial of public

authorities and local citizen because it will transform the rail transportation and increase the capacity of public transport by 10%. Therefore, it can be stated that success of the project is greatly depending on its timely completion so as government authorities have to develop various strategies and need to take appropriate management decision in order to keep the project on the right track.

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1.1 Rationale The primary objective this project is to enhance transportation services to local citizen along with external so as people would get comfortable and quick transportation facilities. In addition to that this project will be found very effective in minimizing the road traffic through pollution level can be controlled. It ensures safety of environment by lowering pollution level (Lucey, 2005). Furthermore, the investigator is focusing on assessment of the benefits of Crossrail project for the local community along with external visitor. Therefore, the present investigation is carried out to evaluate several factors of cross-rail project that assists researcher in facilitation of appropriate and detail information about the benefits of the project of government officials and managers of public authorities.

1.1 Objectives of the research The primary objective of the present research is examining positive aspect of the Cross Rail project for the local community of London. In addition to that the present research is scheduled to evaluate the budget and time frame associated with cross-rail project. The three main objective of the present investigation are mentioned below: To assess the positive outcomes of the project that would be assessed by general public.

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To identify whether this project will provide significant benefits to economy of London.

To evaluate the role of cross-rail project in completion of future transportation requirement.

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help@assignmentdesk.co.uk 1.2 Methodology With reference to present given scenario, investigator requires to assess wide range of information to generate appropriate and accurate outcomes therefore researcher is applying both primary and secondary information associated with the Crossrail project that would assist public Toll Free No. +44 203 8681 670 Assignment desk provides assignment help from professional UK writers.

authority in order to take appropriate business decisions for attainment project goals. In this context, researcher has selected the random sampling approach for selection of best sample through investigator would assess appropriate information for public authorities (Hacklin and Wallnรถfer, 2012).

For collection of first hand information, a sample of 50 local citizens will be taken by researcher who will be affected from cross-rail project. Firstly, qualitative techniques researcher will be found very effective to enhance the understanding about the perception of local people towards particular project that would helps researcher for generating appropriate research outcomes as per the aim of present research. Along with this, using quantitative techniques will be found very effective in evaluation of different statistics along with numerical data (Nicholson and Aman, 2012). In primary section, people of London will be provided questionnaire for assessment of the perception of people about the project of cross-rail through which public authorities are able to take appropriate decision associated with the project.

1.2 Data Analysis In the present study, researcher will apply distinct tools for evaluation of data that have been gained from distinct sources. In this context, thematic and statistical approaches will be considered by researcher. However, thematic analysis will provide significant assistance in evaluation of the Toll Free No. +44 203 8681 670 Assignment desk provides assignment help from professional UK writers.

subjective or qualitative that will be acquired in the form of primary data or through questionnaire (Wallnรถfer and Hacklin, 2012). On the other hand, statistical approach will help investigation in order to interpret the numerical information associated with budget and cost of project along with its benefits to public authorities 1.2 Time Frame Activities/

duration 2

4

6

8

10

12

14

16

in week Analysing

the

situations Determination

of

objectives Selection

of

an

appropriate Methodology Collecting

qualitative

and quantitative data Evaluation of data

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Development of formal to report

to

present

data Estimation

of

the

budgets Assessment of whole project and implement improvement.

1.2 Budget section It is considered as most important aspect of particular. The budget section is determined the total expense that should be managed by researcher for carrying out the research on Crossrail Project. However, the estimated cost of whole research is £2000 in which researcher will be able manage different operations of investigation.

Expenses

Amount

Assessment of secondary data

£500

Research collection from Primary

£600

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data Stationary costs and research

£700

software cost Fuel Cost

£120

Miscellaneous expenditure

£80

Total

£2000

1.3 Questionnaire For collection of primary data, researcher develops a questionnaire in order to assess the perception of local people of community. The questionnaire for present investigation is mentioned below: Name: 1: Gender Male Female 2: Age Group :

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16-20 years 21-25 years 26-30 years 31-35 years 35 and above 3: Do you have knowledge about the upcoming “Crossrail� project of the government of UK? Yes No 4: According to you what is the most important benefit that would you assess from cross rail project?

Enhancing travel experience Increase in connectivity of the public transportation New experience of travelling around the capital Reduction in load on existing transportation system Toll Free No. +44 203 8681 670 Assignment desk provides assignment help from professional UK writers.

5: Do you think, Crossrail project would develop new opportunities for employment?

Yes No 6: Do you agree that Crossrail will be found as important milestone of economic growth in the London?

Strongly Agree Agree Neutral Disagree Strongly Disagree 7: Would you like to you use different services of Crossrail Project?

Yes No 8: Do you think that Crossrail project will change the era the city of

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transportation?

Yes No 9: Will cross-rail project reduce the pollution by lowering traffic?

Yes No Maybe

TASK 2 2.1 & 2.2 Mean, Mode and Median Table 1: Descriptive Analysis No. of Amount

Customers

Mid-value

Spent (ÂŁ)

(f)

(x)

Cumulative Fx

Frequency (CF)

10-20

20

15

300

20

20-30

22

25

550

42

30-40

20

35

700

62

40-50

14

45

630

76

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50-60

16

55

880

92

60-70

10

65

650

102

70-80

8

75

600

110

80-90

6

85

510

116

90-100

4

95

380

120

120

5200

By using above descriptive analysis, store manager is able to take appropriate decision regarding store promotion with the help of various elements that play significant role in decision making process.

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Mean: This approach examines the sum of all numeric information which has been collected from different sources as per the different business requirement. In the present study, the mean value is used to examine the number of customers and their actual spending of cloths (Weygandt, Kimmel and Kieso, 2009). This information will support owner of the Carmen clothing shop for taking wide range of business decision associated with the promotion and advertisement through which profitability and sales of shop will be increased.

Mean = Total of Fx/ Total of number of customers = 5200/120= 43.33

Mode: It is determined that number that consists maximum frequency while collection of different kind of data. In the present research, it has been found that maximum number of customers is spending between £20 & £30 on clothes. This is because customer spending between £20 & £30 has recorded highest frequency of 22 customers. Therefore, calculation of mode of present study is carried out below:

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Mode = Lmo + (Δ1/ Δ1 + Δ2) * i = 20 + (22-20) / (22-20) + (22-20)* 10= 25

Median: It is addressed as most important statistical time that determines the middle value of the collected information (Platt and Huettel, 2008). The calculation of median for the present research is carried out below: Median = Lower limit + (60- CF of Previous Class Interval) /Frequency * Class interval = 30 + (60-42)/20*10 = 30+18/20 *10 = 30+9 = 39

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2.3 Range and Standard Deviation Table 2: Measure of Dispersion No.

of

Amount Spent customers

Mid-

(ÂŁ)

(F)

value(X)

X^2

Fx^2

Fx

10-20

20

15

225

4500

300

20-30

22

25

625

13750 550

30-40

20

35

1225

24500 700

40-50

14

45

2025

28350 630

50-60

16

55

3025

48400 880

60-70

10

65

4225

42250 650

70-80

8

75

5625

45000 600

80-90

6

85

7225

43350 510

90-100

4

95

9025

36100 380 28620

120

495

33225

0

5200

Measurement of dispersion is termed as systematic process in very effective tool of data evaluation through which researcher examine how wide spread the set of given data is in the defined variables. The process provides Toll Free No. +44 203 8681 670 Assignment desk provides assignment help from professional UK writers.

significant support in evaluation of various facts and figures so as management is able take different business decision as per the distinct business requirement (Black, 2011). There are three major elements that are evaluated in measurement of dispersion that include Standard deviation, Range and variance. The evaluation of these factors is carried out below: Standard Deviation: The term standard deviation provides significant assistance to researcher in order to assess the variation between given set of information or among various variables (Kimmel, Weygandt and Kieso, 2010). In the context of present investigation, standard deviation helps owner of Carmen clothing shop for taking appropriate decisions related to pricing of different product by checking whether pricing stick below 40 price range or increase it above 40.

Variance = s2 = ∑Fx2 – ((∑Fx)2 /n)/ n – 1 Variance = 511.48 Standard Deviation = S= √s2 Standard Deviation = 22.61

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Range: In the decision making process, range assists researcher in computing the different between highest value and lowest value from the information which have been collected from different sources (Saaty,

2008).

It

also

provides

significant

support

in

different

management decisions.

Range = (100-(10/ (20+1))-(10/ (4+1))) Range = 97.52

2.4 25th Percentile (Lower 25th Percentile (Lower Quartile) and 75th Percentile (Upper Quartile) and use of Percentile Quartile: In general, quartile is addressed as most important statistical approach which is applied in different management decision. It generates appropriate data by dividing set of numbers into four different quarters as per the requirement of study which are denoted with: Q1, Q2, Q3, and Q4. The first quartile (Q1) determines the data in the form of middle number which is occurred between smallest number and the median of the predetermined set of data (Dew, Read, Sarasvathy and Wiltbank, 2009). On the other hand, Toll Free No. +44 203 8681 670 Assignment desk provides assignment help from professional UK writers.

second quartile (Q2) is determined median of the data. In addition to that the third quartile (Q3) present the middle number which is occurred between highest number and the median of particular set of data associated with a certain investigation.

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help@assignmentdesk.co.uk Percentile: This statistical measure provides significant assistance to a decision taker by defining the value which falls under a below with reference to a particular set of percentage. For instance: 25th percentile determines 25 portion of particular set of data.

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Lower quartile/25th percentile

24.5

Upper quartile/75th percentile

58.8

Interquartile range: In general, inter-quartile range is used as a measure of variability which is derived with reference to certain data that is divided into four different quarters. In other words, this term determine the variation between upper quartile and lower quartile. It plays important in decision making process within an organization.

Interquartile range

34.2

2.4 Calculating the correlation coefficient as per the additional information provided and discuss it advantages to a business Sales (Units)

Discounts (%)

20

1

40

4

50

6

55

6

60

10 Toll Free No. +44 203 8681 670

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70

12

80

13

90

14

100

15

The correlation coefficient of sales and discount are given below: Table 3: Correlation and Coefficient Particular

Sales (Units)

Discounts (%)

Sales (Units)

1

0.97

Discounts (%)

0.97

1

With reference to the formula R2 =0.97 As per the above calculation of the correlation coefficient, there is prefect correlation addressed between the sales and discounts variable.

Therefore, it can be stated that if the sales of units is increased then discount rates are also increased in similar way and vice-verse. The value

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coefficient of correlation is 0.97 that indicates that change in number of sales units significantly influences rate of discount.

TASK 3 3.1 & 4.1 Produce line graph As per the present case, the Managing Director of Clothing Company is acquiring clothes from different countries in order to meet requirement of consumers with an appropriate manner. By satisfying client’s needs with different kinds of clothes, company has gained loyalty of consumers In regard to this, data of last 10 years associated with sales and advertising costs has evaluated to examine the growth in sales with reference to advertisement expenditure.

Line graph:

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Illustration 1: Line graph

Pie Chart:

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Net income generated by 5 branches of company 130 240

140

180

London Manchester Edinburgh Cardif Liverpool

160

Illustration 2: Net Income Generated by 5 Branches of the company in 2015 Bar Chart:

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Net income generated by 5 branches of company 300 250

240

200

180 160 140

150

130

Column B

100 50 0 London

Manchester

Edinburgh

Cardif

Liverpool

Illustration 3: Bar Graph of Net Income Generated by 5 Branches of the company in 2015 Advertising Costs and Sales Data of 2002 – 2015:

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Illustration 4: Advertising and Sales data 2000-2013

Scatter Plot on Advertising costs and sales

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Illustration 5: Scatter Plot on Advertising costs and sales

As per the above charts and diagram, it is evaluated that the sales performance of Clothing Company is showing positive trends and generating attractive outcomes. There has been several factor identified that have played important role in the success and growth of business. It includes change in lifestyle of people, market trends and business environment that are considered as key drivers of increased demand of the imported products Toll Free No. +44 203 8681 670 Assignment desk provides assignment help from professional UK writers.

and services so as company acquires wide range of clothing products from all over the world that leads positive impact on the sales and business performance

of

clothing

company

(Hacklin

and

Wallnรถfer,

2012).

Furthermore, it has found that advancement in marketing prospects along with the application of different kind of promotional tools have increased the advertising related expenditures of business entity. In addition to that the use of social media along with application of latest tools of digital advertising has influenced management of clothing company for investing the huge amount of funds in marketing. This approach assists business entity to attract large number of audience that has led positive impact on the sales of organization and increases marketing related expenditure.

3.2 & 4.1 Trend Lines Trend lines of Advertising costs:

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Illustration 6: Advertising costs

Trend line of Sales

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Illustration 7: Sales 3.3 Business presentation Enclosed in PPT. 3.4 Formal Business Report To, The Board of Directors of Clothing Company Date: 7th January 2015 Toll Free No. +44 203 8681 670 Assignment desk provides assignment help from professional UK writers.

Subject: Information associated with last 10 years sales performance of the firm INTRODUCTION Clothing Company is making efforts to expand business associated with imported clothing products that are greatly attracting to people of UK and generating the demand of for company. In the process, management requires to take appropriate decision for business expansion. Therefore, this report carries out detail evaluation of sales data of the 5 different branches of clothing company. In addition to that evaluation of last 10 year is carried out with the help of different graphs and charts.

METHODOLOGY For carrying out the present study with an appropriate manner, investigator has applied investigator is

able

to

graphical presentation approach through which present

the

information

related

to

sales

performance with a systematic manner so as reader or evaluator of data can easily access the information that have been presented in chart and bar diagram. Along with this, trend lines are also created to predict the advertising cost and overall sales with in next five years that assists managers for taking appropriate business decisions as per the long term goals of company.

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FINDINGS As per the graphical presentation of sales and advertisement cost data, it has been found that sales performance of clothing company is growing with an content rate due to high demand for imported clothing products among consumers of UK. With reference to pie chart, it has addressed that the London branch is termed as a most profitable branch because it is generating highest net income for the company. In addition to that Manchester branch of Clothing company is also earning good profit with the help of high sales volume. However, the assessment of the trend lines has determined that the sales performance of other branches such as Liverpool and Cardiff is also improving coming years because trend lines are showing positive trends.

CONCLUSION As per the above assessment, it can be stated that management of company needs to develop various strategic plans and business strategies in order to grab new business opportunities that would occur in near future.

Apart from that, company is recommended to apply different kinds of Toll Free No. +44 203 8681 670 Assignment desk provides assignment help from professional UK writers.

marketing tools and creative marketing tactics to increase aware of different clothing products among target consumers that would increase sales of business entity.

TASK 4 4.2 Prepare a network diagram for activities using Microsoft Project

Illustration 8: Network Diagram

Calculate Project Duration Critical Path: 1+2+4+5+6+7+11+12 Critical Path duration: 4+3+10+4+6+9+12+20 = 72 days Toll Free No. +44 203 8681 670 Assignment desk provides assignment help from professional UK writers.

Clearly mark the Critical Path Duratio

Task Name

Start

Finish

07/01/16

12/01/16

3 days

13/01/16

15/01/16

15 days

13/01/16

02/02/16

10 days

18/01/16

29/01/16

4 days

01/02/16

04/02/16

6 days

05/02/16

04/02/16

9 days

15/02/16

25/02/16

2 days

13/02/16

04/02/16

10 days

18/01/16

29/01/16

9 days

01/02/16

11/02/16

12 days

26/02/16

14/03/16

n

Physical preparation 4 days Organisational planning Personal selection Equipment installation Personnel training Detailed

system

designing File conversion Establishment standards Program preparation Program testing Finishing Documentation

of

Predecesso rs A A B D E F C B D G, H, I, J

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Follow Up

20 days

15/03/16

11/04/16

K

Prepare a Gantt chart and state the benefits of using it as a Project Management Tool

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Illustration 9: Gantt chart

Benefits of Project management tools: The application of the project management tool has provided significant assistance to a project manager in the form of delegation the tasks and responsibilities with an appropriate manner, scheduling of different activities of the project, tracks the report of projects, ensuring the quality of Toll Free No. +44 203 8681 670 Assignment desk provides assignment help from professional UK writers.

project outcomes, time management and etc (Albright, Winston and Zappe, 2010). This increases the reliability and validity of the project.

TASK 4 B 4.3 Calculation of Net present value and internal rate of return In the contemporary business environment, every organization has to take different management and investment decisions so as management uses of kinds of investment appraisal approaches. It is a method which is used for analyzing the validity and suitability of an investment proposal (Milkman, Chugh and Bazerman, 2012). It supports management in evaluation of risk and return on investment. There are several techniques of appraisals used by different companies such as NPV and IRR.

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Net Present Value: NPV is termed as a most effective and quick tool for evaluating the reliability and feasibility of different investment proposal through which management is able to select best alternative. In this process value of future cash inflow is evaluated with reference to certain discount factor (Martin, 2015). This tool plays important role in evaluation of time value of money through which management is able to select most profitable proposal for company. Furthermore, higher value of NPV determines that particular project is good for the investment.

Initial Investment: ÂŁ200000 in both the Projects Project A @ 10%: Table 4: Project A @ 10% Project A Year

Cash flows

PV factor @10%

Amount

1

55000

0.909

49995

2

67000

0.826

55342

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3

72000

0.751

54072

4

80000

0.683

54640

5

90000

0.621

55890

Total

269939

Less: Initial Investment

200000

NPV

69939

Project A @ 20%: Table 5: Project A @ 20% Project A Year

Cash flows

PV factor @20%

Amount

1

55000

0.833

45815

2

67000

0.694

46498

3

72000

0.579

41688

4

80000

0.482

38560

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5

90000

0.402

36180

Total

208741

Less: Initial Investment

200000

NPV

8741

Project B @ 10%: Table 6: Project B @ 10% Project B Year

Cash flows

PV factor @10%

Amount

1

42000

0.909

38178

2

75000

0.826

61950

3

82000

0.751

61582

4

63000

0.683

43029

5

35000

0.621

21735

Total

226474

Less: Initial Investment

200000

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NPV

26474

Project B @ 20%: Table 7: Project B @ 20% Project B Year

Cash flows

PV factor @ 20%

Amount

1

42000

0.833

34986

2

75000

0.694

52050

3

82000

0.579

47478

4

63000

0.482

30366

5

35000

0.402

14070

Total

178950

Less: Initial Investment

200000

NPV

-21050

Internal rate of return:

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The approach has found very effective in order to check the feasibility of an investment proposal. It also evaluates the time value of money so as managers within particular organization can generate good return from particular investment proposal (Albright, Winston and Zappe, 2010). In this process, IRR has found very effective in evaluation of the potential profit of the investment in terms of percentage. Following is computation of IRR for the present projects: Internal

rate

return

of = lower discount rate + NPV at lower discount rate/ NPV at lower rate - NPV at higher rate* (Higher discount rate – discount rate)

Project A

= 0.10+69939/ (69939-8741)*(0.20-0.10) = 21.42%

Project B

= 0.10 + 26474/ (26474-(-21050) * (0.20-0.10) = 15.57%

Recommendations By considering the above computation of investment appraisal techniques, researcher has been found that Project A is beneficial for Toll Free No. +44 203 8681 670 Assignment desk provides assignment help from professional UK writers.

company. This is because NPV of project A is 69939 which are higher than the Project B that is 26474. Therefore, on the basis of 10% discount factor management should have to invest in Project A. This is because the Project A is generating more returns. In addition to that the internal rate of return is of Project A is also higher as compared to NPV of the project B. Thus, it is suggested to business entity needs to invest funds in the Project A for generating greater returns. It will increase profitability of business and provides good returns to firm.

CONCLUSION As per the above evaluation, it can be concluded that business decision making is identified as a most crucial aspect of business management which is having significant impact on the growth and profitability of business entity. This study has found that an organization can increase effectiveness of business decisions with the help of various statistical tools associated with descriptive statistics through management is able to evaluate different aspect and data such as sales performance and cost of different operations. This report has found that profitability of business entity during investment decisions is greatly influenced by management

decisions

associated

with

selection

of

an

appropriate

investment appraisal tactics such as NPV and IRR. Toll Free No. +44 203 8681 670 Assignment desk provides assignment help from professional UK writers.

REFERENCE ● Albright, S.C.W.C., Winston, W. and Zappe, C., 2010. Data analysis and decision making. Cengage Learning. ● Black, K., 2011. Business statistics: for contemporary decision making.

John Wiley & Sons. ● Dew, N., Read, S., Sarasvathy, S.D. and Wiltbank, R., 2009. Effectual versus predictive logics in entrepreneurial decision-making: Differences between experts and novices. Journal of business venturing. ● Hacklin, F. and Wallnöfer, M., 2012. Management Decision .The business model in the practice of strategic decision making: insights from a case study. ● Hacklin, F. and Wallnöfer, M., 2012. The business model in the practice of strategic decision making: insights from a case study. Management Decision.

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