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Business Decision Making For Improving The Performance And Profitability

University: N/A

  • Unit No: N/A
  • Level: High school
  • Pages: 37 / Words 9293
  • Paper Type: Assignment
  • Course Code: N/A
  • Downloads: 37
Question :

This assessment will require to be answered with:

  • Elaboration of a variety of data and secondary and primary sources.
  • Techniques for analyzing data in business decision-making.
  • Organizational management and appropriate nature of working.
  • Explain the software-generated information.
Answer :
Organization Selected : Northern USA market

INTRODUCTION

Business decision making is related for making plan and strategies for improving the performance and profitability of the firm. Business decision making is important for improvement of various operations of the firm. Hayward Home- style will form part of this study which is involved in the business of bespoke kitchens for customers in Northern USA market. It employs over a thousand people in US. This company want to grow its business in new geographical market. This report will include a spreadsheet of descriptive statistics of the primary data collection which shows the information of customer , their age , income etc. Also , it will provide information about the customers in the target market. Furthermore, this report will give detailed explanation of the possible secondary sources of data. Moreover, it will prove analysis of payback and discounted payback.

TASK ONE

A) Producing a Spreadsheet of Descriptive Statistics For Showing

 

Customer ID

Age

Spend ($)

Annual Income ($)

Gender

A

17

1,602

12,500

F

B

22

2,691

15,900

M

C

29

1,456

37,000

M

D

19

2,530

27,500

F

E

25

897

31,000

M

F

16

98

12,000

F

G

29

1,753

41,000

M

H

20

2,365

16,250

M

I

33

2,118

32,000

M

J

21

825

17,500

F

K

29

1,817

34,000

F

L

35

1,538

48,000

F

M

18

1,435

15,000

M

N

16

37

600

F

O

26

1,892

28,500

M

P

41

1,539

56,000

F

Q

28

1,582

37,500

F

R

31

1,258

37,550

M

S

25

2,846

31,000

F

T

27

1,983

33,500

M

U

22

1,073

27,000

M

V

28

1,594

38,550

F

W

24

682

23,000

M

X

22

1,005

21,500

M

Y

35

1,396

46,500

F

Z

27

2,173

33,525

F

1. Mean Age And Spend, And The Standard Deviations Of Variables

 

Age

Spend ($)

Annual Income ($)

Gender

 

 

 

 

 

Mean

25.57692

1545.577

29014.42

1.5

Standard Error

1.241802

138.6627

2496.924

0.1

Median

25.5

1560.5

31000

1.5

Mode

22

#N/A

31000

2

Standard Deviation

6.33197

707.0438

12731.86

0.509902

Sample Variance

40.09385

499910.9

1.62E+08

0.26

Range

25

2809

55400

1

Minimum

16

37

600

1

Maximum

41

2846

56000

2

 

The above table consists of age, income earned, spend and gender elements. For computing this, male is given 1 and for female is 2.

Mean-

The mean is the central value of discrete set of numbers which is attained by incorporating formula of sum of values divided by number of values. It can be said that mean value attained in terms of age is 25.57 and spend is 1545.77 which states that people within age of 25 spent nearly 1545.77 in effective manner.

Median-

The median is taken as the mid value of the data set which is taken into account. It divides the data into equal halves such as upper half and lower half and as a result, mid value is attained in a better manner. It can be analysed that mid value of age comes to 25.5 and of spend comes to 1560.5 which divides age and spend in two equal halves in effective manner.

Mode-

It is another useful statistical method which takes into data set and carries out value that occurs most frequently in data. It provides clarity in large data as to which value occurs frequently helping to analyse data in the best manner possible. Mode of age is 22 highlights that customers of age 22 makes more purchases and spend is zero as no value is occurred more than once.

Standard Deviation-

Standard deviation is one of the important part in the statistics as it shows how much value is dispersed from mean. The standard deviation of age is 6.33 and of spend is 707.04 showing clearly that mean value will deviate in the future and firm will be able to attain profits in new market of Brazil.

2. Histograms of Age and Spend The Median Income and The Interquartile Range

Age-

Bin

Frequency

16

2

21

5

26

7

31

8

36

3

More

1

Spending-

Bin

Frequency

37

1

598.8

1

1160.6

5

1722.4

9

2284.2

6

More

4

 

Median Income-

The median income as listed in above statistics shows that age of 25.5 and of spend comes to 1560.5 and median annual income comes to 31000.

Interquartile Range

Quartile 1

21.25

1119.25

Quartile 2

25.5

1538.5

Quartile 3

29

1873.25

Interquartile Range

7.75

754

 

Trend Analysis

 

Spend ($)

Annual Income ($)

 

1602

12500

 

2691

15900

 

1456

37000

 

2530

27500

 

897

31000

 

98

12000

 

1753

41000

 

2365

16250

 

2118

32000

 

825

17500

 

1817

34000

 

1538

48000

 

1435

15000

 

37

600

 

1892

28500

 

1539

56000

 

1582

37500

 

1258

37550

 

2846

31000

 

1983

33500

 

1073

27000

 

1594

38550

 

682

23000

 

1005

21500

 

1396

46500

 

2173

33525

Spend

1

0.29

Total Income

0.29

1

The above trend analysis shows that firm will be able to attain profits in a better manner. This is evident from the annual income and raw data that annual income of people is increasing at a rapid rate. It implies that Hayward Home-style would easily attain good share in new geographical market of Brazil. Moreover, it will be able to satisfy people in effective manner by providing good range of bespoke kitchens leading to attainment of desired quantum of profits with ease.

3. Correlation Coefficient Between Total Income and Spend

Correlation Coefficient

The correlation coefficient is one of the important technique which is used for analysing whether relationship among variables under study exist or not. This means that value is obtained shows positive or negative correlation. Positive arises when value of correlation is more than 1 and if value is less than 1, then negative correlation exists. It can be interpreted that correlation between two variables such as spend and total income is 0.29 which comes within the range of -1 to +1, highlighting positive correlation.

B) Producing Short Presentation Entitled ‘Our Existing Customer' Having Graphical Representations

  The above table consists of age, income earned, spend and gender elements. For computing this, male is given 1 and for female is 2.

Mean-

The mean is the central value of discrete set of numbers which is attained by incorporating formula of sum of values divided by number of values. It can be said that mean value attained in terms of age is 25.57 and spend is 1545.77 which states that people within age of 25 spent nearly 1545.77 in effective manner.

Median-

The median is taken as the mid value of the data set which is taken into account. It divides the data into equal halves such as upper half and lower half and as a result, mid value is attained in a better manner. It can be analysed that mid value of age comes to 25.5 and of spend comes to 1560.5 which divides age and spend in two equal halves in effective manner. 

Mode-

It is another useful statistical method which takes into data set and carries out value that occurs most frequently in data. It provides clarity in large data as to which value occurs frequently helping to analyse data in the best manner possible. Mode of age is 22 highlights that customers of age 22 makes more purchases and spend is zero as no value is occurred more than once.

Standard Deviation-

Standard deviation is one of the important part in the statistics as it shows how much value is dispersed from mean. The standard deviation of age is 6.33 and of spend is 707.04 showing clearly that mean value will deviate in the future and firm will be able to attain profits in new market of Brazil.

The above trend analysis shows that firm will be able to attain profits in a better manner. This is evident from the annual income and raw data that annual income of people is increasing at a rapid rate. It implies that Hayward Home-style would easily attain good share in new geographical market of Brazil. Moreover, it will be able to satisfy people in effective manner by providing good range of bespoke kitchens leading to attainment of desired quantum of profits with ease.

The trend analysis is done for Spending and Annual income

Correlation Coefficient

- The correlation coefficient is one of the important technique which is used for analysing whether relationship among variables under study exist or not. This means that value is obtained shows positive or negative correlation. Positive arises when value of correlation is more than 1 and if value is less than 1, then negative correlation exists. It can be interpreted that correlation between two variables such as spend and total income is 0.29 which comes within the range of -1 to +1, highlighting positive correlation.

STRIP5

TASK TWO

A) Formal Plan For Conducting Robust Sample Of Potential Customers In New Market

The primary data is required to be gathered in order to attain transparency of the market for getting desired profits in hand. It can be analysed that Hayward Home-style is engaged in making bespoke kitchens and it is required that firm should take into account market research in effective manner (Wheelen and et.al., 2017). This is required so that Brazilian market could be analysed for testing feasibility in the best manner possible. Primary data is required to be conducted. This data means that first-hand data is to be selected from robust sample of potential customers in the new market. The customer's taste, preferences, location etc. can be seen for drafting plan for the data collection.

The proper planning is required for collecting information directly from respondents with the help of surveys from asking questionnaires to them so that firm may be able to attain efficiency in effective manner (What is Decision Making. 2018). Next step is that after making, data planning, it will be required that to collect desired sample of customers in order to attain clarity regarding target customer market. Thereafter, close-ended questions will be then asked to respondents on official website of Hayward Home-style and people will be asked to effectively fill out their preferences and feedback regarding customised kitchens being offered to them. This will provide complete information regarding data. Moreover, trends will be then made with reference to data attained in a better manner. Thus, this plan will be implemented regarding primary data.

B) Listing secondary sources of data

Secondary data is one of the important source for collecting information in effective manner. It can be said that secondary data is already collected data by researcher and can be served for assessing one for the company (Epstein, 2018). The secondary sources of data can be collected from the sources such as journals, books, government reports are provided with reference to the already generated reports which will serve as the information for the company in the best way possible. This will provide company with increased sources so that firm may be able to analyse resources in a better manner and outcome can be attained in effective manner. The external sources will be helpful in providing the company with proper market research and also will be able to accomplish profits in Brazilian market with ease.

C) Justifying Survey Methodology and Sampling Frame

Survey Methodology:

The survey is one of the crucial way for ascertaining information from the target audience quite effectually. This is required in order to collect quantitative information serving purpose of business with ease. Quantitative information is gathered from group of people, this process is termed as surveying. The researcher can collect data from respondents from variety of ways so as to attain results in the best way possible (Janssen, van der Voort and Wahyudi, 2017). It can be gathered from contacting respondents personally, telephonic interview or surveying through mail. These methods are time-consuming one and should be avoided by scholar as research will take longer time than it is expected.

In order to resolve the same, questionnaire is effective method which serve as the need of company and provide quick and fast results. It can be assessed that questionnaire is effective and can be serve which will be helpful in getting results. 20 respondents will be selected for surveying results in effective manner. Questionnaire will be send to their personal mail ids and relevant information will be achieved. Hence, survey methodology will be fruitful for Hayward Home-style for collecting data and then expand to Brazil.

Sampling Frame:

The sampling is required as it is the data which is collected by taking into account sample which is a representative of entire population. It can be said that sampling leads to save time, as otherwise, it leads to time-consuming mechanism and also it is not possible for gathering information from each and every source present in the population (Kumar and et.al., 2017). There are two sampling methods such as probabilistic and non-probabilistic. Researcher will use simple random sampling method by taking sample of 20 respondents which are customers so that firm may be able to attain clarity regarding the information in effective manner. On the other hand, questionnaire will be issued to respondents by which clarity may be attained regarding viability of the Brazilian market. This will be helpful for generating quantitative report in effective manner.

D) Drafting Questionnaire For Approval

Questionnaire

Name-

Demographic Profile-

Age-

Q 1. How often do you purchase goods from Hayward Home-style?

  • Monthly
  • Once in a week
  • Rarely

Q 2. Among these locations in Brazil, which one will be most convenient to you?

  • Rio de Janeiro
  • Sao Paulo
  • Salvador
  • Brasilia

Q 3. Do you find that bespoke kitchens offered to you are of good quality?

  • Excellent
  • Good
  • Normal
  • Poor

Q 4. Are you satisfied with the services provided by employees of Hayward Home-style?

  • Highly satisfied
  • Satisfied
  • Strongly dissatisfied
  • Dissatisfied

Q 5. Did you prefer the goods offered by Hayward Home-style to your friends?

  • Yes
  • No

Q 6. Do you like to provide any suggestions, kindly provide for improving services...........

 

Theme 1- Goods Are Monthly Purchased By Customers

 

Q 1. How often do you purchase goods from Hayward Home-style?

Frequency

Monthly

10

Once in a week

4

Rarely

6

Total

20

  

Interpretation-

It can be interpreted that goods are purchased by customers on monthly basis as major respondents have answered the same. While, 4 said once in a week and remaining 6 have said the make rare purchase.

Theme 2- Rio De Janeiro Is Preferred Location

Q 2. Among these locations in Brazil, which one will be most convenient to you?

Frequency

Rio de Janeiro

9

Sao Paulo

5

Salvador

3

Brasilia

3

  

Interpretation-

The above chart represents that Rio de Janeiro is most preferred by people to purchase. While, 5 said Sao Paulo and 3 answered in favour of Salvador. Remaining 3 said Brasilia. Thus, Rio de Janeiro should be chosen by Hayward Home-style for expansion in Brazil.

Theme 3: Bespoke Kitchens Offers Good Quality Products To The Customers

Particulars

Number of respondents

Excellent

6

Good

5

Normal

4

Poor

3

Total

20

 

Theme 4: Customers Are Satisfied With The Services Provided By Employees Of Hayward Home-Style

Particulars

Number of respondents

Highly satisfied

7

Satisfied

8

Strongly dissatisfied

3

Dissatisfied

2

Total

20

 

Theme 5: Respondents Prefer To Recommend Goods Offered By Hayward Home-Style To Their Friends

Particulars

Number of respondents

Yes

15

No

`

Total

20

  

TASK THREE

A) Making Analysis Of Payback And Discounted Payback

 

Year

Cash inflow ($,000)

Cash outflow ($,000)

Net cash inflows ($,000)

Discounting factor @ 9 %

 

0

0

1000

-1000

0

0

1

700

250

450

0.917

412.84

2

600

250

350

0.842

294.59

3

650

300

350

0.772

270.26

4

700

300

400

0.708

283.37

5

800

350

450

0.650

292.47

 

 

 

 

 

1553.54

 

 

 

 

Initial investment

1000.00

 

 

 

 

NPV

553.54

 

Year

Cash inflow ($,000)

Cash outflow ($,000)

Net cash inflows ($,000)

Discounting factor @ 9 %

 

Cumulative Discounted Cash Flow (DCF)

0

0

1000

-1000

0.000

0

1000

1

700

250

450

0.917

412.84

1412.84

2

600

250

350

0.842

294.59

1707.43

3

650

300

350

0.772

270.26

1977.70

4

700

300

400

0.708

283.37

2261.07

5

800

350

450

0.650

292.47

2553.54

 

Discounted payback period

= 1 + 294.59 / 1412.84

= 1.20 years

The discounted payback period has been calculated which is showing how much amount of time will be taken to recoup investment in the best manner possible. It is required that payback period should be lower as it makes its feasible for company in attaining desired rate of return on the investment made in the project in effective manner (Chisholm, 2017). Lower the period, better for the company in gaining returns in desired manner. It can be analysed that discounted cash flows are analysed and then on this basis, each cash flow is discounted to show the amount of time investment will be recoup in near future. This shows when amount will be recovered so that operational activities of Hayward Home-style may be enhanced in a better manner and no shortcomings are observed quite effectually.

More accurate picture of investment can be gathered so that firm may take decision whether to invest in project or not. This provides clarity regarding the feasibility of project in a better manner. It can be evaluated from above calculation that discounted payback period comes to 1.20 years which implies that amount of initial investment will be made available to company within the shortest possible time which is within 1 year 2 months. This means that company will be able to attain desired amount of return on investment in short duration quite effectually (Lovan, Murray and Shaffer, 2017).

B) Analysis Of Net Present Value And Its Superiority Over Payback Analysis

NPV is another useful capital budgeting technique which is used to determine whether project will be viable or not in the future. This means that cash flows i.e. cash inflows and cash outflows are differentiated to provide clarity regarding return on investment. This provides company that how much project is profitable to invest in and can generate results. The payback period as discussed provide result that how much time will be needed in order to accomplish desired return on investment. However, it does not provide fact that project will be profitable or not. This fact is effectively taken into account by NPV which shows that money should be invested in the project or not and as a result, profitability can be effectively accomplished with the help of NPV as it is useful technique.

Another superiority of NPV over payback analysis is that NPV takes into account time value money concept. This concept states that amount earned today will be more effective rather than same amount recovered in several years as value of money decreases over the time. This means that concept of time value is effectively complied in NPV which offers clear results as to whether project seems to be commercially viable or not. This implies that payback suffers from such disadvantages and as a result, it is overcome by applying technique of NPV by company to check its commercial viability in the best manner possible (Beach and Lipshitz, 2017). On the other hand, inflation is another important aspect which should be taken into consideration by company before investing money into project. The payback period does not change in inflation while calculating period in which amount will be recovered without any difficulties. This factor is also taken by NPV. On the other side, risk of investment is used to be ascertain so that in risky project, investment could be avoided. This is taken into account by NPV and as a result, it can be said that NPV is much superior in comparison to payback period.

C) Decision-Making Based On Financial Criteria

The capital investment decision-making should be taken by considering all factors so that riskiness may be avoided up to a high extent. It can be said that NPV has been calculated showing that with an initial investment of 1000, Hayward Home-style can effectively attain 553.54 return on investment as NPV is calculated so. This means that by taking into account NPV, it can be conveyed that project should be accepted as it seems to be commercially viable and profits will be attained by investing money in the project (Wang and Byrd, 2017). On the other hand, payback period has been calculated as well which shows that within below hurdle rate of 4 years, investment will be recovered within 1.20 years of time span. This shows that project should be accepted and firm will be able to accomplish desired objectives in Brazil.

D) Preparation Of Gantt Chart For Completing Project On Time

Task Name

Duration

Start

Finish

Predecessors

Reviewing the Market

64 days

Fri 12/7/18

Wed 3/6/19

 

Carrying out market research

40 days

Fri 12/7/18

Thu 1/31/19

 

Updating the logistics

30 days

Thu 3/7/19

Wed 4/17/19

1

Identifying Retail Partners

40 days

Thu 3/7/19

Wed 5/1/19

1,2

Updating logistics processes

50 days

Fri 12/7/18

Thu 2/14/19

 

Formalizing business contracts with Retail Partners

60 days

Thu 4/18/19

Wed 7/10/19

1,2,3

Production of holding stock

30 days

Thu 7/11/19

Wed 8/21/19

1,2,3,4,5,6

Beginning operations

20 days

Thu 8/22/19

Wed 9/18/19

1,2,3,4,5,6,7

 

Also Read:  Managing and Running a Small Business on Rowlinson Knitwear

CONCLUSION

Hereby it can be concluded that decision-making in business is one of significant decision which should be taken by considering all implied factors in effective manner. Hayward Home-style should expand to Brazil as it shows that from statistical methods applied reflects that company will be able to attain good growth by offering bespoke kitchens. Furthermore, capital investment techniques such as NPV and discounted payback period shows that firm will accomplish investment in short time period. This shows that the company will be able to attain profits with ease. 

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