Unit 6 Assignment on Business Decision Making

Unit 6 Assignment on Business Decision Making

Introduction

Business decision making refers to as the process which includes evaluation of various methods, techniques and processes which generate useful and relevant results to draw conclusions for making decisions in context of business. Business decision making assignment includes research about the customer attitudes, preferences, choices and perception about the tour products, recent trends in the tourism industry and other related information to assist the outbound tour company in making decisions about the business problem which relates to the development and launching of new tor product r package in accordance with the customer needs and requirements. He plan for the collection of primary and secondary data, survey methodology and sampling frame and questionnaire are included to be used for the survey. The responses are summarised and evaluated to draw useful conclusions for decision making. The information is presented through charts, graphs and presentation and business report. Also the feasibility analysis of the project along with project plan ad critical path is included.

Task 1

A. Plan for data collection

The data that will be required to be collected from the survey for the decision making process of outbound tour company to launch a new tour product will include facts about the consumer profiles, opinion, attitude, preferences and buying behaviour of customers with regards to the tour products, details about the products of competitors and other related data. The primary and secondary sources that will be used for the collection of both qualitative and quantitative data will be as follows:

• Primary data–It is the data which specifically relates to a particular subject matter and is collect particularly for the research first time. It is the first hand data (Weygandt, 20150. The primary sources are used for the collection of primary data which are those sources which involve direct interaction with the target population to gather the responses from them to evaluate and analyse the information. The methods of data collection from primary sources include questionnaires, interviews, focus group, enquiries, observations etc. Under these methods the data is collected through direct interaction. For the collection of primary data for the survey about the tour products, the primary sources will include the target population comprising of present and past customers of the company as well as other tour companies belonging to different age and income groups and also located at different places.
• Secondary data–This is the second hand data which has already been collected by the researchers for some other purpose but relates to the subject matter of the research and thus can be used for the research. It is the published data and is found in published form only. The sources for collection of secondary data include reports, publications, journals, magazines, websites, internet sources and other sources of procuring published data. The secondary sources that will be used for the collection of secondary data including facts, figures, tables, charts, graphs trends etc. will include the annual reports of company as well as competitors, official statistics website, tour companies’ websites, magazines, and other publications.

B. Survey methodology and sampling frame and strategy

• Survey methodology– The method used for conducting the survey including collection of data and its analysis and evaluation to draw useful conclusions id known as the survey methodology. The survey methodology for collection of primary and secondary data about the proposed tour product of the company will include distributing questionnaires to the present and past customers of the company as well as its competitors. These questionnaires will be sent either on mails or personally and the responses received from them will be collected and summarised. The interviews will also be conducted from such persons and the responses will be noted down for evaluation. Apart from this the data will be extracted from the website of company and other tour operators and national official statistics website about the trends in the  travel and tourism sector  (Hassine, 2016).
• Sampling Frame– The sampling frame will include customers of the company and other tour companies with different profiles. The sampling frame will include population belonging to different age groups and income groups. The local residents of the country as well as visitors and tourists will also be included. Theseare either present customers of the company or past customers of the company or other people related to the customers of the company. Sampling method is used to draw sample from a group or a population where the sample represents the nature, characteristics and features of the population 9san, 2013). Thus for obtaining the sample from the target population simple random sampling method will be used under which locusassignments.will be selected on the random basis from the population. In this way out of the sampling frame will be around 80% of the target population out of which locusassignments.of 100 respondents will be selected on random basis.

C. Questionnaire to carry out the survey

1. Select your gender.

• Male
• Female

2. Select your income range

• £0 - £10,000
• £10,000 - £25,000
• £25,000 – 50,000
• £50,000 - £100,000
• Above £100,000

3. How often do you go on trips in a year?

• Once in a year
• 2-3 times
• 4-6 times
• Every month
• Never

4. How much do you spend on tour?

• Up to £ 25,000
• £25,000 - £50,000
• £50,000 - £80,000
• £80,000 - £100,000
• More than £100,000

5. Which type of tours do you prefer the most?

• Domestic
• International
• Any of the two
• Both of the two

6. Which of the following factors do you consider the most while selecting a tour product?

• Price of the product
• Quality of services
• Accommodation and meals
• Transportation facility
• Location

7. “The Outbound Tour Company provides high quality tour packages with best services and leisure at affordable prices”. Do you agree?

• Agree
• Highly agree
• Disagree
• Highly disagree
• Neutral

8. Are you satisfied with the existing tour products offered by the tour operators and companies in London?

• Satisfied
• Highly satisfied
• Unsatisfied
• Highly unsatisfied
• Neutral

9. The Outbound tour company is planning to develop and launch a new tor product. Are you willing to purchase the new tour product?

• Yes
• No
• Never
• Always

10.Rate the tour products and packages of The Outbound Tor Company on the scale of 5.

• 1
• 2
• 3
• 4
• 5

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Task 2

A. Summary of data and analysis of results

The primary data has been collected from the survey through obtaining responses from the questionnaires filled by the target respondents. The responses have been received from 100 respondents which were selected on the basis of sampling.  The following table summarises the responses with regards to the most important factor contributing to the selection of a new tour product by the customers:

The following table summarises the data with regards to responses received for preference of customers about domestic and international tours:

The following table summarise the data with regards to responses in relation to buying behaviour of customers towards the tour products:

Representative values– These are the values of statistical measures which are used for summarising the data and making analysis and evaluation. These values include mean, mode and median. The representative values for the responses with regards to number of orders for different prices can be calculated as follows:

Mean– It represents the average of the data values and is calculated by adding the data values and then dividing the sum by number of values.

Mean = 32+28+20+14+6/5 = 20

Median– It represents the most middle value of the data when the data values are arranged in an ascending order. It is calculated by identifying the middle value of the data by calculating N/2th term or N+1/2th term.

Median = 3rd term = 20

Mode– It is the representative value which represents the data with the highest frequency. The data vale which is repeated most of the times from all the responses is the mode.

Mode = Highest frequency = 32

Analysis:On the basis of above calculation of representative values, it can be observed that the average number of orders that will be received by the tour operator company will be 20 for the new product. Also the most middle value of the data values is 20. From the mode it can be observed that the highest responses have been received for the lowest price rage. Thus the consumer buying behaviour towards the tour products relate to buying of cheaper products (Abid, et al. 2016).

B. Analysis using measures of dispersion

Standard Deviation– It is the measure of dispersion which is used to identify the deviation of the mean from the actual performance. It is used to quantify the measurement of the variation of mean from the other data values. A higher standard deviation suggests high risk for the deviation of data and vice-versa 9Manikandan, 2011). The standard deviation of the data values can be calculated as follows:

Standard Deviation =√∑ (Value – Mean)2/N

                                    =√440/5

                                    =9.38

Analysis– The standard deviation of the data values is 9.38 which means that the risk of deviation of mean is less since the standard deviation is as low as 9.38. Thus, it can be analysed that the mean can deviate from its path up to 9.38 which means that there is less risk of deviation.

C. Use of quartiles, percentiles and correlation coefficient to aid decision making

• Quartiles– These are the measures of dispersion which are used to divide the complete data values in four equal parts, each representing 25% of the data or 1/4th part. This helps in identifying what data falls in which quartile where first quartile is 25% second quartile is 50% and third quartile is 75%. The quartiles are used in business decision making since they help in arranging the data values in accordance with the contribution in quantities form or percentage.
• Percentiles– These are the measures of dispersion which are used to divide the data values in 100 equal parts where each value represent 1/99th part or a part of percentile. These values are used for making effective decisions for business strategy since they help in the positioning and ranking of the data values. It identifies which data value is above others and by how much.
• Correlation Coefficient – Correlation is the relationship between two variables which defines the movement of each variable with respect to her. The coefficient of correlation is the measure which is used to quantify the correlation between variables ad define the extent to which they are related to each other. The correlation coefficient of 1 indicates perfect positive correlation. This helps in identifying the movement and change in one variable related to the business with respect to the movement and extent of change in another variable (Institute, 2016).

Task 3

A. Graphs and charts to draw valid conclusions

Pie Chart

Analysis- The above pie chart represents the consumer preference with regards to the type of tour products selected by them in relation to location offered within the product our package. It can be observed that majority of the population prefer international tours to domestic trips. Also many respondents believe that any of the domestic or international tour will work for them.

Bar chart

The above bar chart represents the number of orders or responses that relate to different price range of the tour products. It can be observed that majority of the customers intend to buy the tour products which are available at cheaper rates rather than costlier tour products since with the increase in prices the number of orders decreases for the tour company.

Histogram

The above histogram represents the responses that relate to the different factors considered by the customers at different levels for the selection of tour products including the prices offered for the products, quality of services, accommodation and meals, transportation facility provided, location of the tour covered, leisure and comfort etc. It can be observed that the price of the products and locations covered within the tour package are the most important factors contributing to the selection of the tour product.

B. Trend line and forecast

The following table represent the responses with regards to spending on the tour products by customers and average spending for the responses to create trend line for the purpose of forecasting the spending of customers on new tour products:

Analysis and forecast:From the above scatter graph representing responses for the average price spending of customers on tour products, it can be observed that with the increase in prices, the number of responses started decreasing. The trend line suggests that the high prices will result in fewer orders for the company and vice versa (Olsen, 2012). Thus the forecast of number of orders for increase in prices above £150,000 will be less than 5 orders for the purchase of tour products.

C. Business presentation

D. Formal Business Report

To,

The Management

The Outbound Tour Operator Company

Subject: To provide information to assist in development and launching of the new product

This report aims at providing the relevant and useful information and knowledge to the management about the opportunities and threats associated with the development and launching of new tour product. The information included in this report is based on the data collected from the survey about the customer attitude, preferences and buying behaviour in relation to tour products.

The development of tour product contains various elements such as deciding upon the price of product, quality of services, leisure and comfort, transportation facility, locations covered etc. out of which price and location are of highest priority. With the increase in price of the tour product, the demand of the products in the market will decline. Also mostly international tours are preferred by the customer as against the domestic tours.

On the basis of above analysis, it can be concluded that this will be a challenge for the development team of the company todevelop a tour product at cheaper rate with international locations covered. Also the information included in this report will help the company in making effective decisions for its business on the basis of analysis and conclusions provided.

Regards

Consultant

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Task 4

A. Project Plan and critical path for launch of a new product

Project plan is the sequence of activities and actions to be taken for the implementation of a project. The project of the tour company relates to launching of a new tour product in accordance with the customer needs and preferences. The project plan along with the details of activities and their duration can be presented by the following table:

Network Diagram and Critical path

Critical Path– It is the path or the route on the network diagram which represents the longest duration for the completion of the project through completion of all the critical activities. Thus his longest path on the network diagram is known as the critical path. All the activities on the critical path have a zero foot which means that these are critical activities and therefore cannot be delayed (Webber, 2014). The possible paths on the network diagram representing the project plan of company are as follows:

A-B-D-F-G-H = 36 days

A-B-E-H = 17 days

A-D-E-H = 22 days

Critical Path = Longest path = A-B-D-F-G-H = 36 days

B. Feasibility Analysis to assess viability of project

Feasibility analysis is the process of evaluation of the viability of a project with regards to its cost-benefit analysis. This process includes identification of associated cost and benefits related to the project and then making decision about whether the project is feasible and profitable or not for the business to achieve the intended objectives. This can be done with the help of  managing financial tools or investment appraisal techniques such as Net Present Value, Return on Investment, Payback period analysis, etc., the financial viability of a project can be assessed.

Net Present Value– It is the method used to calculate the likely gains to be earned from a project during its life by estimating the present value of all present and future cash inflows and cash outflows. The projects which have appositive NPV are considered to be feasible since the financial gain is the main factor for the selection of a project (Robison, 2015).

Net Present value = Total discounted benefits – Total discounted costs

Return on Investment – This is the rate of return which represents the rate at which profits can be earned from the investment into the project. It’s calculated by dividing the present value of net cash flows from the project by the present value of costs of the project during its life. The formula for calculating the Return on Investment is as follows:

Return on Investment = (Total discounted benefits – Total discounted costs)/Total discounted costs

The Project of the tour company which relates to the launching of a new tour product or package by the company will include an initial cost of £2,50,000 which include capital expenditure on research and development. The project will result in yearly benefits amounting to £30,000 - £50,000 during the period of 10 years. The cost of capital for the investment in the project will be 10%. The NPV and ROI of the project for the evaluation financial viability using Excel is as follows:

From the above calculation, it can be observed that the project will result in a positive Net Present value which indicates that the project will be able to earn gains in the form of cash inflows during its life. Also the Return on investment is 17.93% which is higher than its cost of capital. Thus it can be concluded that the project of launching a new tour product will be feasible and financially viable for the company.

Conclusion

From the analysis and evaluation of the data collected from the survey into the business problem of The Outbound Tour Company in relation to the development and launch of a new tour product, it can be concluded that the results of the survey will be helpful for the company in making effective business decisions. Also it can be concluded that the report and presentation included in this assignment will help in developing the understanding of business decision magi in the real world with regards to tour products.

References

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