HI6007
Statistics for Business Decisions
Topic- Data Analysis for Sony Global.
Research Question –Analysing the relationship betweeen of the Employee Benefits and inflation with the net profit of Sony Global through multiple regression.
Here, the employee benefits and inflation have been selected in the research problem as these factors are quite debatable in terms of their impact on the business profit. Researchers like Spisakova (2019) have argued that employee benefits have positive impact on the company’s profitability. On the other hand, Kumar and Pansari (2015) mentioned that employee benefits is not for those employees who require intrinsic motivation. Spending thousands of dollars on employee benefits would reduce profitability for sure.
Coming on to inflation rate, being a global company, Sony competes with a lot of companies. Inflation would reduce the customers’ buying capacity and sales of the company would reduce and so is the case with profitability (V?tavu, 2015). However, Galí (2015) argued that with inflation, people’s income also increases and therefore, inflation does not have much impact on the profits.
For the analysis, public sources and company’s annual reports have been referred for the past 30 years. Assuming the employee benefits and inflation rate as independent variable and the net profit of the company as dependant variable. Please see the excel sheet for calculation details in the attached sheet.
Target Population and expected Sample Size
In this research, the target population will be the employees, board of directors, HR managers, Finance managers, Operation manager of the company to whom the data serves as a source of information such as information to finance manager to study the previous trend in Profit/loss of the company. The output of the research would help them to make organisational plans and strategies. For the HR manager, the data will serve as a guide to study the trend of the employee remuneration behaviour and information other benefits provided by the company as per the profit of the company in a particular year.
The Sample Size include the number of observations related to employee benefit with that of net profit of the company and Inflation rate for last 30 years with that of the net profit of the company which has been considered to analyse with the help of regression analysis. In this research question, the Sample size is 30.
Most appropriate Sampling method –
The most appropriate sampling method is the random sampling method that helps in eliminating more time consumption and also helps in saving the resources. This method proves to be reliable as it chose the population on a random basis. In this method each and every population have a same probability of being chosen for a particular task. However, Sony has been selected as its past 30 years of reports are available on its website.
The Data set have been provided separately in the excel sheet attached in this document with –
Minimum 2 independent variables which is the Employee Benefits and Inflation
Minimum 30 Observations – Net profit & employee benefits of the company for previous 30 years (from 1990 to 2019)
The data have been taken from secondary source and the data has been collected from below source;
Inflation in Australia in past 30 years is taken from the link provided
Annual Reports of Sony for Profit and Employee benefits are available on the link below:-
Descriptive Statistical Analysis –
Please find below the table for descriptive statistical analysis and please find the relevant excel sheet in the attachment at the end of the document–
Multiple Regression on Employee Benefits on Net Profit
Multiple Regression on Inflation on the Net Profit
Employee Benefits on the Net Profit
Inflation on Net Profit
Descriptive statistic |
Employee Benefits |
Mean |
for the period under study on average the expenditure on employee benefits has been around to $130.45 M |
Standard error |
the sample mean differs from the population mean by $12.32 M |
Median |
$127.50 M is the value of employee benefits that divides the data into two equal halves |
Mode |
$ 151 M is the expenditure on the employees benefits for the most times |
Standard Deviation |
$ 67.28 is the amount by which the yearly employees benefits differs from mean |
Sample Variance |
on average the each data point from the data differs by 4554.05 units |
Kurtosis |
the Kurtosis of 3.5 means that the data is peaked at middle, most values are at the mean |
Skewness |
With skewness of 1.22 most values are at the right of the mean |
Range |
This depicts the difference between the highest and the lowest expenditure on employee benefits by the company |
Descriptive statistic |
Inflation |
Mean |
for the period under study on average the inflation has rose by 2.6% |
Standard error |
the sample mean differs from the population mean by 0.26% |
Median |
2.35% is the rate of inflation that divides the data on inflation into two equal halves |
Mode |
1.8% is the rate of inflation which has occurred for the most times |
Standard Deviation |
1.42% is the rate by which the yearly inflation rate differs from mean inflation rate |
Sample Variance |
on average the each data point from the data differs by 2% |
Kurtosis |
the Kurtosis of 2.97 means that the data is normally distributed |
Skewness |
With skewness of 1.32 most values are at the right of the mean rate of inflation |
Range |
This depicts the difference between the highest and the lowest rate of inflation for the period under study |
Descriptive statistic |
Inflation |
Mean |
for the period under study the average profits of the company has been $657.57 M |
Standard error |
the sample mean profit differs from the population mean profit by $ 105.87 M |
Median |
$ 670.50 is the value of profit that divides the data on inflation into two equal halves |
Mode |
$ 148 M is the value of profit which has occurred for the most times |
Standard Deviation |
$ 579.86 M is the value of profit by which the yearly profits differs from the mean profit |
Sample Variance |
on average the each data point from the from the mean by $336236.65 |
Kurtosis |
the Kurtosis of -1.01 means that the data is platykurtic |
Skewness |
With the skewness of -0.04 means that the data almost follows the normal distribution |
Range |
This depicts the difference between the highest and the lowest rate of inflation for the period under study and for profits the range has been $2138 |
Graph to represent relationship between dependant variable and each independent variable. Refer the attached Excel sheet.
Relationship between Y (Net Profit) and X1 (Employee Benefit)
Relationship between Y (Net Profit) and X2 (Inflation)
a) Derive the multiple regression equation
|
Coefficients |
Standard Error |
Y |
376.83 |
300.12 |
X 1 |
4.06 |
1.40 |
X 2 |
(95.62) |
66.86 |
Therefore, the equation can be estimated as,
Y= ?+?1X1+ ?2X2
Y= 376.83+ 4.06X1-95.62X2
b) The intercept can be explained as when the effect of employee benefits and inflation is zero on the net profit of the company, the net profit of the company would be $ 376.83. The independent variable X1, can be explained as $1 change in the employee benefits by the company, keeping other things constant would lead to $4.06 increase in the net profit of the company. The X2 variable, which is inflation, when changed by 1% would lead to 0.9562 times reduction in the net profit of the company, keeping other variables constant.
c) The coefficient of determination, which is r2, states the percentage of change in the dependent variable which is explained by the change in the independent variable. Here, the r2= 0.34, which means that 34% change in the net profits of the company is accounted to the independent variables, which here are employee benefits and the inflation.
d)
ANOVA |
|
|
|
|
|
|
df |
SS |
MS |
F |
SignificanceF |
Regression |
2 |
3,332,726.21 |
1,666,363.10 |
7.01 |
0.00 |
Residual |
27 |
6,418,136.76 |
237,708.77 |
|
|
Total |
29 |
9,750,862.97 |
|
|
|
The
e)
Variable |
P-value |
X1 |
0.01 |
X2 |
0.16 |
The variable X1 (which is employee benefits) is statistically significant as the p-value is lower than 0.05. But the variable X2 is not statistically significant as its p-value is greater than 0.05.
f)
|
Employee Benefits |
Inflation |
Net Profit |
Employee Benefits |
1 |
|
|
Inflation |
-0.2915 |
1 |
|
Net profit |
0.5403 |
0.3710 |
1 |
The correlation among the explanatory variables (X1 and X2) is negative (-0.2915). There is no possibility of multicollinearity as the explanatory variables are not linearly correlated to each other.
References
Galí, J., 2015. Monetary policy, inflation, and the business cycle: an introduction to the new Keynesian framework and its applications. Princeton University Press.
Kumar, V. and Pansari, A., 2015. Measuring the benefits of employee engagement. MIT Sloan Management Review, 56(4), p.67.
Spisakova, E.D., 2019. Position of employee benefits in remuneration structure. Transformations in Business & Economics, 18(2), p.47.
V?tavu, S., 2015. The impact of capital structure on financial performance in Romanian listed companies. Procedia Economics and Finance, 32, pp.1314-1322.
