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Diploma in Business
Unit Number and Title
Unit 6 Business Decision Making
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.
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:
1. Select your gender.
2. Select your income range
3. How often do you go on trips in a year?
4. How much do you spend on tour?
5. Which type of tours do you prefer the most?
6. Which of the following factors do you consider the most while selecting a tour product?
7. “The Outbound Tour Company provides high quality tour packages with best services and leisure at affordable prices”. Do you agree?
8. Are you satisfied with the existing tour products offered by the tour operators and companies in London?
9. The Outbound tour company is planning to develop and launch a new tor product. Are you willing to purchase the new tour product?
10.Rate the tour products and packages of The Outbound Tor Company on the scale of 5.
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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:
Accommodation and meals
The following table summarises the data with regards to responses received for preference of customers about domestic and international tours:
Type of tour
The following table summarise the data with regards to responses in relation to buying behaviour of customers towards the tour products:
No of orders
Up to £ 25,000
£25,000 - £50,000
£50,000 - £80,000
£80,000 - £100,000
More than £100,000
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).
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
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.
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.
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.
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.
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:
No of orders
Average Price (£)
Up to £ 25,000
£25,000 - £50,000
£50,000 - £80,000
£80,000 - £100,000
More than £100,000
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.
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.
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:
Define resource requirement
Appointment of staff
Entering into contracts withvendors for accommodation, meals and transportation
Assigning duties and responsibilities
Development of tour product
Launching of new tour product
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
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:
Cash Flows (£)
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.
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.
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