Unit 6 Business Decision Making Assignment – KDl

Unit 6 Business Decision Making Assignment – KDl

Introduction

THe business decision making aims at developing the understanding of process of business decision making with the use of various techniques and methods. It includes research about the business problem of a specific business explaining about the plan for collection of primary and secondary data for the business, defining the survey methodology and sampling frame used for the research and the questionnaire used for the collection of primary data. The analysis of the findings of research and other related data is also included in this report to draw valid conclusions to assist the business decision making. The charts and graphs have been used for the presentation of findings in a formal business report format and business presentation format. The project plan has also been included along with the recommendations for the best available option. The business problem on which the survey will be conducted included in this report relates to the Kitchen Design Limited which is a provider of contemporary kitchen installations and is planning to explore the available opportunities within other sectors that relate to market for bathroom designs and equipment. The research about the opportunity for the company to enter into the bathroom design sector will be conducted and presented as a market research consultant with the view to provide information to the management of the company to help them in their marketing process.

Task 1

1.1 Plan for Collection of data

1.2 Survey methodology and sampling frame

Survey Methodology – This will include the survey methods such as questionnaires and personal interviews to gather responses from the target population for collection of primary data and using internal and external sources such as reports, journals, publications, newspapers, website publications etc for collection of secondary data.

Sampling Frame –This will consist of 80% of the target population comprising of past and present customers belonging to different age groups and different income classes.

1.3 Questionnaire

Select your gender.

• Male
• Female

Select your Age band.

• 20-30 years
• 30-45 years
• 45-60 years
• Above 60 years

Select your Self Income band per annum, if applicable

• £10,000 – £25,000
• £25,000 - £50,000
• £50,000 - £80,000
• £80,000 - £100,000
• Above £100,000

Do you buy the products of Kitchen Design Limited?

• Yes
• No
• Always
• Never

Are you satisfied with the quality of kitchen designs and products offered by Kitchen Design limited?

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

After the success in the Kitchen Design sector, Kitchen Design Ltd shall enter into bathroom design sector also. Do you agree?

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

Which of the following factors do you consider the most while selecting about the kitchen and bathroom designs and products?

• Cost
• Quality
• Service
• Design
• Durability

Will you buy the products of bathroom design division of Kitchen Design Limited?

• Yes
• No
• May be
• Can’t say

Rate the products of Kitchen Design Limited on the scale of 5.

• 1
• 2
• 3
• 4
• 5

10. Any suggestions for improvement in the operations of Kitchen Design Limited?

..............................................................................................................................................................................................................................................................................................................................................................................................................................................................................

Task 2

2.1 Summarising data using representative values

Representative values –These are the statistical measures which are used to represent the data values in a systematic and logical sequence with the objective of summarising a large series of data or huge numbers of data values. Thus the representative values are used to summarise the data and make system analysis on the basis of which conclusions can be drawn. There are three major types of representative values. They are mean, median and mode.  The representative values of sales of last 12 months for two main lines of Kitchen Design Limited calculated using Excel is as follows:

Mean –It is the representative value which is used to measure the average of the data values. It represents the mean value which is calculated by adding the values and then dividing the total by number of values. The formula for calculating the mean is as follows:

Mean = Sum of values/ Number of values

Median – It is the representative value which is used to measure and represent the middlemost value in the data series. When the all data values are arranged in an ascending order, then the value which is the middle value of the whole data series is known as the median. The median of a given set of data can be calculated using the following formula:

Median th term, where n is an odd number

Median = Average of N/2th term + N+1/2th term, where N is an even number

Mode –It is the value which represents the highest frequency of the data values. This means that the data which is repeated more than once in a given data series is known as the mode of the data series (Gannoun, 2010). The mode of the data values can be calculated as follows:

Mode = Value having Highest Frequency

2.2 Analysis

From the calculation of representative values including mean, mode and median of the sales of company Kitchen Design Ltd for past 12 months for its two mail lines namely capitalist and minimalist, it can be observed that mean of capitalist line is 191.67 whereas the mean of minimalist line is 353.33. This means that average sales of company from capitalist line is £191,670 and from minimalist line is £353,330. it can be concluded that the sales from minimalist line is much higher than the sales from capitalist line. From the median of the two divisions it can be concluded that the median of minimalist line is near to its average but the median of capitalist line is away from its average. The mode calculated for the sales of capitalist line is 90 which mean that during all the twelve months the amount of sales of £90,000 is repeated in more than one month and similarly the mode of 350 of minimalist division also indicates that the amount of sales of £350,000 has been repeated in more than one month.

2.3 Analysis using measures of dispersion

Measure of dispersion is the statistical measure which is used to determine the deviation of the data values from the mean. the measures of dispersion include range of data values, quartiles, inter-quartile range, standard deviation etc. Range is the value which is the difference between highest and lowest value. Inter quartile range represents the value of difference between first quartile and third quartile. Standard Deviation is the measure of dispersion of mean. It is the variation of mean from its original place. The lesser standard deviation is better for the company since it indicates lesser deviation.

The measures of dispersion calculated using Excel for the sales of company for past 12 months is as follows:

 2.4 Quartiles, percentiles and correlation coefficient

Quartiles –These are the measures of dispersion which divide the data value into four equal parts each representing 25% data. This is used to analyse which data values fall within which quartile and represents 25%, 50% or 75% of data. The quartiles are used in making decisions for business since they help in identifying the priorities of the data values which specifically relate to business (Manikandan, 2011).

Percentiles –These are the values which represent the complete data values divided in 100 equal parts each representing 1/99th part. The percentiles are used in making decisions for the business since they help in providing ranking to the data values on the Basis of part of the data they are representing.

Correlation Coefficient -The correlation is the relationship between two variables and the coefficient of correlation is the measure of such relationship. The positive correlation coefficient indicates the movement of both variables in same direction whereas the negative correlation represents the contrary. The correlation coefficient equal to 1 represent the perfect correlation between the variables. The coefficient calculated using excel for the correlation between capitalist and minimalist lines is as follows:

The negative correlation coefficient indicates that there is an inverse relationship between the two lines of Kitchen Design Limited.

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Task 3

3.1 Presentation using graphs

Kitchen Design ltd is considering four product categories for its business proposal of bathroom design sector. They are Victorian, Budget, Wet room and Sauna. The following charts represent the average industry sales for last four years from 2012 to 2015 of four product categories considered by Kitchen Design Limited under its research:

Pie Chart:

From the above pie chart it can be observed that out of the four product categories, the highest industry sales is of Budget and the lowest sales is of Wet room for the year 2015. Thus Kitchen Design Limited shall consider that it shall enter the product category which has the highest industry sales which indicates high demand in the market.  

Bar Chart:

The above bar chart represents the sales of Victoria product category for the past four years. From the chart it can be observed that the sales of this product for the past four years has increased every year which means that there is an increasing trend in the market for the sale of this product.

Line Chart:

The above line chart represents the sales of the product Budget for the past four years. From the above chart it can be observed that the sales of this product in the industry have increased substantially during the period. The rate of increase was very high in the initial year’s bu8t during the last two years the growth rate has declined. However the amount of sales ahs increased for all four years. 

Histogram:

The above chart represents the sales of product Wet room for the last four years. From the chart it can be observed that the sales have decreased in all the four years at a constant growth rate. Thus this product has a decreasing trend of sales.

3-D Cone Chart:

The above chart represents the sales of the product Sauna in the industry average for the last four years. From the above chart it can be observed that the sale of this product for the last four years has decreased at a constant growth rate. The sale of this product has a decreasing trend.

3.2 Scatter graph with trend lines and forecast

From the above chart the forecast of sales of the four products can be made on the basis of trend line. The sale of Victoria has an increasing trend which is likely to increase up to 6 million in next two years. The sale of Budget also has an increasing trend and is likely to go up to 8 million. The sales of Sauna and Wet room both have a decreasing trend where the sales of Wet room is likely to be up to 1.8 million and the sales of Sauna is likely to be 1.5 million for the next two years.

3.3 Business presentation

.

3.4 Formal Business Report

To,

The Board,

Kitchen Design Limited

Subject: To provide information regarding market for bathroom design and its products for the company.

This report is based on the analysis of the research conducted for the bathroom design sector for Kitchen Limited which includes the analysis of average industry sales of four product categories in this sector. On the basis of analysis it can be concluded that out of the four products, the average industry sales of Victoria is highest and that of Wet room is lowest. Also the sales of Victoria and Budget have an increasing trend whereas the sales of Wet room and Sauna have a decreasing trend. The suitable products for the company are Victoria and Budget. Also the representative values and measures of dispersion calculated for sales of the two lines of company suggest that the sales from minimalist line have higher average than that of capitalist line.

Thus, on the basis of above conclusions, it is recommended that the company shall consider products Victoria and Budget to enter into the bathroom design industry. Also it is recommended that while making decisions for business the company shall consider that minimalist division earn high revenues then capitalist division.

Regards,

Research Consultant

Task 4

4.1 Use of information processing tools

Management of inventory is a crucial decision for every business. therefore the management of inventory by the business shall be done using the information processing tools and software such as Management Information System (MIS), Enterprise Resource Planning (ERP) etc. The MIS can beer used to manage inventory effectively since it enables the recording of inventory in a proper manner, its updating and easy and efficient reporting (Gruenwald, 2013).

4.2 Project plan and critical path

The following table shows the schedule for the project along with duration and preceding activity and details of each activity:

Network diagram:

Critical path is the path on the network diagram which has the longest duration or the path on which all the activities have a zero float (Aireesha, 2010).

Critical path = A-D-G-I-J-K = 27 days and A-D-G-H-J-K = 27 days. This project has two critical paths since both have longest duration which is equal.

4.3 Investment appraisal tools

From the above calculations it can be observed that the NPV and IRR are higher from the MIS Investment to be made from Supplier as compared to that of Supplier B. Since the investment proposal which has higher NPV and IRR is better therefore the company Kitchen Design Limited is recommended too make the investment in MIS by acquiring it from Supplier A. By acquiring the investment project from supplier A the company will be able to generate more cash inflows and will earn higher returns (Bas, 2013).

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Conclusion

From the above research report about the consideration of Kitchen Design Limited to enter into the bathroom sector and the customer attitude and preference about the bathroom design market and products of company, it can be concluded that the company has a high profit and growth potential and by entering into the bathroom design industry the company will be able to increase its returns acquiring larger market share. It can also be concluded that the investment from Supplier A will be more beneficial for the company to install the MIS investment project.

References

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Bas, E. 2013, "A robust approach to the decision rules of NPV and IRR for simple projects", Applied Mathematics and Computation, vol. 219, no. 11, pp. 5901-5908.
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Semiparametric Mode Regression Estimation",Communications in Statistics - Theory and Methods, vol. 39, no. 7, pp. 1141-1157.
Gruenwald, H. 2013, "Logistics Software from a Logistics Management and Management Information Systems (MIS) Perspective", Information Management and Business Review, vol. 5, no. 12, pp. 591.
Habib, M., Pathik, B.B. & Maryam, H. 2014, Research methodology - contemporary practices: guidelines for academic researchers, 1st edn, Cambridge Scholars Publishing, Newcastle upon Tyne, UK.
Manikandan, S. 2011, "Measures of central tendency: Median and mode", Journal of pharmacology & pharmacotherapeutics, vol. 2, no. 3, pp. 214-215.
Olsen, W. 2012;2011;, Data collection: key debates and methods in social research, SAGE Publications, Thousand Oaks, CA.
Roepstorff, C., Petersen, H. & Berthelsen, A. 2015, "Optimizing Data Collection", Biology of Blood and Marrow Transplantation, vol. 21, no. 2, pp. S265.
Sireesha, V. & Shankar, N.R. 2010, "A New Approach to find Total Float time and Critical Path in a fuzzy Project Network", International Journal of Engineering Science and Networking Technologies, vol. 2, no. 4, pp. 600-609.
Standard deviation 2013, , Encyclopædia Britannica Inc.