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Business decision is considered to be very important for effectively running the business in proper manner. Both small and large business undertakes effective decision for their functioning. So in this Unit 6 Business Decision Making Assignment Wet Fish Café is considered for the various scenario by the use of statistical tools and chart. It is the accurate decision which is responsible for the smooth working of an organization. The Wet Fish Café is a medium sized coffee shop in the West Hampstead in north-west London. The café is famous for Americano. This is a strong and rich coffee but not bitter. Since there has been an increasing trend among the people regarding the coffee drinking, so the management of the organization has decided to launch a new coffee drink for their customers. For launching a new drink, the organization need to conduct a research in order to understand the taste, likings, preferences and attitude of the customers. This will help them to grasp an idea about the market size and structure. All these elements are very essential to make proper decision regarding launching a new product in the market. All these information can be gathered by the conducting a research. The information will be gathered in the form of primary and secondary data which will have to be analyzed using several techniques. The analysis of the data is essential as it help the business management to undertake proper decision.
Primary and Secondary Data
The collection of primary data is very essential in order to conduct a research. Primary data can be defined as the data which are gathered for the first time and so are in crude form. The primary data is acquired by the researcher himself with his strong effort(Burch, 1997). The collection of primary data can be lengthy procedure because it requires the preparation of a questionnaire and choosing proper sample frame. However, the collection of primary data is very essential because they help to acquire highly relevant data for the purpose of designing marketing strategy and undertaking effective decision.
The advantages of primary data are as follows:
Along with its several advantages, primary data also possess several disadvantages which are as follows:
Figure.1: Advantages and Disadvantages of Primary Data
The primary data can be gathered from the following sources:
In the current scenario, the management of Wet Fish Café can conduct the primary research by organizing a survey on the selected population in West Hampstead. But, for organizing the survey, the management needs to prepare a survey methodology and choose a sample frame.
Survey Methodology and Sample frame
Survey can be defined as the process of carrying out an extensive research for the purpose of acquiring a wide range of response from the people. Survey methodology is the study of the sources that will create an adverse effect on the quality of the data collected in the survey. Thus, survey methodology highlights the guidelines and principles for planning, collecting, processing and analyzing the data. In order to conduct the survey in a very effective and efficient method and prevent any kind of bias of bias, a questionnaire has to be prepared. The questionnaire will consist of all the important questions that will be relevant to the purpose for which the survey is being carried out. For this reason, the management of Wet Fish Café has decided to conduct the survey by preparing a questionnaire(Lepkowski, 2008). They will be using the questionnaire because of the following advantages:
However, there are certain negative aspects of questionnaire which are as follows:
After preparing the questionnaire, the management of Wet Fish Café need choose a proper sample frame on which the research will be conducted. A sampling frame refers to the complete lists of all the individuals of the population on which the survey will be done(Leeuw, Hox and Dillman, 2008). The sampling frame helps to identify the sample population for the statistical treatment. The sampling frame is done because of the following advantages:
The disadvantages of sampling frame are as follows:
In order to choose a sample frame it is very important to study the population.
Figure.2: Sample Frame
The sampling can be done as simple random sampling, stratified sampling, cluster sampling, multistage sampling and quota sampling. In the given project, the management can conduct the survey in simple random sampling method on 100 people. The survey will be conducted inside the Wet Fish Cafe where all the people aged 14 and above will be allowed to present their view(Leeuw, Hox and Dillman, 2008).
Questionnaire: The management of Wet Fish Café can prepare the questionnaire which is mentioned below:
2. Age group:
3. How often do you drink coffee?
4. What kind of coffee do you prefer?
5. Which item of coffee do you like the most?
6. How much you spend on coffee every month in (£)?
7. When you choose your coffee which factor you consider the most? (1-3 3 being most important)
8. Do you have brand fascination?
9. Do you like to have a new type of coffee?
10. Would you like to taste any of the following?
The collection of secondary data is also very essential in order to conduct the research in a very effective manner. The data which is gathered from already published source is called the secondary data (Ramavataram, 1996). The secondary data helps to make the collection of the primary data more efficient, accurate and precise. The advantages of secondary data are as follows:
The disadvantages of the secondary data are as follows:
Figure.3: Advantages and Disadvantages of Secondary Data
The secondary data can be gathered from magazines, books, newspaper, journals, internet and government. The organization’s reports of sales, income, expenditure, and customers served and customers satisfied can also acts as a source of secondary data(Ramavataram, 1996). In the given scenario, the organization can review their records of sales and expenditure in order to know their current position. They can also explore the internet in order to derive idea about the different types of coffee that can be launched in order to attract the customers. The management of Wet Fish Café got the following mentioned secondary data:
Advertisement Expenditure (£'000)
Sales of Americano (£'000)
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Analysis of Data
The questionnaire has been to conduct the survey and collect primary data. The survey was conducted on 100 people in whom there were 35 male and the 65 female. The survey showed that majority of the people who comes to drink coffee are within the age group of 14-23 followed by the age group 24-33. The majority of the sample population drinks coffee regularly. The survey also revealed that 90% of the population preferred hot coffee. When the sample population was asked in the survey that what kind of coffee they preferred, 52% of the sample population mentioned that they prefer Americano which clearly highlights the popularity of their coffee drink. The management of Wet Fish also found out the majority people spends about £21-£45 in their coffee shop in a month(Call for papers computational statistics & data analysis, 1998). When the sample population was asked what factor they consider while selecting coffee, maximum people put stress on quality followed by price and taste. 65% of the sample population said that they preferred brand while selecting coffee and the rest 35% said that they do not prefer brand while choosing a coffee.
The sample population was also asked if they like to have a new type of coffee, 98% of the population said that they will like to have new coffee and the rest said that they do not. The sample population was also asked that kind of coffee they would like to test. Majority of the sample frame gave their preference for Caf Mocha. The secondary data has also been collected for the sales and advertisement expenditure of the coffee shop. The advertisement expenditure from the year 2009-2013 is quite less as compared to the sales of Americano in Wet Fish Café.
Techniques used for data analysis
Average: Arithmetic Average is being used for the proper analysis of data. They help to identify the in which the store cluster in a set of data. There are basically three types of data which are as follows:
Measures of Dispersion: Measures of dispersion are utilized in the business for the purpose of deriving an idea regarding the degree of dispersion or variation. The measures of dispersion are very essential for undertaking proper business decision (McClave, Dietrich and Sincich, 1997).
The number that lies between the median and the lower half of a set of data is called first quartile. It’s also called 25th percentile. The number which lies in the middle is called the second quartile. It is also called the 50th percentile. The number which lies between the median and the upper half of a set of data is called third quartile. It is also called 50th percentile.
Correlation Coefficient: The strength and the direction of the relationship of two variables are determined by the correlation coefficient. It is a very powerful instrument for decision making by analyzing the data(McClave, Dietrich and Sincich, 1997).
Sales of Americano
The correlation coefficient is positive between the advertisement expenditure and sales. This means if the advertisement expenditure increases then the sales of the coffee will also increase.
1. Primary data
In the survey, there were 65% female while the rest were male.
No. of people
44 & above
The majority of the people who visited the coffee shop for drinking coffee are in the age group of 14-23 and 24-33. So while launching the new coffee, the management can target these two age groups.
3. Frequency of Drinking
The survey showed that most of the people drink coffee regularly. So launching a new coffee will increase their daily sales.
4. Types of Coffee
The above graph shows that majority of the sample frame preferred hot coffee. The management should take account of this while launching a new coffee.
5. Kinds of Coffee
The above graph shows that Americano of the café is quite famous and this is followed by Espresso.
No. of people
41 & above
The above histogram exhibits that majority of the people spend £21-£30 per month in a coffee shop. The management has to keep this mind while launching the new coffee as it will help them to set the price of the drink(Kendall et al., 1994).
The above graph shows that majority of the people gave their preference for quality as compared to the other factors. Yes, price is also an important factor for selecting their coffee. Thus, while launching the new coffee, the management should consider the quality and the price as the most important factor.
8. Brand fascination
The above graph is showing that majority of the people has brand fascination.
This clearly shows that majority of the population gave their preference to try a new type of coffee.
10. New Coffee
It is evident in the graph that majority of the sample frame gave their preference for Caf Mocha. So the management of Wet Fish Café can launch Caf Mocha in their shop.
The advertisement and promotion expenditure of the company was rising steadily but it declined in the year 2012. However, the expenditure again started rising in the 2013 and 2014.
Unlike expenditure, the sales of the company have increased with the passage of years.
The trend line is a very important tool for forecasting the sales, expenditure, profit and income of the business. The R2 equation in the trend line is important. If the value of R2 is closer to 1, then the forecast will be reliable(Kendall et al., 1994).
The above trend line is forecasting the advertisement expenditure of Wet Fish Café. The graph is showing that the expenditure will increase in the year 2015 and 2016. The R2 equation is closer to 1 and so the forecast is reliable.
Aim: The management wants to launch a new coffee drink
In order to fulfill the aims and the objectives, a survey has been carried out to gather the primary and the secondary data. The collected data has been analyzed with the help of the different techniques like representative values, measures of dispersion and correlation coefficient. For better analysis and explanation, graphs have been created(Kendall et al., 1994). The trend lines helped the management of the organization to forecasting their advertisement expenditure.
Conclusion; The entire project helped the management to undertake proper plan to launch a new coffee by analyzing the data. The management can launch a new coffee as is evident in the analysis but it had to consider all the facts that are important while developing their new drink.
Project plan: For launching a new coffee it is very important for the management of the organization to create a proper project plan. If there is a little bit of error in the process of planning, then it can lead to the failure of the product in the market(Sellars, 2009). The management of Wet Fish Café can follow the steps in order to develop their new product:
Information processing Tools: The management of Wet Fish Café can use the following information processing tools in their organization:
The critical path of this activity is AEHIJ and the maximum time to complete this project is 32.
Financial Tools: The following financial tools can be used which are as follows:
In the above table the cash flow of both the projects have been used to analyze the NPV and the IRR. The ARR of the project has also been calculated without taking into account the discounting factor(Dayanada, 2002). From the above calculation we can come to the conclusion that the project A should be chosen over project B as it has a higher NPV and IRR. Though the ARR of project is higher the same is will not be considered as IRR and NPV are better methods of investment appraisal.
The project helped to understand that how effective decision making is essential for proper working of the organization. Unit 6 Business Decision Making Assignment Wet Fish Cafe is very essential for deriving idea about the market structure for launching new products. The analysis of the data and forecasting has further helped the management in process of decision making. In order to make plans for developing new product, the management has to utilize several tools that will guide them to undertake proper plans.
Burch, H. (1997). Selected primary & secondary education data. Annapolis, MD: Dept. of Fiscal Services.
Call for papers computational statistics & data analysis. (1998). Computational Statistics & Data Analysis, 27(1), p.117.
Dayanada, D. (2002). Capital budgeting. Cambridge, UK: Cambridge University Press.
Kendall, M., Stuart, A., Ord, J., Arnold, S. and O'Hagan, A. (1994). Kendall's advanced theory of statistics. London: Edward Arnold.
Leeuw, E., Hox, J. and Dillman, D. (2008). International handbook of survey methodology. New York: Lawrence Erlbaum Associates.
Lepkowski, J. (2008). Advances in telephone survey methodology. Hoboken, NJ: John Wiley & Sons.
McClave, J., Dietrich, F. and Sincich, T. (1997). Statistics. Upper Saddle River, N.J.: Prentice Hall.
Ramavataram, S. (1996). Secondary Sources. Nuclear Data Sheets, 79(4), pp.997-1015.
Sellars, D. (2009). Business plan project. [New York, N.Y.] (222 East 46th Street, New York, NY 10017): Business Expert Press.
Vogt, W. (2010). Data collection. Los Angeles: SAGE
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