Unit 6 Business Decision Making Assignment - WM Morrison

Unit 6 Business Decision Making Assignment - WM Morrison

Unit 6 Business Decision Making Assignment - WM Morrison

Program

Diploma in Business

Unit Number and Title

Unit 6 Business Decision Making - WM Morrison

QFC Level

Level 5

Introduction

Business Decision making refers to as the process of identification of business problem, gathering data related to the problem, analysis and evaluation of facts and figures and drawing conclusions on the basis of which decision is made to select the best course of action to solve business problem. This unit 6 business decision making assignment WM Morrison aims at assisting WM Morrison which is a food discount retail store in London in solving its business problems based on the information provided in accordance with the evaluation of data gathered from the survey into the consumer behaviour and attitude towards food discounting retailing stores in Greater London.

Unit 6 Business Decision Making Assignment - WM Morrison

Task 1

P1.1 Plan for collection of primary and secondary data

  • Primary data – The primary data refers to as the data which is collected first time specifically for a purpose. The target population for collection of data will include the customers who visit the retail stores and grocery shops in London so that their perception can be known and analysed. It will include customers above the age of 18 years so that relevant data can be collected. This will constitute around 3-4 months for collecting for collecting the data from all the customers within the sampling frame and sample. These customers will be given questionnaires to fill and also personal questions will be asked from them through interviews and the responses will be noted a summarised. This will require  human resources  as part of team, digital communication resources, internet resources, mobile phones and telephone devices for telephonic interviews etc. (Olsen, 2012)
  • Secondary Data – The data which is not gathered for a specific purpose or which has been collected for some other purpose but can be used for the survey. The plan for collection of secondary data will include gathering data from secondary sources such as journals, publications, annual reports, articles, websites etc which contains details about the performance of food discount retail stores in London and the performance of WM Morrison. The internet can be used for collecting secondary data.

P1.2 Survey methodology and sampling frame used for survey

  • Survey methodology – The method of survey will include questionnaire and interviews. The questionnaire will be given to customers of retail stores and grocery shops at London and they will be asked to fill them and submit back. The questionnaires will also be sent on mail to customers who could not be reached personally requesting them to fill and send back. The interviews will be conducted by asking questions from included  customer satisfaction  the target population personally as well as through telephones by calling them (Hassine, 2016).
  • Sampling Frame – The sampling frame will include 60% of the target population which includes customers of food discount retail stores and grocery shops in Greater London who are above the age of 18 years. The customers will be selected on statistical sampling basis which means every 5th customer who will visit the retail stores and grocery shops will be selected to constitute the sampling frame and sample from the target population (Asan, 2013).

P1.3 designing of a questionnaire

Please answer the following question by marking a tick on the most appropriate answer in your opinion as a part of survey into the consumer behaviour and attitude towards Food Discount Retailing by WM Morrison:

1. Select your gender:

  1. Male
  2. Female

2. What is your age?

  1. 18-25 years
  2. 26-35 years
  3. 36-50 years
  4. Above 50 years

3. What is your working status?

  1. Government Employment
  2. Business
  3. Private Service
  4. Unemployed
  5. Not Working

4. What is your annual income?

  1. Below £10,000
  2. £10,000 - £25,000
  3. £25,000-£50,000
  4. More than £50,000

5. Are you local resident of Greater London?

  1. Yes
  2. No

6. Do you shop at food discount retailing stores?

  1. Regularly
  2. Sometimes
  3. Never
  4. Always

7. What is the distance travelled by you to your regular grocery shop or food discount retailing store?

  1. 0 – 2 kms
  2. 2 – 6 kms
  3. 6 - 10 kms
  4. More than 10 kms

8. Do you use food discount retailing schemes vouchers or discount coupons for purchase of grocery or food items?

  1. Sometimes
  2. Always
  3. Never

9. Which food discount retail store will you prefer for purchase of grocery or food items out of these four retail stores?

  1. WM Morrison
  2. Js Sainsbury’s
  3. Lidl Ltd.
  4. Aldi

10. Which factor do you consider most important while selecting the grocery shop or food discount retail stores?

  1. Price
  2. Quality
  3. Service
  4. Discount coupons or vouchers
  5. Variety of items

11. What is monthly expenditure at food discount retail stores?

  1. Up to £2,000
  2. £2,000 - £5,000
  3. £5,000 - £8,000
  4. £8,000 - £10,000\
  5. More than £10,000

12. WM Morrison is the best food discount retail store in Greater London. Do you agree?

  1. Agree
  2. Highly agree
  3. Disagree
  4. Highly disagree
  5. Neutral

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Task 2

P2.1 Creation of information for decision making by summarising data using the representative values

The responses received from respondents through questionnaires filled in by them as the part of survey into the  customer satisfaction  behaviour and attitude towards the food discount retailing stores in Greater London for WM Morrison on various aspects of research included 43% female and 57% male respondents. There were 28% respondents between the age of 18 to 25 years, 40% were those belonging to age group of 26-35 years, 20% were from age group 36-50 and 12% were above 50 years of age. As far as working status is concerned, 10% were government employees, 56% were businessmen, 22% were private employees, 2% were unemployed and 8% were those who did not work and were dependents. The income of various respondents was as follows:

Below £10,000 = 15%
£10,000 - £25,000 = 44%
£25,000-£50,000 = 26%
More than £50,000 = 15%

Out of total respondents 85% were the local residents from London and remaining 15% were visitors. 62% said that they visited food discount retail stores regularly, 23% sometimes visited, 5% never visited and 10% visited always. Most of the population used the food discount coupons and vouchers while shopping at retail stores and a very little of the respondents were those who never use them. The responses for the most preferred store were as follows:

WM Morrison – 32%
Js Sainsbury’s – 26%
Lidl Ltd. – 22%
Aldi – 20%

The responses received for most important factor to be considered by customers while shopping at food discount retailing stores are as follows:

Price – 30
Quality – 23
Service - 16
Discount coupons or vouchers - 20
Variety of items - 11

The responses for monthly expenditure on food discounting retail stores made by customers are as follows:

Up to £2,000 = 28
£2,000 - £5,000 = 37
£5,000 - £8,000 = 20
£8,000 - £10,000 = 10
More than £10,000 = 5

The responses about how many people agree that WM Morrison is the best retail store in Greater London included the following responses:

Agree – 38%
Highly agree – 24%
Disagree – 20%
Highly disagree – 8%
Neutral – 10%

Calculation of representative values: The responses received in respect of how many people agree out of the respondents for  business environment of WM Morrison  to be the best food discount retailing store in London have been taken to calculate the representative values. The calculation of representative values which are mean, median and mode is as follows:

Mean – It represents the average of responses or figures included in the set of data. It is calculated by adding all the values and then dividing it by number of values. The formula and calculation of mean is as follows:

Mean = Sum of values/Number of values

= (6 + 10 + 24 + 38 + 22)/5
= 20

Median – It represents the most middle value when the data is arranged in ascending order. It is equal to the second quartile which represents 50% of the values. The number of values which are before and after the median are equal in the set of data. The median is calculated by identifying n+1/2th term when number of values is even and it is calculated by calculating the average of n/2th term and n+1/2th term when the total number of values is even (Abid, 2016).

Median = n=1/2th term
6, 10, 22, 24, 38
Median = 5+1/2th term
            = 3rd term
             = 22

Mode – It represents the value which occurs most often. If no value is repeated in the series or set of data, there will be no mode of the values. It is the highest frequency of the data values.

Mode = Highest frequency
            = Not Applicable

Since no value is repeated, therefore there is no mode of these values.

P2.2 Analysis of results to draw valid conclusions

From the above calculation of representative values and summary of data by using the responses received from the survey into the customer attitude and behaviour towards food discount retail stores in London for WM Morrison it can be observed that the mean of the responses about how many people agree that WM Morrison is the best food discount retail store in London. This means that the average responses received for this view is 20. The median of responses is 22 which means the most middle value of responses is 22. Thus the probability of falling the value below and above 22 is equal. There is no mode of the responses which means no value is repeated. Apart from this other conclusions that can be made from the summarised data include that out of the four biggest food stores in London namely WM Morrison, Js Sainsbury’s, Lidl Ltd and Aldi, highest number of population prefer WM Morisson for shopping of  food items safety  and grocery products. It can also be concluded that out of the factors contributing the selection of food discount retail store, price of the products, quality of products and the discount coupons and vouchers are considered as the most important factors by most of the population. The monthly expenditure of most of the people at these stores range between £2,000 to £5,000.

P2.3 Analysis of data using measures of dispersion

  • Measures of Dispersion: It refers to as those values which indicate the variance of the statistical values or risk of dispersion of calculation of representative values. It denotes the level of how stretched or dispersed the distribution of values is. It includes variance, standard deviation and inter-quartile range (Robinson, 2016). The calculation of measures of dispersion as standard deviation and range is as follows:
  • Standard Deviation - It is the quantity or measure which express the variation or dispersion of data values. It denotes that how many members of the population or group differs from the mean value. The standard deviation of the responses is calculated As follows:

Responses (X)

Mean

X - Mean

(X-Mean)2

6

20

-14

196

10

20

-10

100

22

20

2

4

24

20

4

16

38

20

18

324

Total

 

 

640

Standard Deviation =√ ∑(X-Mean) 2/N
                                    =√640/5
                                    = 11.31

The standard deviation of the responses about WM Morrison being the best food discount retail store in London is 11.31 whereas the mean is 20. It means that the mean of 20 can deviate on either side by 11.31. There are chances that the responses received can be different by 11.31 % of the population. This denotes the risk of mean of responses about its variation.

Range – It is the measure which denotes the range of the values which is calculated as the difference between the highest and the lowest value. The range of the responses is calculated as follows:

Range = Maximum value – Minimum Value
            = 38 – 6
            = 32

The range of the responses is 32 which means that the difference between any of the two values of the data is not greater than 32. This indicates that the values are close to each other and lie between 6 and 38.

P2.4 Explanation of how quartiles, percentiles and correlation coefficient are used to draw valid conclusions

  • Quartiles – These are the measures of dispersion which are used to divide the whole population into four equal parts each representing 1/4th value in context of data distribution related to a particular variable or factor. It is useful in business decision making as it helps in ranking the data within the boundaries of three quartile points. It can be determined that how many values lie within first quartile representing 25%, second quartile representing 50% also known as median, third quartile of 75% an fourth quartile representing 100%.
  • Percentiles – These are the measures of dispersion used to divide the data into 100 equal parts. It denotes the rank of all the 100 parts by representi9ng the percent of data lies below a given percentile so as to determine the order or sequence of the data values. Thus it is very useful measure in making decisions as it helps in identifying the ranking of the data values.
  • Correlation Coefficient – Correlation refers to as the relationship between two variables or factors in a given situation. This relation may be either positive or negative. Positive correlation indicates the movement of two variables in same direction and negative correlation denotes the movement in opposite directions. The coefficient of correlation is used to quantify or measure the correlation. The correlation coefficient of 1 indicates that the variables are perfectly correlated and the change in one variable will affect the other in same ratio and proportion. It is used in business decision making as it helps in understanding the effect and relationship of two variables and measure the effect of changes on any one on the other (Institute, 2016).

Task 3

P3.1 Producing graphs using spreadsheets and drawing useful conclusions

Pie Chart

Pie Chart

From the above chart it can be concluded out of the four big food discount retail stores in Greater London most of the customers prefer to shop at WM Morrison and Js Sainsbury’s. It means they both are the major competitors of each other however Lidl and Aldi are also not far from the competition. Thus WM Morrison is already popular among the buyers in London.

Column Chart

Column Chart

From the above chart it can be observed that out uf all the factors that contribute to the selection of food discount retail store for purchasing the grocery and food items the price of products quality of food items and discount coupons offered by the retail stores are the most important factors. Least consideration is given by the customers to the variety of items available at these stores. (Webber, 2014)

Doughnut Chart

Doughnut Chart

The above chart shows the monthly expenditure of customers at the food discount retail stores in London. It can be concluded that large number of customers includes those who spent amount which range between £2,000 - £5,000 and up to £2,000. The expenditure goes above £10,000 for a minimum of people.

Bar Chart

Bar Chart

From the above chart it can be concluded that a large part of population including the customers above the age of 18 years agree that the WM Morrison is the best food discount retail store in London. A few people highly disagree to this view.

P3.2 creating trend lines for assisting in forecasting sales revenue

The sales revenues of four food discount retailers in UK are as follows:

 

Retailer

Year

WM Morrison

Js Sainsbury’s

Lidl Ltd

Aldi

2009

14,528

18,911

164.5

2,004

2010

15,410

19,964

167.9

2,014

2011

16,479

21,102

183.2

2,768

2012

17,663

22,294

202.7

3,891

2013

18,116

23,303

212.2

5200

2014  Forecast

19,268

24,447

225.12

5656.1

2015 Forecast

20,211

25,558

238.14

5953

2016 Forecast

21,154

26,669

251.16

7310

trend lines for assisting in forecasting sales revenue

trend lines for assisting in forecasting sales revenue

trend lines for assisting in forecasting sales revenue

P3.3 Business presentation to disseminate information effectively

Business presentation Slide 1, 2

Business presentation Slide 3, 4

Business presentation Slide 5, 6

Business presentation Slide 7, 8

Business presentation Slide 9, 10

Business presentation Slide 11, 12

Business presentation Slide 13, 14

P3.4 Formal Business Report

To,
The Management,
WM Morrison Plc

Subject: To provide information about threats of discount food retailers and ways to respond these threats.

This report aims at providing information based on the analysis and conclusions drawn from the data gathered through the survey into the consumer attitude and behaviour towards food discount retailing in London for WM Morrison. The threats to the company and ways to deal with them are mentioned in this report.

From the survey data analysis and evaluation it can be observed that the company is doing well in London but there still exist certain threats which have to be dealt with. The biggest of them is the growth and enhanced performance of its competitors which mainly include Js Sainsbury’s, Lidl Ltd and alder. The customers consider price and discount coupons and vouchers as most important factor in selection the retail store. These companies are offering best prices with heavy discounts to attract more and more customers. In order to deal with the threat of increasing competitors and shifting of existing customers the company need to take immediate actions by revising its pricing strategies and standards. Since quality ibis also the preference of major population the focus shall be shifted on improving the quality of product at store and offering attractive discounting vouchers and coupons to attract customers.

It is recommended that the company shall adopt the revised strategies to cope up with the threats and business problems and it can be concluded that through effective methods and strategies the company will be able to convert its threats into opportunities.

Regards
Abacus Research and Analytics
Market Research Consultant

Task 4

P4.1 Information processing tools for operational, tactical and strategic decision making

Operational decision making refers to as the decisions for WM Morrison which relates to the operations of company whose supervision is performed by the lower level management of company. Tactical level decision making involves middle level managers which perform observation, controlling, decision making, and other managerial activities. Strategic level decision making involves senior level management who handle strategic issues for the company through planning the processes. The information processing tools that can be used by the company at various levels are Management Information system (MIS) at strategic level, Transaction Processing System (TPS) at operational level and Decision Support System (DSS) at tactical level.

P4.2 Plan for activity and determination of critical path

The details of the project including the activities to be carried out can be represented using the following table and network diagram:

Activity

Description

Immediate predecessors

Expected time   

Number of staff required                    

 

A

Preliminary design

Nil

5

3

B

Market research

Nil

3

2

C

Obtain engineering quotes

A

2

2

D

Construct prototype

A

5

5

E

Prepare marketing material

A

3

3

F

Costing

C

2

2

G

Product testing

D

4

5

H

Pilot survey

B,E

6

4

I

Pricing estimates

H

2

1

J

Final report

F,G,I

6

2

critical path

The various paths on the above network diagram are as follows:

A-C-F-J = 12 days
A-D-G-J = 18 days
A-E-H-I-J = 22 days
B-H-I-J = 17 days

Critical path is the path which has the activities with the longest duration and it represents the shortest time required to complete the project (East, 2015). The activities on the critical path have zero float. The critical path of the project is as follows:

Critical Path = (A-E-H-I-J = 22 days)

The action plan that will be undertaken for the new product development is represented in the following Gantt chart:

Gantt chart

P4.3 Financial tools for decision making

WM Morrison Supermarkets Plc intends to evaluate the financial viability of two proposed capital investment projects, Project and project B as the company can invest in only one project. The cost of capital for both the projects is 10% and initial investment is £500,000. For assessing the viability the financial tools such as NPV and IRR can be used by the company for making decisions. The calculation of NPV and IRR for both the projects made using excel is as follows:

Year

Net Cash flow  (£’000)

 

Project A

Project B

0

-500

-500

1

100

50

2

200

150

3

400

300

4

300

400

5

200

300

NPV

350.74

322.09

IRR

33%

29%

  • NPV – It refers to as the present value of net cash flows from a project. A higher NPV suggests that the project will be able to generate more cash inflows for future in comparison to initial outflow.
  • IRR – It is the rate of return at which the present value of cash outflow equals the present value of cash inflow. The project which has the IRR exceeding the cost of capital shall be accepted as it suggests that the project will generate higher cash flows (Robison, 2015).
  • Recommendation for decision making – Out of the proposed capital investment projects for the company Project A has higher NPV and IRR as compared to Project B. Therefore the company shall accept Project A as it is capable to generate higher cash inflows for the company.

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Conclusion

From the above discussion and analysis about the consumer behaviour and attitude towards the food discount retail stores in London based on the data gathered from the survey and use of information processing tools and decision making tools it can be concluded that WM Morrison is popular among the customers in London. This report is able to provide useful information to the  management resources  of company to assist them in making decisions for the business. Also the formal report addressed to management has provided them the threats to the company and the ways that can be used to deal with these threats.

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