Unit 6 Business Decision Making Tools Assignment

Unit 6 Business Decision Making Tools Assignment

Introduction

In this Unit 6 Business Decision Making Tools Assignment Coffex Coffee is a company which deals with the packaging of coffee. It is a quite successful company and earns good revenue. The company manufactures several coffee based drink which has become a recent trend in the market. Currently the management of the company wants to launch a new coffee based drink for the customers of the coffee shop. For this purpose the company wanted to conduct a research which will help them to collect primary and secondary data. The primary and the secondary data will help them to develop a clear idea about the taste, preference and the likings of the consumers. Based on this information the company will launch a new product. In order to collect the primary data then management of the company can conduct a survey on the customers.

Task 1

1.1 Create a plan for the collection of primary and secondary data for a given business problem

The management of Coffex Coffee needs to collect the primary and the secondary data for the purpose of gathering required information that will them in effective decision making.

The data which is collected for the first time through the efficient effort of the researcher can be termed as primary data. The collection of primary data requires time and effort and money. The primary data can be classified as quantitative data as well as qualitative data. The data which can be easily measured with some particular process can be termed as quantitative data. The quantitative data aids in performing accurate and profound analysis. The quantitative data can be gathered by observation, survey, simulation as well as experiment (Groves, 2004). On the other hand, the data which cannot be measured is termed as qualitative data. The qualitative data can be gathered by individual depth, observation and case studies.
In this current scenario the management of the Coffex Coffee can acquire the primary data by conducting a survey. The survey will be conducted on the population of London. In the survey both the quantitative as well as the qualitative data will be collected because both these data will help the management to undertake proper decision.

1.2 Present the survey methodology and sampling frame used

As said earlier a survey will be conducted by the management of Coffex Coffee on the population of London. A comprehensive research conducted on the people in order to gather vital information to help in business decision making can be termed as survey. In this case, the survey will be conducted on 100 people for the purpose of gathering information about their liking, preference and choices in drinking coffee which will help the management in the process of launching a new product in the market (Leeuw, Hox and Dillman, 2008).
The survey has two essential features. These two essential features include questionnaire and sample frame. The questionnaire consists of all the important questions which are sequenced in a proper manner for the purpose of obtaining data. The questionnaire helps the survey to be done in a fair way and prevent any kind of interview bias and general opinion.
The unit of population on which the survey the survey will be conducted is known as sample frame. The sample consists of a numerical identifier for specific individual in conjunction with other informative characteristics for the purpose of helping in more acute analysis. Sample frame should consider the following matters:

• Population Explanation: In order to conduct a survey, it is very important to study the population. This is because the size of sample frame depends on the size and diversity of the population.
• Assessment of Sample Frame: The large size sample frame is much important for gathering accurate, precise and extra information. However, the large size sample will be much expensive and time consuming as compared to the small size sample frame (Leeuw, Hox and Dillman, 2008).
• Types of Sampling: There are several ways in which sampling can be done. These methods include simple random sampling, stratified sampling, quota sampling, cluster sampling and multi sage sampling method.

In the present scenario, the stratified sampling method will be used in which the people aged from 18 will be surveyed. The survey will be done in London on 100 people with the help of well-designed questionnaire in order to gather information about the likings and preference of the consumer that will help the management to undertake proper decision for launching a new product.

Questionnaire

1.3 Design a questionnaire for a given business problem

A questionnaire is the most vital tool that is very helpful for the survey. In order to conduct a survey for the taste and preferences of the customers of the Coffex Coffee it is advisable for the management to design a questionnaire which on turn would help the management to take suitable decisions regarding the introduction of the new type of coffee in the market. The questionnaire must be framed very simply which would be easily understandable by the population that will be selected for the purpose of the interview. On the other hand the questionnaire that is prepared should have the introduction, purpose of the survey, different types of questions, specific number of questions and even cross check (Hamersveld and Bont, 2007). The questionnaire framed must have a proper purpose thereby collecting data from the sample population. The first and foremost objective in designing a questionnaire is to help the management regarding the decisions they have taken thereby executing the same. In this purpose the questionnaire will be having 10 short and brief questions that would probably help the management to gather the required data. The questionnaire is given below:

What is Age group?

• 18- 27
• 28- 37
• 38- 47
• 50 above

How often do you drink coffee?

• Once
• Twice a day
• Very frequent

Which form of coffee you prefer the most? Give reason.

• Hot coffee
• Cold coffee
• Coffee with ice cream

What type of coffee you prefer most?

• Café Crema
• Café Latte
• Espresso
• The flat White

When do drink coffee?

• Morning
• Evening
• Any time

How much you want to spend for your coffee (monthly)?

• £11- 20
• £21- 30
• £31- 40
• £41 and above
• Which brand is more preferable to you?

Nescafe

• Bru
• De Luca Coffee
• Coffee Hit

Why have you chosen the brand?

• Price
• Taste
• Quality
• Health

Would you like to have a new type of coffee?

• Yes
• No

What price would you like spend on the new coffee?

• £6- 10
• £11-15
• £16- 20
• £21- 35

The data which is collected from some other sources can be termed as secondary data. The collection of these data requires much less time, effort and money. However, they are not of less importance. The secondary data helps to make the primary data more precise and accurate. The secondary data can be collected both from internal as well as external sources. The internal sources include market strategies, customer feedback and sale. The external sources include newspaper, books, magazines and journals.

In the given case, the secondary data can be collected from magazines, journals and internets by the management of the company. They can collect the secondary data for the purpose of gathering information and grasp a clear understanding of the market size for coffee drinks, organizational structure, competitors, customer spending on coffee drinks and the market share of the major coffee producing companies. All these information will be very beneficial for Coffex Coffee and they will take proper decision for the launch of their product (Brace, 2008). 

Task 2

2.1 Create information for decision making by summarising data using representative values

After reviewing the information collected from the survey done it was found that firstly it was found that all the people that were selected as the sample population were fond of having coffee. Almost all the age group that has been selected loved to drink coffee. It has been found that the middle aged person consumes coffee more than the other age groups. Firstly when the sample population was asked how often like to have some coffee it was found that only 20% of the total sample population consumes coffee for once in the day, 35% of the total population consumes twice a day and the rest 45% consumes coffee very frequently (Linoff, 2008). So in this case the management has got a positive chance to introduce a type of coffee as maximum population love to drink coffee. Again, on asking the sample population regarding the form of coffee they would prefer the most 50% of the total sample population prefers hot coffee, 35% of the total sample population prefers cold coffee and the rest of the population i.e. 15% likes cold coffee with ice cream. This means that the management can develop a type of coffee that would suit the majority’s preferences. On the other hand when the population was asked what type of coffee they want to have, 15% of the total sample population said that they would prefer café crema, 25% of the total sample population answered that they would like to have café latte, 45% of the total population prefers to have espresso and at last 15% of the total sample population preferred the flat white coffee. So on scrutinizing on the data the management can develop the espresso coffee as most of the population likes it (Linoff, 2008).

2.2 Analyse the results to draw valid conclusions in a business context

When the population was asked when they like to have coffee 20% of the population drinks coffee in the morning only, 35% of the total sample population consumes coffee in the evening and at last it was found 45% of the total population consumes coffee at any time they wished to have. Next, when the population was asked how much they want to spend in coffee monthly the population answered that 45%of the population spends £11- 20, 15% of the population spends £21-30, 20% of the total sample population spends £31- 40 and only 20% of the population spends more than £40 on coffee. So, it is clear that if the management reduces the cost of the new type of coffee then it can increase its sales (Sarantakos, 2007).   On asking them about the brand they prefer 20% of the total population prefers Nescafe, 20% of the population prefers Bru, 40% of the population prefers De Luca coffee and 20% of the population prefers coffee hit.  Next when the population was asked why do they prefer their above mentioned brand they said that 25% of the population said likes the brand because of the less price, 40% said that they prefer the brand because of its taste, 20% of the population said that they likes the brand because of the quality and 15% said that they prefers the brand because it’s good for health.  At last when they were asked which price would they offer for their new type of coffee majority said that they prefer £6- 10, 35% said that they prefer £11-15, 15% said that they like to have £16-20 and at last only 5% of the population said that they can afford to have coffee at an amount of £21-25. So, this indicates that the management should make the new type of coffee but at a lower price in order to increase its sales.

2.3 Analyse data using measures of dispersions to inform a given business scenario

2.4 explain how quartiles, percentiles, and the correlation coefficient are used to draw useful conclusions in a business context

In order to measure the spreadsheet of a data, the measures of dispersion are used. The measures of dispersion are used by the business organization for the purpose of analysing and scrutinizing the effect of the investors and also the analyst which is based on the securities trading as well to study the variability. Standard deviation can be used for the purpose of assessing measures of dispersion. The measures of dispersion help in the following mentioned things:

• Helps in the comparison of variability between two or more series
• Aids in utilizing other statistical measures
• To monitor and control the variability
• Assessing the reliability on an average

The following measures of dispersion are used in order to study the variation:

• The Range      
• Mean Deviation
• Standard Deviation
• The inter quartile range and quartile deviation

The standard deviations are utilized for the purpose of assessing the amount of variation or dispersion from the average (Cizek, Hardle and Weron, 2011). The standard deviation helps to exhibit the historical volatility. The square root of the variance helps to calculate the square root of the variance. The standard deviation is used in order to calculate the standard deviation:

Mean can be defined as the average of all the numbers. Mean can be calculated with the help of the following formula:

The middles score of a particular set of data can be termed as median.
The most frequent score in a specific set of data can be termed as mode. The mode represents the highest bar in the histogram. The mode is used by the business organization for the purpose of understanding the most frequent tendency in the profit and also the loss of the organization.
The quartiles are used by the business organization because they are very simple, transparent and precise and also the practical period in order to track the major indication of the business which includes the income cost, customer served, sales and also the number of the customer satisfied. Quartile also helps in providing the time notice as well as it also help to spot the particular trend in order to influence the result of the next quarter (C?iz?ek, Ha?rdle and Weron, 2011). There are three types of quartile:
The number between the smallest number and the median in a particular set of data is known as first quartile. The first quartile is also called 25^th percentile.
The median in a set of data is known as the second quartile. The second quartile is also called 50^th percentile.
The number between the median and the highest set of data is known as third quartile. The third quartile is also called the 75^th percentile.
Percentile is defined as the positional estimation of a particular set of data. The business firms make use of the percentile in order to analyse the data in order to acquire the regarding the need and the requirement of the general people and thereby categorize them according to their need.
The correlation coefficient is defined as the statistical measurement of the linear relationship between and independent. It helps to calculate the degree in which the movement of the two variables is linked with each other. The correlation coefficient is calculated by the following formula:

Task 3

3.1 Produce graphs using spreadsheets and draw valid conclusions based on the information derived

1. Age group

2. Consumption of coffee

3. Form of coffee

4. Type of coffee

5. Time for coffee

6. Monthly spending

7. Brand name

8. Reason for choosing the brand

9. New type of coffee

10. Price level

3.2 Create trend lines in spreadsheet graphs to assist in forecasting for specified business information

The line which helps to display the general tendency of something is known as trend line. The trend line helps the business organization to forecast the profit, sales, income, expenditure as well the revenue of the company. The R2 equation of the trend line helps the business organization in forecasting. If the R2 equation is closer to 1 then the forecast will be correct and if the R2 equation is not closer to 1 then the forecast will not be accurate. The following table shows the expenditure of the consumer on the coffee drinking for five years:

In the above figure R2 is 0.986. This is very closer to 1. It is clear that the forecast will be correct.  In the future there is a chance of increasing the consumer expenditure on drinking coffee.

Task 4

4.1 Use appropriate information processing tools

For the purpose of this project management would have to mainly resort to the use of Ms-Projects and Ms-Excel for the purpose of investment analysis. It is expected that the organization would try to launch a new coffee drink which would less costly than the other major brands available in the market. It is for this reason the organization would have to buy new machines in order to reduce the cost while not tampering with the quality of the product. Ms-Projects would allow the organization to keep a track of the time frame of the project and Ms-Excel would allow the organization to analyse the lucrativeness associated with the project (Baker, 1981).

4.2 Prepare a project plan for an activity and determine the critical path

For the purpose of installing the new coffee machine the organization would have to analyse the various machines available in the market in terms of quality and the cost effectiveness. The organization would also have to spend a considerable time on finalizing the machine and training the employees to handle the same.

4.3 use financial tools for decision making

For the purpose of the investment analysis the tool of NPV has been resorted to as the same takes into account the time value of money and provides a more accurate outcome. The cash flow considered for the three machines is after taking into the revenue and the associated cost. The initial investments of the three machines vary as the same are not from a single manufacturer. For the purpose of discounting the cash flow of the organization a rate of 10% has been considered as the cost of capital of the organization. Based on the above analysis the machine A should be procured as that would yield the highest return for the organization (Bragg, 2000).

Conclusion

Various business decision making tools are employed by the organization not only in the face of crisis but when taking decisions regarding new product launches etc. Various statistical and financial tools better position the manager in regards to decision making. It is for this reason that the managers should be aware of the use of such business decision making tools.

References

Baker, A. (1981). Business decision making. New York: St. Martin's Press.
Brace, I. (2008). Questionnaire design. London: Kogan Page.
Bragg, S. (2000). Financial analysis. New York: Wiley.
Cizek, P., Hardle, W. and Weron, R. (2011). Statistical tools for finance and insurance. Berlin: Springer.
Groves, R. (2004). Survey methodology. Hoboken, NJ: J. Wiley.
Hamersveld, M. and Bont, C. (2007). Marketing research handbook. Chichester, West Sussex, England: John Wiley & Sons.
Leeuw, E., Hox, J. and Dillman, D. (2008). International handbook of survey methodology. New York: Lawrence Erlbaum Associates.
Linoff, G. (2008). Data analysis using SQL and Excel. Indianapolis, Ind.: Wiley Pub.
Sarantakos, S. (2007). Data analysis. Los Angeles: SAGE.