Business decision making Sample Report

1. Business decision making Get Your Essay Writing at Instant Assignment Help Australia

2. Table of Contents INTRODUCTION..........................................................................................................................6 TASK1............................................................................................................................................6 Plan for Collection of data.................................................................................................6 Questionnaire.........................................................................................................................8 TASK 2........................................................................................................................................10 Descriptive Statistics........................................................................................................10 Percentiles............................................................................................................................11 Correlation Coefficient.....................................................................................................12 TASK 3...........................................................................Error! Bookmark not defined. Graphical presentation.......................................Error! Bookmark not defined. Trend Lines...........................................................................................................................14 Presentation.........................................................................................................................15 Findings & Analysis........................................................................................................... 15 TASK 4........................................................................................................................................16 Part A: Network of activities.........................................................................................16 Part B: Investment Appraisal Techniques................................................................17 CONCLUSION............................................................................................................................21 Get Your Essay Writing at Instant Assignment Help Australia

3. REFERENCES............................................................................................................................22REFERENCES............................................................................................................................22 Get Your Essay Writing at Instant Assignment Help Australia

4. List of figures Figure 1: Histogram presenting sales of J Sainsbury plcError! Bookmark not defined. Figure 2: Histogram presenting operating profit of Sainsbury plc.Error! Bookmark not defined. Figure 3: XY scatter plot presenting sales of Sainsbury plc..Error! Bookmark not defined. Figure 4: Line diagram presenting sales of Sainsbury plc.Error! Bookmark not defined. Figure 5: Histogram presenting sales of Tesco plcError! Bookmark not defined. Figure 6: Histogram presenting operating profit of Tesco plc Error! Bookmark not defined. Figure 7: Scatter plot presenting sales of Tesco plc...Error! Bookmark not defined. Figure 8: Line diagram presenting sales of Tesco plcError! Bookmark not defined. Figure 9: Trend line presenting sales of Sainsbury plc.. Error! Bookmark not defined. Figure 10: Trend Line presenting operating profit of Sainsbury plc.Error! Bookmark not defined. Figure 11: Trend line presenting sales of Tesco plcError! Bookmark not defined. Get Your Essay Writing at Instant Assignment Help Australia

5. Figure 12: Trend line presenting operating profit of Tesco plc.Error! Bookmark not defined. List of tables Table 1: Descriptive Statistics for Sainsbury's performance.................................10 Table 2: Descriptive Statistics for Tesco’s performance.........................................10 Table 3: Percentiles for Sainsbury's performance.....................................................11 Table 4: Percentiles for Tesco’s performance.............................................................12 Table 5: Correlation Coefficient for Sainsbury's performance..............................13 Table 6: Correlation coefficient for Tesco's performance.......................................13 Table 7: Calculation of NPV for Project A......................................................................18 Table 8: Calculation of NPV for Project B......................................................................18 Table 9: IRR calculation for Project A.............................................................................19 Table 10: IRR calculation for Project B...........................................................................19 Table 11: IRR for Project A..................................................................................................20 Table 12: IRR for Project B..................................................................................................20 Get Your Essay Writing at Instant Assignment Help Australia

6. INTRODUCTION Every owner or manger being in the charge of organization’s performance faces the situation for decision making at all the levels of organization. In present scenario each business related decision is made after though evaluation of opportunities available. Scholars from time to time have developed a range of quantitative techniques so as to come up with optimal solution for each issue (Jaisankar, 2009). Performance of the company over last few years can be analyzed through adoption of these techniques. This analysis in addition to the information collected assist in forecasting future performance for the business unit. To demonstrate the research work performance for two retail giants; Sainsbury and Tesco plc has been analyzed. Research emphasizes on evaluation of profitability, performance, consumer preferences and position of two companies within the industry. It is through application of capital budgeting techniques the investment decision of the company is justified. TASK1 Plan for Collection of data Business decisions are majorly based on the information gathered for the purpose of analysis. It is the validity and reliability of data collected that determines the accuracy of evaluation and in turn makes the decision profitable. Information required is formally collected with the help of two sources hence data is categorized as follows: Get Your Essay Writing at Instant Assignment Help Australia

7. Primary Data: The facts and figures that are collected for the first time in order to serve the purpose of study into consideration. Collection of the data helps in developing a brief overview of opinions of different individuals. For the purpose of conducting research on Sainsbury’s performance primary data will be collected in the form of accumulating customer references by way of questionnaires. Secondary Data: Information that is collected from the secondary sources such as previous research works, journals and articles published and so on. The data has already undergone the analysis for the purpose of some other study or research. It is through adoption of qualitative techniques of analysis that secondary data is analyzed. The information most of the time supports the research work in addition to primary data. In case of Sainsbury plc information about company can be extracted from the financial statements and articles published about the company. Once the data will be collected from both primary and secondary sources further evaluation is done through adoption of appropriate survey methodology and sampling frame. Survey methodology: Survey that supports the research work can be conducted by way of collecting information in the form of questionnaire from customers. The methodology assists in accumulating reliable information. The data will be collected from large customers hence single questionnaire should serve the purpose. The questionnaire should be simple to answer and less time consuming so that consumers gets interested in giving their feedbacks (Fowler, 2009). In order generate feedbacks questionnaire will be Get Your Essay Writing at Instant Assignment Help Australia

8. filled through interview method. This in turn helps in collection of primary data for the purpose of evaluation. The secondary data will be collected by referring published articles and journals on the field. Sampling frame: The framework that facilitates selection of sample and collection of data in a systematic manner is termed as a Sampling frame. It is through random sampling method the sample of customers for collection of data is collected. The technique assigns every outcome an equal probability for selection purpose. The sample size for conducting survey comprises of around 120 customers. This customers since are selected based on random sampling method comprises of all group of people so as to get clear idea of the business position in minds of customer (Groves and et.al., 2013). Questionnaire Name: Contact details: Nearest Sainsbury store: Q.1. Are you satisfied with services of Sainsbury? Yes No Q.2. Do you find the prices reasonable at Sainsbury’s store? Yes No Q.3. Do you think employees behave in a polite manner at store? Get Your Essay Writing at Instant Assignment Help Australia

9. Yes No Q.4. Do you face difficulty in searching the product of your choice? Yes No Q.5. Do you like Ambience of the store? Yes No Q.6. Are discounts and other offers attract you for making more purchase? Yes No Q.7. Do you possess any special preference for Sainsbury’s products? Yes No Q.8.Do you company should work for some improvements? If yes, kindly state ________________________________________ Q.9. If you find more of Sainsbury’s store in your city; would you love it? Yes No Q.10. your valuable suggestions _________________________________________ Get Your Essay Writing at Instant Assignment Help Australia

10. TASK 2 Descriptive Statistics Table 1: Descriptive Statistics for Sainsbury's performance Sales Mean 14759.81 Standard Error 973.2369 Median 16061 Mode #N/A Standard Deviation 4866.185 Sample Variance 23679753 Kurtosis -0.69538 Skewness -0.58956 Range 17292.5 Minimum 5001.5 Maximum 22294 Sum 368995.3 Count 25 Operating Profit Mean Standard Error Median Mode Standard Deviation Sample Variance Kurtosis Skewness Range Minimum Maximum Sum Count 590.588 46.0969 656 #N/A 230.4845 53123.1 3.236692 -1.47161 1025 -151 874 14764.7 25 Table 2: Descriptive Statistics for Tesco’s performance Sales Mean 36312 Standard Error 4096.398 Median 33711.5 Mode #N/A Standard Deviation 16385.59 Sample Variance 2.68E+08 Kurtosis -1.21182 Skewness 0.387411 Range 49555 Minimum 14984 Operating Profit Mean Standard Error Median Mode Standard Deviation Sample Variance Kurtosis Skewness Range Minimum 2091.3125 278.1557375 1843.5 #N/A 1112.62295 1237929.829 -1.16794686 0.474418418 3211 774 Get Your Essay Writing at Instant Assignment Help Australia

11. Maximum Sum Count 64539 580992 16 Maximum Sum Count 3985 33461 16 Descriptive statistics provides certain important quantitative measurement that assist in analyzing the performance of the company. The tabular presentation shows the descriptive statistic for the figures of sales and operating profit of both Sainsbury and Tesco plc (Lucey, 2002.). The average of Sales and operating that is measured in the form of mean is higher for Tesco plc indicating the large scale operation of business unit. Standard error is the measurement of the variances that may occur in the data provided. In case of Sainsbury plc standard error is lower suggesting the data is more reliable and d accurate. Standard deviation on contrary calculates the deviation or variance the values have from the average value. In other words it measures the manner in which data is spread around the mean. Sainsbury plc with comparatively lower standard deviation suggests that degree of deviation of values from mean is lower. Percentiles The technique emphasizes on measurement of the proportion of values that fall below specific value. Majorly it calculates a 25th, 50th and 75th percentile that determines the value below which 25%, 50% and 75% of value fall respectively (Newbold and et. al, 2009). Table 3: Percentiles for Sainsbury's performance Percentiles Sales 25th 11223.8 Operating profit 520 Get Your Essay Writing at Instant Assignment Help Australia

12. 50th 75th 16061 18206 656 756 Table 4: Percentiles for Tesco’s performance Percentiles Sales 25th 22169.25 50th 33711.5 75th 48948 Operating profit 1132 1843.5 2885.5 The above figure for Sainsbury plc shows that 25% of overall values lie below 11223.8; 50% of values lie below 16061 and 75% below 18206. Similarly, 25% of values of operating profit fall below 520; 50% below 656 and 75% below 756. Revenue of the company is increasing year-on-year basis suggesting the 75% of values for both sales and operating profit lies below highest value (Wallnöfer and Hacklin, 2012). The same being the case with Tesco plc the quartile with highest values has 75% of all the values of sales and operating profit. This indicates the company too is achieving growth in its sales every year; that in turn resulted in increase in operating profit on annual basis. Correlation Coefficient Correlation coefficient is the quantitative technique that helps in measurement of the degree and direction of relationship that is present between two variables. The relationship is established one of the variables is dependent on other. In the case two variables that are analyzed are Sales and operating profit (Kazan, Özer and Çetin, 2006). Sales are an independent Get Your Essay Writing at Instant Assignment Help Australia

13. variable that is determined by the market factors and operational efficiency of the company. Operating profit on contrary is dependent on level of sales. Measurement of correlation coefficient for both Sainsbury and Tesco is presented underneath. Table 5: Correlation Coefficient for Sainsbury's performance Column 1 Column 1 Column 2 Column 2 1 0.3160 52 1 Table 6: Correlation coefficient for Tesco's performance Column 1 Column 1 1 Column 2 52 The correlation coefficient for both the companies shows that there is Column 2 0.9966 1 positive or direct relation between both the variables. This can be signified from the fact that coefficient is positive in both the cases. It suggests that with increase in sales there will be corresponding increase in sales. The degree of correlation in case of Sainsbury is moderate since value is measured at 0.316052. This indicates one unit of operating profit will rise when there is approximately 32% increase in sales. In addition it signifies that profitability of the company is dependent on various other factors such as cost, market conditions and so on. In case of Tesco plc the degree of Get Your Essay Writing at Instant Assignment Help Australia

14. relation between the variables is strong since correlation coefficient is calculated at 0.996652. The value is approximately equivalent to 100 signifying that with every unit increase in sales there will be a unit increase in operating profit (Freedman, Pisan and Purves, 2007). Histogram is the graphical presentation that presents the distribution of data over a period of time (Li, 2006.). Sainsbury’s sales figure in the histogram indicates that the sales of £ 20000 has highest frequency suggesting that it is the sales that is achieved maximum number of times. The graph of cumulative frequency indicates that revenue is growing at decreasing rate (Jankowicz, 2005.). The graph for operating profit on contrary brings forth the fact that profit of £ 800 ha maximum occurrence and the profit is rising at increasing rate. This signifies that profit for the company is dependent on vario The graphical presentation for Tesco plc indicates that company has achieved maximum number of times sales more than £20000. Operating profit has highest frequency at the values more than £800. The cumulative graph for both sales and profit is signifying that sales is increasing at initial stages at increasing rate and then becomes constant (Gibson, 2011). Trend Lines Trend line for sales of Sainsbury plc anticipates that revenue is going to rise at decreasing rate in upcoming year and gradually reach the target levels. In addition the value of R at 0.840 indicates that strong relation exist between sales of two corresponding years. Get Your Essay Writing at Instant Assignment Help Australia

15. Operating profit trend line anticipates that profit is going to rise at increasing rate in upcoming years. Also the value of r is very close to 1 signifying the strong relation between profits of two years. Trend line for sales of Tesco plc anticipates the revenue for the upcoming years will rise initially at increasing rate and then at declining rate. Also the company may not achieve it target figures in near future. In addition value of R suggests the weak relation between sales of two years. The trend line for operating profit has similar anticipation that of sales and also value of r signifies the weak relation (Ge, 2002). Presentation Power point presentation enclosed. Findings & Analysis Analysis based on the graphs brings forth the facts such as sales and operating profit for corresponding years in case of Sainsbury plc are highly correlated. In case of Tesco the relation between figures of two years is weak. The anticipation as per trend lines suggest that sales for Sainsbury is going to increase at decreasing rate while operating profits are anticipated to increase at higher rates. On other hand in case of Tesco plc sales and operating profit are anticipated to increase initially at increasing rate and then at decreasing rate. Get Your Essay Writing at Instant Assignment Help Australia

16. TASK 4 Part A: Network of activities The network diagram is prepared to arrive at the shortest path possible for completing the series of action (Cohen and et. al., 2013). The same is prepared underneath for BBC news. Get Your Essay Writing at Instant Assignment Help Australia

17. BBC news has to design a framework through which it is able to complete all the activities before 6:00 p.m. so that show can be broadcasted at the time. The critical path as identified in diagram is as follows: The path that is shortest and results in completion of all activities on time is B-C-F-G; the same is highlighted in red in network diagram. Through this path the channel will be able to complete all the activities in 85 minutes that is till 5:55 p.m. Part B: Investment Appraisal Techniques The capital budgeting techniques are developed over a period of time so as to judge financial viability of the project under consideration (Khamees, Al-Fayoumi and Al-Thuneibat, 2010). The projects available are analyzed on the basis of Net present Value (NPV) and Internal Rate of Return (IRR) method. Get Your Essay Writing at Instant Assignment Help Australia

18. NPV – Project A Table 7: Calculation of NPV for Project A PV Factor @ 10% @10% 0.909 31815 0.826 24780 0.751 18775 0.683 13660 Cash Flow 35000 30000 25000 20000 PV of CF PV Factor @ 60% 0.625 0.39 0.244 0.152 PV of CF @60% 21875 11700 6100 3040 Year 1 2 3 4 Scrap value 10000 Total present value Less Initial Investment Net Present Value 0.683 6830 95860 50000 45860 0.152 1520 44235 50000 (5765) NPV – Project B Table 8: Calculation of NPV for Project B PV Factor @ 10% @10% 0.909 18180 0.826 16520 0.751 18024 0.683 24588 Cash Flow 20000 20000 24000 36000 PV of CF PV Factor @ 60% 0.625 0.39 0.244 0.152 PV of CF @60% 12500 7800 5856 5472 Year 1 2 3 4 Scrap value 10000 Total present value Less Initial Investment Net Present Value 0.683 6830 84142 50000 34142 0.152 1520 33148 50000 (16852) IRR- Linear interpolation method: Internal rate of return by linear interpolation method is calculated with the help of following formula: Get Your Essay Writing at Instant Assignment Help Australia

19. Where, A is the lower trial rate B is the higher trial rate PVA represents present value of cash inflows with lower trial rate PVB represents Present value of cash inflows with higher trial rate IRR – project A Table 9: IRR calculation for Project A Cash Flow 35000 30000 25000 20000 10000 Total Present value Less Initial investment NPV Year 1 2 3 4 PV @20% 0.833 0.694 0.578 0.482 0.482 Net Cash flow 29155 20820 14450 9640 4820 78885 50000 28885 Residual Value IRR –Project B Table 10: IRR calculation for Project B Cash Flow 20000 20000 24000 Year 1 2 3 PV @20% 0.833 0.694 0.578 Net Cash flow 16660 13880 13872 Get Your Essay Writing at Instant Assignment Help Australia

20. 4 36000 10000 0.482 0.482 17352 4820 66584 50000 16584 Residual Value Total Present value Less Initial investment NPV IRR calculation- MS excel Project A Table 11: IRR for Project A Year Cash Flow -50000 35000 30000 25000 20000 10000 49% Initial Investment 1 2 3 4 Residual Value IRR Project B Table 12: IRR for Project B Year Cash Flow -50000 20000 20000 24000 36000 10000 33% Initial investment 1 2 3 4 Residual Value IRR Get Your Essay Writing at Instant Assignment Help Australia

21. Recommendations NPV method discounts the future cash flows at cost of capital to arrive at present value (Chen and Ward, 2000.). It recommends the investment in project A at 10% cost of capital since the project is capable of generating positive and comparatively higher NPV. On contrary at 60% cost of capital NPV is negative for both the project so no investment should be considered if cost of capital is estimated to be at 60%. Internal rate of return measures the rate at which NPV becomes equal to zero. According to linear interpolation method IRR for project A is calculated at 37.02% whereas for project B the same is calculated at 29.45%. Excel calculation on other hand measures IRR at 49% and 33% for both project A and project B respectively. IRR calculation through both of the methodologies suggest the investment in project A since it higher IRR. Hence, capital budgeting techniques recommends the investment in project A at 10% cost of capital. CONCLUSION The research herewith dealt application of various financial measures and quantitative techniques for the purpose of decision making. It brings forth the fact that reliability of data collected is essential for the purpose of research. In addition quantitative techniques such as descriptive statistics, graphical presentation and network diagram helps in directing business actions in appropriate manner. Investment decisions are supported by the application of investment appraisal techniques. Get Your Essay Writing at Instant Assignment Help Australia

22. REFERENCES Chen, Y. H. and Ward, C.,2000. Evaluating investment projects: The hurdle rate. Journal of Corporate Real Estate. 2(4).pp.295–303. Cohen, J. and et. al., 2013. Applied Multiple Regression/ Correlation Analysis for the Behavioral Sciences. Routledge. Day, A., 2005. Mastering Financial Mathematics with Excel: A Practical Guide for Business Calculations. Financial Times/Prentice Hall. Fowler, J. F., 2009. Survey Research Methods. SAGE. Freedman, A.D., Pisani, R.and Purves, R.,2007. Statistics. 4thed. WW Norton & Company incorporated. Ge, D., 2002.Value pricing in presence of network effects. Journal of Product & Brand Management.11(3). pp.174–185. Gibson, A., 2011. Exposure and understanding the histogram. Peachpit press. Get Your Essay Writing at Instant Assignment Help Australia