Business Decision-Making - Sampling Frame and Survey Methodology - Assignment Example

Student’s Name: Instructor’s Name: Course Code & Name: Date of Submission: TASK 1 INTRODUCTION Business prosperity is always reflected by the decision made at the preliminary stages of business such as the point of idea generation until the business starts to operate. Therefore, it is mandatory to carry enough visibility study in order to enhance sound decision making and avoid loss of funds due to failure of the business as a result of inadequate research on the viability of the business idea. Investment on hospitality industry in Birmingham is challenging but worth when one get a proper grip of what market demands. Thus, it is important to do in-depth analysis on the industry to determine the niche that the current players in the industry have not filled and satisfy the dissatisfied customers from the provision of the current hospitality services (Helfat, C. and Lieberman, M. 2002). We came up with a business plan in which it will guide us in determination of the strength we should utilize, weakness to avoid, opportunities to improve turnover and customer services and also, coming up with the threats posed by the current hospitality players (SWOT analysis) (Coldwell, D. and Herbst, F. 2004). 1.1 PRIMARY AND SECONDARY DATA COLLECTION PLAN Data will be collected from two sources that is secondary journal which includes published reports about hospitality in Birmingham, tourism journals and published hotels published reports. Secondary data collection should come first in order to guide us in formulation of structure to be used in collection of primary data. Secondly, data will be obtained from primary source that collection of raw data from the field. Primary data collection will involve use of questionnaires, interviews and observations. In order to obtain a well exhaustive and adequate feedback on questionnaires and interviews, it will be mandatory to carry several pilot test on the adequacy of the questions both on decision making and adherence to the research ethics. The questions should include satisfaction of customer on the current services, what they lack from current hotels and what need to be improved or what combination services do they prefer to have in a hotel. On approval, the interviews and questionnaires will be administered in public places during lunch and dinner time in order to avoid unnecessary inconvenience on respondent time and get Maximum Corporation (Coldwell, D. and Herbst, F. 2004). 1.2 SAMPLING FRAME AND SURVEY METHODOLOGY Sampling frame Sampling frame on visibility study will cover a 3600 radius of Birmingham to obtain target population. The regions will be targeting highly populated regions such as tourist attraction sites, institutions and government and Non-governmental offices. The target population will compose of 500 respondents from which 100 questionnaires will be picked by use of random sampling which will then analyzed. The table below shows how data will be collected and recorded; Category Population Sample Male 200 40 Female 300 60 Total 500 100 Survey methodology The survey will rely on the use of questionnaires and interviews in collection of data which will categorized and recorded in order to be used to obtain sound analysis results on the factors that influence hospitality industry in Birmingham. Quantitative data on the hospitality industry will be used in the visibility study and obtained from various sources within the last decade in market analysis of the hospitality industry in Birmingham, after which the data is statistically manipulated to assess and analyze the extent of correlation and causation in the data. Sampling technique Random sampling will be the most appropriate technique in collection of primary data. The technique was arrived at after due consideration of the expected data and behavior of the target population this include relatively uniform distribution of the target population and cost reduction that come with using the technique without compromising with the quality of the primary data (Coldwell, D. and Herbst, F. 2004). 1.3 QUESTIONNAIRE This questionnaire seeks to collect data for determination of market visibility in hospitality industry. The study looks to determine the niche and opportunities in hospitality industry in Birmingham. All information will be treated with confidentiality. Do not put any name or identification on this questionnaire. Answer all questions as indicated by either filling in the blank or ticking the option that applies SECTION A: BACKGROUND INFORMATION 1. Age of the investor: a) 19 years and below ( ) b) 20-30 years ( ) c) 31-40 years ( ) d) 41-50 years ( ) e) Over 51 years ( ) 2. Indicate your gender a) Male ( ) b) Female ( ) 3. Marital status. a) Single ( ) b) Married ( ) c) Divorced ( ) e) Other (specify) ………………………………………. 4. What is the highest level of education attained? a) Primary ( ) b) Secondary ( ) c) College ( ) d) University ( ) e) Other ( ) SECTION B: CUSTOMER PREFERENCE 5. How many times in a week do you go out for dinner, breakfast or lunch? ……………………………………………………………………………………………………… 6. What type of services do you miss either in your dinner, breakfast or lunch outings? ……………………………………………………………………………………………………… 7. Are you satisfied with services being provided by current market players? [Yes] [No] If no, what makes you dissatisfied? ……………………………………………………………………………………………………… 8. What are your maximum and minimum spending limits on dines per meal? ……………………………………………………………………………………………………… SECTION C: RECOMMENDATION 9. Do you have any suggestion on how to improve customer service delivery in hospitality industry? ……………………………………………………………………………………………………… Thank you for your co-operation in completing this questionnaire. Kindly return the questionnaire as specified. DATE COMPLETED………………………….. TASK 2 2.1 MEAN, MEDIAN AND MODE Mean £47055.5556 Median £45000 Mode £45000 2.2 DEFINITION, ADVANTAGES AND DISADVANTAGES OF MEAN, MEDIAN AND MODE Mean It is measure of central tendency always obtained by summing up all the data then dividing by the number of the values summed. Mean (µ) = x= Middle age in each class µ = mean f = Frequency of in each class n = Sample size The method is suitable for data which is not skewed since it is affected by the extreme values in a given distribution. . When median is equal to mean the distribution is normal while when there is variation distribution is either positively or negatively skewed (Chikkodi & Satyaprasad, 2010) Advantages It takes into consideration all the values in a distribution thus not biased. It is easy to compute since it only requires addition and division knowledge to come up with mean. It is easy to understand since it is self-explanatory that the value obtained is the measure of central tendency of the distribution. Disadvantages It is affected by skewed/ extreme data distribution thus biased conclusion if the data is not normally distributed. The mean might not be a number in the distribution but approximate of value that lies in the distribution. Median It is the value that divides a distribution halfway for the top and bottom data arranged either in ascending or descending order (Gupta, C. B. 2007).. Median= Lm+ [] i Where, n= sample size F= cumulative frequency of the preceding class f=frequency of the median class i=Class width Lm= Lower class boundary Advantages It is not affected by the skewedness of data distribution. It does not involves selection of value out of the recorded data thus realistic. It is easily understood thus ease decision making process. Disadvantages It assumes other data in the distribution thus might have some biasness. It is only applicable to limited type of data i.e. cardinal data alone. It is not suitable to use in carrying other type of analysis unlike mean. Mode This is the value that is appearing many times compared to other value and therefore there is higher possibility of occurring future or being sample out (Gupta, C. B. 2007). Mode= Lmo + [] i Lmo= Lower class boundary of mode class Δ1 = difference between the frequency of the modal class and the class after modal class frequency Δ2= the difference between the mode class frequency with the frequency of proceeding class i= Mode class width Advantages It is not affected by skewedness of the data distribution One obtains actual value from the distribution unlike mean. It is easy to calculate and understand. Disadvantages It cannot be used for other analysis. It does not consider all the data in the distribution. Modes can be more than one thus one obtain mode through approximation. INCOME ANALYSIS From the data obtained it is evident that the distribution of income from 1995-2012 is skewed since mean and median is not equal. Therefore, making median appropriate measure in drawing decision other than mean. The most occurring income between 1995-2012 periods is £45000. Therefore, it can be used in forecasting though it is not the best option since it doesn’t have high degree of certainty. 2.3 STANDARD DEVIATION AND MEAN WHERE 95% OF INCOME RANGE The standard deviation of the income of HMV is £16163.9937. Standard deviation shows the level of risk involved in a given investment and it is always important in making decision since more risky ventures are considered to be profitable given that the management is able to manage the risk well. Profit is always termed as the return from risk management (Gupta, C. B. 2007). Mean of 95% of income range lies in £44579 2.4 SALES EXPENSES AND NET INCOME CORRELATION COEFFICIENT. Sales expenses and net income have a correlation coefficient of 0.90255496. Therefore, sales expenses and net income have very strong positive relationship. Meaning when sales expenses increases net income increases too due to intense competition i.e. high promotion and advertisement expenditure. INTERQUARTILE AND 80TH PERCENTILE OF NET INCOME Interquartile range = ½ (Q3-Q1) =½ (57000-34750) =£11,125 80th percentile of net income = £58400 Source: excel Quartile It is measure of dispersion used in determination of the position of first quartile (Q1) that quarter of distribution and third quartile (Q3) that is three-quarter of the distribution. This help in analysis of the location where the highest and the lowest value in the distribution lies. It can be used to obtain interquartile range too in order to draw conclusion on the deviation between the highest and lowest value in the distribution (Gupta, C. B. 2007). Percentile It divide distribution into 100 equal part, this enables a manager to determine the range in which most of the data appears in the distribution thus act appropriately e.g. if 50th percentile comes up with value less than average therefore, requires manager to take stern action rescue the firm from failing (Chikkodi & Satyaprasad, 2010). Correlation coefficient It is measure of dispersion that assist managers and analyst in determination of the strength of relationship between two variables this is always important in instances where they seek to determine impact another variable in case they of alter a given factor in the production. It ranges between -1 and +1 and denoted as (r) (Chikkodi & Satyaprasad, 2010). TASK 3 3.1 GRAPHS i. Line graph for advertising and sales The level of sales has been on the rise since 1995-2010 due to increasing expense on the advertisements incurred by the company. This shows a positive relationship between sales revenue and advertisement expenses. ii. Pie and Bar chart for income From the pie and bar chart above, we are able to note that Birmingham branch contributes the highest proportion of the income followed Solihull, Coventry, Wolverhampton and lastly stoke produces the lowest proportion. iii. Histogram From the histogram above we are able to note that the employees earning £21-£30 are the majority followed by £41-£50, £51-£60 and £71-£80 have the same number of employees, £61-£70 and lastly, £11-£20 have the least. 3.2 Scatter graph Linear equation; y = 357.76x – 713006 Where, Y= Independent variable representing level of sales X= Dependent variable representing years. 713006= It is fixed level of sales. Sales between Jan and June 2011 y = 357.76x - 713006 y= 357.76(2010 +1/2)-713006 =£6270.48 3.3 BUSINESS PRESENTATION The chart above shows the performance of the company’s branches for the last financial year. The chart below shows division of the working hours for the employees as a way of enhancing efficiency but reducing overwork, underwork and Idle labor in the company. The sales of the company has been increasing with minimal deviation since the year 1995 up to the last financial year of 2010. The chart below shows overview of the trend that has been exhibited by the company, 3.4 FORMAL BUSINESS REPORT FOR OLIVE OIL COMPANY We could like to acknowledge the management, shareholders and all the stakeholders of Olive Oil Company for the growing support that you have shown since we entered this competitive industry. We a glad to report a positive results on the company performance despite the negative trend witnessed in the industry which has led to downturn of other companies in the industry and other industries as well. The sales of the company has been increasing since the year 1995 up to date where we recorded sales of £6300 up by £400 from last year’s performance. There is change in the net profit of the company also due to increase efficiency where majority of the employees work in a range of 21-30 hours while the few employees works for 11-20 hours thus increase of the production. Advertising cost also has been increasing due to the fact that many firms has entered into the market thus increasing level of competition. The advertisement included adverts on media and use of sales personnel which has yielded positively since we’ve seen increase in the sales considerably higher than the increase in the cost of advertising. The best performer according to the branches of company was Birmingham where we recorded net income of £2300 this is as a result of favorable factors of the region that includes high population of the region. We appreciate the effort of all stakeholders who have shown has support over the years and we are looking forward to growing our sales and thus increase shareholder wealth without compromising on the corporate social responsibility of the company. TASK 4 4.1 Uses of MIS in operational, strategic and tactical functioning of organization Operational management information system is important in the following ways; General ledger subsystem helps manager in coming up with periodic reports and statements, aid in budgeting, ledger creation and fiscal period definition and more importantly production of list accounts maintained in the organization. Sales order processing subsystem helps manager to record day to day sales orders, provides level on inventory and warning to reorder levels, updating stock levels on after sales and production of sales invoices. Account receivable and account payable subsystem helps managers to come up with customer monthly statements, invoices, credit and debit notes, cash received and payments made for the credit sales and purchases. Payroll subsystem is of great use in an organization since it helps in recording employee payment, PAYE deduction and other disbursement entitled to employees. Purchase order processing subsystem deals with purchase order processing and tracking records of the goods. The subsystem helps in recording and seeking reference on date of purchase and any damages if it occurred. Strategic management information system is always used by the strategic level of organization in making decision such as company financial goals and investments decision making (They make long term decisions of the company). It includes two types of MIS this are financial condition analysis and long-range forecasting system (Guevara, L., Rosales, M. and Romero, D. (2010). It therefore, have the following importance; Financial condition analysis helps in ratio analysis report and a wide range of tools of analysis of the company soundness and ability to withstand financial distress and more importantly show areas of improvement. The report is more detailed and easy to understand thus safe time without compromise of the quality of the decision arrived at by the management. Long-range forecasting system- through use of the past data we are able to determine impact of future trend in economic environment and organization soundness for example effect of changes in interest rate, inflation level, competition and negotiation of different wage rate. Tactical management information system helps in supplementing the decision made by the managers at the tactical level. The uses of tactical MIS is important in the following ways; Budgeting systems helps the manager in determination of future financial needs, trends and forecast demand in order to adjust accordingly to avoid company inability to adopt changes. Most importantly the budgets forecasted will be compared with actual to find deviation and seek corrective mechanism if it falls below the budget or appraisal of departments if they exceeded expectation. Cash management systems assist managers to ensure there is sufficient cash needs, excess funds are invested and determination of borrowing power to meet the emerging needs and investment opportunities that may arise. Lastly, the MIS provides help in resources reallocation within different departments in the organization. Capital budgeting systems this aid decisions made by the manager such as disposal, acquisition and project analysis and comparison using tools such as net present value and internal rate of return. Investment management systems this helps managers in drawing sound decision in regard of huge capital investment in volatile market of stock, bonds and other financial securities through analysis of the factors that might leads to increase in return or fall of return in future and thus enabling managers to sell or buy the security. 4.2 Project management definition and Network Diagram analysis Project management is the process by an organization mobilizes resources such as knowledge, skills and technique to execute a given activity efficiently and effectively as an aim of accomplishing organizational goal by providing unique products and services. It is always accompanied by the report which periodically submitted to the strategic management by the tactical management in order to approve and may be allocate more resources if the project shows potential viability (Peterson Drake, P. and Fabozzi, F. 2002). NETWORK DIAGRAM 0 0 4 4 2 14 14 3 4 26 23 6 30 30 5 34 31 7 8 39 39 9 The project will take 39 days to be completed. The critical path is foundation-Framing-Siding-Paint exterior-fixtures Early start It is earliest time an activity is accomplished/finished at its head. Esi = LCj – TFij – Dij Where, Esi= Early start LCj= latest completion at the head of the activity TFij= Total Float of the activity Dij= Duration of the activity Late start It is the latest time an activity can start without delaying the project completion time. Early finish It is the early start of an activity added to the activity time. EF= ES + D Where, ES= early start D= Duration of the activity Late finish It is the latest time an activity can be finished/completed without delaying the project completion time. Slack dummy This is the activity that does not consume any time or resources but aimed joining (Complete) two activities. It is therefore, can be delayed without delaying the overall project finish time. It is always represented by a dotted line or arrow. Slack dummy = LF (Late finish) – ES (Early start) 4.3 Net present value analysis Year Cash flow(£) PV factor[ (1+r)-T] NPV cash flow(£) 2015 55,000 0.8929 49,107 2016 60,000 0.7972 47,832 2017 72,000 0.7118 51,250 2018 86, 000 0.6355 54,653 2019 92, 000 0.5674 52,203 2020 120, 000 0.5066 60,792 2021 150, 000 0.4523 67,845 2022 210, 000 0.4039 84,819 TOTAL 468,501 Where, r = cost of capital T = is the time in years NPV= NET PRESENT VALUE OF CASH FLOW – INITIAL COST = 468,501-420,000 = £48,501 The project is therefore, profitable and it can be undertaken IRR OF THE PROJECT Source (Excel sheet) According to IRR the project is likely to incur loses therefore, it should not be undertaken. But it is not discounted thus making NPV method more appropriate in decision making since it takes care of time value of money (Peterson Drake, P. and Fabozzi, F. 2002). REFERENCE Coldwell, D. and Herbst, F. (2004). Business research. 1st ed. 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