Analyzing Business Problem and Decision Making

The provided assignment is based on the topic BSBINM601 - Manage Business Operations. The document first analyzes a business problem faced by a coffee bar, which is struggling with financial performance due to a decline in sales. Through sensitivity analysis, it is determined that a 50% increase in customers leads to a 10% rise in sales. The assignment then proposes decisions for the coffee bar to maintain its financial performance and attract more customers, including providing staff training, hiring trained baristas, and utilizing technology for optimum efficiency and quality.

Task 1
BSBINM601
Manage Knowledge and Information

Introduction
The Coffee bar
The coffee bar was established in 2015 serving the best coffee in Melbourne CBD. It serves a
variety of hot and cold drinks, coffee, tea, ice cream, beverages, and snacks. It is one of the
largest coffee company in Australia. Along with varieties of drinks and coffee, the coffee bar
also manufactures and sells coffee machine which is available on its online store.
The mission and vision of the Coffee bar are to achieve 100% customer satisfaction, become a
famous coffee company, and to extend its business in different states of Australia.
SWOT Analysis
Strengths
 Use of the coffee machine to brew
coffee
 Customer satisfaction
Weakness
 Less number of stores in Melbourne
 Weak marketing and advertisement
 Lack of skilled staff
Opportunities
 To sell different types of coffee and
drinks.
 Encourage to brew coffee using the
coffee machine
 Expand its business throughout the
Threats
 Growing competitors with same
products
 Establishment of similar coffee shop
nearby
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states
The coffee bar has been earning profit and has become able to expand its business employing
more than 30 employees for the last five years. It has been providing quality services and
attracting a large number of customers but lately, we can see some changes in the business
performances. By observing the sales report and the number of customers of the company for the
last five years the following data was collected.
2015 2016 2017 2018 2019 2020
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
sales customer number
One of the issues of the coffee bar is the number of customers is decreasing and have received
some negative feedback, which causes a decline in the sales of the company.
The major objectives of the coffee bar at a recent time is to:
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 earn customer's trust, increase the number of customers, and increase their satisfaction,
which will automatically increase the sales of the company.
Goals Strategy Outcome
Increase customer number and
satisfaction
Providing training to the
existing staffs and hiring new
trained/skilled staffs
Increase staff performances
and customer service
Increase sales by providing
high-quality coffee
The coffee bar performed a survey to know the root cause of the problem, where customers were
asked the reasons for their un-satisfaction. While collecting the data, the customer complaints
were more on basically two aspects: they had to wait for a long time and the cost of coffee was
high. Some people were satisfied with the staff services. The following samples were collected
between 20 consecutive days
No. of samples Time taken Satisfaction (no
problem)
Cost of coffee
1 31 10 12
2 27 12 11
3 27 12 10
4 34 8 7
5 40 8 9
6 35 7 6
7 45 5 5
8 23 11 10
9 23 11 12
10 32 7 8
11 78 2 2
12 78 2 1
13 98 1 3
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14 65 3 4
15 43 6 4
16 21 13 13
17 32 8 9
18 87 2 2
19 55 6 5
20 56 6 4
The coffee bar uses an electrical method to keep records of its financial transactions and for data
validation. It also keeps a record of customer feedback because the coffee bar depends mostly on
customer comments to take business decisions. The coffee bar implements customer experience
management (CEM) programs before making any kinds of business decisions such as
establishing strategy, changing business procedures, organizing employee's training programs,
and assigning organization assets. The success of the coffee bar directly depends upon customer
satisfaction and their feedback.
To check the validity and reliability, the coffee bar applies psychometrics methods where
questionaries’ are prepared and presented to the customers and the results are evaluated applying
scientifically accepted standards. Reliability can be measured by checking CEM program, where
the program shows a similar result. In this case, different customers are provided similar services
and their feedbacks are similar (mostly related to complaints about preparation time of coffee).
Undertaking sensitivity analysis
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10 20 30 40 50 60 70 80 90 100 110
0
2
4
6
8
10
12
14
f(x) = − 0.147167874649126 x + 13.8054694373455
R² = 0.855192641313018
Chart Title
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.942429
R Square 0.888173
Adjusted R
Square 0.88196
Standard
Error 1.280677
Observatio
ns 20
ANOVA
df SS MS F
Significanc
e F
Regression 1
234.477
6
234.477
6
142.962
4
5.34886E-
10
Residual 18
29.5224
2
1.64013
4
Total 19 264
Coefficien
ts
Standar
d Error t Stat P-value Lower 95%
Upper
95%
Lower
95.0%
Upper
95.0%
Intercept 0.575314
0.60887
6
0.94487
9
0.35723
2
-
0.7038868
73
1.85451
5
-
0.70389
1.85451
5
cost of
coffee 0.93791
0.07844
2
11.9566
9
5.35E-
10
0.7731091
66
1.10271
2
0.77310
9
1.10271
2
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R square value=0.888
p= 0.357
The p-value is the indicator of the truthfulness of the results drawn from the observed samples. If
the p-value is high, then it proves that the relationship between variables used in the sample is a
less reliable indicator of each other. The p-value also indicates the probability of error that may
have been occurred in the sample affecting the validity of the results. If the p-value is < 0.05 then
it is assumed to be statistically significant as it still involves a 5% probability of error. If the p-
value is 0.005 or 0.001 then the results are assumed to be highly significant. From the above
data, the p-value is extremely high that is 0.357 representing 35.7 % probability of error.
Therefore, it can be concluded that there is no correlation between customer satisfaction and the
cost of coffee.
Correlation analysis
time
taken
satisfacti
on
time
taken 1
satisfacti
on
-
0.9264
9 1
From the above data, we can observe the correlation between customer satisfaction and the time
taken to prepare the coffee is a negative correlation with coefficient value -0.92649 which is
closer to -1 or –0.92. Negative coefficient indicates that if the value of one variable increases or
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decreases then the value of other decreases or increases. (Frost, n.d.) It means customer
satisfaction decreases with the increment of the preparation time of the coffee.
Trend analysis
Trend analysis is one of the ways to collect and evaluate data collected from different time
periods to know the pattern or trends of two or more variables and their relationship (Bagg,
2020). It is mostly used for future prediction of the trends over different time periods to know the
response of customers and market position. It also provides knowledge about the best time
period for the demand of products in the market. (Trend analysis, n.d.)
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
0
20
40
60
80
100
120
time taken Linear (time taken)
satisfaction
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
0
20
40
60
80
100
120
time taken satisfaction
Linear (satisfaction )
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
0
20
40
60
80
100
120
time taken satisfaction
Here we can see a negative trend between customer satisfaction and time taken to prepare coffee.
It means when it takes a long time to prepare coffee less number of customers are satisfied with
the services.
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Therefore, from these three data analyses, it can be concluded that the coffee bar company
should work more on coffee preparation time to attract more customers and satisfy existing
customers.
Undertaking sensitivity analysis
Sensitivity analysis is the process of identifying the effects of varying independent variables on a
particular dependent variable of a given set of assumptions. It is also known as what if or
simulation analysis which assists in predicting the future data or information.
Using sensitivity analysis to compare the relation between sales and the number of customers.
The total sales of the coffee bar in 2015 were $45, 000 with 4,000 total number of customers.
The sales increases to $50,000 next year with 8,000 customers. Here 50 % increase in customers
leads to a rise in sales by 10%. So through sensitivity analysis, if customer number increases by
50%, 100%, the sales increase by 10%, 20% respectively. Hence, the sales of the company are
directly related/dependent on the number of customers. (Kindness, 2020)
Decisions on the identified business problem
Now the problem of the coffee bar is identified, decisions have to be made in consultation with
stakeholders and specialists. According to specialists, the coffee bar must take the following
steps to maintain its financial performances and attract more customers. The advised steps have
their own risks and advantages.
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Step 1: Provide staff training
For all the existing staff, compulsory training must be provided for customer services and
maintaining the quality and taste of the coffee. This step might affect in company’s finance as it
increases expenses causing a decline in sales. The positive outcome of this step is it increases the
number of costumers and also helps in increasing sales.
Step 2: Hiring trained baristas to serve a variety of coffee
The positive and negative outcome of this is similar to step 1, but it helps in gaining customer’s
trust and increase positive customer feedback and also promotes the brand image of the
company, assists in business expansion.
Use of technology for optimum efficiency and quality
This is the 21st century where technology changes and upgrades every hour, every day with new
and advanced methods. In this era, a business cannot survive or compete with its competitors if it
still depends on paper-based to manage and analyses its information. There are different software
available online which perform or analyze data and information within a short time with great
efficiency and accuracy. The company has to communicate within an organization or outside the
organization, and the evolution of the technology has made major changes in the way the
company interacts and transfers its information to its employees and customers. The company
uses different types of communication methods such as email, face to face meetings, social
media, pamphlets, newsletters, etc to convey its messages to their clients and customers. With
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the use of technology, information can be edited and reviewed easily. Through the utilization of
web conferencing people from different locations can participate in the company’s meeting,
seminar. The introduction and development of communication technology have changed the way
of business performances providing more flexibility to the workforce.
The coffee bar also uses communication technology to disseminate its decisions among its client
and customers. A communication plan is prepared first, then the information is broadcast through
face to face meetings and then through regular emails. Since, the information are collected,
stored and transferred through electronic system, the coffee bar has installed software to prevent
hacking and leakages of important information.
References
Bagg, S. (2020, February 27). Trend analysis. Retrieved from Accounting tools:
https://www.accountingtools.com/articles/trend-analysis-definition-and-usage.html
Frost, J. (n.d.). Interpreting Correlation Coefficients. Retrieved from statisticsbyjim:
https://statisticsbyjim.com/basics/correlations/#:~:text=A%20correlation%20between
%20variables%20indicates,value%20of%20the%20other%20variable.
Kindness, D. (2020, May 28). Financial Analysis. Retrieved from Investopedia:
https://www.investopedia.com/terms/s/sensitivityanalysis.asp
Trend analysis. (n.d.). Retrieved from QuestionPro: https://www.questionpro.com/features/trend-
analysis.html#:~:text=Trend%20analysis%20helps%20to%20display,phases%20to%20take
%20actions%20accordingly.
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