Business Decision Making Essay

Business Decision
Making
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Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION ...............................................................................................................................6
REFERENCES................................................................................................................................6
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INTRODUCTION
The concept of decision-making refers to a procedure within which certain steps are
considered by a person or by a business organisation in order to accomplish predetermined
targets. This procedure includes determination of goals & then considering various steps to attain
such targets. These objectives are commonly attained by several ways but in respect to decision-
making, it is essential to choose any one alternative available from all which would provide the
highest benefit as well as helps the company in achieving their objective. The present essay
includes certain key concepts of tools such as Payback period & Net present value along with
financial & non-financial drivers which will contribute in the process of decision making related
to the case study furnished.
MAIN BODY
In case of AJ plc, a chocolate producing business, the company’s strategic managers of the
company is planning to invest their money into a project to manufacture Vegan chocolates or
could be a manufacturing of Vegan spreads. In order to have favourable decisions it is important
for a business to company & analyse both the two projects through various tools that will further
help in decision making.
Payback Period: The payback period denotes to the time period within that an organisation
would recover its initial investment for a project. Each organisation is provided with variety of
projects in which they could invest & attain growth for their company. The calculation of
payback period in respect to the provided case study is under.
Year Annual cash flow
of A
Cumulative cash
flow of A
Annual cash flow
of B
Cumulative cash
flow of B
0 (Initial
Investment)
-140000 -140000 -120000 -120000
1 52000 -88000 46000 -74000
2 58000 -30000 60000 -14000
3 82000 52000 72000 58000
4 105000 157000 89000 147000
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