Business Decision Making and Discount Supermarket

The given assignment is focused on business decision making, with a specific emphasis on launching a discount supermarket chain in the UK. The report highlights the importance of primary and secondary data for accurate conclusions and recommends Full Discount Ltd to provide excellent add-on services and target branded clothes. The conclusion emphasizes the significance of business decision making in management success and suggests that Full Discount Ltd can proceed with its plan due to shifting consumer preferences.

BUSINESS DECISION MAKING

EXECUTIVE SUMMARY
Business decision making is considered as one of the most important component of
modern management. Precise decision making is taken as the crucial function of management.
Business decision making term can be understood as the process of selection of the best course
of action from amongst two or more alternatives for arriving at answer to a business problem. In
the project report, a primary and secondary research is conducted by a member of research team
of Full discount Ltd. Primary research is the method where the information is collected first
handedly by the researcher itself while secondary research is one where information for the study
is drawn out from the already established data. In primary research, a questionnaire is prepared
where sample population of 20 is taken. In secondary data analysis, mean, median and standard
deviation is computed along with line and bar charts. The company has undertaken this research
as it planning process for introducing its own discount supermarket chain in UK.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1 ...........................................................................................................................................1
Primary data collection and analysis............................................................................................1
TASK 2 ...........................................................................................................................................8
Secondary data collection and analysis........................................................................................8
RECOMMENDATIONS...............................................................................................................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................15
APPENDICES...............................................................................................................................16

INTRODUCTION
Business decision making can be best described as the check and balance method that
keeps a company growing both in linear and vertical directions (Weygandt and et.al., 2018). In
simpler meaning, decision making is the process identifying the problem, gathering information,
identifying alternatives, weighing pros and cons of each alternative, evaluating and analysis each
alternative, selecting the best course of action and monitoring the same. The present project
report is about the Full Discount Ltd, who is undertaking research as its planning process for
launching its own discount supermarket chain in the United Kingdom. The report will cover the
primary data collection and analysis in which a questionnaire would be prepared and analysis
would be accordingly. Further, secondary data collection and analysis will be done for the
purpose of comparison with rival discounters.
TASK 1
Primary data collection and analysis
 Primary data collection is the process of collecting data directly from the original
sources. The researcher itself collects data first handedly for the specific research.
The data can be obtained by the way of observation, by mail, telephone surveys,
questionnaire, face to face interviews etc. With due care regarding personal bias,
the data collected through this method is the most accurate and reliable one for
addressing the issues in the research. In here, the research is undertaken by the
research team of Full Discount Ltd, for assessing the competitiveness of rivals,
customers preferences regarding the discounters in the market. For this purpose, a
questionnaire is prepared for collecting the first hand data directly from the
customers (Neelankavil, 2015).
For the survey, a sample population of 20 customers has been taken to whom this
questionnaire will be given to find out the required results.
Q.1 In which age group do you belong ? Respondents
16-25 7
26-35 6
1

36-45 4
Above 45 years 3
Q.2 What is your average spending in a
month ? Respondents
150 6
250 8
350 4
more than 350 2
Q.3 What is the factor that attracts you
towards the discount supermarket? Respondents
Prices 5
discounts 9
location 2
product range 4
Q.4 Which type of supermarket do you
prefer? Respondents
Discount supermarket 11
Big retail supermarket 9
Q.5 Why do you prefer retail supermarket ? Respondents
Home delivery 8
ambience 3
2

branded products 5
after sale services/add-on services 4
Statistics
Q.1 In which age
group do you
belong ?
What is your
average spending
in a month ?
Q.3 What is the
factor that attracts
you towards the
discount
supermarket?
Q.4 Which type of
supermarket do
you prefer?
Q.5 Why do you
prefer retail
supermarket ?
N
Valid 20 20 20 20 20
Missing 0 0 0 0 0
Mean 2.15 2.10 2.25 1.45 2.25
Median 2.00 2.00 2.00 1.00 2.00
Mode 1 2 2 1 1
Std.
Deviation 1.089 .968 1.070 .510 1.209
Variance 1.187 .937 1.145 .261 1.461
Minimum 1 1 1 1 1
Maximum 4 4 4 2 4
Interpretation : From the above table, it can be interpreted that average of the
respondents' age group is 2.15, median is 2 and mode is 1. Standard deviation is a measure that
calculate the deviation between the mean of the variables in a data set. The standard deviation of
respondents' age is 1.089, for average spending it is 0.968, for factors that attracts customers
towards discount supermarket is 1.070, for which type of supermarket does the customer prefer
is 0.510 and for reason of preference towards retail supermarket it is 1.209.
Frequency Table
Q.1 In which age group do you belong ?
Frequency Percent Valid Percent Cumulative Percent
Valid 1 7 35.0 35.0 35.0
3

2 6 30.0 30.0 65.0
3 4 20.0 20.0 85.0
4 3 15.0 15.0 100.0
Total 20 100.0 100.0
Interpretation : It can be seen from the chart and table that majority of the respondents
belongs to the age group of 16-25. While 6 respondents belongs to the age group of 26-35. 4
respondents are from the age group 36-45 whereas 3 were above the age of 45 in the data/
sample population.
What is your average spending in a month ?
Frequency Percent Valid Percent Cumulative Percent
Valid
1 6 30.0 30.0 30.0
2 8 40.0 40.0 70.0
3 4 20.0 20.0 90.0
4 2 10.0 10.0 100.0
Total 20 100.0 100.0
4

Interpretation : From the above graph and table, it can be interpreted that 8 respondents
out of the sample population of 20 respondents, have a monthly average income of 250 pounds
which is the majority of the sample population. 6 out of 20 respondents spends about 150 pounds
in a month on a average basis. 4 people told that they spend about 350 pounds in a month for the
household purposes while only 2 respondents said that they spend their earnings more than 350
on a average basis in a month.
Q.3 What is the factor that attracts you towards the discount supermarket?
Frequency Percent Valid Percent Cumulative Percent
Valid
1 5 25.0 25.0 25.0
2 9 45.0 45.0 70.0
3 2 10.0 10.0 80.0
4 4 20.0 20.0 100.0
Total 20 100.0 100.0
5

Interpretation : The next question in the questionnaire was that what factors does
encourage people towards shopping from the discount supermarkets. From the table and graph,
the result can be interpreted that majority of the people that is about 9 respondents out of 20 said
that discount is the factor which ignites them in shopping from such discounters in the market
(He, Wang and Akula, 2017). 5 respondents told that prices of the goods provided by the
discount supermarket are relatively lower which does not disturb their monthly budget and in-
fact saves some of their part of income which otherwise could not have been saved if went to the
retail supermarket. 3 people said that convenience of the location is the key factor that drives
them towards to the discount market while 4 said that range of products available in discount
supermarket is wide enough to attract them.
Q.4 Which type of supermarket do you prefer?
Frequency Percent Valid Percent Cumulative Percent
Valid
1 11 55.0 55.0 55.0
2 9 45.0 45.0 100.0
Total 20 100.0 100.0
6

Interpretation : When the people were asked about which supermarket they prefer, most
of the respondents around 11 out of 20 said that they prefer discount supermarket over retail
supermarket such as B&M and Home Bargains while 9 respondents said that they like to shop
their households, grocery and other products from the retail supermarkets like Asda, Tesco etc.,
only.
Q.5 Why do you prefer retail supermarket ?
Frequency Percent Valid Percent Cumulative Percent
Valid
1 8 40.0 40.0 40.0
2 3 15.0 15.0 55.0
3 5 25.0 25.0 80.0
4 4 20.0 20.0 100.0
Total 20 100.0 100.0
7

Interpretation : From the above graph, it can be interpreted that home delivery is the
biggest reason why people opt for the retail supermarket. 8 people said that retailers provides the
facility of home delivery to them which saves their time. 5 respondents said that they prefer
branded clothes over the regular clothes, which is the reason why they go to such retail
supermarkets. 4 people said that add on facilities are attracts them towards the retailers and
enhances their experience that helps them in achieving the utility of the money they are spending
in the retail supermarkets. 3 people out of 20 said that they enjoy the ambience of the retail
supermarkets.
TASK 2
Secondary data collection and analysis
Secondary data is such data which already exists. This means that it is such data has been
published already on the internet, journals, newspaper, articles etc. Secondary data is collected
by a person for a purpose other the researcher's current issue and that data has already gone
through the process of statistical analysis. This is the reason why it is called as second hand data
(Secondary Data Collection Methods, 2019).
The internal methods from where the secondary data can be taken are financial
statements, customer's details, MIS, company information, feedbacks from customers, suppliers,
etc. External sources could be census of government, business magazines, journals, internet,
libraries etc. The secondary data could be both quantitative and qualitative. Qualitative data
could be attained by the way of newspapers, interviews , transcripts etc., while quantitative data
can be attained through survey, financial statements and statistics which are published.
8

Profitability analysis of B & M, Tesco and Sainsbury
Gross profit ratio:
B&M
2015 2016 2017 2018
Gross profit/sales Gross profit 570 703 844 1029
sales 1647 2035 2431 3030
GP ratio 34.61% 34.55% 34.72% 33.96%
Interpretation : From the above table, it can be said that gross profit of B&M has
remained constant over the last four years. It was stable at the rate of 34.61% for the year
2015,2016, 2017. However, it slightly reduced to 33.96% with a variance of 0.22%. Gross profit
ratio shows firm's income before any operating expenses in response to the revenue generated for
the year.
Operating profit ratio :
Operating
profit/sales 2015 2016 2017 2018
Operating profit 157 181 205 240
sales 1647 2035 2431 3030
Operating profit
margin 9.53% 8.89% 8.43% 7.92%
Interpretation : Operating profit is the income left after deducting all the operating
expenses. The company had the operating profit of 9.53% in 2015 which is continuously
decreasing in the next following years. This means that operating expenses of the company are
increasing more than increase in the gross revenues.
Net profit ratio :
2015 2016 2017 2018
net income/sales net profit 39 125 143 186
9

sales 1647 2035 2431 3030
Net profit
margin 2.37% 6.14% 5.88% 6.14%
Interpretation : Net profit is the income of the company which is derived after
deducting all operating expenses, deprecation and taxes. Net profit of the organisation is
increasing since the year 2015.
Current ratio :
current asset/current
liabilities
2015 2016 2017 2018
current assets 370 481 653 684
current liabilities 159 206 295 435
Current ratio 2.32 2.33 2.21 1.57
Interpretation : Current ratio is one of the liquidity ratio that depicts the ability of entity
to pay its short term liabilities within one year. The ideal ratio is 1:1 (Arnsten, Lee and
Pittenger, 2017). Current ratio in the years 2015, 2016, 2017 was above 1 which means that
company has more assets to pay its short term obligations can be paid. Ideal cash is also not good
for the company therefore, it has to be around 1. In the year 2018, it was 1.57.
Inventory turnover ratio :
COGS/average
inventory
2015 2016 2017 2018
cogs 1077 1332 1586 2001
average
inventory 289.5 417 587 790
Inventory
turnover
ratio= 3.72 3.19 2.7 2.53
Interpretation: Inventory turnover ratio is measure that depicts the number of times,
inventory has been sold or consumed during the year. High inventory ratio is good for company
as it means that sales are increasing. In the last two years, company's inventory has decreased
when compared to 2015 & 2016.
TESCO
10

Gross profit ratio
2015 2016 2017 2018
Gross profit/sales Gross profit -2112 2854 2902 3350
sales 62284 54433 55917 57491
GP ratio -3.39% 5.24% 5.19% 5.83%
Interpretation: In the year 2015, it was negative 3.39% which became stable in the years
2016,2017 & 2018 to 5% approx. This shows that company's earnings are stable for the last thre
years which depicts good heath of the company.
Operating profit ratio
Operating profit/sales 2015 2016 2017 2018
Operating profit -4807 980 1168 1564
sales 62284 54433 55917 57491
Operating
profit margin -7.72% 1.80% 2.09% 2.72%
Interpretation : The operating profit of TESCO was negative in year 2015 while the
company became profitable again in the year 2016 after which the profits increased for two
consecutive years.
Net profit ratio
2015 2016 2017 2018
net income/sales net profit -5741 138 -40 1206
sales 62284 54433 55917 57491
Net profit
margin -9.22% 0.25% -0.07% 2.10%
Interpretation : Net profit was negative in 2015 at 9.22%. It again made loss in 2017.
Thus, it can be said that net profits of company is very low and is highly fluctuating.
Current ratio
2015 2016 2017 2018
current asset/current
liabilities current assets 11958 14828 15417 13726
current liabilities 19810 19714 19405 19238
11

Current ratio 0.6 0.75 0.79 0.71
Interpretation: The current ratio in all the years are below the ideal ratio of 1:1.
However, it is satisfactory in the recent years and can pay its short time liabilities.
inventory turnover ratio :
COGS/average
inventory
2015 2016 2017 2018
cogs 64396 51579 53015 54141
average
inventory 4519 6030.5 10104.5 7795
Inventory
turnover ratio 14.25 8.55 5.25 6.94
Interpretation: The inventory turnover ratio was very impressive in 2015 when it was
14.25. This meant that company was able to consume or sale very quickly its inventory.
However, it decreased in following years (Profitability Ratio: Definition, Formula, Analysis &
Example, 2019).
SAINSBURY
Gross profit ratio :
2015 2016 2017 2018
Gross profit/sales Gross profit 1208 1456 1634 1882
sales 23775 23506 26224 28456
GP ratio 5.08% 6.19% 6.23% 6.61%
Interpretation: The GP has been increasing in last four years and is showing increasing
trend which depicts that company is in a good position in market.
Operating profit ratio :
Operating profit/sales
2015 2016 2017 2018
Operating profit 81 707 642 518
sales 23775 23506 26224 28456
Operating profit
margin 0.34% 3.01% 2.45% 1.82%
12

Interpretation : The operating profit ratio is fluctuating which means that company is
facing difficulties in controlling and managing its costs and expenses.
Net profit ratio :
net income/sales
2015 2016 2017 2018
net profit -166 471 377 309
sales 23775 23506 26224 28456
Net profit
margin -0.70% 2.00% 1.44% 1.09%
Interpretation : Net profit ratio is very low which means that company is unable to generate
higher profits for the shareholders.
Current ratio :
current asset/current liabilities
2015 2016 2017 2018
current
assets 4505 4444 6322 7866
current
liabilities 6923 6724 8573 10302
Current
ratio 0.65 0.66 0.73 0.76
Interpretation : The ratio is below the ideal ratio however, it is above the danger limit
that is 0.5. The company can pay its short term liabilities with its short term assets. The liquidity
is not satisfactory but it is above the danger level.
inventory turnover ratio :
COGS/average
inventory
2015 2016 2017 2018
cogs 22567 22050 24590 26574
average
inventory 1499.5 1466.5 1855.5 2697.5
Inventory
turnover
ratio 15.04 15.03 13.25 9.85
13

Interpretation : The inventory turnover ratio is very impressive for the three years 2015,
2016, 2017. However, it decreased in the year 2018 to 9.85 which meant that company is unable
to clear its inventory up to a retired level.
RECOMMENDATIONS
By the looking at the comparative analysis of the three companies, it can be found out the
discounter B&M is giving serious competition to the retail supermarkets such as TESCO and
Sainsbury. The discounters are getting good market opportunities as people are shifting their
preferences from retailers to discounters because the latter [provides goods at relatively lower
prices than former along with the convenience of getting everything under one roof.
It is recommended to the Full Discount Ltd., that it should provide excellent add-on
services to its customers along with the pleasant ambience. This will help in enhancing customer
experience. It could offer branded clothes also so that, this particular segment of the market
could also be targeted.
CONCLUSION
From the above project report, it can be summarised that business decision making is one
of the most of the integral part of management because the success of the company depends upon
the quality of decisions taken by the business managers. In the report, it was concluded that for a
research primary and secondary data are equally important. Primary data is required for getting
the accurate and reliable information so that correct conclusions could be drawn from that. Also,
the secondary data is important as the information is quickly available which significantly
reduces the efforts of a researcher. Lastly, it can be summarised that Full Discount Ltd, can go
ahead with the plan of launching its own discount supermarket chain as people are shifting
preference from retailers to discounter ion the UK.
14

REFERENCES
Books and journals
Arnsten, A. F., Lee, D. and Pittenger, C., 2017. Risky business: the circuits that impact stress-
induced decision-making. Cell. 171(5). pp.992-993.
He, W., Wang, F. K. and Akula, V., 2017. Managing extracted knowledge from big social media
data for business decision making. Journal of Knowledge Management. 21(2). pp.275-294.
Neelankavil, J. P., 2015. Primary Data Collection: An Introduction to Conclusive Research.
In International Business Research (pp. 146-163). Routledge.
Weygandt, J. J and et.al., 2018.Managerial Accounting: Tools for Business Decision-making.
John Wiley & Sons Canada, Limited.
Online
Profitability Ratio: Definition, Formula, Analysis & Example.2019. [Online]. Available through
<https://study.com/academy/lesson/profitability-ratio-definition-formula-analysis-
example.html>
Secondary Data Collection Methods. 2019. [Online]. Available through
<https://businessjargons.com/secondary-data-collection-methods.html>
15

APPENDICES
Questionnaire
Q.1 In which age group do you belong ?
 16-25
 26-35
 36-45
 Above 45 years
Q.2 What is your average spending in a month ?
 150
 250
 350
 more than 350
Q.3 What is the factor that attracts you towards the discount supermarket?
 Prices
 discounts
 location
 product range
Q.4 Which type of supermarket do you prefer?
 Discount supermarket
 Big retail supermarket
Q.5 Why do you prefer retail supermarket ?
 Home delivery
 ambience
 branded products
 after sale services/add-on services
16

Financial statements of B&M
17

Financial statements of TESCO
Financial statements of Sainsbury
18

19