Business Decision Making: Evaluation Techniques and Factors

This article discusses the evaluation techniques like payback period and net present value used in business decision making. It also explains the impact of financial and non-financial factors on investment decisions. The case study of S&P Plc is used to illustrate the selection of the best method between NPV and PBP.

Business decision making

Contents
INTRODUCTION...........................................................................................................................1
1. Evaluation period of payback of each the projections............................................................1
2.Calculation of net present value of each projection.................................................................2
3. Measuring and evaluating the techniques that is used in project A and project B..................4
4. Financial and non financial element on investment decision .................................................4
CONCLUSION ...............................................................................................................................5
REFERENCES................................................................................................................................5

INTRODUCTION
The process of business decision making is the procedure that helps to the individual or
expert to find out the appropriate resolution by utilizing weighing proof, assembling all the
notification and computing the alternatives. These decisions are related to the operational activity
in the business enterprises (Alam, Masroor and Nabi, 2020). It consists the written
documentation that measures the two projections with the help of number of techniques such as
discounting and non discounting. These techniques includes the period of pay back, net present
value. Although, there is mandatory to select out one appropriate option that suits more and
through which company gain more profits. At the final reports, it analyses sources of the
financial as well as non-financial and their impacts on the investment decisions.
1. Evaluation period of payback of each the projections
It refers to the time period. It mean the appropriate time that has taken by the projection
of first finance for the purpose of retrieve the investment. In other words, it compass the time for
current assets and fixed assets to reach at the break even point. It is evaluated by fractioning the
total investment by annually amount of cash flow. This techniques is casual to analyse the
numerical quantity. It mean there is lack of complexity and turbulent method. It assists to
measure the dependability and accuracy of the project (Li and et al., 2021). For the purpose of
analysing this period, the formula is used below:
Payback period
1

2.Calculation of net present value of each projection.
It is an valuation tool, its main purpose is to take the decision in order to making money
for finance in the assets and determining the feasibleness of the projection in which the company
wants to invest it (Liang, and Liu, 2018). It has various kind of benefits that aids in decreasing
the cash flows of separate numerical value that can be simply compared with the other net
present value projections. For the purpose of calculating the NPV, the formula is being used in
below:
2

= 147320
3

3. Measuring and evaluating the techniques that is used in project A and project B
S&P Plc is the organization that produce the bag that thinks regarding venture that
merged all the kind of supply of luggage that are based on the leather and materials. There has
strategic supervisor who help in assess by using net present value method and the pay back
period technique for a particular task or projections. These can be deodorized the sustainability
and price of the venture for the long period of time. NPV is a technique that relates with the
economic for usage of the money according to the time that is considerable in order to
fashionable approach in manner to doing comparison with other venture. On the other hand side,
the PBP method is utilized to choose out and observe the venture that has to be brought. It
specifies the time duration in years, month that helps in provide the particular term of payback
approximately. The net present value approach gets relax in manner of the weighing desire of the
tasks and the payback method contemplate on the time that has wish to shift back on
accumulation. In other words, the period of pay back has speciality in most comfortable term of
investing because it does not consider any probabilities for the long time period. With the help of
analysing their perks and the benefits, this method is easiest and comfortable for taking the
decision regarding financing these are little, iterative, tax related and the depreciation in nature.
On the opposite side, the NPV is more appropriate and reliable device or system which assists in
create usages of the flow of the cash (Marcolin and et al., 2021). There is no find the any kind of
income that are long term in nature and impact on the investing activity. For S&P Plc, the
company or project manager must utilize the NPV methods rather than PBP techniques for the
purpose of completion the most effective economic choices because it is so far of green devices.
With the help of the NPV method, they can select one venture without facing any issues and
difficulties. The NPV of venture A and the venture B are £147,320 and £143,450 respectively.
Thus, S&P Plc can select the project A of synthetic leather luggage.
4. Financial and non financial element on investment decision
Investment estimation is not related to the economic. There are number of sources or the
factors that are non financials. These sources performs essential part in creating any specific
investing selection.
There are various kind of non financial elements that impacts on investment decision:
4

 Climatic changes: now a days, there are number of green activities that has been
faced so that the agencies should not invest in those assets that depends on
environment for the long time period.
 Regulation of the government: There are different rules of various country and
they can be changed anytime. There is required to contemplate about the
authorities that are applicable for the legal guidelines and the notifications before
investing in further project or assets.
An investment is a section that an individual does their own choice and number of
sources which can be related with those options are follows as (Parra and Guerrero, 2020). The
main aim of the any investment defines the fund allocation that are related to the short term and
long term period. It is the beginning point of the technique of selection making.
CONCLUSION
As per the above report, it has been concluded that the capital techniques is used to
measure the utility of both the projection. These project are contemplated in manner of strategic
of S&P Plc. It involves the evaluation of the techniques i.e. selection of the best method between
NPV as well as PBP. It also considered the factors in manner of financial as well as non
financials.
5

REFERENCES
Alam, M.N., Masroor, I. and Nabi, M.N.U., 2020. Does entrepreneurs’ risk perception influence
firm’s rapidity in foreign market entry through moderation of entrepreneurial decision-
making approach?. Review of International Business and Strategy.
Li and et al., 2021. Intelligent decision support system for business forecasting using artificial
intelligence. Arabian Journal for Science and Engineering, pp.1-11.
Liang, T.P. and Liu, Y.H., 2018. Research landscape of business intelligence and big data
analytics: A bibliometrics study. Expert Systems with Applications, 111, pp.2-10.
Marcolin and et al., 2021. Listening to the voice of the guest: A framework to improve decision-
making processes with text data. International Journal of Hospitality Management, 94,
p.102853.
Parra, D.T. and Guerrero, C.D., 2020, June. Decision-making IoT adoption in SMEs from a
technological perspective. In 2020 15th Iberian Conference on Information Systems and
Technologies (CISTI) (pp. 1-6). IEEE.
Reavis, M., Singh, K. and Tucci, J., 2021. Millennials' Strategic Decision Making Through the
Lens of Corporate Social Responsibility and Financial Management. Journal of
Business Strategies, 38(2), pp.125-146.
6