Business Decision Making: Analysis of Techniques and Factors

Essay on Business
Decision Making

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Analysis of techniques such as net present value and payback period along with different
financial and non financial factors that aids decision making.....................................................1
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
For all the organisations it is very important to make sure that they are formulating
effective decision for future for the purpose of growing business and this whole procedure is
known as business decision making. If businesses will not be able to form effective strategies for
future then it will be very difficult to reach all the desired goals and objectives (Chen, Treviño
and Humphrey, 2020). Present essay is focused with A & B restaurant chain which is willing to
invest funds in two of the services that are outsourced by it. For this purpose, different elements
will be focused that can help to formulate effective decisions. These are various types of
financial and non-financial factors, techniques such as payback period and net present value.
MAIN BODY
Analysis of techniques such as net present value and payback period along with different
financial and non financial factors that aids decision making
All the businesses are focused with growth and development of business and for this
purpose they are required to formulate effective decisions for future. While planning to invest in
a project it is very important for all the organisations to analyse that they are using different tools
to evaluate the suitability of the option. As A&B restaurant is willing to invest in one of the
services which are outsourced by it. These are software and dishwashing. If the entity wants to
choose the right option, then it can use different types of components that are investment
appraisal techniques and financial and non-financial factors. The evaluation of all of them is as
follows:
The investment for Project A (Dishwashing) will be around 120000 and for Project B
(Software) it will be 150000 and the rate of discount for both the alternatives will be 14%.
One of the techniques which could be used by A&B is payback period which can help to
analyse the time period in which the total value of investment will be recovered by the
organisation (Jeffrey, Lévesque and Maxwell, 2016). It can help the enterprise to choose one of
the projects for investment purpose that are proposed by it. Calculations of it for both the project
A and B are conducted below:
Formula: Year in which maximum amount of investment will be recovered + cost of
whole project – cumulative cash inflow of the recovered year / cash inflow of next year
Payback period for Project A:
1