Analyzing Business Decisions: A Case Study of DDK plc's Projects

This essay delves into the crucial role of business decision-making, emphasizing its significance in corporate success. It presents a case study centered on DDK plc, a UK-based textile company, and utilizes capital budgeting techniques such as payback period and Net Present Value (NPV) to evaluate project feasibility. The essay provides a detailed computation of payback periods for two projects (Belt and Trainers) and calculates their respective NPVs. The analysis then compares these methods, highlighting their advantages and disadvantages. Furthermore, the essay explores both financial factors, including income, working capital, and profit, and non-financial factors, such as human resources, technology, and marketing strategies, that influence business operations. The conclusion underscores the importance of informed decision-making in achieving organizational objectives and establishing a strong market presence, supported by references to relevant academic sources.

Essay on Business
Decision Making

Contents
INTRODUCTION...........................................................................................................................................3
MAIN BODY.................................................................................................................................................3
1. Computation of payback period:..........................................................................................................3
2. Calculation of NPV in project A and B:..............................................................................................4
3. Analysis...............................................................................................................................................6
CONCLUSION...............................................................................................................................................8
REFERENCES................................................................................................................................................9

INTRODUCTION
Business decision making is so crucial in industry, it is the most essential characteristic of
the corporation. Going to make the right choice or judgment among the different options
available to accomplish the goal successfully and reliably is referred to as business decisions
(Peters, Kliestik, Musa and Durana, 2020). Since examining, decision making refers to selecting
the right option; sound decision making is considered a key feature. This report based on the
DDK plc which is UK based Textile Company. In this report includes capital budgeting
technique to take right decision and for this apply payback period and NPV method. Moreover,
determine financial nd non financial factors in detailed manner.
MAIN BODY
1. Computation of payback period:
Project A – Belt Project
Year Net cash flow Cumulative Cash Flow
1 45000 45000
2 45000 90000
3 35000 125000
4 70000 195000
5 82000 277000
Payback period = 3 + (25000 / 70000 * 12)
= 3 + 4.3 month
Project B – Trainers Project
Year Net cash flow Cumulative Cash Flow

1 50000 50000
2 45000 95000
3 70000 165000
4 90000 255000
5 90000 345000
Payback period = 3 + (65000 / 90000 * 12)
= 3 + 8.7 month
2. Calculation of NPV in project A and B:
Formula: Net Present Value = Cash flow / (1+i) t - initial investment
Year
Project
A
PV Factor
(14%) DCF
0
-
17000
0 1
-
17000
0
1 45000
0.8771929
8 39465
2 45000
0.7694675
3 34605
3 35000
0.6749715
2 23625
4 70000
0.5920802
8 41440
5 82000
0.5193686
6 42558

-11693
Year
Project
B
PV Factor
(14%) DCF
0
-
19000
0 1
-
19000
0
1 50000
0.8771929
8 43850
2 45000
0.7694675
3 34605
3 70000
0.6749715
2 47250
4 90000
0.5920802
8 53280
5 90000
0.5193686
6 46710
-35695
The calculation yields a negative net present value, which suggests that the capital produced in
the forward isn't worth more than just the expense of the original investment. A minus net
present value indicates that this is a risky investment since could not get a return.

3. Analysis
NPV: This method evaluates the true present value of all financial statements in order to
calculate the project's feasibility. It uses a particular rate to calculate the current value of cash
flows. If the total purchase price of a project's capital inflows exceeds the total present value of
its cash outflows, the project is deemed sustainable.
Advantage: The main benefit of this method is that cash flows are calculated at a fixed rate (cost
of capital) to determine the true value of the cash flows. Another advantage of this approach is
that it is both quick and simple to implement.
Disadvantage: This approach has a drawback in that it can only be used to compare projects
with similar cash flows and life cycles. Furthermore, discounting rates are often dependent on
assumptions, which have an effect on decision-making dependent on this strategy (García
Márquez and Pliego Marugán, 2019).
Payback period: A payback period is the amount of time it takes to recoup any of the expenses
or savings invested in a certain project. It aids the observer in making an accurate decision about
which capital expenditure to produce. The project with the shortest duration is normally chosen
because it makes it easier to assess the investment risk. It's a kind of assessment. The
productivity and liquidity of a business are improved by a short payback period. The benefit of a
payback date is that it is simple to quantify and comprehend, since it entails less ambiguity when
dealing with a short time.
Advantage: The main benefit of this strategy is that it allows for a quick assessment of the
project's viability while taking into account how long it would take to recoup the development's
initial investment expense. It's also a simple job to calculate the payback time of a project.
Disadvantage: The payment scheme has a significant flaw in that it does not allow for the
project's current valuation. A good comparison of two life spans those are identical and
equivalent. This method relies exclusively on time and ignores certain factors that typically
affect selection.
From the aforementioned payback period estimation, it can be seen that the payback
period of the Belt Project is 3 years and 4.3 months, whereas the payback period of the Trainer

Project is 3 + 8.7 months, indicating that the Belt Project can recover expenditure in a shorter
time than the Trainer Project. According to the cumulative review, Project A is more realistic
because the NPV method's product is preferred because it considers the current levels of cash
flows. As a result, Project A may be more realistic than Project B.
Financial and non financial factors
These are the causes that have a significant impact on an entity's cash flow operations. It
takes into account all aspects that support the company financially. Below is a list of all financial
considerations.
 Income is the gross amount of sales produced from a company's business activities. That
is the primary source of funding.
 Working capital is the value of liquid assets needed to meet basic and day-to-day
requirements in order to operate a successful enterprise.
 Profit: The value of net income or benefit obtained by a company after deducting
different types of expenses resulting from cash outflow. Profits highlight the firm's
goodwill and help to establish a positive brand in the marketplace (Hilkevics and
Semakina, 2019).
Non financial factors
There are many factors that have an indirect influence on a firm's profitability and
effectiveness, rather than having a direct impact. The non-financial considerations are listed
below:
 Human Resources: Human Resources play a critical part in every project's progress.
DDK plc would never be able to achieve their goal inside the time frame allotted if they
do not have a qualified workforce.
 Technology: Today's markets are fully reliant on technological advancements. These
companies are able to produce higher-capacity pistons in a cost-effective manner while
impressing their customers with advanced technologies. Moreover, since it is very
difficult for workers to consider system modifications, technologies must be chosen in
accordance with the workers.

 Marketing tactics: A company's success is determined by how successful and profitable
its marketing strategies and campaigns and practices are. Managers at DDK plc must
develop successful strategies that aid in the retention of existing clients and the attraction
of new ones for their textile business (Abdel‐Basset and et.al, 2019).
CONCLUSION
According to the aforementioned review of this report, managers of corporate organizations
must make business decisions in order to operate their businesses effectively. They use a variety
of capital budgeting techniques, such as the payback cycle and net present value process, to
determine the efficiently rate and time necessary to complete the project. Based on this, and after
assessing the influence of financial and non-financial factors on day-to-day business operations,
managers are able to make the right decisions that can help them achieve their objectives while
still establishing a good market place in the market environment.

REFERENCES
Books and Journal
Peters, E., Kliestik, T., Musa, H. and Durana, P., 2020. Product decision-making information
systems, real-time big data analytics, and deep learning-enabled smart process planning
in sustainable industry 4.0. Journal of Self-Governance and Management
Economics. 8(3). pp.16-22.
García Márquez, F. P., Segovia Ramírez, I. and Pliego Marugán, A., 2019. Decision making
using logical decision tree and binary decision diagrams: A real case study of wind
turbine manufacturing. Energies. 12(9). p.1753.
Hilkevics, S. and Semakina, V., 2019. The classification and comparison of business ratios
analysis methods. Insights into Regional Development. 1(1). pp.47-56.
Abdel‐Basset, M. and et.al, 2019. Internet of things in smart education environment: Supportive
framework in the decision‐making process. Concurrency and Computation: Practice and
Experience. 31(10). p.e4515.