Business Decision Making: Opening a New Branch of Balti Palace Report

This report presents a comprehensive analysis for Balti Palace, a London-based restaurant, regarding the opening of a new branch. It begins with a detailed data gathering plan, outlining primary and secondary research methods, followed by the design of a survey questionnaire and the methodology used for sampling. The report then delves into data analysis, employing representative values, measures of dispersion, and correlation techniques to derive meaningful conclusions. Statistical tools are used to analyze sales and profit data, alongside the interpretation of survey results to identify consumer preferences and trends. Furthermore, the report integrates graphical representations using MS Spreadsheet, including trend lines for forecasting and prepares a business presentation and formal business report. Finally, the report uses information processing tools, project planning, and financial tools to support the decision-making process, culminating in a conclusion that provides recommendations for Balti Palace's expansion strategy.

BUSINESS DECISION MAKING
(Opening a new branch of Balti Palace)

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Data gathering plan................................................................................................................1
1.2 Survey methodology and sampling frame.............................................................................2
1.3 Questionnaire.........................................................................................................................2
TASK 2............................................................................................................................................5
2.1 Creating information for decision-making purpose using representative values...................5
2.2 Analyzing the results to draw valid conclusion...................................................................10
2.3 Analyzing the results using dispersion.................................................................................10
2.4 Quartile, percentile and correlation to derive conclusion....................................................11
TASK 3..........................................................................................................................................13
3.1 Graphs in MS Spreadsheet and draw useful conclusion based on information...................13
3.2 Trend lines in Spreadsheet graphs to assist forecasting.......................................................16
3.3 Preparing business presentation to disseminate information...............................................17
3.4 Formal business report.........................................................................................................17
TASK 4..........................................................................................................................................17
4.1 Appropriate information processing tool.............................................................................17
4.2 Prepare project plan for an activity and its critical path......................................................18
4.3 Using financial tools for decision-making...........................................................................18
CONCLUSION..............................................................................................................................21
REFERENCES..............................................................................................................................22
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INTRODUCTION
In past few years, British restaurant sector undergone significant changes with the rising
consumer spending, competition level and other factors. Despite immense competition facing by
the restaurant operators, the market is still expected to grow and reach to the value of GBP20bn
or above @ 4% annual growth rate (Mullan, 2017). Balti Palace is one of the successful and
pioneering restaurant of London who is serving customers with the quality cuisine, exciting
place, modern surroundings and others. Its Eastern influence satisfy all the appetite through
quality and healthiest food choices in traditional flavors. Looking to wonderful growth, it is keen
to invest in one more restaurant in London. Thus, the study creates data collection plan, conduct
an original survey and analyze the results using distinctive statistical methods. Moreover,
charting will be used to graphically present its own sales & profit performance. In addition,
financial tools and MS project management will be usedfor business decision.
TASK 1
1.1 Data gathering plan
Data collection is a key requirement for Balti Palace before setting a new branch at any
other location in London. In order to protect reliability and credibility, it must obtain necessary
set of data using acceptable data collection techniques. Research can be defined as a scientific
investigation to discover the hidden facts about the chosen problem. As Balti Palace is going to
invest in a new restaurant unit, thus, data can be collect from following sources:
Primary research: Investigation carried out by researcher to collect fresh dataset
targeting specific need is called primary research. To know consumer thinking, perspective for
restaurant, their desirable cuisine, infrastructure and others, Balti Palace can take interview and
survey selected people (Pickard, 2012). No-doubt, it seems bit difficult to conduct a real survey
as it requires resources, time and money because it starts from scratch, still credibility and
reliability is high.
Secondary research: Unlike above, it is just about using available data that was earlier
gathered by primary research by any other scholar. Governmental association report, newsletters,
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journal, encyclopedia, journals are the basic and readily available sources. Balti Palace can
assess their current status using sales and profitability outcome. Moreover, web resources would
be access to know restaurant industry growth, level of consumer spending and its future outlook.
1.2 Survey methodology and sampling frame
The essence of survey methodology can be defined as a way of questioning target
individuals on a selected topic and then drawing useful inferences from their responses gathered.
Survey will be the best method for Balti Palace to reflect people attitude towards restaurant
concept, segmentation, their desires, level of satisfaction and other success determinable factors
(Pickard, 2012). Mail survey, Telephonic survey, personalized interview are several survey
methods. Here, it is decided to conduct an online mail survey of the target people that will be
self-administered. It will be done through questionnaire to extract useful information within a
short time period. It is cheaper than any other source of primary data collection and selected
individuals can also remain anonymous.
As, Balti Palace is a large Indian cuisine who strongly appeal customers, thus, the
restaurant has a great customer base. Therefore, it seems important to choose some group of
people among all for the sample selection. It will survey only the chosen individuals but they
must represent the entire universe, therefore, random sampling seems appropriate which
withdraw some members randomly without any choices or preferences (West, 2016).
Considering its large base, it is decided to choose 100 regular customers of Balti Palace, all will
be surveyed only after their voluntary acceptance that assure information credibility, reliability &
authenticity.
1.3 Questionnaire
Please provide your responses, it will take few minutes, your opinion matters.
Demographic details
Name: ___________________________
Age: ____________________________
Gender: _________________________
Marital status: _____________________
Nationality: _______________________
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1. Which comes in your mind first when thinking about eating out?
 Convenient than cooking
 Not adequately clean
 Variety of cuisine
 It doesn’t matter
2. How frequently do you visit restaurant?
 Once in a week
 Twice in a week
 Once in fortnight
 Once in month
 Other (Kindly specify)
3. What time do you often choose to take eat out?
 Breakfast
 Lunch
 Dinner
 No matter
4. What kind of food choice would you like to have in Balti Palance new restaurant?
 Chinese
 Japanese
 Italian
 French
 American
 Indian
 Continental
5. Factors do you opined the most significant while selecting a restaurant to take meal out?
 Price and discount
 Food quality and taste
 Services
 Interior design and surrounding
 Entertainment
 Hygiene
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6. When you thinks about convenience, which one you seem highly important over others?
 Distances to the restaurant
 Free of cost delivery
 Take-away facilities
 Online and telephonic ordering
7. Your preferable architectural style that you like the most?
 Modern
 Baroque
 Romantic
 Gothic
 Traditional
 Other
8. Which kind of extra facilities for entertainment do you expects?
 Live soft music
 Pop music
 Drinking bar
 Jazz & lounge
 Others (Specify)
9. Which of the below medium do you inform yourself about any restaurant?
 Leaflet
 Friend recommendations
 Internet
 TV advertisement
 Social media
 Others
10. How much cost would you ready to pay for the meal?
 Less than £50
 £50 - £100
 £100-£150
 £150-£200
 £200-£250
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 More than £250
11. What type of dining rooms do you expects from us in our new restaurant unit?
 Private
 Relaxed
 Formal
 Casual
12. Give us your suggestions: ________________________________________________
TASK 2
2.1 Creating information for decision-making purpose using representative values
Respondents
Convenient than cooking 33
Not adequately clean 18
Variety of cuisine 42
It doesn’t matter 7
100
33%
18%
42%
7%
Number of respondents
Convenient than cooking
Not adequately clean
Variety of cuisine
It doesn’t matter
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Interpretation: Variety of cuisine at the single place is the main thought comes in the
mind of maximum target individuals (42%) when they thinks about any restaurant to take meal
out. Thus, it satisfy their different food choices and meet their expectations. However, 33%
people thinks about convenience instead of cooking as they get prepared food at their ordered
place (Bartels and et.al., 2015)
Respondents
Price and discount 32
Food quality and taste 22
Services 12
Interior design and surrounding 9
Entertainment 7
Hygiene 18
100
32%
22%12%
9%
7%
18%
Most important factors affecing decisions
Price and discount
Food quality and taste
Services
Interior design and surrounding
Entertainment
Hygiene
Interpretation: Price and discount, no-doubt, affect users to a great extent as 32% people
says that cheaper and affordable prices with attractive discounting options encourage them to
visit that particular restaurant to get benefit of the same. However, 22% thinks about food quality
and taste to meet their desires, thus, quality means taste is of critical importance. However, with
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the changing period, people, now-a-days, prefer hygiene too with the quality to get nutritious and
healthier food as 18% people preferred the same.
Respondents
Modern 22
Baroque 8
Romantic 13
Gothic 9
Traditional 42
Other 6
100
Modern
22%
Baroque
8%
Romantic
13%
Gothic
9%
Traditional
42%
Other
6%
Style of restaurant
Modern
Baroque
Romantic
Gothic
Traditional
Other
Interpretation: Pie graph displays that traditional style of restaurant gains preferences
over any other style, because, in UK, there are limited number of restaurants based on traditional
design. In the survey, 42% prefer that new restaurant unit must be design in traditional style,
however, 22% prefer modern surroundings and style of restaurant.
Sales and profitability results
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Year Sales/turnover Net profit
2008 2645 104
2009 2680 128
2010 2470 134
2011 2645 178
2012 2830 226
2013 2600 260
2014 2780 360
2015 3240 470
2016 3560 415
2017 4060 378
29510 2653.00
Average: It expresses the central number presenting typical value in a given data set. It is
computed by dividing the sum of total values by their number (Zheng and et.al., 2016).
Average sales=∑ Fx /∑ x
¿ £ 29,510/ 10 years
¿ £ 2,951
Average profitability=£ 2,653/10 years
¿ £ 265.3
Median: It is the middle value of sorted list of numbers in either ascending or descending
order. Here, after arranging dataset in ascending order, the median value is found as follows:
Value of ( N +1)/2thitem
¿(10+ 1)/2 th item
¿ 11/2th item
¿ 5.5 thitem
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Sales=( £ 2,680+£ 2,780)/2 th item
¿ £ 2,730
Profit=(£ 226+ £ 260)/2
¿ £ 486 /2
£ 243
Mode (Z) = Not exist as in the practical world, it is not obvious to see the same sales and
profit results more than once time.
2.2 Analyzing the results to draw valid conclusion
The findings of the results states that on average, Balti Palace obtain annual sales of
£2,951 at an average return of £265.3. Thus, it demonstrates that restaurants collects an annual
profit percentage of 9% on their total sales revenue. It shows that looking to the industry and
prevailing growth, Balti Palace results shows an average performance, neither too impressive nor
too low. However, as the competition is too immense and throat-cut, therefore, managers need to
look after the initiatives to maximize their sales revenues and perform better. It requires
introducing more cuisine to offer more menu choices to the customers belonging to different
culture, nationality and citizens (Babajana and Phillips, 2016). Moreover, as the restaurant is
looking for expansion, therefore, the proposed strategy by opening one more outlet in the country
would be definitely yield worthy. However, the median sales is found to £2,730 and profitability
median is £230. It indicates, that currently, the restaurant is getting more above median value and
performing good.
2.3 Analyzing the results using dispersion
Range is the simplest measurement of dispersion that just can be known by subtracting
lowest value with the highest one (Gravetter and Wallnau, 2016). Here, range for sales and profit
results are obtained as follows:
Sales=£ 4,060−£ 2,470
¿ £ 1,590
Profit=£ 470−£ 104
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¿ £ 366
Yea
r
Sales/
turnover
Net
profit
Sales Profitability
Deviation from
A D^2
Deviation from
A D^2
2008 2645 104 45 2025 -156 24336
2009 2680 128 80 6400 -132 17424
2010 2470 134 -130 16900 -126 15876
2011 2645 178 45 2025 -82 6724
2012 2830 226 230 52900 -34 1156
2013 2600 260 0 0 0 0
2014 2780 360 180 32400 100 10000
2015 3240 470 640 409600 210 44100
2016 3560 415 960 921600 155 24025
118 4060 378 1460
213160
0 13924
3510
357545
0 53
15756
5
Standard deviation
Sales=√ ∑ Dx 2/N – (∑ D)2 /N
¿ √ 357450/10−(351002 /102)
¿ √ 234344
¿ 484.09
Profit=√ 157565/10 – (532)/102
¿ √ 15756.5 – 2809/100
¿ √ 15,475.6
¿ 124.401
Both the results found greater value of range as well as standard deviation for the sales
data series, thus, it represent greater scatter from the average value. In some year, sales figure
outer-performed to the average however, in rest of the year, sales revenue is below the average
sales. However, in compare to this, profit series shows less value of standard deviation to
124.401 shows less scatter or dispersion in the series.
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2.4 Quartile, percentile and correlation to derive conclusion
Quartile indicates 25% value prevailing in the series, thus, by this way, every data series
has 4 quartile presenting ¼, ½, 3/4 and 100% value of the series. However, percentile is used for
more classification which categorize series into 100 proportion representing the value prevailing
under the given observation (Zheng and et.al., 2016).
Percentile Quartile Sales profit
P25 Q1 2645 145
P50 Q2 2730 243
P75 Q3 3137.5 373.5
P100 Q4 4060 470
The results indicates that in the last decade, 25% of sales and profit are equivalent to
£2,645 and £145 while ½ means 50% of the sales revenue and profit are equal to £2730 and
£243. ¾ means 75% of the total turnover and net profit that Balti Palace had received is £3,137.5
and £373.5. Since 2008, the maximum sales and profit of the restaurant is £4,060 and £470.
Sales & profits are no doubt, related to each other, generally, profit rises up with the sales
increase or fall, when firm receive less revenue. However, the statement do not present statistical
measurement to judge that how sensitive is profit with the change either increase or decrease in
sales. Therefore, correlation is used to derive facts to determine the level and direction of
relationship between correlated or interrelated series (Shevlyakov and Smirnov, 2016).
Year Sales/turnover Net profit
2008 2645 104
2009 2680 128
2010 2470 134
2011 2645 178
2012 2830 226
2013 2600 260
2014 2780 360
2015 3240 470
2016 3560 415
2017 4060 378
Correl 0.73
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The table reflects that sales and profits are moderately related as there correlation
coefficient of 0.73 lies in the range of 0.25-0.75 that means that with the increase or decrease in
sales revenues of Balti Palace, profit also shows similar trend with 75% change. It indicates that
other factors also affect its return like cost.
TASK 3
3.1 Graphs in MS Spreadsheet and draw useful conclusion based on information
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
2645 2680 2470 2645 2830 2600 2780
3240
3560
4060
104 128 134 178 226 260 360 470 415 378
Sales and profit performance
Turnover Net profit
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
2645 2680 2470 2645 2830 2600 2780
3240
3560
4060
104 128 134 178 226 260 360 470 415 378
Sales and profit performance
Turnover Net profit
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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
0
500
1000
1500
2000
2500
3000
3500
4000
4500
0
50
100
150
200
250
300
350
400
450
500
Sales and profit performance
Turnover Net profit
Year
SAlES (IN GBP)
PROFIT ( IN GBP)
2645
2680
2470
2645
2830
2600
2780
3240
3560
4060
104 128
134
178
226
260
360
470
415
378
Sales and profit performance 2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
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2200 2400 2600 2800 3000 3200 3400 3600 3800 4000 4200
0
50
100
150
200
250
300
350
400
450
500
Scatter diagram
Sales (IN GBP)
Profit (IN GBP)
Interpretation: Above graphs prepared above clearly exhibits that Balti Palace shows
fluctuating trend in their sales and profit results. It is because, in 2010, its sales dropped,
however, controlled cost enabled business to grow its profit by 4.69%. In the following years,
although the results showed improvements but at declined rate, then again, in 2013, total sales
fallen to £2,600, still, profit increased from £226 to £260 by 15.04%. A Robust cost management
plan with close supervision and tight monitoring of the departmental heads or functional
counterpart make it possible for the Balti Palace to get good return. Afterwards, as the market
demand for restaurant sector in UK is continuously increasing, therefore, restaurant gathered
higher sales, however, the competitor’s offerings affected the growth rate (Babajana and Phillips,
2016). Despite growing sales, it struggled with profitability issues as in latest 2 years, inflation,
high cost of sustainable, fresh and organic food and rising staffing cost resultant poor return as it
dropped by 11.70% and 8.92% respectively.
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3.2 Trend lines in Spreadsheet graphs to assist forecasting
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
0
500
1000
1500
2000
2500
3000
3500
4000
4500
2645 2680 2470 2645 2830 2600 2780 3240 3560
4060
f(x) = 138.909090909091 x + 2187
R² = 0.679299739621318
Trend line
Turnover Linear (Turnover)
Year
Sales (IN GBP)
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
0
50
100
150
200
250
300
350
400
450
500
104 128 134
178
226
260
360
470
415
378
f(x) = 40.8181818181818 x + 40.8
R² = 0.87392957884953
Net profit
Year
Profit (N GBP_
From the results, it is seen future of Balti Palaces seems better as it is expected to
generate more sales with higher return. In the results, it is viewed that sales shows a moderate
fluctuations as an impact of rising consumer discretionary expenditures on food, café and
restaurants. However, profit shows highly volatile trend as in the beginning period, it was too
low, shows consistent growth and suddenly in 2015, it had hit record of £470 and then dropped.
Considering the historical occurrence and results, trend line predicted that future will be possibly
better as restaurant will be able to generate increased return with higher income through sales. It
is because of strong appeal to the customers on social media channel and its own website.
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Moreover, as new outlet is going to open, therefore, no-doubt, it is obvious, that sales would be
definitely grow up from the existing level.
3.3 Preparing business presentation to disseminate information
PPT
3.4 Formal business report
To: Bali Palace, Manager
From: Business analyst
Date: 21st December 2017
From the results, it is to informed that in the last decade, changing market forces,
consumer demographic, their food choices and preferences and other factors affected business
sales with high volatility. Due to present of such factors, Balti Palace sales is found highly
spreaded from the average sales and profit. In recent years, as customers now like to to taste
their desired cuisine and prefer take meal out therefore, the demand for restaurant has been
increased, as a result, the sales shows consistent increase. Despite such growth, competition
cannot be ignored and in tough time, business was unable to derive regularly increasing profit as
in recent two years, profit had fallen. Moreover, rising cost of staffing, minimum labor wages act
regulation, inflation, interest on borrowing, high tax etc, are the reason which limits profit. Still,
historical results shows probable growth in upcoming years and restaurant is supposed to get
more revenues at increased return.
TASK 4
4.1 Appropriate information processing tool
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(Source: Type of Information System, 2016)
Decision support system: This system is of crucial significance for the top managers and
policymakers of Balti Palace who can use it to access required information to better inform
themselves and thereby make competitive decisions (Sperl-Hillen and et.al., 2016). It enable
them to analyze massive data set, compile and synthesize them all into actionable intelligence to
make informed decision quickly.
Management Information system: At the tactical level, middle-level managers,
supervisors and heads of department comes who are more concerned about overseeing
operational management. Thus, they use semi-structured package, MIS that enable them to
monitor current performance. MIS use TPS output as input and analyze the same applying
routine algorithms to aggregate or summarize results. Tactical manager use it to track current
status and predict future results (Laudon and Laudon, 2011).
Transaction processing system: Operational level of Balti Palace is concerned about
carrying out daily transactions and include users like cashier, staff members and others. They all
use TPS to keep structured record of routine functionality and create better operational planning.
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Figure 1 Information Processing system for operational, tactical and
strategic level

4.2 Prepare project plan for an activity and its critical path
Gantt chart is one of the famous tool that shows key activities or tasks against the set time
period. The left side presents all the activities or events by bar and on the top, suitable time scale
is displayed. The length & position of the bar presents beginning date, activity duration and
closing date.
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All the planned activities are critical which will take 18 + 9 + 10 + 8 + 12 + 7 + 11 = 75
days in opening new outlet in London of Balti Palace.
4.3 Using financial tools for decision-making
Capital budgeting is the long-term investment planning which aims to finance the most
worthy project from its capitalization structure, which is expect to derive impressive results.
Net present value: It is the most widely used tool of investment appraisal that analyze
managerial projections carefully and discount them all back to present bya using weighted
average cost of capital (WACC). Its total subtracted from investment cost to judge their
desirability (Dellavigna and Pollet, 2013). Balti Palace should invest money in the project, if it
yield positive or favorable NPV demonstrating that restaurant will obtain excess cash over
invested capital. Although, the method has downfall side too as projected inflows rarely match
actual and many-times, discounting rate used do not found appropriate.
Year
Projected cash
inflows (£)
Discount rate
@12%
Discounted cash flows
(£)
Cost of beginning outlay 190000
1 50000 0.893 44650
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2 64000 0.797 51008
3 58000 0.712 41296
4 70000 0.636 44520
Total 181474
Beginning outlay 190,000
NPV/NPW
(Total discounted cash inflow –
Beginning outlay)
(181,474 – 190,000)
= -8526
Decision: As the NPV of the new investment project to open a second restaurant is
negative GBP8526, hence, it does not seem to be worthy.
Internal rate of return: It is one of the effective technique that present the discounting
rate at which project achieves break even. It is the rate that makes total of cash inflows and
outflows zero (Dellavigna and Pollet, 2013).
Year
Cash
inflo
ws
(£)
Discount factor
@10% Discount factor
@12%
DCI @ 10%
(Upto 2
decimals)
DCI @ 12%
(Upto 2
decimals)
1
5000
0 0.909091 0.892857 45454.55 44642.86
2
6400
0 0.826446 0.797194 52892.56 51020.41
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3
5800
0 0.751315 0.71178 43576.26 41283.25
4
7000
0 0.683013 0.635518 47810.94 44486.27
189734.3 181432.8
Less:
Investment
made at the
beginning of
the period 190000 190000
Net present
value -265.69 -8567.21
IRR = 10% + (-265.69)/(-265.69)-(-8567.21)*(12%-10%)
= 9.94%
Decision: IRR is far below from the cost of capital, hence, similar to NPV, it shows new
investment project would not be profitable for Balti Palace.
CONCLUSION
Analysis in the paper brought the fact that changing market forces, volatile trend,
changing demographic, inflation, consumer preferences and competition level affected Balti
Palace financial results including both sales and profit. Despite challenging market, restaurant
sector of UK is expected to grow and trend analysis suggested firm with probable growth in
future. However, application of investment appraisal did not seem existing project yield worthy,
hence, firm is suggested to find other investment opportunity to open new outlet.
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