Business Decision Making Report: Syngenta's Amistar Launch Plan

This report provides a comprehensive analysis of business decision-making processes, focusing on Syngenta's plan to launch Amistar, a broad-spectrum fungicide, in London. The study begins with an introduction to business decision-making, highlighting its importance for corporate success. Task ...Read More

Business Decision Making

TABLE OF CONTENTS
INTRODUCTION................................................................................................................................
TASK 1.................................................................................................................................................
Q.1 Collection of primary or secondary data and discussion on survey methodology and
sampling technique......................................................................................................................1
Q.2 Market survey questionnaire.................................................................................................2
M1 Ways of calculating coefficient of skewness and its use in improving organization's
performance.................................................................................................................................5
TASK 2.................................................................................................................................................
TASK 2.................................................................................................................................................
Q.1 Mean and Mode and Median................................................................................................5
Q.2 Range and Standard Deviation..............................................................................................7
Q.3 25th Percentile (Lower iii. 25th Percentile (Lower Quartile) and 75th Percentile (Upper
Quartile) and use of Percentile.....................................................................................................9
TASK 3...............................................................................................................................................
Q.1 Producing column and bar graph for sales cost and profit..................................................11
Q.2 Line graphs showing trend lines which can be used for projecting sales and profit..........13
Q.3 This part is covered in PowerPoint presentation.................................................................15
D1 Evaluating use of time series analysis as a tool for forecasting...........................................15
TASK 4...............................................................................................................................................
Q1 Gantt chart............................................................................................................................16
Q2 Network Diagram.................................................................................................................18
Q.3 Use of financial tools for decision making.........................................................................19
D3...............................................................................................................................................23
CONCLUSION..................................................................................................................................
References..........................................................................................................................................

INTRODUCTION
Business decision making is regarded as an essential part of every business. This is being
carried out with an aim to make selection of suitable course of actions that can result in
attainment of success by the firm. It is regarded as a cognitive process that leads to the selection
of appropriate action among the various alternatives present (Black, 2011). For the purpose of
surviving for the longer term, it is essential for the corporation to take into account different
actions so that it can achieve desired targets in an appropriate manner.
In the present report, business decision making has been discussed with respect to
Syngenta. The firm is one of the world's leading companies that possesses more than 28000
employees in approximately 90 countries. Main purpose of the business to bring plant potential
to life. The company is planning to launch new product that is Amistar which is a broad
spectrum fungicide that can be used in Integrated Pest Management. The country chosen for the
launch of Amistar is London. The present study entails to make the use of wide range of sources
for data collection. Further, it covers understanding regarding range of techniques for the
analysis of data. The report involves the production of information in a suitable formation for
decision making. Lastly, the study makes use of software generated information to develop
decisions at operational, tactical and strategic level within business.
TASK 1
Q.1 Collection of primary or secondary data and discussion on survey methodology and
sampling technique
The launch of Amistar will be done in the country that is London. This is used in order to
reduce the threat of diseases that might occur from various pests such as cockroaches, beds,
bugs, mice, rats as well as moths etc. Launch of Amistar can be beneficial for London as it
makes country clean and free from pests (Fassin, Van Rossemand Buelens, 2011). The technique
of data collection is regarded as the most crucial business activity that acts as an aid in taking
suitable decisions. Further, it is essential for the purpose of gathering information with an aim to
gain knowledge regarding preferences as well as opinions of respondents in an effective manner.
In the present study, data has been gathered in order to take appropriate decision related to
launch of Amistar in London. With an aim to know whether or not the particular decision would
be profitable for Syngenta, collection through primary and secondary sources has been used.
Through this, better understanding can be developed with respect to values and beliefs of
1

consumers regarding the launch of Amistar in London (Alexander, 2007). Market research is
considered as an effective source that assists business in gaining insight to the opinions of
existing customers with respect to particular plan. Data collection sources such as primary and
secondary have been enumerated in the manner below: Primary data: Under this, information is gathered by the direct interaction with
respondents. The technique of survey has been incorporated in order to gather
information from the existing customers in an effective way (Goetsch and Davis, 2014).
Questionnaire has been developed by the researcher in order to gain knowledge regarding
agreement or disagreement of the respondents with respect to launch of Amistar in
London.
 Secondary data: In this, data is collected through past financial information of the
organization. This includes sales records, profitability data as well as annual reports. This
is effective in offering clear picture of the capability of Syngenta in order to launch
Amistar in London. It takes less time and minimal efforts for the purpose of gathering
information through secondary sources (Aharoni, Tihanyiand Connelly, 2011). But, it is
not obvious that data offers accurate information with respect to the preferences of
existing customers towards the project plan.
In the present study, for the purpose of data collection, the technique of survey is being
used. Under this, viewpoints of the customers can be gathered through the technique of
questionnaire. This is comprised of open ended and close ended questions. Open ended question
acts as an aid for Syngenta in gaining insight to the opinions, views as well as attitude of the
customers in relation to the launch of Amistar in London project plan (Kownatzki and et. al,
2013). In contrast to this, close ended question restricts the choice of respondents as such
questions possess multiple choices. Therefore, existing customers are conjugate to present their
viewpoints from the choice offered. The technique of sampling that is being used in the present
study is probability sampling. Under this, selection of sample is done on the random basis. This
is because it offers equal opportunity to every individual in getting selected as sample for the
purpose of investigation. The size of sample would be 20 which includes existing customers of
Syngenta. Sampling frame is regarded as small unit of population that represents the entire
population (Madsen, 2007).
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Q.2 Market survey questionnaire
QUESTIONNAIRE
(Kindly take few minutes to provide your responses. Your feedback is appreciated)
Demographic information
Name:
Age:
Gender:
Male □
Female □
1. From how long you have been using products and services of Syngenta?
Less than 5 year □
5-10 years □
Above 10 years □
2. Do you make purchase of products and services offered by Syngenta?
Yes □
No □
3. What are the factors that attract you towards purchasing of Syngenta's products?
High quality □
Reasonable prices □
Attractive discounts □
Benefit of location □
4. Are you satisfied with the services provided by Syngenta?
Strongly satisfied □
Satisfied □
Neutral □
Dissatisfied □
Strongly dissatisfied □
5. Do you agree with the statement that Amistar can offer better prevention from cockroaches,
beds, bugs, mice, rats as well as moths etc.?
Strongly agree □
Agree □
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Neutral □
Disagree □
Strongly disagree □
6. Do you agree with the view that launch of Amistar can be beneficial for London?
Strongly agree □
Agree □
Neutral □
Disagree □
Strongly disagree □
7. Do you think, Amistar can enhance global food security?
Yes □
No □
8. What is your level of agreement to the view that Amistar can lead to responsible agriculture in
the London?
Strongly agree □
Agree □
Neutral □
Disagree □
Strongly disagree □
9. Are you satisfied with the pricing policy of Syngenta in terms of affordability?
Strongly satisfied □
Satisfied □
Neutral □
Dissatisfied □
Strongly dissatisfied □
10. Do you agree with the view that integrated pest management can be effectively carried out
through Amistar?
Strongly agree □
Agree □
Neutral □
Disagree □
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Strongly disagree □
11. If, you did not request pest control service, why not?
Do own pest control □
Difficult to be prepared for treatment □
Concern about the chemicals □
12. Suggest the manner in which Syngenta can bring improvement in the products and services?
______________________________________________________________________________
____________________________________________________________________________
M1 Ways of calculating coefficient of skewness and its use in improving organization's
performance
Skewness is referred to as measure of asymmetry of the probability distribution of real
values random variable about its mean. In other words, it demonstrates the imbalance and
asymmetry from the mean of data distribution. The value of Skewness can be positive as well as
negative (Ogilvie, 2008). A positive skew implies that data results are larger. However, negative
skew denotes extreme data outcomes that are smaller. Coefficient of Skewness can be calculated
through the formula that is:
= 3 (Mean -Median)/ Standard deviation
The role of Skewness is effective in determining whether there is positive or negative
data results. Thus, this outcome assists in examining the past data of organization in an effective
manner. Moreover, it plays a significant role in determining the causes of deviation. Therefore,
corrective actions can be taken within reasonable time span. Skewness plays an essential role in
enhancing the overall performance of organization as such it makes evaluation of the entire
performance to a greater extent (Pettigrew, 2014). It is important for the businesses to take into
account such so that firm can attain its desired targets with efficiency and effectiveness.
Moreover, it would assist in survival of firm for the longer time.
TASK 2
TASK 2
Q.1 Mean and Mode and Median
Annual Expenditure /£m No. of Counties Mid value Fx CF
0-10 13 5 65 13
5

10-20 25 15 375 38
20-30 37 25 925 75
30-40 22 35 770 97
40-50 21 45 945 118
50-60 20 55 1100 138
60-70 12 65 780 150
150 4960
Mean ∑FX/ n 33.07
Median L + (n/2- CF)/f*h 30.00 q2
Mode L + h (fm-f1)/ 2*(fm-f1-f2) 24.44
In general, descriptive statistics can be defined as the discipline of quantitatively
describing the main features of gathering information. However, descriptive analysis is
distinguished from inferential statistics or inductive statistics. The main purpose of descriptive
analysis is to summarize the sample of data and present in an effective and efficient manner
(Salkey, 2006). Further, some measures that are commonly used to describe the given set of data
are defined as measure of central tendency and measure of variability or dispersion. In this
regard, measure of central tendency consists of mean, mode and median whereas, measure of
variability consists of standard deviation, minimum and maximum values of the variables,
kurtosis and skewness. With the help of above computed table, various elements of central
tendency has been calculated. However, by the means of these elements, researcher can easily
provide the reliable and suitable information for the readers and learners so that they can make
effective decisions. Following is the illustration of different elements of the central tendency:
 Mean: In general context, mean can be defined as the sum of collected quantitative
information with the help of different sources that consist of primary and secondary data
collection approaches (Bell, Masaoka and Zimmerman, 2010). On the basis of above
given case, it can be said that top level management of Amistar has to spend on an
average of 33.07 million as the annual expenditure to carry out all the operations in an
effective and efficient manner. Therefore, with the help of this, line manager can easily
make decisions regarding the annual expenditure on each country and accordingly
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communicate with the financial department for arranging funds so that execution of
business activities can be done in the best possible manner.
Mean = Total of FX/ Total of number of customers
= 4960/ 150
= 33.07
 Median: In common, it is defined as the middle value of the collected quantitative data.
In this, manager has to arrange the data from lowest to highest and then identify the
middle number by crossing of the number until reach the middle point (Solomon and et.
al, 2014). According to the present collected annual expenditure information for Amistar
Ltd, median value is 30.
Median = lower limit + (60- CF of previous class interval)/Frequency * class interval
= 20 + (((150/2)-38)/37)*10
= 20 + (((75)-37)/37)*10
= 30
 Mode: This is another important component of the central tendency as it is the number
which occurs most in the collected information (Triantaphyllou, 2013). According to the
present collected information, mode of annual expenditure for Amistar is 24.44.
Mode formula: L +h(fm-f1)/2*(fm-f1-f2)
In which,
L = Lower boundary of modal class
h = Size of model class
Fm = frequency corresponding to modal class
F1 = frequency preceding to modal class
F2 = frequency proceeding to modal class
= 20 + (10*((37-25)/ (2*37-25-22)))
= 24.44
Q.2 Range and Standard Deviation
Annual
Expenditure /£m
No. of
Counties Mid value X^2 F*x^2 Fx
0-10 13 5 25 325 65
10-20 25 15 225 5625 375
7

20-30 37 25 625 23125 925
30-40 22 35 1225 26950 770
40-50 21 45 2025 42525 945
50-60 20 55 3025 60500 1100
60-70 12 65 4225 50700 780
150 209750 4960
Variance
s2 = ∑Fx2 –
((∑Fx)2/n)/ n – 1 208649.257
Std. Deviation 456.781411
Range
Highest value -
lowest value 70
In statistical terms, dispersion can be defined as the method of identifying how much the
given set of data is stretched or squeezed. Furthermore, it assists in evaluating how various
elements behave with regards to some sort of central tendency which usually consist of mean
(Olsen, 2011). There are several elements which are involved in the measure of dispersion such
as range, inter-quartile range, variance, standard deviation and absolute deviation. Herein, two of
its elements have been used to analyse the collected information for Amistar which are: standard
deviation and range.
 Standard deviation: In general, standard deviation can be defined as the square root of
variance. However, it is the measure of how precise the mean of a population or sample
is. The main purpose of computing standard deviation is that it assists in indicating the
trends in the elements in a given data set with respect to the mean i.e, is the spread of
these elements from the mean (Gakhar, 2012). However, according to the present given
case, standard deviation for the collected information helps in indicating the average
annual expenditure that top level management of Amistar has to incur in order to carry
out business operations.
Variance = s2 = ∑Fx2 – ((∑Fx) 2 /n)/ n – 1
Variance = 208649.257
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Standard Deviation = S= √s2
Standard Deviation = 456.781411
 Range: Range in general is the difference between highest values of the interval and
lowest value of the interval (Keller, 2013). According to the present information given for
the Amistar Ltd, range has been calculated:
Range = Highest value - lowest value
Range = 70 – 0
Range = 70
Q.3 25th Percentile (Lower iii. 25th Percentile (Lower Quartile) and 75th Percentile (Upper
Quartile) and use of Percentile
Percentile:
A percentile can be defined as the certain percentage of set of data. However, percentiles
are used with an aim of observing how many of a given set of data fall within the certain
percentage range. In this context, 25th percentile helps in evaluating that the total number of
values that comes under the 25 percentage group of the total values. In other words, it is also
defined as lower quartile (Li, 2006). Similarly, 75th percentile assists in identifying that the total
number of values that are present fall under the 75 percentage of the overall observation group.
In general, they are termed as upper quartile. Herein, researcher aims at evaluating percentile to
identify the percentage value of collected information and under which group, it falls.
Percentile for Annual expenditure:
Value of percentile of 25th = 20.2
Value of percentile of 50th = 24.44
Value of percentile of 75th = 47.38
Quartile:
Quartile is used with an aim of dividing collected information into four different quarters.
In general terms, quartile is the term derived from quarter which means one fourth of something.
Therefore, quartile is a certain fourth of a given data (Morato, 2013). Furthermore, first quarter is
denoted as (Q1) which indicates the middle value between the smallest number and the median
of the defined set of data. While on the other hand, second quartile (Q2) can be defined as
median of entire data which is computed in the measure of central tendency. Whereas, third
9

quartile (Q3) refers to the mid value between the median and the highest value of a given set of
quantitative information (Weygandt and et.al, 2009).
According to the present given case, researcher is focusing on computing quartile and
percentile at 25th and 75th so as to determine the lower and upper group in which collected
information falls. Following are the quartile and percentile for the current study:
Annual Expenditure
Quartile1 20.2
Quartile2 24.44
Quartile3 47.38
Interquartile range:
In general, the interquartile range (IQR) can be defined as the measure of variability
which is based on dividing the given set of quantitative information into quartiles. Furthermore,
interquartile range can be computed by the difference between the upper quartile and lower
quartile (Brennanand Perkins, 2012).
Interquartile range = Upper Quartile – Lower Quartile
Interquartile range = 47.38 – 20.2
Interquartile range = 27.18
Correlation coefficient:
In the statistical terms, correlation coefficient can be defined as the tool which focuses on
evaluating the interdependencies of two variables on one another (Correlation. 2014).
Furthermore, it is considered as the best approach for computing the relationship between two or
more variables. According to the present given case, correlation coefficient of sales and profit of
Amistar Company can be computed. Operating in such a competitive environment, it is
important to generate higher revenues so as to maintain the profitability position of business
enterprise (Ferrell and Fraedrich, 2014). Through the help of study made by different authors, it
can be said that lower the value of sales leads firm to generate lower profits. Therefore, in order
to raise the profits of business, it is essential for the top level management to undertake better
sales strategies as well as minimize the cost of sales so as to increase the profit margin ( Anninos
and Chytiris, 2011).
Year Sales (£’m) Profit (£’m)
10

2005 270 70
2006 310 90
2007 320 100
2008 400 150
2009 380 130
2010 350 110
2011 330 110
2012 330 100
2013 340 110
2014 480 140
The correlation coefficient of sales and discount are given below:
Particular Sales Units (£’m) Profits (£’m)
Sales (Units) (£’m) 1 0.888030143
Profits (£’m) 0.888030143 1
Formula:
As per the Formula R2 = 0.888030143
Through the means of above calculation of correlation coefficient, it can be evaluated that
sales and profit are highly correlated to each other. However, as the sales of Amistar Company
increases, profit margin also increases and vice-verse. In this context R2 = 0.888030143 clearly
indicates that sales and profits of the cited firm are highly correlated and it is important for the
management to make sure that they employ effective and efficient strategies so as to generate
desired results and outcomes.
TASK 3
Q.1 Producing column and bar graph for sales cost and profit
The data of sales, cost and profit for Japanese market has been enumerated in the manner
below:
11

Year Sales (£’m) Cost (£’m) Profit (£’m)
2005 270 200 70
2006 310 220 90
2007 320 220 100
2008 400 250 150
2009 380 250 130
2010 350 240 110
2011 330 220 110
2012 330 230 100
2013 340 230 110
2014 480 240 140
Column graph of Sales, Profit and Cost:
Bar graph of Sales, Profit and cost:
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Interpretation:
These figures present the column and bar graph of Sales as well as cost and profit of
Syngenta's product that is Amistar in Japanese market. The graph represents the data of last ten
years that starts from 2005 to 2015. This would act as an aid in making analysis of the
performance of organization in an effective manner. From the analysis of above column and bar
graph, it has been gained that sales of the company is increasing significantly. This is as a reason
of increasing demand for the product in Japanese market. In addition to this, profitability of the
organization is fluctuating that implies that it is increasing in some years while decreasing in
others. This is because of increasing expenses of the business that affects the profitability of
Syngenta in the Japanese market. But overall, it can be determined that revenues of the firm are
increasing to a greater extent. Another factor is cost which is also fluctuating in all the respective
years. This is due to reason of increasing cost of material, labour and distribution that affects the
overall cost of production. This thereby results in impacting the profitability of Syngenta's
product that is Amistar to a greater extent. It is essential for the corporation to keep a track on the
expenses so as to enhance the performance of organization to a significant level.
Q.2 Line graphs showing trend lines which can be used for projecting sales and profit
The trend line for sales and profit has been demonstrated in the manner below:
Year Sales (£’m) Profit (£’m)
13

2005 270 70
2006 310 90
2007 320 100
2008 400 150
2009 380 130
2010 350 110
2011 330 110
2012 330 100
2013 340 110
2014 480 140
2015
2016
2017
2018
2019
Interpretation:
Trend line is regarded as an important tool in technical analysis that assists in both trend
identification as well as confirmation. Trend line is the line that indicates the general course or
14

tendency of something. It is considered as a straight line that connects two or more points and
then extends into future in order to act as line of support. The above graph presents the trend line
analysis of Syngenta's product that is Amistar in the Japanese market. It is important for the
business to forecast its sales and profitability for future so that it can manage its business
activities accordingly. The trend line above demonstrates the profit and sales for next five years.
There is existence of two types of trends.
This includes upward and downward trend that act as an aid in determining the
performance of corporation to a greater extent. In the present study, it has been examined that
sales and profitability of the company is increasing significantly for the next five years. Thus,
organization can take appropriate decision regarding the expansion of firm in different markets.
This would result in increasing the market share of organization through enhancement in base of
customers. It is important for the business to forecast its future so that it can arrange all its
resources in an effective manner. In addition to this, through examination of financials of the
business, suitable decision can be taken with respect to formulation of budget as well as
investment. The above analysis presents that both sales and profitability figures are reflecting an
upward trend; therefore decision can be taken effectively regarding the launch of Syngenta's
product that is Amistar in the London.
Q.3 This part is covered in PowerPoint presentation
D1 Evaluating use of time series analysis as a tool for forecasting
Time series analysis is comprised of techniques that assist in analysis of time series data
for the purpose of extracting meaningful statistics and other characteristics of data. It is regarded
as the model that acts as an aid in predicting future values on the basis of previously observed
values. It focuses on the comparison of values of single time series or multiple dependent time
series at several points in time. The role of time series analysis can be greatly viewed towards
viewing the given asset, security or changes in the economic variable over period of time.
Further, the manner in which it gets changed is compared to other variables over the similar time
span. Time series analysis can be effectively used for the purpose of forecasting future. With
this, organization can implement suitable actions in order to improve the overall performance in
an appropriate manner. The technique of time series analysis is categorized into two. This
includes parametric as well as non-parametric methods. The past performance is being taken into
account with the aim to predict future. Thus, this acts as an aid for the business in increasing its
15

overall performance in an effective manner. Time series analysis can result in gaining insight to
the business activities that can be carried out in future for the purpose of attaining desired set of
outcomes.
Time series is regarded as ordered sequence of values or variables that are equally spaced
at time intervals. There is greater usability of time series analysis. This is in relation with
economic forecasting, sales forecasting, budgetary analysis, stock market analysis, yield project,
process and quality control, census analysis, workload projections, inventory studies as well as
utility studies. This acts as an aid for the business in taking appropriate decision so that it can
attain its targets within specified duration of time. Further, it acts as an aid in reducing the risk
associated with uncertainties that might occur in future.
TASK 4
Q1 Gantt chart
Task
Mode Task Name Duration Start Finish Predecessors
A Lay foundation and build
structure 80 days Wed 2/10/16 Tue 5/31/16
B Build stairs 30 days Wed 6/1/16 Tue 7/12/16 1
C Build roof 40 days Wed 6/1/16 Tue 7/26/16 1
D Build Windows 8 days Wed 6/1/16 Fri 6/10/16 1
E Plastering 70 days Wed 6/1/16 Tue 9/6/16 1
F Carpenter 70 days Wed 9/7/16 Tue 12/13/16 2,3,4,5
G Electrical 84 days Wed 9/7/16 Mon 1/2/17 2,3,4,5
H Heating 70 days Wed 9/7/16 Tue 12/13/16 2,3,4,5
I Plumbing 63 days Wed 9/7/16 Fri 12/2/16 2,3,4,5
J Floor covering 28 days Tue 1/3/17 Thu 2/9/17 6,7,8,9
K Decorating 35 days Fri 2/10/17 Thu 3/30/17 6,7,8,9,10
Gantt chart:
16

Gantt chart refers to a horizontal bar that assists in representing the total time required by
the project to be completed. Further, it is considered as one of the most important project
management techniques which assists project manager in managing time and carrying out
activities of the project in an effective and efficient manner. However, the main purpose of using
this tool is to determine the actual time that will be required by the project in completing. Along
with this, it helps project manager to understand which activity should be started after which
activity (Bryde, 2003). According to the present given scenario, Line Manager of Amistar
Company is planning to construct a new warehouse for which different activities have been
identified along with analyzing the expected time required to carry out those activities. There are
several benefits of Gantt chart which project manager should understand and accordingly, use to
evaluate the reliability and validity of the project.
 Clarity: It is considered as one of the biggest benefits of Gantt chart as this tool has
ability to showcase multiple tasks with clarity so that readers and learners can easily
understand (Brennanand Perkins, 2012). Further, it is one of the project management
tools which means there are managers who make decisions on the basis of this. Thus,
Gantt is important as it provides clear picture about all the activities and their preceding.
 Communication: By the means of Gantt chart, teams of Amistar Company can easily
enhance the level of functioning and communicate in more effective and efficient
manner.
17

 Understand task relationships: Through the help of this chart, managers can easily
understand the interrelationships between the activities. Entire completion of project
depends on the basis of these activities.
 Effectively allocate resources: Gantt chart is especially used to allocate the available
resources in the best possible manner. In order to carry out an activity, it is important for
the project manager of Amistar Company to make use of available resources in an
appropriate manner so that desired results and outcomes can be generated.
Q2 Network Diagram
On the basis of above network diagram, critical path for carrying out the new warehouse
project can be identified. Furthermore, it refers to the visual representation of project’s schedule.
The main purpose of using network diagram is that it is useful in planning and tracking the
project from beginning to finish as well as assists in representing the scope of project. Following
is the critical path of new warehouse project of Amistar Company.
Critical Path 1: 1+5+7+10+11 = 80+70+48+28+35 = 261 Days
Critical Path 2: 1+5+7+11 = 80+70+48+35 = 233 Days
Therefore, in order to complete the project effectively, project manager of Amistar
Company should consider critical path 2 as it will help in completing the project within 233
days.
18

Q.3 Use of financial tools for decision making
Feasibility of the project that are Grangemouth as well as Inverness can be examined
through the technique of capital budgeting. The technique of investment appraisal can be referred
to as the process that evaluates and analyzes the reliability as well as validity of the investment
proposal to a greater extent. Such techniques are regarded as the most common approaches that
can be used by managers in order to develop smart and effective decisions in relation to future
contingencies (Olsen, 2011). There is existence of several tools and techniques that assist in
making selection of the most accurate project by the business. This includes net present value,
pay back, and average accounting rate of return as well as internal rate of return (The internal
rate of return. 2014). The techniques of investment appraisal have been presented in the manner
below:
Proposal information:
Net Cash flow
Year Grangemouth Inverness
Initial Investment £150m £150m
1 £30m £30m
2 £40m £50m
3 £60m £50m
4 £30m £40m
5 £50m £40m
Payback period:
It is referred as investment appraisal technique that determines the time in which the
initial cash outflow of an investment will be getting recovered from the cash inflow that is being
generated by the investment. It is one of the simplest techniques that assists in determining the
minimum time duration in which the amount of initial investment can be recovered by the
project (Manshu, 2010). The proposal that possesses shorter payback period needs to be accepted
by the business. However, proposal with longer pay back needs to be rejected as it would recover
amount of initial investment in longer duration of time.
Year Cash flow of Grangemouth (£m) Cumulative cash flow
19

Initial Investment -150 -150
1 30 -120
2 40 -80
3 60 -20
4 30 10
5 50 60
Payback period = 3.66 years
Year Cash flow of Inverness (£m) Cumulative cash flow
Initial Investment -150 -150
1 30 -120
2 50 -70
3 50 -20
4 40 20
5 40 60
Payback period = 3.5 years
Interpretation
From the above calculation of pay back, it can be interpreted that payback period of
Grangemouth is 2.66 years whereas that of Inverness, it is 3.5 years. Thus, it can be gained that
payback period of Inverness is shorter. Therefore, Syngenta can decide on selecting this
investment project. However, it needs to reject Grangemouth proposal as it is recovering initial
investment amount in maximum time duration.
Net present value (NPV)
It is regarded as the approach that is the most commonly used for the purpose of
analyzing the best investment proposal available with the management of business for future
investment. Under this technique, present value of future cash flow is discounted in order to take
accurate decision regarding the selection of investment proposal. The proposal that possesses
20

higher and positive NPV needs to select by the firm (Milisn, 2009). However, it needs to reject
the proposal which has negative and lower NPV.
Year
Cash flow of
Grangemouth (£m) P.V factor @ 10% Present Value (£m)
1 30 0.909 27.27
2 40 0.826 33.04
3 60 0.751 45.06
4 30 0.683 20.49
5 50 0.621 31.05
Total present value (£) 156.91
Initial investment (£) 150
Net present value (£) 6.91
Year
Cash flow of Inverness
(£m) P.V factor @ 10% Present Value (£m)
1 30 0.909 27.27
2 50 0.826 41.3
3 50 0.751 37.55
4 40 0.683 27.32
5 40 0.621 24.84
Total present value (£) 158.28
Initial investment (£) 150
Net present value (£) 8.28
Interpretation
From the above calculation of net present value, it can be interpreted that NPV of
Grangemouth is 6.91 whereas that of Inverness, it is 8.28. Thus, it can be gained that NPV of
Inverness is higher in comparison with other investment proposal. Therefore, Syngenta can
decide on selecting this investment project. However, it needs to reject Grangemouth proposal as
the net present value of this project is lower.
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Accounting rate of return (ARR)
Accounting rate of return is referred as the ratio of estimated accounting profit of the
investment project to average investment made in the project. The proposal that has higher ARR
needs to select by the firm. However, it needs to reject the project that possesses lower
accounting rate of return.
Year Cash flow of Grangemouth (£m)
Initial Investment -150
1 30
2 40
3 60
4 30
5 50
Average accounting income 170
Average investment 75
Accounting rate of return
Average accounting income/Average investment
=2.266
Year Cash flow of Inverness (£m)
Initial Investment -150
1 30
2 50
3 50
4 40
5 40
Average accounting income 178
Average investment 75
22

Accounting rate of return
Average accounting income/Average investment
=2.37
Interpretation
From the above calculation of ARR, it can be gained that accounting rate of return of
Grangemouth is 2.26 whereas that of Inverness, it is 2.37. Thus, it can be gained that ARR of
Inverness is higher in comparison with other investment proposal. Therefore, Syngenta can
decide on selecting this investment project. However, it needs to reject Grangemouth proposal as
the ARR of this project is lower.
D3
i) Internal rate of return for each project
Internal rate of return is defined as the minimum discount rate that is being used by the
management in order to identify return that would be yield by future project which would be
acceptable.
Year Cash flow of Grangemouth (£m) Cash flow of Inverness(£m)
Initial Investment -150 -150
1 30 30
2 40 50
3 60 50
4 30 40
5 50 40
Internal rate of return 11.70% 12.09%
Interpretation:
From the calculation carried above, it can be gained that IRR of Grangemouth is 11.70%
whereas that of Inverness, it is 12.09%. Thus, it can be gained that internal rate of return of
Inverness is higher. Therefore, it can be regarded as the best investment option. Due to this,
Syngenta can decide on selecting this investment project. However, it needs to reject
Grangemouth proposal as the IRR of this project is lower.
ii) Critical evaluation of four measures of investment appraisal
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The technique of payback period is easy to understand but it does not take into account
the time value of money. In contrast to this, NPV is a capital budgeting technique that gives
importance to time value of money (Triantaphyllou, 2013). Further, it also assists in maximizing
firm's value in an effective manner. However, it is difficult to use this tool and also it might not
result in correct decisions. The technique of ARR is effective in determining the information
needed. But, it might not provide true rate of return. IRR is the measure that examines
profitability of business.
CONCLUSION
It can be concluded from the study that business decision making plays a crucial role in
determining the best course of action that can be implemented by the organization. Further, from
the analysis, it has been determined that firm can plan to launch Amistar in London. This would
result in affecting the profitability as well as sales of Syngenta in a positive manner. It has been
inferred from the report that there is greater need with the business to examine the return of
investment proposal. This can be done with the assistance of investment appraisal techniques.
With this, organization can effectively take decisions for the future.
24

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