Business Decision Making: Data Analysis, Planning, and Decision-Making

This assignment focuses on business decision-making within the context of a bespoke kitchen business, Hayward Home-style, aiming to expand into a new geographical market. The assignment begins with an analysis of primary data, including descriptive statistics like mean, median, mode, and sta...Read More

BUSINESS DECISION
MAKING

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK ONE .....................................................................................................................................3
A) Producing spreadsheet of descriptive statistics for showing..................................................3
2. Histograms of age and spend The Median Income and the Interquartile Range....................6
3. Correlation coefficient between total income and spend........................................................9
B) Producing short presentation entitled ‘Our Existing Customer' having graphical
representations...........................................................................................................................10
Covered in ppt...........................................................................................................................10
TASK TWO...................................................................................................................................10
A) Formal plan for conducting robust sample of potential customers in new market..............10
B) Listing secondary sources of data........................................................................................10
C) Justifying Survey Methodology and Sampling Frame.........................................................11
D) Drafting questionnaire for approval.....................................................................................12
TASK THREE...............................................................................................................................14
A) Making analysis of payback and discounted payback ........................................................14
B) Analysis of Net Present Value and its superiority over payback analysis...........................15
C) Decision-making based on financial criteria........................................................................16
D) Preparation of Gantt chart for completing project on time..................................................16
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................19

INTRODUCTION
Business decision making is related for making plan and strategies for improving the
performance and profitability of the firm. Business decision making is important for
improvement of various operations of the firm. Hayward Home- style will form part of this study
which is involved in the business of bespoke kitchens for customers in Northern USA market. It
employs over a thousand people in US. This company want to grow its business in new
geographical market. This report will include a spreadsheet of descriptive statistics of the
primary data collection which shows the information of customer , their age , income etc. Also ,
it will provide information about the customers in the target market. Furthermore, this report
will give detailed explanation of the possible secondary sources of data. Moreover, it will prove
analysis of payback and discounted payback.
TASK ONE
A) Producing spreadsheet of descriptive statistics for showing
Customer
ID
Age Spend ($) Annual Income
($)
Gender
A 17 1,602 12,500 F
B 22 2,691 15,900 M
C 29 1,456 37,000 M
D 19 2,530 27,500 F
E 25 897 31,000 M
F 16 98 12,000 F
G 29 1,753 41,000 M
H 20 2,365 16,250 M
I 33 2,118 32,000 M
J 21 825 17,500 F
3

K 29 1,817 34,000 F
L 35 1,538 48,000 F
M 18 1,435 15,000 M
N 16 37 600 F
O 26 1,892 28,500 M
P 41 1,539 56,000 F
Q 28 1,582 37,500 F
R 31 1,258 37,550 M
S 25 2,846 31,000 F
T 27 1,983 33,500 M
U 22 1,073 27,000 M
V 28 1,594 38,550 F
W 24 682 23,000 M
X 22 1,005 21,500 M
Y 35 1,396 46,500 F
Z 27 2,173 33,525 F
1. Mean age and spend, and the Standard Deviations of variables
Age Spend ($)
Annual Income
($) Gender
4

Mean 25.57692 1545.577 29014.42 1.5
Standard Error 1.241802 138.6627 2496.924 0.1
Median 25.5 1560.5 31000 1.5
Mode 22 #N/A 31000 2
Standard
Deviation 6.33197 707.0438 12731.86 0.509902
Sample Variance 40.09385 499910.9 1.62E+08 0.26
Range 25 2809 55400 1
Minimum 16 37 600 1
Maximum 41 2846 56000 2
5

The above table consists of age, income earned, spend and gender elements. For
computing this, male is given 1 and for female is 2.
Mean-
The mean is the central value of discrete set of numbers which is attained by
incorporating formula of sum of values divided by number of values. It can be said that mean
value attained in terms of age is 25.57 and spend is 1545.77 which states that people within age
of 25 spent nearly 1545.77 in effective manner.
Median-
The median is taken as the mid value of the data set which is taken into account. It
divides the data into equal halves such as upper half and lower half and as a result, mid value is
attained in a better manner. It can be analysed that mid value of age comes to 25.5 and of spend
comes to 1560.5 which divides age and spend in two equal halves in effective manner.
Mode-
It is another useful statistical method which takes into data set and carries out value that
occurs most frequently in data. It provides clarity in large data as to which value occurs
frequently helping to analyse data in the best manner possible. Mode of age is 22 highlights that
customers of age 22 makes more purchases and spend is zero as no value is occurred more than
once.
Standard deviation-
Standard deviation is one of the important part in the statistics as it shows how much
value is dispersed from mean. The standard deviation of age is 6.33 and of spend is 707.04
showing clearly that mean value will deviate in the future and firm will be able to attain profits in
new market of Brazil.
2. Histograms of age and spend The Median Income and the Interquartile Range
Age-
Bin Frequency
6

16 2
21 5
26 7
31 8
36 3
More 1
Spending-
Bin Frequency
37 1
598.8 1
7

1160.6 5
1722.4 9
2284.2 6
More 4
Median Income-
The median income as listed in above statistics shows that age of 25.5 and of spend
comes to 1560.5 and median annual income comes to 31000.
Interquartile Range
Quartile 1 21.25 1119.25
Quartile 2 25.5 1538.5
Quartile 3 29 1873.25
Interquartile Range 7.75 754
Trend Analysis
Spend ($) Annual Income ($)
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1602 12500
2691 15900
1456 37000
2530 27500
897 31000
98 12000
1753 41000
2365 16250
2118 32000
825 17500
1817 34000
1538 48000
1435 15000
37 600
1892 28500
1539 56000
1582 37500
1258 37550
2846 31000
1983 33500
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1073 27000
1594 38550
682 23000
1005 21500
1396 46500
2173 33525
Spend 1 0.29
Total Income 0.29 1
10

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
0
10000
20000
30000
40000
50000
60000 f(x) = -10.09x + 1681.75
f(x) = 500.37x + 22259.46
Spend ($)
Linear (Spend ($))
The above trend analysis shows that firm will be able to attain profits in a better manner.
This is evident from the annual income and raw data that annual income of people is increasing
at a rapid rate. It implies that Hayward Home-style would easily attain good share in new
geographical market of Brazil. Moreover, it will be able to satisfy people in effective manner by
providing good range of bespoke kitchens leading to attainment of desired quantum of profits
with ease.
3. Correlation coefficient between total income and spend
Correlation coefficient
The correlation coefficient is one of the important technique which is used for analysing
whether relationship among variables under study exist or not. This means that value is obtained
shows positive or negative correlation. Positive arises when value of correlation is more than 1
and if value is less than 1, then negative correlation exists. It can be interpreted that correlation
between two variables such as spend and total income is 0.29 which comes within the range of -1
to +1, highlighting positive correlation.
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B) Producing short presentation entitled ‘Our Existing Customer' having graphical
representations
12

13

The above table consists of age, income earned, spend and gender elements. For computing this,
male is given 1 and for female is 2.
Mean-
The mean is the central value of discrete set of numbers which is attained by incorporating formula of
sum of values divided by number of values. It can be said that mean value attained in terms of age is
25.57 and spend is 1545.77 which states that people within age of 25 spent nearly 1545.77 in effective
manner.
Median-
The median is taken as the mid value of the data set which is taken into account. It divides the data into
equal halves such as upper half and lower half and as a result, mid value is attained in a better manner. It
can be analysed that mid value of age comes to 25.5 and of spend comes to 1560.5 which divides age and
spend in two equal halves in effective manner.
Mode-
It is another useful statistical method which takes into data set and carries out value that occurs
most frequently in data. It provides clarity in large data as to which value occurs frequently helping to
analyse data in the best manner possible. Mode of age is 22 highlights that customers of age 22 makes
more purchases and spend is zero as no value is occurred more than once.
Standard deviation-
Standard deviation is one of the important part in the statistics as it shows how much value is dispersed
from mean. The standard deviation of age is 6.33 and of spend is 707.04 showing clearly that mean value
will deviate in the future and firm will be able to attain profits in new market of Brazil.
14

15

16

17

The above trend analysis shows that firm will be able to attain profits in a better manner. This is
evident from the annual income and raw data that annual income of people is increasing at a rapid rate. It
implies that Hayward Home-style would easily attain good share in new geographical market of Brazil.
Moreover, it will be able to satisfy people in effective manner by providing good range of bespoke
kitchens leading to attainment of desired quantum of profits with ease.
18

The trend analysis is done for Spending and Annual income
19

Correlation coefficient
- The correlation coefficient is one of the important technique which is used for analysing whether
relationship among variables under study exist or not. This means that value is obtained shows positive or
negative correlation. Positive arises when value of correlation is more than 1 and if value is less than 1,
then negative correlation exists. It can be interpreted that correlation between two variables such as spend
and total income is 0.29 which comes within the range of -1 to +1, highlighting positive correlation.
20

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TASK TWO
A) Formal plan for conducting robust sample of potential customers in new market
The primary data is required to be gathered in order to attain transparency of the market
for getting desired profits in hand. It can be analysed that Hayward Home-style is engaged in
making bespoke kitchens and it is required that firm should take into account market research in
effective manner (Wheelen and et.al., 2017). This is required so that Brazilian market could be
analysed for testing feasibility in the best manner possible. Primary data is required to be
conducted. This data means that first-hand data is to be selected from robust sample of potential
customers in the new market. The customer's taste, preferences, location etc. can be seen for
drafting plan for the data collection.
The proper planning is required for collecting information directly from respondents with
the help of surveys from asking questionnaires to them so that firm may be able to attain
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efficiency in effective manner (What is Decision Making. 2018). Next step is that after making,
data planning, it will be required that to collect desired sample of customers in order to attain
clarity regarding target customer market. Thereafter, close-ended questions will be then asked to
respondents on official website of Hayward Home-style and people will be asked to effectively
fill out their preferences and feedback regarding customised kitchens being offered to them. This
will provide complete information regarding data. Moreover, trends will be then made with
reference to data attained in a better manner. Thus, this plan will be implemented regarding
primary data.
B) Listing secondary sources of data
Secondary data is one of the important source for collecting information in effective
manner. It can be said that secondary data is already collected data by researcher and can be
served for assessing one for the company (Epstein, 2018). The secondary sources of data can be
collected from the sources such as journals, books, government reports are provided with
reference to the already generated reports which will serve as the information for the company in
the best way possible. This will provide company with increased sources so that firm may be
able to analyse resources in a better manner and outcome can be attained in effective manner.
The external sources will be helpful in providing the company with proper market research and
also will be able to accomplish profits in Brazilian market with ease.
C) Justifying Survey Methodology and Sampling Frame
Survey methodology:
The survey is one of the crucial way for ascertaining information from the target audience
quite effectually. This is required in order to collect quantitative information serving purpose of
business with ease. Quantitative information is gathered from group of people, this process is
termed as surveying. The researcher can collect data from respondents from variety of ways so as
to attain results in the best way possible (Janssen, van der Voort and Wahyudi, 2017). It can be
gathered from contacting respondents personally, telephonic interview or surveying through
mail. These methods are time-consuming one and should be avoided by scholar as research will
take longer time than it is expected.
In order to resolve the same, questionnaire is effective method which serve as the need of
company and provide quick and fast results. It can be assessed that questionnaire is effective and
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can be serve which will be helpful in getting results. 20 respondents will be selected for
surveying results in effective manner. Questionnaire will be send to their personal mail ids and
relevant information will be achieved. Hence, survey methodology will be fruitful for Hayward
Home-style for collecting data and then expand to Brazil.
Sampling Frame:
The sampling is required as it is the data which is collected by taking into account sample
which is a representative of entire population. It can be said that sampling leads to save time, as
otherwise, it leads to time-consuming mechanism and also it is not possible for gathering
information from each and every source present in the population (Kumar and et.al., 2017).
There are two sampling methods such as probabilistic and non-probabilistic. Researcher will use
simple random sampling method by taking sample of 20 respondents which are customers so
that firm may be able to attain clarity regarding the information in effective manner. On the
other hand, questionnaire will be issued to respondents by which clarity may be attained
regarding viability of the Brazilian market. This will be helpful for generating quantitative
report in effective manner.
D) Drafting questionnaire for approval
Questionnaire
Name-
Demographic Profile-
Age-
Q 1. How often do you purchase goods from Hayward Home-style?
 Monthly
 Once in a week
 Rarely
Q 2. Among these locations in Brazil, which one will be most convenient to you?
 Rio de Janeiro
 Sao Paulo
 Salvador
 Brasilia
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Q 3. Do you find that bespoke kitchens offered to you are of good quality?
 Excellent
 Good
 Normal
 Poor
Q 4. Are you satisfied with the services provided by employees of Hayward Home-style?
 Highly satisfied
 Satisfied
 Strongly dissatisfied
 Dissatisfied
Q 5. Did you prefer the goods offered by Hayward Home-style to your friends?
 Yes
 No
Q 6. Do you like to provide any suggestions, kindly provide for improving services...........
Theme 1- Goods are monthly purchased by customers
Q 1. How often do you purchase goods from
Hayward Home-style? Frequency
Monthly 10
Once in a week 4
Rarely 6
Total 20
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Interpretation-
It can be interpreted that goods are purchased by customers on monthly basis as major
respondents have answered the same. While, 4 said once in a week and remaining 6 have said the
make rare purchase.
Theme 2- Rio de Janeiro is preferred location
Q 2. Among these locations in Brazil, which
one will be most convenient to you? Frequency
Rio de Janeiro 9
Sao Paulo 5
Salvador 3
Brasilia 3
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Interpretation-
The above chart represents that Rio de Janeiro is most preferred by people to purchase.
While, 5 said Sao Paulo and 3 answered in favour of Salvador. Remaining 3 said Brasilia. Thus,
Rio de Janeiro should be chosen by Hayward Home-style for expansion in Brazil.
Theme 3: Bespoke kitchens offers good quality products to the customers
Particulars
Number of
respondents
Excellent 6
Good 5
Normal
4
Poor 3
Total 20
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Theme 4: Customers are satisfied with the services provided by employees of Hayward Home-
style
Particulars
Number of
respondents
Highly
satisfied 7
Satisfied 8
Strongly
dissatisfied 3
Dissatisfied 2
Total 20
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Theme 5: Respondents prefer to recommend goods offered by Hayward Home-style to their
friends
Particulars Number of
respondents
Yes 15
No `
Total 20
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TASK THREE
A) Making analysis of payback and discounted payback
Year
Cash inflow
($,000)
Cash outflow
($,000)
Net cash
inflows
($,000)
Discounting
factor @ 9 %
0 0 1000 -1000 0 0
1 700 250 450 0.917 412.84
2 600 250 350 0.842 294.59
3 650 300 350 0.772 270.26
4 700 300 400 0.708 283.37
5 800 350 450 0.650 292.47
1553.54
Initial
investment 1000.00
NPV 553.54
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Year
Cash inflow
($,000)
Cash
outflow
($,000)
Net cash
inflows
($,000)
Discounting
factor @ 9
%
Cumulative
Discounted
Cash Flow
(DCF)
0 0 1000 -1000 0.000 0 1000
1 700 250 450 0.917 412.84 1412.84
2 600 250 350 0.842 294.59 1707.43
3 650 300 350 0.772 270.26 1977.70
4 700 300 400 0.708 283.37 2261.07
5 800 350 450 0.650 292.47 2553.54
Discounted payback period
= 1 + 294.59 / 1412.84
= 1.20 years
The discounted payback period has been calculated which is showing how much amount
of time will be taken to recoup investment in the best manner possible. It is required that payback
period should be lower as it makes its feasible for company in attaining desired rate of return on
the investment made in the project in effective manner (Chisholm, 2017). Lower the period,
better for the company in gaining returns in desired manner. It can be analysed that discounted
cash flows are analysed and then on this basis, each cash flow is discounted to show the amount
of time investment will be recoup in near future. This shows when amount will be recovered so
that operational activities of Hayward Home-style may be enhanced in a better manner and no
shortcomings are observed quite effectually.
More accurate picture of investment can be gathered so that firm may take decision
whether to invest in project or not. This provides clarity regarding the feasibility of project in a
better manner. It can be evaluated from above calculation that discounted payback period comes
to 1.20 years which implies that amount of initial investment will be made available to company
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within the shortest possible time which is within 1 year 2 months. This means that company will
be able to attain desired amount of return on investment in short duration quite effectually
(Lovan, Murray and Shaffer, 2017).
B) Analysis of Net Present Value and its superiority over payback analysis
NPV is another useful capital budgeting technique which is used to determine whether
project will be viable or not in the future. This means that cash flows i.e. cash inflows and cash
outflows are differentiated to provide clarity regarding return on investment. This provides
company that how much project is profitable to invest in and can generate results. The payback
period as discussed provide result that how much time will be needed in order to accomplish
desired return on investment. However, it does not provide fact that project will be profitable or
not. This fact is effectively taken into account by NPV which shows that money should be
invested in the project or not and as a result, profitability can be effectively accomplished with
the help of NPV as it is useful technique.
Another superiority of NPV over payback analysis is that NPV takes into account time
value money concept. This concept states that amount earned today will be more effective rather
than same amount recovered in several years as value of money decreases over the time. This
means that concept of time value is effectively complied in NPV which offers clear results as to
whether project seems to be commercially viable or not. This implies that payback suffers from
such disadvantages and as a result, it is overcome by applying technique of NPV by company to
check its commercial viability in the best manner possible (Beach and Lipshitz, 2017). On the
other hand, inflation is another important aspect which should be taken into consideration by
company before investing money into project. The payback period does not change in inflation
while calculating period in which amount will be recovered without any difficulties. This factor
is also taken by NPV. On the other side, risk of investment is used to be ascertain so that in risky
project, investment could be avoided. This is taken into account by NPV and as a result, it can be
said that NPV is much superior in comparison to payback period.
C) Decision-making based on financial criteria
The capital investment decision-making should be taken by considering all factors so that
riskiness may be avoided up to a high extent. It can be said that NPV has been calculated
showing that with an initial investment of 1000, Hayward Home-style can effectively attain
553.54 return on investment as NPV is calculated so. This means that by taking into account
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NPV, it can be conveyed that project should be accepted as it seems to be commercially viable
and profits will be attained by investing money in the project (Wang and Byrd, 2017). On the
other hand, payback period has been calculated as well which shows that within below hurdle
rate of 4 years, investment will be recovered within 1.20 years of time span. This shows that
project should be accepted and firm will be able to accomplish desired objectives in Brazil.
D) Preparation of Gantt chart for completing project on time
Task Name Duration Start Finish Predecessors
Reviewing the Market 64 days Fri 12/7/18 Wed 3/6/19
Carrying out market
research 40 days Fri 12/7/18 Thu 1/31/19
Updating the logistics 30 days Thu 3/7/19 Wed 4/17/19 1
Identifying Retail
Partners 40 days Thu 3/7/19 Wed 5/1/19 1,2
Updating logistics
processes 50 days Fri 12/7/18 Thu 2/14/19
Formalizing business
contracts with Retail
Partners
60 days Thu 4/18/19 Wed 7/10/19 1,2,3
Production of holding
stock 30 days Thu 7/11/19 Wed 8/21/19 1,2,3,4,5,6
Beginning operations 20 days Thu 8/22/19 Wed 9/18/19 1,2,3,4,5,6,7
Figure 1Gantt Chart
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Figure 2Network Diagram
CONCLUSION
Hereby it can be concluded that decision-making in business is one of significant
decision which should be taken by considering all implied factors in effective manner. Hayward
Home-style should expand to Brazil as it shows that from statistical methods applied reflects that
company will be able to attain good growth by offering bespoke kitchens. Furthermore, capital
investment techniques such as NPV and discounted payback period shows that firm will
accomplish investment in short time period. This shows that company will be able to attain
profits with ease.
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REFERENCES
Books and Journals
Beach, L. R. and Lipshitz, R., 2017. Why classical decision theory is an inappropriate standard
for evaluating and aiding most human decision making. Decision making in aviation. 85.
pp.835-847.
Chisholm, R., 2017. Interorganizational decision making. Routledge.
Epstein, M. J., 2018. Making sustainability work: Best practices in managing and measuring
corporate social, environmental and economic impacts. Routledge.
Janssen, M., van der Voort, H. and Wahyudi, A., 2017. Factors influencing big data decision-
making quality. Journal of Business Research. 70. pp.338-345.
Kumar, A. and et.al., 2017. A review of multi criteria decision making (MCDM) towards
sustainable renewable energy development. Renewable and Sustainable Energy Reviews.69.
pp.596-609.
Lovan, W. R., Murray, M. and Shaffer, R., 2017. Participatory governance: planning, conflict
mediation and public decision-making in civil society. Routledge.
Wang, Y. and Byrd, T. A., 2017. Business analytics-enabled decision-making effectiveness
through knowledge absorptive capacity in health care. Journal of Knowledge
Management. 21(3). pp.517-539.
Wheelen, T.L and et.al., 2017. Strategic management and business policy. Pearson.
Online
What is Decision Making. 2018 [Online] Available Through:
<https://www.managementstudyguide.com/what-is-decision-making.htm>
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