Business Decision Making

Contents

Introduction......................................................................................................................................3

Task 1...............................................................................................................................................4

1. Create a plan for the collection of primary and secondary data for your research questions
on Marks and Spencer and present the survey methodology and sampling frame used..............4

2. Design a questionnaire to carry out the survey with relevant instruments to reflect the
required data.................................................................................................................................6

Task 2.............................................................................................................................................10

1. Summarise the data for total revenue of the group and revenue from general merchandise
division of Marks & Spencer using representative values (averages) and measures of
dispersion. Analyse the results to draw valid conclusions.........................................................10

Mean..............................................................................................................................................11

Mean is a tool to take strategic decision by analysing the results. It is defined as the average of
numbers and variables which are included in the collection and set data (Francis, et. Al 2016). It
can be defined as arithmetical mean, mathematical expectation and averages of different values.
Following is the calculation of Mean of the company M&S of total revenue and general
merchandise revenue.....................................................................................................................11

2. Explain the use of quartiles in drawing conclusion on the total revenue and general
merchandise revenue of M&S....................................................................................................14

3. Estimation of correlation coefficient between total revenue and genral merchandise revenue
of M&S and relationship between these two variables..............................................................15

Task 3.............................................................................................................................................16

1
 Time series graphs of total group revenue and general merchandise revenue...........................16

Conclusion.....................................................................................................................................22

Task 4.........................................................................................................................................23

Part A.........................................................................................................................................23

1. Determine the critical path of the project...........................................................................23

ii. Calculate the planned duration of the project in weeks.........................................................26

iii. Identify any non- critical tasks and the float (free slack) on each........................................26

Part 2..........................................................................................................................................27

Calculation of Net Present Value and internal rate of return of both projects for different cost
of capital-...................................................................................................................................27

Brief memorandum report..........................................................................................................28

References......................................................................................................................................30

2
To

Board of Directors

Mark & Spencer Group

Subject- Identifying the perspective of customers towards company and identifying relationship
between total group revenue and general merchandise revenue of the company.

Introduction

This report is a detailed study of various aspects which are making impact on the business
decision making in an organisation. This is helping in making the most strategic decisions which
are making impact on the growth rate of the company. For making effective decisions in the
business there is conducted research for data collection process which are analysed and evaluated
to identify the most suitable decisions. In this report we will analyse decision making in business
of a multinational retailer Mark & Spencer Plc having headquarter in London. The company is
involved in retailing of clothes, home products and luxury food products. The company went in
sudden slump which took a huge level of shareholders to loss. The food market of the company
is increased in comparison to cloth business. The CEO of the company has made efforts and
investments to match the level of profits which are generated from food sales. Mark Bolland has
to take decision as in where he should invest and expand its business (Weygandt, et. Al 2015).
This business decision will be made after conducting a research for analysing the perception of
others and relationship between total revenue and revenue from merchandise division. There are
defined various capital budgeting techniques which are useful for making effective decisions.

3
Task 1

1. Create a plan for the collection of primary and secondary data for your research
questions on Marks and Spencer and present the survey methodology and sampling frame
used.

Mark and Spencer Plc is a multinational company which is involved in the retailing of clothes,
home products and luxury food products. Mark has spent billions on regenerating and
redeveloping the brand and its profitability but did not get success in achieving that profit margin
which the company had achieved before and this is due to change in the fashion in clothing. The
difference between the cost price and selling price is making the profit margin which is
delivering the first rise in profits. We will conduct a research to find out solution of the following
problems (Weygandt, et. Al 2015).

 Current perception of customers on the general merchandise division.

 Relationship between total revenue for the group and revenue for the general merchandise
division.

For conducting any research there are required to collect primary and secondary data which are
essential for analyses and achieve results. We will understand about the primary and secondary
data first.

Primary data- Primary data is collected by the researcher by using different sources and tools.
This is a raw kind of data which is collected by researcher personally and is not derived from any
pre-searched data. This is prime requirement for the researcher and can be collected by using
various methods. This data can be collected by doing interview, experiments, and survey by
questionnaire and observation. This type of data is essential for qualitative data in the research.

Secondary data- Secondary data is that kind of data which is already published and researched in
any general and book and related to the research topic of researcher. There are various sources
for collecting secondary data like internet, papers, magazines, research reports and business
reports (Enrique et. Al 2011). Quantitative data can be collected by secondary sources.

4
Data collection plan

Data collected from Customer perspective and views are identified by way of collecting
primary sources primary sources in the research and data related to this purpose are
collected.

Data collected from Data which are related to the results defining various aspects of
Secondary sources customer’s behaviours and buying habits and other factors which
are related to this research and making impact are collected by
secondary sources.

Budget of research There is defined a budget which is predicted by analysing future

activities and their importance in research.

Deadline Deadline or timeline is defined in this planning process which can

be in accordance to various activities.

Tool for collecting Survey is conducted by filling questionnaire and personal

Primary data interviews and observations are used as tool for collecting primary
data (Enrique et. Al 2011).

Methods to collect Secondary data will be collected from various sources like
Secondary data newspaper, websites, social sites, research papers and business
papers.

Sampling Method Random sampling and systematic sampling will be used in the
research for selecting the population (Enrique et. Al 2011).

Survey Methodology-

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Survey methodology is the method or technique which is going to be adopted in the research to
and will be used in collecting the primary data. This methodology includes questionnaire that is
used to collect the perspectives and behaviour of the population by way of filling questionnaire
by them. The questionnaire is prepared by considering the research question and objectives on
which we have to analyse. There are included 10 questions in this questionnaire which will help
in identifying customer’s perspective and views of selected population which is defined in the
sampling.

Sampling Method-

Sampling is defined as those methods which are used by the researcher to select the sample
population which is used to collect the primary data which can be analysed in the research
process. The target population is divided in different sizes by which it becomes easy to collect
primary data. Following are the method of sampling which are used in the research (García-
Peñalvo, et. Al 2014).

Random sampling- This is also known as simple sampling method in which random samples are
taken by which target population is set. This is effective way for sampling provide efficient
results.

Systematic sampling- This method of sampling is used for selecting target population in a way
that there is taken sample on regular interval basis (García-Peñalvo, et. Al 2014).

2. Design a questionnaire to carry out the survey with relevant instruments to reflect the
required data.

1. Age of respondents

15 years – 20 years

21 years – 25 years

26 years – 30 yeas

31 years – 35 years

6
2. Tick source of income

Business

Self employed

Private employee

Other sources

3. Tick your level of income

Up to £ 2000

£ 2001 - £ 5000

£ 5001 - £ 10000

£ More than £ 10000

4. Customers are satisfied with range of products of M&S.

Satisfied

Strongly satisfied

Neutral

Dissatisfied

Strongly dissatisfied

5. What are the more preferable products of the company?

Home wear

Clothing

Shoes

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Food products

6. Do you agree that general merchandise division participated on huge level in generating total
revenue of M&S?

Strongly agree

Agree

Neutral

Strongly disagree

Disagree

7. Do you agree that the company is providing its products on high prices in comparison to its
competitors?

Strongly agree

Agree

Neutral

Strongly disagree

Disagree

8. Do you agree that company is lacking to match current fashion in its clothing merchandise
which is affecting its sales?

Strongly agree

Agree

8
Neutral

Strongly disagree

Disagree

9. Do you agree that efforts which are made by CEO of M&S are in wrong direction?

Strongly agree

Agree

Neutral

Strongly disagree

Disagree

10. Mark ranking for the company and its efforts.

(Francis, et. Al 2016)

9
Task 2

1. Summarise the data for total revenue of the group and revenue from general
merchandise division of Marks & Spencer using representative values (averages) and
measures of dispersion. Analyse the results to draw valid conclusions.

Calculation of representative values

Year Total Revenue($) Merchandise Revenue($)

2005 7490.50 3641.60

2006 7797.70 3644.40

2007 8588.10 4002.80

2008 9022.00 4059.30

2009 9062.10 3918.30

2010 9536.60 4152.00

2011 9740.30 4233.60

2012 9934.30 4195.10

2013 10026.80 4090.30

2014 10309.70 4092.50

2015 10311.40 3988.40

Total 101819.5 44018.3

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Mean

Mean is a tool to take strategic decision by analysing the results. It is defined as the average of
numbers and variables which are included in the collection and set data (Francis, et. Al 2016). It
can be defined as arithmetical mean, mathematical expectation and averages of different values.
Following is the calculation of Mean of the company M&S of total revenue and general
merchandise revenue.

Mean = Sum of values/ Number of values

Mean of total revenue = $101,819.5/11

= $9,256.32

Mean of merchandise revenue = $44,018.3/11

= 4,001.67

Conclusion- from the above calculation mean which is the average value of numbers which is
provided in the set data and making impact on the business decision making. There can be
identified that the mean of the total revenue of the company is more than the mean of the general
merchandise revenue of the company which is explaining that the company’s average revenues
are related. The average profit which is earned by the company in year 2015 is more than the
average revue of last 11 years which shows that it is on growing stage. This is exact same in the
case of general merchandise revenue of the company. This is defining that there is rise in total
revenue and profit margin in general merchandise of the company.

Median

Median is defined as the separation of the data in the half of data samples, populations, and
probability distribution and discriminate it from other simple data. In simple words it can be
defined as the middle value of the overall data set and is an effective tool of statistical analyses.

11
It also used for describing the data by comparing with the mean of the data set. By calculating
median we can identify the breakdown point. Calculation of median of the total group revenue
and general merchandise revenue of M&S is as follows (Francis, et. Al 2016).

The median is calculated by using n+1/2 th term. It is used when the number of values is odd
number and average of n/2th term and n/2 +1 term, when the number of values represent even
number. So the median will be-

Median of Total Revenue = n+1/2 th term

= 6th term

= Revenue during the year 2010

= $ 9,536.60

Median of Merchandise revenue = n+1/2 th term

= 6th term

= Revenue during the year 2010

= $4,152

Conclusion- By the calculation of median we have identified the mid value and breakpoint of the
values which are showing the total revenue and general merchandise value of the company
(Marković, et. Al 2013). Median of total group revenue is calculated as $ 9,536.60 and median of
general merchandise revenue is $4,152. This is more than the mean of the company which
explaining that the median value is more than the average of the total and general merchandise
value of the company.

Mode

Mode defines the value with the highest frequency in the data set. It defines the value which
repeated various times in given data and numbers. There are various ways to calculate the mode
of the data in which frequency method is more effective and it is taken as an effective strategic

12
tool for data analysis (Marković, et. Al 2013). To calculate mode it is required to put the
following formula.

Mode= Highest Frequency

For calculating the mode of the total and general merchandise revenue of M&S we will identify
the most reputed number and data. The revenue data of the company defines that there is not
reputed any number and data in the company’s revenue history of last 11 years which defines
that there cannot be calculated mode (Majumdar, 2014).

Measures of Dispersion

Standard Deviation

In the strategic analysis standard deviation is taken as an effective tool which helps in calculating
variation and dispersion of the given data set. There are defined various advantages and
disadvantages of calculating standard deviation. This is also treated as risk or beta factor in any
organisation which is calculated to effectively manage the risk factors in the company. the
calculation of Standard deviation is as follows for the company’s total revenue and general
merchandise revenue of the company (measures of dispersion 2016).

The standard deviation of the data of M&S for the last 11 years of total revenue and general
merchandise revenue of the company is as follows:

Total Revenue Revenue Merchandise

Standard Deviation 26736.63 11553.37

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2. Explain the use of quartiles in drawing conclusion on the total revenue and general
merchandise revenue of M&S.

Quartiles

Quartiles are defined as the tool of descriptive statistics which divides the set data in four equal
groups and each quartile includes equal number of set data which are called as quantile. First
quartile is the breakeven point between the lowest value and median of the set data (Manikandan,
2011). Second quartile is median and the third is the middle value between median and highest
data set value. Calculation of the quartiles of the total revenue and general merchandise revenue
of M&S is as follows.

General
Total merchandi
revenue se revenue

8913.5
Quartile 1 (25th) 25 3970.875

9638.4
Quartile 2 (50th) 5 4074.8

10097.
Quartile 3 (75th) 53 4162.775

The above calculation of the quartile of the company’s revenue defines that the overall
performance and level of the revenue generation and their effectiveness in the company. this
describes the relationship between the revenues of different periods.

14
3. Estimation of correlation coefficient between total revenue and general merchandise
revenue of M&S and relationship between these two variables.

Correlation coefficient

Correlation coefficient is defined as the level of correlation between two factors or data set. This
is the measure by which can analyse and evaluate the belongingness and dependency of two
factors and data set on each other. In the calculation of correlation coefficient between total
revenue and general merchandise revenue of the company we find that it is near 1 which is the
standard correlation coefficient (Manikandan, 2011).

Correlation 0.99973
Coefficient 8

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Task 3

Time series graphs of total group revenue and general merchandise revenue

Years Total Revenue General merchandise revenue

2005 7490.50 3641.60

2006 7797.70 3644.40

2007 8588.10 4002.80

2008 9022.00 4059.30

2009 9062.10 3918.30

2010 9536.60 4152.00

2011 9740.30 4233.60

2012 9934.30 4195.10

2013 10026.80 4090.30

2014 10309.70 4092.50

2015 10311.40 3988.40

Time series of total revenue

16
 2015

2014

2013

2012

2011

2010
Column2
2009

2008

2007

2006

2005

0 2000 4000 6000 8000 10000 12000

On the basis of time line graph above we can define that there is increase in the total revenue of
group year by year which is defined in above graph and this shows company is on growth. The
overall revenue of the company is including revenue from general merchandise revenue and this
is expressed in the above graph (Kołacz, et. Al 2016).

17
Time series graph of general merchandise revenue

Merchandise Revenue
2015
2014
2013
2012
2011
Series 1
2010
2009
2008
2007
2006
2005

3300 3400 3500 3600 3700 3800 3900 4000 4100 4200 4300

In other side we can see that for general merchandise revenue of the company is not constant and
after year 2011 revenue is decreasing continuously. General merchandise revenue of the
company is decreased due to its lack in matching the fashion requirement which cannot be
recovered even after making efforts by the CEO of the company. The first rise is achieved due to
the profit margin which is derived from the difference between the cost of production and selling
price (Kołacz, et. Al 2016).

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Scatter graph showing relationship between total group revenue and general merchandise
revenue-

4300
4200
f(x) = 0.17 x + 2427.27
4100 R² = 0.68
General Merchandise Revenue

4000
3900
3800
Y-Values
3700
Linear (Y-Values)
3600
3500
3400
3300
7000 7500 8000 8500 9000 9500 10000 10500
Total Revenue

Scatter graph shows relationship between total group revenue and general merchandise revenue
defines that both are making impact on each other as in general merchandise revenue is making
impact on the overall group revenue but it do not decreases with the decrease in the general
merchandise revenue of the company. This shows that total group revenue have participation of
other revenue which is making it to increase (Francis, et. Al 2016).

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Trend line Analysis

12000

R² ==0.93
f(x) 281.56 x + 7566.97 Total Revenue
10000
Linear (Total Revenue)

8000 Linear (Total Revenue)

Linear (Total Revenue)

6000
revenue General
Merchandise
4000 f(x) = 39.78 x + 3762.98
R² = 0.44 Linear (revenue General
Merchandise)
2000
Linear (revenue General
Merchandise)
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Forecasting for year 2016, 2017 and 2018

Total group Revenue= y = 281.5x +7567

y (2016) = 281.5*12 + 7567

y = $10,945

y (2017) = 281.5*13 + 7567

y=$ 11226.5

y (2018) = 281.5*14 + 7567

y = $11,508

Revenue General Merchandise- y = 39.78x + 3763

y (2016) = 39.78*12+3763

y = $4240.36

20
 y (2017) = 39.78*13+3763

y = $4280.14

y (2018) = 39.78*14+3763

y = $4319.92

The forecasted revenue for M&S are represented by following table-

Year Total Revenue ($) General Merchandise Revenue

($)

2016 10,945 4240.36

2017 11226.5 4280.14

2018 11508 4319.92

This trend line analyses is based on the forecasting for the year 2016, 2017 and 2018 which is
made on the basis of the available data of the company’s revenue which is diversified in total
group revenue and general merchandise revenue. R² equation defines the reliability which is
available in the forecasting done. The standard reliability factor is 1 which shows overall
effectiveness of forecasting and estimation made for the revenue in organisation. For total group
revenue R² is calculated as 0.9303 which is nearby 1 (Francis, et. Al 2016). This defines that
forecasting can be taken as effective and accurate to a good level. And for general merchandise
revenue R² which is reliability factor is calculated as 0.043 which is very low from 1 and this
shows the inefficiency and low level of accuracy of forecasting done for revenue. By these
analyses we can say that there exists more reliability in total group revenue in comparison with
general merchandise revenue of M&S.

21
Conclusion

This report is overall study of various aspects which are related to the effective working of the
company by appropriate business decision making in company. Mark & Spencer is a British
merchandise company which is involved in clothing, home wear, and footwear and luxury food
products. The general merchandise of the company has been affected by its inefficiency in
meeting the fashion requirement. And this cannot be done even after making efforts by the CEO
of the company which has invested to increase profitability of general merchandise of company.
There is requirement to take decision for the effective running of the company which can be
done doing analyses and research. From this report we have identified different perspectives of
the customers which can make effect on increase in the revenue from the general merchandise of
the company. Primary and secondary data is also collected for research purpose which is
analysed by using various capital budgeting methods and tools. This analysis is expressed in
graphs and charts for example time chart, trend line chart, and scattered charts which is helping
in taking effective decision in business (Hendriks, et. Al 2016). There are prepared network
diagram of different activities and estimated the longest path to complete any project. Non
critical activities are also identified and the future estimation for the profits of the company and
their reliability.

Task 4

Part A

1. Determine the critical path of the project.

Critical path- It is project management technique in which there are identified various paths in
which the task can be completed and then analyse the most critical path among those paths. This
helps in managing projects in organisation in effective manner which can lead to achieving
project goals (critical-path analysis 2016).
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 Task Description Duration (Working Constraints
Days)

A Requirement 5 -
Analyses

B System Design 15 A

C Programming 25 B

D Telecoms 15 B

E Hardware Installation 30 B

F Integration 10 C,D

G System Testing 10 E,F

H Training/Support 5 G

i Handover and Go live 5 h

Calculation of critical path

For calculation of critical path we will calculate different paths and will select the longest path
from them.

23
The different paths in the network diagram and their duration are as follows:
A-B-C-F-G-H-I=5+15+25+10+10+5+5 = 75 days
A-B-D-F-G-H-I = 5+15+15+10+10+5+5 = 65days
A-B-E-G-H-I = 5+15+20+10+5+5 = 60 days

The critical path of this project will be A-B-C-F-G-H-I which is of 75 days.

(critical-path analysis 2016)

Network Diagram is as follows-

Start

15

24
 25 20

15
E
C
D

10
10
10
F
10
G

END

25
ii. Calculate the planned duration of the project in weeks.

As in provided in the assignment it is assumed that project team will work in standard working
week. This week includes 5 working days in a week and we will also calculate this critical path
in weeks. The calculation is as follows.

Days included in critical path= 75

Days in a standard week= 5

Critical path in weeks= 75/5 = 15

iii. Identify any non- critical tasks and the float (free slack) on each.

Task Description Duration Late start Early Start Total Float

(LS) (ES)

A Requirement 5 5 5 0
Analyses

B System Design 15 20 20 0

C Programming 25 45 45 0

D Telecoms 15 45 35 10

E Hardware 30 55 50 5
Installation

F Integration 10 55 55 0

G System Testing 10 65 65 0

H Training/Suppor 5 70 70 0

26
 t

I Handover and 5 75 75 0
Go live

In the activity D and E there are calculated float which is difference between early start and late
start is calculated as 10 and 5 respectively.

Part 2

Calculation of Net Present Value and internal rate of return of both projects for different
cost of capital-

Years Cash Flows

Project Project
  A B

0 -50,000 -50,000

1 35000 20000

2 30000 20000

3 25000 34000

4 30000 46000

(Abazari, et. Al 2013)

27
 If cost of capital is 10%

NP $41,713.4 $37,885.5
V 9 1

IRR 50% 39%

If cost of capital is 60%

NP ($3,578.19 ($8,979.80
V ) )

IRR 50% 39%

Brief memorandum report

Net present value of project can be defined as the difference between the present value of cash
outflows and present value of cash inflows in a project. It is a capital budgeting tool which is
adopted to analyse the profitability of a project. Positive NPV defines profitability in the project
results and negative NPV defines the losses which are resulted by the project (Maroyi, et. Al
2012).

Internal Rate of Return (IRR) is defined as a discount rate which makes all the cash flows in
NPV equal to zero and defines and measures the profitability of potential investments. This
makes the positive cash follows equal to negative cash flows.

Both the projects above are calculated the NPV and IRR by taking discount rate as 10% and
60%. While taking discount rate as 10% the project A should be selected as in both NPV and
IRR are in favour and leading to positive results. In case of discount rate taken as 60% there are
provided two options. On the basis of NPV project B is more profitable and on the basis of IRR
project A is more profitable (Maroyi, et. Al 2012).
28
29
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