Business Decision Making - Assignment Example

? Business Decision Making According to Baker decision making can be defined as the process of developing a solution toa problem. In addition, decision making can also be termed as the process of selecting the best alternative courses of actions from all the available options. In business, decision making is an inherent management activity. In the business arena, every manager whether of a high, middle or low level in an organization, has to encounter a situation which requires them to make a decision. For example, the chief directors of a company make grant strategic decisions while middle level managers like the head of departments makes decisions concerning the relevant task in there area of concern. Decisions range from smaller and simple ones to complex ones which require great effort to facilitate the arrival to a reliable conclusion. The overall process of decision making needs to be executed in a logical and systematic manner that will allow the evaluation of all relevant elements before adopting one of the available alternative courses of actions. Therefore, decision making has to be carried out with an organized approach that will facilitate the consideration of all factors. This is according to Baker (2010). Williams (2007) agrees that academic experts in the business sector have devised models that can be employed when developing a decision. These models advocates for the adoption of various requisite steps in building the decision. The essential steps applied in making decisions at all contexts starts from then definition of a problem, identification of the alternative, evaluation of the available options, selecting the best alternative, appraising the feasibility of the decision and presenting the proposed decision for approval by the relevant authorities. All major decisions are carried out systematically using these steps without omitting even one. In the business context, once the underlying problem has been defined rationally, the next step will entail the identification of the available solutions. The first two steps of decision making require the application of information concerning the problem situation. The third step on evaluation of the options also needs the appraisal of the situation’s information. At this juncture, one should be in a position to interpret the collected information appropriately using a suitable interpretation technique. Upon interpreting, the decision maker will pick the best alternative course of action, based on the validity of the findings depicted by the interpretation. This is according to Williams (2007). Baker (2010) asserts that information on a situation needs to be acquired before initiating a decision making process. The data collected from the sources will supplement the values needed to develop a body of information concerning a situation. At this juncture, it is logical to state that the practical part of a decision making process begins from the collection data on the concept under consideration. Data collection can be carried out using the suitable methods. The data can be obtained from either the primary or the secondary sources. Primary sources data collection entails the process of obtaining information from first hand respondents especially in the field by exercises like surveys and administration of questioners. In our discussion, the decision making process concerning Exchange Partnership Team (EPT) will start from the development of an outline illustrating the data collection exercise. Question 1 In the context of the West London Exchange company, the Exchange Partnership Team (EPT), data can be obtained with respect to the outline below; 1) Primary Data sources a) Administering Questionnaires b) Observations c) Case studies d) Portfolios e) Interviews f) Evaluation of critical incidences 2) Secondary Sources a) Internet Databases b) Internal business records c) Government agencies records d) Business directories Question 2 Questionnaire According to Baker (2010), the most appropriate research methodology in this context should comprise both the qualitative and the quantitative aspects of data collection. The design employed in the methodology should allow the primary data collectors to obtain qualitative and quantitative measures of a given population. Therefore, the most appropriate method is the true-experiment method. The most useful sample frame would be the community sample frame. This will ensure that each community is studied exclusively with regard to its perception on the West London Exchange. The data collection from the field will be facilitated by the use of questionnaires. These will be one page papers containing the appropriate questions that are meant to provide information concerning the underlying concept of study. In this case, the questions will probe into the usage of West London Exchange. The relevant questions include; Question 3 1) Do EPT influence West London Exchange business growth? [yes][no] 2) Do EPT respond to clients needs appropriately? [yes][no] 3) Do EPT show any signs of its business growth over the next one year? [yes][no] 4) Will EPT be able to provide services to the growing West London Exchange [yes][no] 5) Has EPT services delivery improved over the last one year? [yes][no] Question Strongly Agree Agree Disagree Strongly Disagree 6. EPT is socially responsible in business 7. EPT achieves customer satisfaction 8. EPT has ethical business practices 9. EPT employs good business strategies 10. EPT company will expand in future Question (4) From the information on grouped data, the following statistical calculations will be carried out. Formula for mean =, where x=class mid-point and f(frequency)=number of employees 1, a) Mean (2010) = 314/50, =6.28 Hours b) Mean (2011) =322/50, = 6.44 Hours 2, Median formula for grouped data =L+ h/f(n/2-c) Where L=the lower class boundary of median class, h=the size of median class, f=frequency of the middle class, c=cumulative frequency of previous classes and n=total observations. a) For 2010, L=6, h=3, f=12, c=24, n=50, therefore the median for 2010 =6.25 Hours b) For 2011, L=6, h=3, f=13, c=23, n=50, therefore the median for 2011 =6.46 Hours 3, The formula for mode =L+{(fm-f1)/(fm-f1)+(fm-f2)} ?h Where L=lower class boundary of modal class, fm=frequency of the modal class, f1=frequency preceding modal class, f2=frequency succeeding modal class, h=class width. a) For 2010, L=5.5, f1=11, f2=8, fm=12, h=3, therefore mode for 2010=6.5 Hours b) For 2011, L=3.5, f1=7, f2=13, fm=14, h=3, therefore mode for 2011=6.125 Hours 4, The formula for interquartile range is Q3-Q1, where Q3= L(Q3)+[((3n/4 )-F)/f(Q3)], and Q1=L(Q1)+[((n/4)-F)/f(Q1)] a) For 2010, L(Q1)=2, F=3, f(Q1)=10, n/4=12.5, therefore the first quartile Q1=2.95, Q3=8.19. The interquartile range for 2010=Q3-Q1=5.24 b) For 2011, Q1=4.25, Q3=8.15. the interquartile range for 2011=3.9 5, The formula for standard deviation is given by s=s, For 2010, =6.28, therefore s= 3.044 For 2011, 6.44, therefore s=2.741 Brechner (2011) agrees that all these mathematical calculations are of significance to the situation of overtime worked by the company employees. In the first calculation, the mean of each year indicates the average number of overtime hours worked by the employees. For example in 2010, the average number of hours worked was 6.28 hours. On the data median, this shows the number of hours worked by half of the employees. Mode shows the number of hours worked by most employees; interquartile range indicates the difference between the hours worked by 75% of the employees and that of 25% of the employees. Standard deviation shows the disparity between the hours worked by the employees. Question 5 This chart depicts the trend of the data within the four years Raw Data trend and Adjusted Seasonal variation. Brechner (2010) agrees that the application of seasonal adjustment in the economic or financial trends helps to indicate the influence that seasons exert on a company’s business. The seasonal adjustments are used to eliminate the irregular annual variations observed in raw data. In business decision making, knowing about the seasonal fluctuations of economic factors will help in structuring policies that will allow them to address the impact of seasonal variation. Therefore, seasonally adjusted data is of great importance to economic agents who wants to respond appropriately to the economic trends witnessed. Question 6 Store Rank 1 Rank 2 d d Squared A 1 3 2 4 B 2 4 2 4 C 3 1 2 4 D 4 2 2 4 E 5 5 0 0 F 6 7 1 1 G 7 6 1 1 Formula for Spearman’s rank correlation coefficient by; Therefore the correlation coefficient of these variables=0.678. The correlation coefficient serves to indicate the relationship between the variables under study. It indicated whether the relationship is positive, negative or neutral. In our case, the correlation coefficient of +0.678 indicates that there is a positive relationship between the aspects of absenteeism and salary. This means that absenteeism is attributed to the salary scale of the employees. Question 7 Gantt chart displays the graphical model of a projects progress in terms of the amount of work done and the amount of work remaining. The Gantt chart below displays the project’s progress based on the WBS (Work Breakdown Structure). Gantt Chart for the project Question 8 Year Project X(Cash Flow) Project X(Net Cash Flow) Present Value at 12% rate Project Y(Cash Flow) Project Y(Net Cash Flow) Present Value at rate 12% 0 -10000 -10000 -25000 -25000 1 5000 -5000 4464.28 6000 -19000 5357.14 2 4000 -1000 2542.07 6000 -13000 4783.16 3 4000 3000 2847.12 7500 -5500 5338.35 4 2000 5000 1271.04 10000 4500 6355.18 5 1000 6000 567.43 12000 16500 6809.13 (NPV)=3414.55 (NPV)=3642.96 The payback period for Project X occur somewhere in the third year while that for Project Y occurs in the forth year. These years are when the net cash flows of the projects moves from positive to negative values indicating that the invested cash has been recovered. The Net Present Value of Project X=3414.55 while that of Project Y=3642.96. This financial aspect of NPV indicates the feasibility of a long term project. It is used in appraising the long term viability of a project. In this case, Project Y has a higher net present value than X. This means that Project Y will give a higher return once all the financial elements of the project have been made. Project Y will give an excess of 3642.96 while project X earns 3414.55 within the same period, all expressed in present value terms. In the concept of internal rate of return, the IRR value for Project X=-30% or -0.3. On the other hand, the IRR for Project Y=50% or 0.5. The internal rate of return is calculated by setting the NPV of a project at 0 and then summing all the ratios between the individual cash flows and the required rate of return. Solving for the required rate of return gives the Project’s internal rate of return. The assumptions made after calculating the IRR is that if a project’s IRR is >0, accept it, and is it is Read More