The Field of Information Technology - Essay Example

Business Decision Making Table of Contents Task 3 Task 2 5 Task 3 6 Task 4 8 Task 5 12 Task 6 15 Reference List 18 Task Market research plan Background With the development made in the field of information technology, people are increasingly seeking innovative products in order for their own convenience. This requirement for innovation has compelled technology companies to revalorize the ways in which information is channelized throughout the world. The world has come a long way since the invention which was in its time the most efficient means of relaying information. Since then a number of developments have been made in the field of information technology, with Internet being the most drastic invention. However, the introduction of internet made it necessary for technology companies to design products which would help people to access this vast space of information. That is when these companies came up with innovations such as smart phones and tablets. Since then the number of people using these products have sky rocketed. With the use of these products people have also craved for other peripherals such as Bluetooth speakers, external headphones, wired speakers, Bluetooth microphones and so on and so forth. It is with regards to these requirements that our company is endeavouring to introduce a Bluetooth enabled speaker which has unmatched quality of sound output and also comes at a very low price. This product is set to compete with the likes of products manufactured by Sony, JBL and Sennheiser. Rationale The underlying rationale of this market research plan is to learn about needs and requirements of the target audience. This will help the company’s managers to have a holistic view of the market as well as learn about the expectations of its target market. Moreover the analysts will also be able to make an estimation of the price that should be placed for this particular product. Objective of research The objective of this market research is to conduct a detailed study of the target market (tablet users in UK) which in turn will help the organizational managers to understand the factors that will serve as a key determinant of the product’s success. Present survey methodology In order to conduct this research in an appropriate manner, a mix method approach needs to be adopted where the researcher will be conducting surveys as well as interviews with households in the UK. The higher income households will be interviewed while the households within the lower income range will be included within the survey. The underlying reason behind the application of a mixed method approach is to have a holistic view of the issues that is being researcher. It will enable the researcher to have an in-depth idea about the needs and expectations of the target customers. The market research report will serve as a benchmark that will allow the organizational managers to design their products accordingly. Moreover the survey as well as interview will also allow the managers to have a precise estimation of its actual target market which in turn will allow them to formulate the promotional strategies appropriately. Data collection Given the fact that this study involves the exploration of a broad issue, both secondary as well as primary data needs to be collected. As far as the primary data is concerned, they will be collected on field with the help of interviews and surveys conducted with households all over UK. As mentioned above, the higher income households will be interviewed whereas the lower income households will be included within the survey. The surveys as well as interviews will be conducted using computer aided telephonic system. The survey feedback will be coded by the researcher in the computer screen whereas the interview feedback will be recorded automatically. As far as the collection of secondary is concerned, they will be gathered through newspapers, article reviews and other online databases. Time frame Budget The estimated budget for the preparation of this market research report is £250,000. Sample questionnaire 1. Are you an active user of a tablet? If yes, go to question 2. If no, terminate survey process. 2. Which brand are you currently using? 3. Do you use any Bluetooth speaker along with your tablet? If yes go to question 4, else go to question 7. 4. Which brand are you currently using? 5. Kindly state the price range within which the price of your Bluetooth speaker falls? 6. Are you satisfied with the sound quality of your current Bluetooth speaker? 7. Are you planning to buy a Bluetooth speaker within the next three months? If yes, go to question 8, else terminate the survey process. 8. What is your budget? Task 2 The following table represents the number of orders placed with a definite range of amount in a restaurant. The following information were fed in excel statistical functions. The output has been Table 1: Given information Amount Spent (£) No. of Orders 0 to 10 5 10 to 20 7 20 to 30 10 30 to 40 12 40 to 50 14 50 to 60 15 60 to 70 14 70 to 80 13 80 to 90 6 90 to 100 4 Mean 10 Median 11 Mode 14 Standard deviation 4.16 Range` 11 25th percentile 6.25 75th percentile 13.75 Q3 13.75 Q1 6.25 Inter quartile range 7.5 The average number of orders placed is 10. The median is 11 which separate the higher half of the sample data from the lower half of the sample data. The mode for the given data set is 14 which imply that this value was present the most within the sample data. This is evident from the given information where the frequency of the value 14 is 2. The mean, median and mode value of 10, 11and 14 indicates that the most popular price range is between 20 and 50. The maximum number of order placed in the restaurant falls within this price range. The range is the difference between the highest observed value and the lowest observed value. In the given set of information the highest value is 15 whereas the lower value of 4 which in turn implies that the range is 4. The 25th percentile or the first quartile value for the given data set is 6.25 whereas the 75th quartile or the third quartile value for the same data set came out to be 13.75. This provides the researcher with the opportunity to quantify the inter-quartile range. The inter-quartile range is the difference between the value of the third quartile and the first quartile. By putting the values according to the above mentioned formula, the researcher obtained the quartile value to be 7.5. Task 3 Figure 1: Alpha limited financial figures (Source: Author’s creation) Figure 2: Alpha Limited trend line (Source: Author’s creation) Figure 3: Alpha Limited predictions (Source: Author’s creation) Figure 4: Regression analysis (Source: Author’s creation) Task 4 Figure 5: Forecasting - introduction (Source: Author’s creation) Figure 6: Importance of forecasting (Source: Author’s creation) Figure 7: Benefits of financial forecasting (Source: Author’s creation) Figure 8: Financial performance of Alpha Limited (Source: Author’s creation) Figure 9: Performance prediction of Alpha limited (Source: Author’s creation) Business report 1800 Ridge Ware Street Los Angeles, California 600042 October 12, 2014 To, The President Alpha Limited Dear Sir/Madam, Alpha Limited has proven to be a very successful company over the last ten years. The magnitude of operations that are conducted within the company has grown in a consistent manner over the past few years. This is clearly evident from the growing cost of operations as well as goods and services provided by the company. In order to compensate for the costs incurred by the company, the managers have done exceedingly generated adequate amount of revenue which could be subsequently converted into profits. This is also evident from the company’s growing amount of sales over the last ten years. However, there was a relatively degree of fluctuation in the performance delivered by the company. Consequently, the company attained negative growth in sales during that period of time. Nonetheless, Alpha Limited continued to realize profits but the figures decreased with decreasing amount of sales. As a result of this the margin of profit decreased during a particular time frame. A regression analysis was performed in order to understand the impact of sales and cost n profit. The profit realized by Alpha Limited was considered as the dependent variable. On the other hand sales and costs were considered as the independent variable. Upon running the regression function in MS Excel it was seen that both cost and significant impact on profit. The t value and p value for sales was recorded to be 2.73559E+16 and 3.5712E-129 respectively. The value indicates that they are statistically significant at 1% level of significance. The positive value of test statistic indicates that there is a positive association between sales and profit. This implies that with an increase in the amount of sales, there will be a consistent increase in the amount of profit for the company. The t value and p value for cost was recorded to be -9.11226E+15 and 2.3562E-125 respectively. These values are also statically significant at 1% level of significance. However the negative test statistic value for costs indicates that there is a negative association between cost and profit. This implies that with an increase in the amount of cost, there will be a corresponding reduction in the level of profit realized by the company. The situation was the same for Alpha Limited during the year 2008 which a considerable in the amount of cost led to a significant decrease in the margin of profit realized by the company. The average growth rate in sales was calculated to be 6.81% and that of cost was calculated to be 1.81%. These values were used in order to compute the amount of sales to be generated as well as the costs to be incurred by the company over the next five years. This facilitated the calculation of an approximate level of profit that would be realized in the course of the next five years. The calculation revealed that the company will prove to be profitable just like it did in the past years and at the end of 2015 the profit for the company is expected to reach £240,000 from £140,000 in 2010. Sincerely, John Smith Management Consultant, Alpha Limited Task 5 Project management tools are very instrumental when it comes to providing assistance to project managers. The application of these tools enables project managers to schedule the activities within a project effectively and efficiently. In addition to that it also allows managers to formulate resource allocation strategies in an appropriate manner. Managers are able to schedule the arrival and disposal of resources with the help of project management tools. Gantt chart, critical path method and network diagram are the most frequently used project management tools. Implementation of tools like these enables project managers to prioritize any particular activity on the basis of its overall relevance within the project. It also allows organizational managers to have a holistic view of the overall duration of a project. By doing so, they place themselves in a position by means of which they can plan all the other activities following the conclusion of the project (Norman, Brotherton and Fried, 2011; Project Smart, 2013). As far as the new project that is being undertaken by Bright Spark Limited is concerned, the following figure reveals that there are twelve activities within the project that begins on 14th October 11, 2014 and ends on 5th February, 2015. On the right hand side of the figure, the timeline of the overall project has been depicted with the help of bar chart. The tasks that have been highlighted in red are the critical tasks thereby providing the researcher the critical path of the project. The analysis of the critical path enables a project management to calculate the actual duration of the project. The project has to be approached on the basis of the critical path that has been outlined. Figure 10: Gantt chart (Source: Author’s creation) The figure given below is the project network diagram that highlights the sequence in which the activities are to be performed. As is evident from the diagram the red blocks are the critical paths and therefore the project is to be approached according to the critical paths. The critical path for this project is as follows: Task A – Task B – Task D – Task E – Task F – Task G – Task K – Task L The critical path given above is also a determinant of the actual duration of the project. Therefore, the value can be obtained by adding the time duration of each of the critical activities given above. Project duration = 4 + 2 + 15 + 4 + 9 + 9 + 20 + 20 = 83 days. However, including the Saturdays and Sundays (non working days) that fall within the overall duration, the project gets extended till the 5th of February. Nonetheless, the Saturdays and Sundays are not considered while calculating the actual number of working days that are required to complete the project. Figure 11: Network diagram (part 1) (Source: Author’s creation) Figure 12: Network diagram (part 2) (Source: Author’s creation) Another importance of these project management tools is that it highlights the slack present in the activities within a project (Haugan, 2002). Slack can be defined as the number of days by which a particular activity within a project can be delayed. Therefore, as depicted within the Gantt chart given in figure 1, slack is present in task 8 (H), task 9 (I) and task 10 (J). The float time in case of task 8 is 1 which means that the activity can be delayed by a day. The float time in case of task 9 is 27 days which in turn implies that this activity can be delayed by that many number of days. The float time in case of task 10 is 13 days suggesting that this activity can be delayed by this many number of days. Figure 13: Network diagram (part 4) (Source: Author’s creation) Task 6 Project Alpha has an initial investment of 200,000. The expected cash flows over the next 5 years have been depicted in the following table. Year Cash flow Year 1 35,000 Year 2 80,000 Year 3 90,000 Year 4 75,000 Year 5 20,000 The present value of the future cash flows has been calculated using the following formula: PV = Cash flow × [1 ÷ (1+r)t] (Li and Wu, 2009) (1) In the above equation, ‘r’ denotes the discounting rate. In majority of the cases the weighted average cost of capital is used as the discounting rate. After applying this formula, the present value of all the future cash flows was obtained and has been subsequently depicted in the following table. Given the fact that the discounting rate was not provided within the question, the researcher has assumed it to be 10%. Year Cash flow Present value Year 1 35,000 31818.18 Year 2 80,000 66115.7 Year 3 90,000 67618.33 Year 4 75,000 51226.01 Year 5 20,000 12418.43 The sum of present value of all the future cash flows came out to be 229196.70. This value was subtracted from the initial amount of money that has been invested. By doing so, the researcher obtained a net present value of 29196.65. In a similar manner project beta also involves an initial investment of 200,000. However, unlike project alpha, the cash flow of project beta is different and has been depicted in the following table. Year Cash flow Year 1 210,000 Year 2 10,000 Year 3 10,000 Year 4 4,000 Year 5 3,000 The formula given in equation 1 has been applied in this case as well which in turn enabled the researcher to obtain the following figures of present value. Year Cash flow Present value Year 1 210,000 198181.82 Year 2 10,000 8264.46 Year 3 10,000 7513.15 Year 4 4,000 2732.05 Year 5 3,000 1862.76 The sum of all the present values came out to be 218,554.25 and upon subtracting this value from the initial investment of 200,000 the researcher obtained a net present value of 15,554.25. As far as the internal rate of return is concerned, the IRR function in excel has been used. Upon the application of this formula, the researcher obtained an IRR of 16% and 19% for project alpha and project beta respectively. Therefore, the evaluation of these projects was conducted in an unbiased manner where the projects were compared on an equal scale and factors. Upon the evaluation of project Alpha and Beta it is strongly recommended that Rapid Solutions Limited should invest in project Alpha. This is precisely because the net present value of this project is far greater than that of project Beta (Will, Subramanyam and Robert, 2001; Berk and DeMarzo, 2011). Although the internal rate of return for project B is higher than that of project Alpha, but the cash flows keep on decreasing steadily over the years unlike the cash flow of project. This is another reason which supports the reason behind an investment in project A (Rose and Hudgins, 2008; Maness and Zietlow, 2004; McCrary, 2010). Moreover, the cash flow of project Alpha is comparatively steadier than that of project beta. Special case However, if the payback period factor is taken into account, in that case the verdict goes in favour of project Beta as the company gets the payback of the initial investment right in the very first year. On the other hand, the payback period of project alpha is more than 3years. Given the fact that according to the payback investment rule, a prospective project is one that pays back the initial investment quickly, the verdict goes in favour of project Beta (Kruschwitz and Löffler, 2006; Stovall and Maurer, 2011; Subramanyam and Wild, 2009). Reference List Stovall, J. and Maurer, T., 2011. The Ultimate Financial Plan: Balancing Your Money and Life. New Jersey: John Wiley & Sons. Subramanyam, K. R. and Wild, J. J., 2009. Financial statement analysis. New York, NY: McGraw-Hill. Will, I., Subramanyam, K. R. and Robert, F. H., 2001. Financial statement analysis. New York: McGraw-Hill International. Rose, P. S. and Hudgins, S. C., 2008. Bank management and financial services. 7th edition. New York: McGraw Hill. Li, X., and Wu, Z., 2009. Corporate risk management and investment decisions. The Journal of Risk Finance, 10(2), pp. 155-168. Maness, T. S. and Zietlow, J. T., 2004. Short Term Financial Management. USA: South-Western Educational Publishing. McCrary, S. A., 2010. Financial Statement Analysis. Mastering Financial Accounting Essentials: The Critical Nuts and Bolts, pp. 89-99. Berk, J. and DeMarzo, P., 2011. Corporate finance. Ney Jersey. Pearson education. Kruschwitz, L. and Löffler, A., 2006. Discounted cash flow: a theory of the valuation of firms. New Jersey: John Wiley & Sons. Haugan, G. T., 2002. Effective work breakdown structures. Vienna: Management Concepts. Norman, E. S., Brotherton, S. A. and Fried, R. T., 2011. Work Breakdown Structures: The Foundation for Project Management Excellence. New Jersey: Wiley. Project Smart, 2013. Role of the Project Manager. [online] Available at: [Accessed 11 October 2014]. Read More