Business Decision Making - Case Study Example

Business Decision Making Sainsbury’s Kenny Chin Sainsburys Supermarkets Ltd, one of UK’s leading supermarkets is expanding. The chain store is planning to open yet another store in the neighborhood a feature that validates the extensive market research and analysis in order to determine the viability of the new store. The supermarket contracts the researcher who after carrying out the research develops the report below. The report details the market research describing every feature of the study. The researcher uses the random sampling technique in selecting a sample. Additionally, the researcher uses such data collection techniques as questionnaire, interview and observation in collecting exhaustive data from the subject group. The researcher further uses numerous data processing tools including the SPSS in coding and processing the data thus making realistic conclusion. In data presentation, the researcher uses numerous graphical data presentation techniques thereby making comprehension of the research findings and conclusion easier. Introduction With a revenue of £23.303 billion in the year, 2013, Sainsburys is definitely one of the leading supermarkets in the United Kingdom. The business, which is a chain of supermarkets, retails numerous household goods and groceries thereby targeting a wide market. The company that has survived for more than one hundred years exhibits effective management a feature that influences its strategic operation and expansion plan to increasing its market share (Pickton & Broderick, 2005). The business employs different marketing and operation strategies in order to sustain its profitability. Key among its strategies is diversity of both products and services and the expansion of stores within the country. The two strategies are effective in ensuring that the supermarket increases its market share as it enters into new markets. The report below is therefore one that seeks to inform the creation of yet a new store. The decision is important owing to the financial implications of the new investment. Opening up a new store within the city will increase the capacity of the company. However, just as any other business the new store requires effective market research and analysis in order to ensure that the demand in the region will sustain the desired profitability of the store besides increasing the business’ market share in the region. The report follows an extensive market research and analysis that sought to determine the viability of the new store. The research investigated the features of the new target market with the view of discovering the products that are appropriate for the market, the population of the target market thus formulating appropriate recommendations for the management of the store (Ireland, 2008). The effectiveness of the research will influence the management’s decision-making therefore informing them on the type of goods to dispense in the new store besides the appropriate marketing strategies that will improve the success and profitability of the store. Questionnaire: I would be very pleased if you could spend 2 minutes of your time to complete this questionnaire. The data collected is to be used purely for academic purpose and respondent’s information will not be disclosed to any third party. 1) What is your gender? Male Female 2) What is your occupation? Full-time employee Lecturer Student Staff Other 3) How old are you? 18-25 26-35 36-49 Above 50 4) What is your nationality? Specific________________ 5) Which is your favorite supermarket? Tesco Sainsbury Morrison ASDA Mark & Spencer Other 6) Do you heard about Sainsbury’s? ___________________ 7）How often do you visit Sainsbury? Everyday Once a month Once a week Never, Prefer Shop Online. Half a month 8）Are you interested in the loyalty programs offered by Sainsbury? Such as discount, voucher, loyalty card or free goods Yes No 9）Which one of promotion is your favorite? Loyalty card Voucher Discount Free goods Others__________________ 10）Does the loyalty card could affect your purchase or spending more? Yes No 11）What features you look for shopping at Sainsbury supermarket? Price Quality of product Variety of product Branding 12）How much average do you spend at supermarket per month? Under £200 Under £500 Below £1000 Others___________ 13）How normally you received supermarket promotion information and offer? Social media Advertising Newspapers or Magazine Email Other Purpose The research sought to determine fundamental market factors that will influence the profitability of the new store that Sainsburys wants to set up near the Coventry university campus. In doing so, the research’s primary objective is to inform the management thereby influencing the decision making process. This requires of the research, which must investigate every personal feature exhibited by the people living around the university in order to discover their consumption patterns. This way, the findings and recommendation of the research becomes effective since they provide realistic presentation of the market. Statement of Hypothesis Marketing is a function of the management mandated with the determination, anticipation and satisfaction of customer demands. Effective marketing requires appropriate market research and analysis in order to steer the operations of a business venture. By understanding both the industry and the origination, Sainsburys will open up the new store with the assurance of increased profitability since the new store will sustain its operations besides increasing the supermarket’s market share. Assumptions and Limitations As discussed earlier, Sainsburys is a large business entity with numerous stores strewn throughout the country. Carrying out a hypothetical research for such an organization remains constrained to specific assumptions and limitations both of which will influence the operations of the researcher. The major assumptions in this case are: I. The society around the University campus is ideal with numerous age groups II. Age groups influence the consumption patterns of the target market III. Age influences the purchasing power of consumers in the market The only limitation in the research is its hypothetical nature that denies it the effectiveness of valid data collection and computation. The researcher will rely on the assumptions and the nature of the society to derive findings that may not influence the operations of the actual store. This may influence the actions of both the researchers and the research sample. However, the researcher strives to overlook such and carry out an extensive research with the view of making reliable marketing recommendations. Additionally, the sample size was considerably too low (n=100). It was also concentrated around the university hence might not incorporate views and ideas from a divergent people. This might hamper the reliability and accuracy of the formulated conclusion. Review of related literature Decision-making is often a responsibility of top-level management. Among the fundamental figures at Sainsburys who make operational decision include the chair, David Tyler and the chief executive Mike Coupe. The two are important people in the store with each representing specific interests. The chairperson for example heads the board of directors, a special group of individuals who represent the interests of the owners of the business, the board influence funding a vital feature that influences the operations of any business. The chief executive on the other hand is the highest manager in any businesses. He makes operational decisions on a daily basis thereby regulating the use of the company’s resources (Homburg, Sabine & Harley, 2009). Both the chair and the chief executive are therefore important people in the business who ensure that the company sustains its profitability. The systems theory of management asserts that organizations are like systems with various components that must function harmoniously in order for the organization to realize profitability. Sainsburys is one such system with various departments all of which are semiautonomous but must function in tandem in order for the company to realize increased profitability. Among the most important departments in the business are marketing, human resource, administration and sales (Fournier, 1998). The operation of the four departments must synchronize in order to steer the even operation of the business empire. Each department has esteemed employees who work under the leadership of successive managers who report to the chief executive officer. The operation of the different departments is reliant on the application of specific theories that help steer the profitability of the company. Expansion is a basic portrayal of a business’ growth and therefore an objective of every business. Businesses increase their capacities by diversifying their products and services while expanding their capacities thus increasing their market shares. An expansion plan as is the case with Sainsburys is thus a fundamental process that requires effective collaboration of all the departments within the business (Kotler & Kevin, 2010). However, the marketing department must carry out extensive marketing research in order to determine the viability of the new store. As defined earlier, marketing managers are top-level managers who influence the decisions that the chief executive makes. In this context, the marketing carries out extensive market research with the view of measuring the size of the market. The results of the research must guide the store guiding on the type of products to dispense in particular store while outlining appropriate marketing strategies that will enhance the profitability of the new store thus the company. Among the marketing tools that marketers use in analyzing their target markets, include SWOT and PEST analysis both of which provide them with adequate information on both their companies and the industries. Furthermore, marketers must carry out extensive market researches with the view of determining the consumption patterns of the market among other factors that may affect the viability of a business idea in a particular region. By identifying the consumption patterns of the market, Sainsburys marketing departments will determine the type of goods to retail at the store thus cushioning the company from incurring loses. Data collection and analysis Analyzing the target market for Sainsburys with the view of determining the viability of a new store around the Coventry University campus is an extensive process that will seek to investigate the purchasing power and patterns of the university community. This way, the research findings will help formulate the nature of the new store and the products Sainsburys will dispense in the store in order to realize increased profitability. The research uses random sampling technique; this includes the selection of fifteen people at random including lecturers and students at the university campus among other people living around the university. Random sampling technique provides a realistic view of the society since it provides a virtual reality thereby providing a valid hypothesis of the research findings. With such an effective sampling technique, the research must utilize equally effective data collection techniques (Lotz, 2007). Among the data collection techniques that the research uses include interview, questionnaire, and observation. Questionnaires refer to the use of structured forms to collect data from the respondents. The questionnaire contains a list of specific questions that the respondent answers before submitting the answered questionnaire back to the researcher. This provides both parties with great convenience as they both process the data at their own times. Interviews on the other hand are face-to-face interactions through which the researcher engages the respondents in a series of questions (Elizabeth & Michelle, 2008). Observation on the other hand is an equally important data collection tool in the research. The researcher will observe the shopping pattern in the community thereby determining the pattern that will influence the profitability of the new store. Below is a Gantt chart that summarizes the data collection and analysis process Activity Jan –Feb Feb 1- March 10 March 11-15 March 16- April 20 April 20-28 May 1- 20 June 1-5 1. Preparing and drafting questionnaires 2. Disbursing questionnaires 3. Collecting the data and interviews 4. Assembling the questionnaires to a common place 5. Summarizing data 6. Data analysis and conclusion 7. Reporting the findings Research findings The community around the university campus is a cosmopolitan society with people from varied backgrounds. Additionally, the population is high a feature that makes it a viable target market. The university campus intensifies the economic activity in the community owing to the fact that it raises the population of the region (Clow & Baack, 2007). However, numerous factors and features of the community will influence the demand for different products. The supermarket must consider such factors in order to develop appropriate products for the particular market thus positioning itself strategically in order to benefit from the unique features of the market. Among the major research findings include: This Pie Chart below shown the consumer spends on supermarket per month. This pie chart collected from the 200 people around the university, the result who spend under £200 approxiemately 35%, then spend under £500 about 45%. Lastly, who spend spend under £1000 are 20%. Ordering the data Visit to Sainsbury daily Once a week Once a month Twice a month Thrice a month Once a year Never visited Number 19 9 6 6 5 3 2 Ordered data set 2,3,5,6,6,9, 19. The mean of the data is 6. Quartile 1= 3 Q2= 6 Q3= 6 Percentiles- 75%= 6 50% =6 25% = 3 From the above observations, 25% of the values are above 6 implying that more people visit the Sainsbury stores. Additionally, 25% of the values are above 3. This implies that though many people attend the stores, more still lack the inordinate opportunity to shop in the stores hence more stores need to be opened to increase accessibility and expand the customer base. The correlation coefficient between spending and income is positive. The R2 of the data further indicates that there is a strong relationship between income and expenditure hence the stores can be opened in densely populated areas inhabited by high-income earners. Most people who have not visited the stores are due to lack of awareness hence more promotion should be done (Ireland, 2008). Alternatively, the stores need to strive and meet the divergent needs, tastes, and preferences of its customers. The population of the region comprises of more youths than the old as the chart below portrays The ages of the population influence their earnings thus purchasing power. Additionally, age influences tastes and preference. Most of the young people are students at the university while most of the elderly in the society are employees of the university among other similar facilities in the region. Just as with the younger population, the financial ability of the older generation varies depending on their jobs. Such factors affect the purchasing power of the people (Cutlip, Allen & Glen, 2011). Despite such, an observation of the nature of the lifestyle in the society portrays a growing demand for particular products capable of sustaining profitability for the supermarket. Additionally, the students who constitute a larger percentage of the region’s population are not financially independent. Despite this, the students obtain most of their funding from their parents. The students exhibit extravagance in their spending a feature attributable to the strong economy of the country resulting in the students obtaining adequate money from their parents. This implies that the region is likely to create a viable market for the new store. Conclusion After an effective analysis of the research findings, it becomes evident that the region is a potential market for the supermarket. Among the factors that contribute to the potential of the region, include the high population. Furthermore, the people in the region enjoy financial independence and have pertinent needs that the store will satisfy. The expansion idea is thus timely with the region promising to sustain the profitability objectives of the chain store. However, the supermarket must introduce specific goods that will appeal to the unique population of the region in order to sustain its profitability. References Clow, K. & Baack, D. E. (2007). Integrated Advertising, Promotion, and Marketing Communications. New York: Prentice Hall. Cutlip, S. Allen, H. C. & Glen, B. M. (2011). Effective Public Relations. Englewood Cliffs: Prentice-Hall. Elizabeth, B & Michelle, C. (2008). Definition of Social environment. New York, McGrawHill. Fournier, S. (1998). Consumers and their brands: Developing relationship theory in consumer research. New York: New York Times. Homburg, C. Sabine, K. & Harley, K. (2009). Marketing Management - A Contemporary Perspective (1st edition). New Jersey, U.S: John Wiley & Sons. Ireland, H. (2008). Understanding Business Strategy. New York: Free Press. Kidder, D. & Hoffman, R. (2013). The Startup Playbook: Secrets of the Fastest Growing Start Ups from the founding Entrepreneurs. San Francisco, CA: Chronicle Books. Kotler, P. & Kevin, K. (2010). Marketing Management. Upper Saddle River: Pearson Prentice Hall. Lotz, A. D. (2007). The Television Will Be Revolutionized. New York, NY: New York University Press. Pickton, D. & Broderick, A. (2005). Integrated marketing communications (2nd ed.). London: FT Pearson. Sreedharan, E. (2004). A textbook of historiography, 500 B.C. to A.D. 2000. 1st ed. New Delhi: Orient Longman. Sreedharan, E. (2004). A Textbook of Historiography, 500 B.C. to A.D. 2000, Orient Longman. p. 302. ISBN 8125026576. Read More