Business Decision Making - Assignment Example

Business Decision Making Task1/A The following table contains sampled data that was collected by the research firm contracted to do the research activity. A short questionnaire was sent to recent customers to obtain some basic information about the following: Age, Gender. Location (The company divided the country into the North, n, The South, s, The East, e, and the West, w), the most recent spend in £ and the customers Gross Income in £. The presented data was captured by an external market research firm using follow up phone calls to customers of one of the largest UK suppliers of the product merchandise. Respondent rate was somehow low; one out of 10 calls were successful; hence, the sample is very low mean age Total Age 505 total individuals 20 Mean 505/20 25.25yrs mean spend total spend 2814.35 number of spend 20 Mean 2814.35/20 140.7175 Age Standard Deviation 8.25151501 Spend Standard Deviation 48.7280492 This above table has summarized the mean and standard deviation of age and Spending trends. Mean age was 25.25, this implies that the average age of employees is approximately 25 years. According to the results, it implies that the average spending rate stood at £140.7175. Age Standard Deviation 8.251515012 Spend Standard Deviation 48.7280492 Income Median 18731 Interquartile Range 15762 Correlational coefficient between age and spend -0.77983 This shows a perfect correlation, in that as age increases, spending rate also increases. The table summarizes the median income and interquartile ranges income Median 18731 Interquartile Range 15762 The following table contains power point slides that have been used in illustrating these outcomes: Slide 1 This is the introductory part of the presentation. Slide 2 This illustrates how data was collected and manipulated to reach at the results Slide 3 Age and spending trends mean are calculated; other variables are also calculated Slide 4 Slide 5 Slide 6 Task 2 Introduction Appalachian PLC, a renowned manufacturer of high end furniture that are sold directly to retailers, in firm markets across Europe and the UK has witnessed a drop in its overall sales to the established markets and has opted to inquire opportunities in a new target geographical markets; this is particularly in China and the far East. This aims at widening the market niche in order to have increased sales volume. China and Far East have been identified as the next market target since most competitors have not invaded the market segment in these areas. Additionally, most foreigners from China and the Far East back in the UK portray excellent purchasing trends. The move can result in either being positive or negative depending on the approach used in the new market segments. Statement of the problem The main aim of this study was particularly to determine the type of core customer, the price margin that can be charged and the levels of income in China and the Far East. Significance of the study There are 3 groups that are likely to benefit from this study. The first lot consists of the company employees who may gain skills in pitching new customers in the new market niche. Identifying customer trend may help them to take the necessary actions to coup with challenges that may arise in the event of initiating business activities in the new markets. Through sharing this knowledge, the employees can act as machines to aid management in implementing appropriate marketing strategies. The second group is the employers who automatically gain insight as to how new market can actually be managed having consumer preference data. Finally, business analysts can use these findings as valuable guide whenever advising Appalachian PLC. Through analysts, the firm can be in a position to determine whether they will have a significant profit income or not. Scope of the study The study was limited to the real income and age of clients in China from a merchandise firm in the UK; the interest was on the type of prices that can be charged and the levels of income in China. For the purpose of this study, what constitute pricing is determined by the employer. This study was restricted to customers based in China. This sample included a range of customers evenly distributed within China Republic. Review of related literature Barden, a freelance writer specializing in new business ventures and a former managing editor of Commerce and Accounting, stated the importance of through market research and gave specific examples of new markets that have successfully been reached. The Company that was used in undertaking the research activity currently makes huge profits for every furniture sale by offering services such as customized furniture according to customer need, amount of cash, and customer locality. According to market statistics, the success of this company offers enough evidence that China can be a good hub to do business in. the company spend less and make huge amount of profits. Foster, a professional speaker on business channel development, surveyed midlevel consumers in China and found customer preference to be a major determinant in having high sales volume. Methods of study Secondary data Secondary data is important in complementing the primary data collected. For the company, PLC, it would be important to look at the journals on the Chinese business market. These can be gotten from various avenues. For instance, the performance and financial statements of companies already established in the Chinese market can be used. In addition, scholarly journals and reports on the same can be used as a good guide for the PLC. In particular, the reports on firms dealing in furniture would so relevant to the company. Books provide good sources of secondary data. In this case, past case studies conducted in the Chinese market would be quite relevant for PLC as it seeks to venture into the Chinese market. Source of data Questionnaires were used to collect data for this study, which was developed by a business consultant firm outside the United Kingdom. It generally focused on the income of the individuals and the age groups. Respondents were asked whether having cheap and customized furniture would be their preferred choice. Sample Selection The respondents involved in this survey were China’s middle class working in companies located in China. A nonprobability, convenience-sampling technique was used in collecting the primary data. All the members of the research crewwereanswerable for calling 5 members of the sample. To ensure confidentiality, respondents were convinced that their personal information and the information given would remain discrete at all cost. Controls were used to exclude response duplicate. Statistical Methods Guileless statistical techniques were deployed in results tabulation for this research project. All the primary data obtained were analyzed by the use of percent response that was successful. In order compute, the total number of those respondents who gave information via phone calls divided the needed percent response, responses number to each choice. The results of questions were tabulated by totaling the number of respondents who picked a section each believed was either least or mostly affected by their choice. The respondent also gave their age groups. Limitations of the study Not all firms that may be manufacturing furniture may have been involved in this study. This study activity may also be limited by using a nonprobability, convenience selection technique. The sample of business consumers was chosen for convenience purposes and could be possible that theymay not be the total population representation of this business consumer. A lot of Care should be given priority whenever generalizing these conclusions to the entire population. Then finally, using simple statistical techniques may leadto subjectivity element into the analysis and interpretationof the data. Finally, all measures have been put in place to minimize effects of these limitations witnessed on the study. Findings The outcome has been presented in two major segments according to the following characteristics: Age, and spending habits. All successful responses from the sample were considered full-time employees. The participants were also required to specify their age group; the results featured all age ranges, as shown: Most of the respondents were below thirty years of age. Most of the participants were between the age of 25 and 30 years. The trend illustrates that elderly people spend less as compared to the young individuals. Conclusion China and the Far East remains a potential market, which Appalachian PLC can invade. The firm should focus on producing furniture that are unique from what the giant competitor has in store for most of the consumers in these areas. To achieve this, Appalachian PLC should consider recruiting young talents around China and the Far East to come up with furniture that are very attractive to young individuals especially who are establishing life. Task 3 Introduction PLC is experiencing a market challenges in most areas they operate in within United Kingdom. The managing crew is under pressure to look for new markets that would enable them make significant profits. The company has identified China and the Far East to be the major market niche with great potential. The Company has prepared a budget that it intends to use once it storms the market. Due to economic challenges and challenges experienced by new entries, the company has opted to operate in China for the start. Statement of the problem The main aim of this report is to analyze the proposed capital outlined by the company to launch its services in the China. This report will focus on four major segments: Payback analysis The company has commissioned a draft cash budget for the first 5 years of its operations in China, which has been summarized as follows; Year0Year1Year2Year3Year4Year5 £,000£, 000£,000£,000£, 000£,000 Cashoutflow1000200200200200200 Cashinflow01502505001000750 The company has adopted a payback period of three years as a hurdle rate for new project in recent years, but given the importance to the company, and the input of the Finance Manager, the Board is interested to look at discounted cash flow. The company has a weighted cost of capital of 10%. The adoption is essential especially when entering new market, which has established companies with their esteemed customers. The first order of this firm when doing discounted cash flow analysis is to find out how far out into the future the firm should project cash flows. PLC Company is estimated to grow faster than gross domestic product expansion of China’s economy. Over this excessive returns period, the company will be in a position to net returns on new investments that are greater than cost of capital. Therefore, the DCF requires forecasting on free cash flow amount that the company intends to witness over this period. Net Present value analysis Net present value is gage of how much important a project or an investment brings to the firm. In the case of PLC Company, the NPV stands to be a positive; hence, the company should go ahead and establish new markets in China. It should be noted that risked investments having positive NPV might be accepted. For this case, PLC has experience and enough resources to enter the Chinese market in a more efficient way. With the estimates, the intended cash flow is subject to success and is very essential in predicting the payback. It should be noted that net present value in any way does not cogitate the existence of a constraint in the system of cash flow generation, which could limit the total amount of cash really generated in due business operation. Result can be a projected net present value that cannot be recognized. The NVP is good determinant over payback analysis since it gives a real variance and not an estimate of what is the expected outcome. Financial criteria The company has opted to set up an office depending on the following data: Key Process Dependent Tasks Timeto Completion A LeasingOfficeSpace None 3months B UndertakingMarketResearch None 6Months C FindingLocalSuppliersofRawMaterials A 2Months D IdentifyingRetailPartners A,B 1Month E LeasingWarehouseSpace None 1Month F FormalizingbusinesscontractswithRetailPartners A,B,C 2Months G Developinglogisticsandsupplychain A,B,C,D,E,F 1Month H Beginningdeliveriestoretailpartners/commencingnormal operations A,B,C,D,E,F,G 1Month The company has estimated sufficient time frame that could see it thrive in a new environment. To implement all of these, the company should opt for recruiting staff originating from these markets. The staff members are then trained back in the United Kingdom and later sent to undertake their duties in China. The first thing the company should establish is an office, of which in this case has been given priority; an office with a designated administrator would see most operation move in a smooth manner. The company should look for more suppliers as much as possible to do away with issues of material supplies fluctuating immediately they start operating. It is important for the company to collaborate with its competitors, especially those who lend an ear in order to be networked. GNATT Chart The chart summarizes all that the project intends to do over a specified duration. The project can be completed in time if at all the measures are adhered to. Conclusion With the current market state in China, it may be tough to penetrate, this will generate many challenges, which are supposed to be categorized and dealt with accordingly. China offers a good avenue for starting a business since it has all kind of customers that can dominate the numbers of consumers. With PLC making customized furniture, it would be simple and easy for the company to penetrate wider market. The company should focus on investing a lot in new techniques to keep the customers in need for more. Bibliography MENNE-HARITZ, A. (2005). Business processes an archival science approach to Collaborative decision-making, records, and knowledge management. Berlin, Springer. Read More