Business Decision-Making - Project Management - Assignment Example

PROJECT MANAGEMENT Name Course Lecturer Date Task 2 Year Sales Expenses Net Income 1995 £ 15,000 £ 20,000 1996 £ 20,000 £ 25,000 1997 £ 24,000 £ 30,000 1998 £ 20,000 £ 40,000 1999 £ 18,000 £ 35,000 2000 £ 25,000 £ 50,000 2001 £ 20,000 £ 45,000 2002 £ 30,000 £ 65,000 2003 £ 24,000 £ 45,000 2004 £ 28,000 £ 55,000 2005 £ 30,000 £ 60,000 2006 £ 40,000 £ 90,000 2007 £ 22,000 £ 45,000 2008 £ 15,000 £ 34,000 2009 £ 25,000 £ 52,000 2010 £ 35,000 £ 62,000 2011 £ 16,000 £ 38,000 2012 £ 28,000 £ 56,000 Mean Mean is the same as average, it is used to calculate the average of a set of data. Mean is the average of a set of data or numbers. It is calculated by adding up all the numbers and dividing them by how many they are. Advantages It is very accurate; it is the most accurate method of calculating average for a set of numbers It is easy to understand and hence simple to calculate It is unique as well, this is because every set of numbers has only one average or mean Mean acts as a balancing point It takes in to account all numbers in the population Disadvantages Outliers can change the average or mean greatly thereby making it lower or higher that it should be It does not exist for qualitative data, only for quantitative data only. Median This is the middle number in a set of numbers. Advantages It is not affected by outliers It is accurate Finds the middle number with ease It works on ordered population A set population has only one median and there it is unique as well. Disadvantages Large gaps between numbers cause median to be inaccurate It not affected by movement of data from the centre It is not popular as mean It takes long time to calculate especially for large sets of population Mode This is the value that occurs most often in a set of numbers. Advantages It is simple to calculate and easy to understand. Can be located by inspection of discrete frequency distribution and ungrouped data It is not affected by smaller or large values. It is convenient for qualitative data. It is easy to be located using graphical method. Disadvantages Sometimes it is very far from the middle of a set of population It is the least reliable method of finding average or middle of a population It is not defined well It does not take in to account all values Cannot be used for further mathematical treatment A set of numbers can have more than one mode while a population may not have a mode at all Analysis of the results The mean of the net income is 89,158, it indicates that the income is well distributed between the years. The median is £45,000, this is the middle income. The mode is aslo £45,000. The organisation earned a net income of £45,000 many severaL times during the eghteen years period. Standard deviation The stadard deviation indicates that there is much deviationq from the mean. It is £16633 and this is very far from the mean . Each of the data point is very far fom the mean. The standard deviation is useful for HMV business in the way that it helps to align the income of the business. Instead of earning large income on one year and very low income the followoing years, it is able to align its operations to as to have stable income. This is very useful for planning purposes of the future of the business. The range about the mean within which approximatly 95% of the net income values fall is 245.84. Year Sales Expenses Net Income 1995 £ 15,000 £ 20,000 1996 £ 20,000 £ 25,000 1997 £ 24,000 £ 30,000 1998 £ 20,000 £ 40,000 1999 £ 18,000 £ 35,000 2000 £ 25,000 £ 50,000 2001 £ 20,000 £ 45,000 2002 £ 30,000 £ 65,000 2003 £ 24,000 £ 45,000 2004 £ 28,000 £ 55,000 2005 £ 30,000 £ 60,000 2006 £ 40,000 £ 90,000 2007 £ 22,000 £ 45,000 2008 £ 15,000 £ 34,000 2009 £ 25,000 £ 52,000 2010 £ 35,000 £ 62,000 2011 £ 16,000 £ 38,000 2012 £ 28,000 £ 56,000 Sum £ 435,000 £ 847,000 Mean £ 89,158 Median £ 45,000 Mode 45000 Standard Deviation 16633 Confidence Interval 245.8378907 Correlation Coefficient 0.902554958 quartiles 0.8 Task 3 3(i) Year Advertising Sales 1995 £ 100 £ 1,200 1996 £ 120 £ 1,400 1997 £ 150 £ 1,500 1998 £ 170 £ 1,800 1999 £ 200 £ 2,200 2000 £ 240 £ 2,300 2001 £ 260 £ 2,400 2002 £ 320 £ 2,780 2003 £ 380 £ 3,200 2004 £ 440 £ 3,750 2005 £ 460 £ 4,460 2006 £ 490 £ 4,820 2007 £ 510 £ 5,000 2008 £ 550 £ 5,670 2009 £ 585 £ 5,900 2010 £ 600 £ 6,300 Line graph for advertising Line graph for sales The advertising graph indicates an increasing expenditure on advertising campaigns. The expenditure is increasing at an increasing rate for each of the years from 1995 to 2010. This is a sign of increasing market presence of the company. The olive oil is getting popular in the United Kingdom market. This is because of increased usage of the product. The increasing advertising expenditure is also a sign of increased competition from other providers of the product. As such, the company has to keep advertising in order to maintain its relevance in the market. The company increases advertising also to keep its customers and other potential customers of its products and ability to provide quality product. Moreover, the increasing advertising is a sign of the company's expansion and growth. The company is expanding at a very high rate and reaching out to new markets in the United Kingdom has been crucial for the expansion and expansion, hence the increasing advertising. On the side of sales, they have been increasing at an increasing rate. As with the advertising expenditure, the sales record an impressive growth. Sales record increase from 1995 to year 2010, this signifies growth of the business. The increase in sales is a clear and good indication of the effectiveness of the advertising campaigns of the business. The increase also indicates that the business has been able to increase its market share year after year and thus increase in sales. It has been increasing its market share while at the same time consolidating its existing markets. There is a direct relationship between the advertising and the sales, both of them record increase at an increasing rate. The rate of expenditure on advertising is causing increase in sales of the olive oil in the United Kingdom market. Essentially, the business is at its best years. It also indicates signs of increase in sales in the future and this is growth. There is indication of growth prospects of the business. It is important for the business to continue advertising in the markets that it has not yet reached. This will enable the business to acquire more customers thereby expanding its market share. This will translate to increasing sales. 3(ii) The bar chart Branch location Net income (£) Birmingham branch 2300 Coventry branch 1400 Wolverhampton branch 1000 Solihull branch 1600 Stoke branch 900 The pie chart Branch location Net income (£) Birmingham branch 2300 Coventry branch 1400 Wolverhampton branch 1000 Solihull branch 1600 Stoke branch 900 The bar and pie charts indicate the performance of the five branches in the United Kingdom market. The five market segments vary in their performances. The Birmingham branch has the highest performance provides the highest income; it has the biggest bar in the bar chart while having the biggest area in the pie chart above. Birmingham region and its environs is an industrial zone, this is one of the factors for the highest returns. The company has heavy presence in this area as well. The stoke branch has the lowest returns of net income. Essentially, there is a big difference between the Birmingham branch and the stoke branch (the highest and the lowest performance respectively). It is recommendable for this company to increasing adverting in the stoke branch and Wolverhampton branch. These are the branches with the lowest returns of net income. Increasing advertising would create more awareness of the company products in these areas and increase sales. This would level the returns in all the branches. 3(iii) Bin Range (£) Rate 0-10 0 11-20 1 21-30 9 31-40 4 41-50 6 51-60 3 61-70 2 71-80 3 From the histogram above, the hourly rate of office employees in the bin range of £21-30 has the highest number of employees. Many of the employees are earn hourly rate between £21 and £30. This is followed employees who earn in the range of between £41 and £50. There are no employees earning hourly rate below the range of £11. The least paid employee is paid an hourly rate of £18 while the highest is paid an hourly rate of £75. Most of the office employees earn above £40. There is good balance in the hourly rate of pay to the office employees. For recommendations, it is important for the company to increase the employees pay according to their performance. This is a very good mechanism of rewarding employees and motivating them to work even harder. Another way to motivation the office employees are to increase their pay with the increase in company performance. The growth of the company in term so net income should be reflected in the employees’ pay. In addition, the company should also 1give the office employees some benefits. These factors are not only motivating to the employees but they also make them to own the whole company operations and therefore work effectively. Task 4 Uses of management information systems in the operational, strategic and tactical function of an organisation The management information systems are used in the operational function of an organisation to he1lp understand how services and products are created as well as ultimately how they are delivered to customer. This indicates that the MISs play a vital role in the operational function. They help to explain and hence understand how an organisation manufactures its products and as well as how the products reach the customers. As such, it is used to increase productivity and efficiency. By understanding the operations well, an organisation reduces wastefulness, defective items as well as speed up the processes. This results in creation of products that meets customer satisfaction (Meredith & Mantel 2011). The software used in this level is operational information system (OIS). Tactically, the management information systems are used as key factors to facilitate and attain efficient decision making in an organisation. They help the management to make successful decisions. This is also very crucial to an organisation; it indicates that organizations employ MISs in making strategic and tactical planning purposes. Hence, this plays a significant role in the future of an organization (Baker, Murphy & Fisher 2008). The software used in this level is decision support systems (DSS). Management information systems are valuable strategic resources to an organisation. They help an organisation to gain a competitive advantage in the market above the competitors. They strategically link an organisation to potential and willing customers and suppliers. MISs helps an organisation to create an effective integration of using information in a value adding process. Moreover, organisation use MISs to develop, produce, make as well as deliver new services and products based on market information. MISs provides the senior management with information that helps them to develop as well as implement strategies. These uses indicate that the management information system is very useful in an organisation; it strategically places an organisation in a higher market position with a competitive edge over the competitors (Baker, Murphy & Fisher 2008). The software used in this level is strategic information systems (SIS). The table below summaries the uses of management information system in the three le1vels in an organisation Operational Strategic Tactical Number of employee hours Level of raw materials input in to a production process Stock levels needed Rejection rate Hours spent on each single job Capital requirements (equipment) Profitability of an organisation Resource levels Total cash requirements Government policy Analysis of the competitors Future prospects of the market Cost of capital and its availability Segments and divisions profitability Labour turnover Stock turnover Budgetary control reports cash flow forecast variance analysis measurements of the productivity 4.2 project management Project management is application of methods, processes, skills, knowledge and experience to achieve stated project objectives and targets. A project is a transient and unique endeavor that is undertaken to achieve planned aims. The aims or objectives are defined in terms of benefits, outputs or outcomes. Project critical path 9 8 Plumbing 6 wall board Electrical 10 Framing paint interior 5 4 16 Foundation 6 Sliding 9 fixtures Paint exterior 4+10+9+8+5+6 = 42 days 4+10+6+8+5+6 = 39 days 4+10+16+9+6 = 45 days The critical path is; Foundation – framing – electrical – wall board – paint interior – fixtures This path takes the shortest time of 39 days and hence it is the critical path. Early start – this is the earliest likely time or date when the awaiting portions of a schedule activity or phase can start depending on the schedule constrains and network logic. Late start – this is the latest likely point in time or day that a schedule or activity can be completed without delaying a specified project finish date (Turner 2009). Early finish – this is the earliest likely time or date when the awaiting parts of an activity or schedule can finish depending on the schedule constrains and network logic. Late finish – this is the latest likely time or date when the awaiting parts of a schedule phase or activity can finish without delaying project completion date or violating any schedule constrains (Gray et al., 2006). Slack – this is an activity that is contained within a super task in the project. Dummy – this is a simulated activity or schedule of sorts that is of zero duration, it is created for purposes of demonstrating special relationship as well path of action. This imaginary activity does not exist in the project activities and it is also used to indicate connectivity between two or more activities. 4.3 The NPV and IRR Net Present Value Method Initial investment = £420,000 Present value factors 2015 = 1/ (1 + 12%) ^1 = 0.8929 2016 = 1/ (1 + 12%) ^2 = 0.7972 2017 = 1/ (1 + 12%) ^3 = 0.7118 2018 = 1/ (1 + 12%) ^4 = 0.6355 2019 = 1/ (1 + 12%) ^5 = 0.5674 2020 = 1/ (1 + 12%) ^6 = 0.5066 2021 = 1/ (1 + 12%) ^7 = 0.4523 2022 = 1/ (1 + 12%) ^8 = 0.4039 Year Cash Flow Flows Present Value Factor Present Value (Amount) 2015 £ 55,000 0.8929 £ 49,110 2016 £ 60,000 0.7972 £ 47,832 2017 £ 72,000 0.7118 £ 51,250 2018 £ 86,000 0.6355 £ 54,653 2019 £ 92,000 0.5674 £ 52,201 2020 £ 120,000 0.5066 £ 60,792 2021 £ 150,000 0.4523 £ 67,845 2022 £ 210,000 0.4039 £ 84,819     Total Present Value £ 468,501     Initial Investment £ 420,000     Net Present Value £ 48,501 Internal Rate of Return Year Cash Flow Flows Present Value Factor Present Value (Amount) 2015 £ 55,000 0.8772 £ 48,246 2016 £ 60,000 0.7695 £ 46,168 2017 £ 72,000 0.6750 £ 48,598 2018 £ 86,000 0.5921 £ 50,919 2019 £ 92,000 0.5194 £ 47,782 2020 £ 120,000 0.4556 £ 54,670 2021 £ 150,000 0.3996 £ 59,946 2022 £ 210,000 0.3506 £ 73,617     Total Present Value £ 429,946     Initial Investment £ 420,000     Net Present Value £ 9,946 The internal rate of return should be 14 percent. References Baker, B. N., Murphy, D. C., & Fisher, D. 2008. Factors affecting project success. Project Management Handbook, Second Edition, 902-919. Gray, C. F., Larson, E. W., & Desai, G. V. 2006. Project management: The managerial process. Meredith, J. R., & Mantel Jr, S. J. 2011. Project management: a managerial approach. John Wiley & Sons. Turner, R. 2009. Handbook of Project-Based Management, 4/e. Read More