Regent College; Business Decision Making Unit 6 Answer Sample - Essay Prowess

Regent College; Business Decision Making Unit 6 Answer Sample

Regent College; Business Decision Making Unit 6 Answer Sample

  

TASK 1

LO 1.1: Plan for Primary and Secondary Data Collection

Primary data sources provide information in its original form. This data is obtained fromoriginal research, creative works and eyewitness accounts that are presented in their original form of recording. Examples of methods used gather these kinds of data include personal diaries, letters, manuscripts, speeches and interviews that are recorded in their original form. There other sources of primary data including autobiographies, photographs, audio recordings and paintings. Experiments can be performed and the results recorded as primary data (Sapsford and Jupp, pp.17). It is primary data if results are recorded in an original form. Experiments are similar to observations in gathering first-hand data. However, experiments involve a lot of procedures. 

Secondary data gathering involves collecting data from other sources that have information that was recorded from primary data research. Secondary data sources often contain detailed data.Reference books are secondary sources of data that provide detailed information about a specific subject. These are very useful in this kind of research. Other sources include internet which provide up-to-date information. The websites of existing restaurants in the city are a credible source of secondary data. Similarly databases provided secondary data that is stored strategically making the process of finding secondary data about restaurants easier and quicker.

Historical records provide data about major events and trends in the hospitality and catering industry. These are useful in analyzing market trends in the region. There other sources that can also prove useful in the process of fetching secondary data. For instance, criticism and reviews provide refined data. Newspapers and magazines feature latest and exclusive information about restaurants. They can also serve as sources of secondary data.

LO 1.2: Survey Methodology and Sampling Frame Used

            There are three fact finding methods that are helpful for this research. These methods include the use of interviews. Interviews involve a face-to-face discussion between the interviewer and the interviewee. They seek answerers and comments through questions. Usage of interviews for fact finding requires good interviewing skills to reduce some challenges that face the effectiveness of interviews. The interviewers should have good background information of the restaurant so that they can frame comprehensive questions. The interviewer’s aggressiveness will result into in-depth answers and cooperation from the interviewee.

            Questionnaires are another fact finding method that can gather structured data from respondents is formulated properly. They are applicable and convenient where one cannot physically visit an organization. They can be administered physically, by post or online. Questionnaires are also very advantageous in that they can collect a wide range of data in very short time using little effort and money. However, they can result into poor response especially if they are designed poorly. Therefore, they should not be ambiguous and should be used in simple systems.

            Observations are also useful in the process of fact finding. They can collect cheap and meaningful information in a very short time. They give the actual information instead of what is expected to be happening or what is believed to be happening. However, they may change the reaction of those who are being observed. Therefore, they need to be carried out by a knowledgeable person (Levy and Lemeshow, pp.21).

            They intended survey should cover the intended population so that it can capture the relevant data. It should be conducted legal especially due to geographic restrictions where different regions have different legal systems. The surveyor should have enough knowledge to deal with language barriers or miscommunication. For instance, the interviewer should have skills to interview a customer who does not understand the language of the interviewer. The structuring of the interview and questionnaire questions should be done properly.

            The surveyor should deal with problems associated with fact finding accordingly. Such problems include the availability of data. Data may not be available easily to the surveyor. Therefore, the surveyor should be aggressive and skillful to maneuver demanding situations to get the best out of the surveying process. Respondents may not be available to respond to the surveyor’s questions. The survey should thus plan the fact finding process to accommodate the busy schedule of the respondents (Sapsford and Jupp, pp.19).

            The stakeholders to be sampled should be chosen and classified strategically so that data can be obtained for specific groups. The classification of stakeholders should be based on the kind of information they are capable of providing. For example, they can be classified into simple groups such as top management, the management, employees, and customers. The structure may vary from one restaurant to another but these differences are not significant.  

LO 1.3: Questionnaires

                The following questionnaire will be administered to the management of the existing restaurants in London City to gather both qualitative and quantitative data

  • What is the approximate number of customers you receive in a day?
  • Less than 10
  • 10- 30
  • 30-50
  • 50-100
  • 100- 150
  • 150-200
  • 200-300
  • 300-500
  • 500-1000
  • Over 1000
  • How many employees do you have?
  • Less than 10
  • 10-30
  • 30-50
  • 50-100
  • 100-150
  • 150-200
  • 200-300
  • Over 300
  • Approximately how many Sterling Pounds do you spend on foods and other expenses in a day?
  • Less than 1000
  • 1000- 3000
  • 3000-5000
  • 5000-10000
  • 10000-20000
  • 20000-50000
  • Over 50000
  • Approximately how many Sterling Pounds do you spend employees in a day?
  • Less than 1000
  • 1000- 3000
  • 3000-5000
  • 5000-10000
  • 10000-20000
  • 20000-50000
  • Over 50000
  • Approximately how many Sterling Pounds do you spend on bills and licenses in a month?
  • Less than 1000
  • 1000- 3000
  • 3000-5000
  • 5000-10000
  • 10000-20000
  • 20000-50000
  • Over 50000
  • Approximately how many Sterling Pounds do you get as returns in a day?
  • Less than 2000
  • 2000- 5000
  • 5000-10000
  • 10000-20000
  • 20000-50000
  • Over 50000

The following questionnaire was administered to customers in selected restaurants in London City. It was administered to customers while they were in the restaurants

  • Gender
  • Male 
  • Female
  • Select the category of your age
  • 18-35
  • 36-55
  • 56-75
  • Above 75
  • Are you are citizen?
  • Yes
  • No
  • If you are not a UK citizen, what makes you visit United Kingdom?
  • Business
  • Holiday
  • Visiting Family
  • Work
  • How many times in your stay do you take your meals at the restaurant?
  • Once Daily
  • Twice Daily
  • Thrice Daily
  • Once in a Week
  • Once in a Month
  • Do you use accommodation services offered by this restaurant?
  • Yes 
  • No
  • Approximately how long do you stay in the restaurant?
  • Less than 3 days
  • 3 days to 1 week
  • Less than 2 weeks
  • 1 Month
  • Over 2 Months
  • How much do you pay for meals in a day?
  • Less than 200
  • 200-500
  • 500-1000
  • 1000-3000
  • Over 3000
  • Approximately how many Sterling Pounds do you pay for your accommodation services?
  • Less than 200
  • 500-1000
  • 1000-3000
  • Over 3000
  • Which other services do you consider important in the restaurant?
  • Conference
  • Telecommuting
  • Transport
  • Gambling
  • Pub
  • Swimming Pools
  • Other (Specify)
  • Which hours of the day do you like to spend in the restaurant?
  • 6 A.M – 11 A.M
  • 12 P.M- 5 P.M
  • 6 P.M- 8 P.M
  • 9 P.M – 6 A.M
  • All Day
  • Does the restaurant provide all your preferred food and drink choices? If not, please indicate the names of the foods and drinks.
  • Yes
  • No

LO 2.1: Summary of Data Using Representative Values

The values presented in the table below where obtained from the results gathered through a questionnaire. They are based on monthly trends of customer practices throughout a year. The monthly trends are essential in providing vital information for the new restaurant management. The monthly trends can assist the management to plan for each month or season based on the performances of the other restaurants in the region. The results of the questionnaire have been analysed using a spreadsheet (accompanying this package) and presented in the table below. 

                                          Income                                                Expenses 
Month Meals Income Entertainment Income Accommodation Income Meals Expenses Accommodation Expenses Advertisement Fees Employee Salaries (Every 50 employees) Bills and Licenses  
January 75000 45600 430000 32000 20000 12000 20000 30000   
February 67000 34000 435000 34000 22000 11500 20000 30000   
March 75000 46400 410000 37000 25000 12400 20000 30000   
April 63000 38470 402500 33300 21000 10400 20000 30000   
May 70000 43430 401300 36050 23500 13100 20000 30000   
June 63000 34300 309000 35800 23400 13230 20000 30000   
July 68500 38000 308700 34000 24500 12000 20000 30000   
August 69050 38300 304690 34000 23460 18900 20000 30000   
September 67000 43000 363000 34500 23400 18640 20000 30000   
October 73670 43500 343060 36000 24800 19600 22000 30000   
November 75000 44000 392000 36500 24950 17200 22000 30000   
December 77000 45400 350500 36900 25000 16000 22000 30000   
                    
                    
                    
                    

LO 2.2: Analysis of the Results to Draw Useful Information in a Business Context

Annual Income Annual Expenses Annual Profit
5787370   1482030   4305340  

Income of the operational restaurant is generated from accommodation, meals and entertainment. The restaurants expenses are due to accommodation maintenance, meals expenses, advertisements, bills and licenses. The annual income of the restaurant adds up to 5787370 pounds. Its annual expenses add up to 1482030 pounds. Therefore, the restaurant makes an annual profit of 4305340 pounds. From these results it shows that a restaurant in London City makes huge profits annually. It shows that it is viable to start a new restaurant. The new restaurant can make huge profits if it is managed effectively to compete with the existing restaurants (Kimmel et al, pp. 23).

LO 2.3: Analysis of Data Using Measures of Dispersion

Month Meals Income Entertainment Income Accommodation Income Meals Expenses Accommodation Expenses Advertisement Fees Employee Salaries (Every 50 employees) Bills and Licenses
January 75000 45600 430000 32000 20000 12000 20000 30000 
February 67000 34000 435000 34000 22000 11500 20000 30000 
March 75000 46400 410000 37000 25000 12400 20000 30000 
April 63000 38470 402500 33300 21000 10400 20000 30000 
May 70000 43430 401300 36050 23500 13100 20000 30000 
June 63000 34300 309000 35800 23400 13230 20000 30000 
July 68500 38000 308700 34000 24500 12000 20000 30000 
August 69050 38300 304690 34000 23460 18900 20000 30000 
September 67000 43000 363000 34500 23400 18640 20000 30000 
October 73670 43500 343060 36000 24800 19600 22000 30000 
November 75000 44000 392000 36500 24950 17200 22000 30000 
December 77000 45400 350500 36900 25000 16000 22000 30000 
Totals 843220 494400 4449750 420050 281010 174970 246000 360000 
Mean 70268.33 41200 370812.5 35004.167 23417.5 14580.83333 20500 30000 
Standard Deviation 4821.895 4379.038915 47516.61702 1588.089 1650.961841 3278.914616 904.534034 0 

            The standard deviation of the different fields of the results shows little deviations about the mean. For instance, there is no deviation in the bills and expenses of all the monthly bills and licenses. The mean of the fields in income and expenses show little differences with other fields. Other fields experience little deviations showing that is a lot of stability in the results hence higher predictability of the results. This shows that restaurant businesses are very stable in London. The data can be very useful in determining the rate of volatility of the restaurant business in the city (Piccirilloand Massimo, pp.38).

LO 2.4: Use of Quartiles, Percentiles and the Correlation Coefficient to Draw Useful Conclusions in a Business Context

                                          Income                                                Expenses 
Month Meals Income Entertainment Income Accommodation Income Meals Expenses Accommodation Expenses Advertisement Fees Employee Salaries (Every 50 employees) Bills and Licenses  
January 75000 45600 430000 32000 20000 12000 20000 30000   
February 67000 34000 435000 34000 22000 11500 20000 30000   
March 75000 46400 410000 37000 25000 12400 20000 30000   
April 63000 38470 402500 33300 21000 10400 20000 30000   
May 70000 43430 401300 36050 23500 13100 20000 30000   
June 63000 34300 309000 35800 23400 13230 20000 30000   
July 68500 38000 308700 34000 24500 12000 20000 30000   
August 69050 38300 304690 34000 23460 18900 20000 30000   
September 67000 43000 363000 34500 23400 18640 20000 30000   
October 73670 43500 343060 36000 24800 19600 22000 30000   
November 75000 44000 392000 36500 24950 17200 22000 30000   
December 77000 45400 350500 36900 25000 16000 22000 30000   
Totals 843220 494400 4449750 420050 281010 174970 246000 360000   
Mean 70268.3333 41200 370812.5 35004.1667 23417.5 14580.83333 20500 30000   
Standard Deviation 4821.89482 4379.038915 47516.61702 1588.08895 1650.961841 3278.914616 904.5340337 0   
                    
80th Percentile 75000 45120 408500 36410 24920 18352 21600 30000   
First Quartile 67000 38225 334545 34000 23050 12000 20000 30000   
Third Quartile 75000 44350 404375 36162.5 24837.5 17560 20500 30000   
Interquartile Rage 8000 6125 69830 2162.5 1787.5 5560 500 0   
Correlation Coefficient of meals income and expenses 0.38828439                 

From the figures in the table above it is clearly evident that the interquartile range of all the fields is not very large showing that most of the values are spread around the mean. This indicates stability of the results of income and expenses (Weygandt et al, pp. 29). This shows consistency of income and expenses all the twelve months of that year. The results also show that the mean is close to the 80th percentile. It is an indication that the most values are above average.

The correlation coefficient between meals income and meals expenses is closer to +1. Normally, it ranges from -1 to + 1. If it is closer to +1 means that there is a strong relationship between meals expenses and meals income.Hence, it can be deduced that the more the restaurant spends on meals the more income it gets. The information can be used to make adjustments to expenses so that income can be more predictable.

TASK 2

LO 3.1: Using Spreadsheet Graphs to Draw Valid Conclusions

From the graph above generated by a spread sheet, it is can be noted that accommodation produces the highest income every month of a year. It can be concluded that most customers visiting the restaurants use accommodation services and pay good process for the services. Therefore, we can state that accommodation service provision by the restaurants is a good business in the region of the city because it produces the highest profits for the restaurants. On the other hand, accommodation is also the highest expenditure for the restaurants.  Other income sources for the restaurants such as meals and entertainment also generate substantial income for the restaurants. Expenses are almost constant for all the months of the year.   This is because of the requirements needed to offer accommodation services. The other sources of income for the restaurants such as food, drinks, conferences, and entertainment also generate significant income for the restaurants. Most expenses remain constant in many months of the year (Weygandt et al, pp. 16).  

LO 3.2: Using Trend lines to Forecast Business Information  

The trend lines show little differences in terms of changes in either income or expenses. The trends thus show that the business is highly predictable. Changes in the performance of the income and expenses are determined by other factors and not time. However, seasonal changes can be considered to affect the trends in income and expenses of the restaurants.  

It can be deduced that there is high stability in restaurant business in the region of the city. The trends also indicate that the restaurant business is highly predictable. It can also be concluded that variances in the performance of the expenses and income are influenced by other factors and not necessarily time of the year. However, seasonal changes are likely to influence the trends in income and expenses of these restaurants in the region.

LO 3.3: Business Presentation

Please refer to the PowerPoint slides that are included in this package of the assignment.     

LO 3.4: Formal Business Report

The following is a formal business report of the findings of a research that intended to determine the viability of a new restaurant business in London City.  The research analyzed the existing restaurants in the city to determine their operations. The study identified that the business is viable as the following report demonstrates through factual information obtained from the research.

Income of existing restaurants is generated from accommodation, meals and entertainment. In the process, the restaurant’s expenses are due to accommodation maintenance, meals expenses, advertisements, bills and licenses. These figures show that the income of the restaurant is 5787370 pounds. The income comes with annual expenses that have been summed up to 1482030 pounds. Therefore, the restaurant makes an annual profit of 4305340 pounds. It is thus evident that restaurants in London City make huge profits annually. It is hence feasible to   start a new restaurant. The new restaurant can make huge profits if it is highly competitive through good management and strategic planning (Cooper et al, 25).

It can also be concluded that advertising plays a vital role in the performance of the existing restaurants. The restaurants spend significant sums of money to make their business reachable to customers. The new restaurant will have an advantage since it will be opened through a chain restaurant business. The good name of the other restaurants in other regions will give the new restaurant a competitive edge above the other restaurants.

Restaurants in the city do not experience extreme changes in the business since almost all months of the year have significant profits. This is further proof of business stability which will prove important especially for new players in the industry.

Another advantage of the new restaurant is that it will be run by management with similar strategies as the other successful chain restaurants. The other restaurants have been successful in other regions because of their good management skills (Fullen, 67). They will hence serve as the benchmark for the new restaurants. The same knowledge can be passed to the new restaurant so that it can be successful too. In fact, employees can be trained using the facilities of other chain restaurants to make them more competent in their duties. 

LO 4.1: Information Processing Tools

Management Information Systems (MIS) are the applications used in business decision making. Operational management of a restaurant is heavily dependent on Management Information Systems especially in the contemporary business management. Operational functioning of a restaurant is more enhanced by the MIS by controlling and monitoring day-to-day activities. This depends on the restaurant structure where Executive Support Systems (ESS) and Executive Information Systems (EIS) software applications are used to assist the top level management in the running of the business. These software applications are customized to fit the needs of the managers. MIS can be used by the restaurant management to monitor and control the operations of the restaurant easily. The applications can produce different decision-making options that would otherwise be made ineffectively. 

            Strategic and tactical functions require timeliness and accuracy in the process of gathering and disseminating information in a restaurant. They involve making critical decisions that have impacts on the direction of the organization. Decision Support Systems (DSS) are very crucial in propelling the implementation of an organization’s tactical and strategic decisions. Strategic and tactical levels of organizations require highly relevant information. The software applications used at these levels are enhanced to filter information and deliver very decisive information to the management (Kimmel et al, pp.32). 

LO 4.2: Project Plan for the New Restaurant Opening

Gant Chart

Task Jan
1-7
Jan
8-14
Jan 15-21 Jan
22-28
Jan 29-
Feb 6
Feb
7-13
Feb
14-20
Analysis and Feasibility Study (A)                
Planning (B)              
Allocation of Responsibilities (C)              
Funds Allocation (D)              
Wall Board (E)              
Acquisition of Premises (F)              
Setup of Equipment (G)              
Opening of the Restaurant (H)              
Full Operation              

Network Diagram

Critical Path= 28+15+6+12+22+ 28= 101 days

LO 4.3: Using Financial Tools to Make Decision

The following financial analysis checks at the initial amount of investment towards the new restaurant and its feasibility. The values are in consideration of the annual profit predicted in the previous research. The initial cost is approximated to be 0.42 million pounds.

NPV= -Initial investment + (sum of) [OCF/ (1+R(r)) t] + [TCF/ (1+R(r)) n]

NPV=- 420,000 + (55,000 /1.10) + (60,000 /1.10^2) + (72,000 /1.10^3) + (86,000 /1.10^4) + (92,000/1.10^5) + (120,000/1.10^6) + (150,000/1.10^7) + (210,000/1.10^8)

NPV= 1,057,296.865

Since the NPV value is a positive value, the new restaurant is thus feasible.

IRR:

0 = – 420,000 + 55,000 / (1+0.12) – 60,000 / (1+0.12) ^2 – 72,000 / (1+0.12) ^3 – 86,000 / (1+ 0.12) ^4 – 92,000/ (1+0.12) ^5 – 120,000/ (1+0.12) ^6 – 150,000/ (1+0.12) ^7 + 210,000/ (1+0.12) ^8 = – 0.92675

The sum gives a figure which is close to zero meaning that the new restaurant is feasible.

Work Cited

Cooper, Brian, Gina McNeill, and Brian Floody. HYPERLINK “http://www.bibme.org/”  HYPERLINK “http://www.bibme.org/”Start and run a restaurant business HYPERLINK “http://www.bibme.org/”. 2nd ed. Bellingham, Wash.: Self-Counsel Press, 2005. Print.

Fullen, Sharon L.. HYPERLINK “http://www.bibme.org/”  HYPERLINK “http://www.bibme.org/”Opening a restaurant or other food business starter kit: how to prepare a restaurant business plan  HYPERLINK “http://www.bibme.org/”& HYPERLINK “http://www.bibme.org/” feasibility study : with companion CD-ROM HYPERLINK “http://www.bibme.org/”. Ocala, Fla.: Atlantic Pub. Group, 2005. Print.

Kimmel, Paul D., Jerry J. Weygandt, and Donald E. Kieso. HYPERLINK “http://www.bibme.org/”  HYPERLINK “http://www.bibme.org/”Financial accounting: tools for business decision making HYPERLINK “http://www.bibme.org/”. 4th ed. Hoboken, NJ: John Wiley, 2007. Print.

Kuiper, Shirley. HYPERLINK “http://www.bibme.org/”  HYPERLINK “http://www.bibme.org/”Contemporary business report writing HYPERLINK “http://www.bibme.org/”. 3rd ed. Mason, OH: Thomson South-Western, 2007. Print.

Levy, Paul S., and Stanley Lemeshow. HYPERLINK “http://www.bibme.org/”Sampling of populations: methods and applications HYPERLINK “http://www.bibme.org/”. 3rd ed. New York: Wiley, 1999. Print.

Piccirillo, Ettore, and Massimo G. Noro. HYPERLINK “http://www.bibme.org/”Guidebook for supporting decision making under uncertainties today’s managers, tomorrow’s business HYPERLINK “http://www.bibme.org/”. Hackensack, NJ: World Scientific, 2008. Print.

Sapsford, Roger, and Victor Jupp. HYPERLINK “http://www.bibme.org/”  HYPERLINK “http://www.bibme.org/”Data collection and analysis HYPERLINK “http://www.bibme.org/”. 2nd ed. London: SAGE Publications in association with the Open University, 2006. Print.

Weygandt, Jerry J., Donald E. Kieso, and Paul D. Kimmel. HYPERLINK “http://www.bibme.org/”  HYPERLINK “http://www.bibme.org/”Managerial accounting: tools for business decision making HYPERLINK “http://www.bibme.org/”. 2nd ed. New York: Wiley, 2002. Print.

  
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