Introduction To Decision Making Process
Every business unit irrespective of their size is involved in Decision Making Process so as to achieve long term success. Decision making is an essential element that forms basis for efficient operations and organization’s success. However, it is responsibility of the corporate to involve into proficient decision making process. A proper analysis and in-depth evaluation of all aspects is essential for long term business success (Morato, 2013). The report herewith emphasizes on various statistical methods to be adopted so as to support analysis and evaluation for the decision making process. It suggests the manner in which data is to be collected and evaluated in detail so as to support the decision making process. Each aspect of business decision making ranging from identification of issue to collection of data and adoption of statistical measures to reach the valid conclusion is dealt with. It provides complete understanding of all tools and techniques to support
Collection of primary data
For present research data can be collected through both primary and secondary sources. Primary data is first hand information i.e. collected specifically for the research objective. In order to collect relevant data the researcher needs to accumulate primary data by way of interview or questionnaire method. The data helps in serving purpose of research or survey into consideration. This is information that is original in nature and is collected in the form of feedbacks generated from sample of population selected.
Collection of secondary data
Secondary data will be used to determine market trend and changing expectations of customers. Researcher can also serve the purpose of study by analyzing the information that is already collected for certain previous research. It is the second hand information but provides valuable insight for conducting research in an efficient manner. The data can be accumulated by way of published journals, articles and other information (Newbold and et. al., 2009). The present research deals with studying market structure and consumer behavior for soft drinks market. In order to demonstrate the study data will be collected for two soft drink giants Pepsi and Coca-cola. It is through their financial statements and published report that sales or revenue figures for both of the business units are generated. Coca-cola and Pepsi are considered to be most popular brands in the United Kingdom and across the world (Soft drinks in United Kingdom, 2013). The two competitors creates tough business scenario for each other. It is through analysis of growth achieved and other relevant information that preferred brand among consumers can be analyzed. The present research is supported by analysis of both primary and secondary data. This in turn helps in identifying consumers’ preferences and adopting appropriate measures for long term.
Primary data will be collected through survey methodology. In order to conduct research for consumer profile, preference, attitude and buying behavior related to the consumer drinks the primary information will be collected by the way of questionnaire method. The same will be distributed among a sample of individuals that are targeted for studying buying behavior. The sample of consumers will be selected by way of random sampling method (Jones, 2004). It is suitable method since it assigns equal probability to each observation under consideration.
The sample of 50 consumers will be selected so as to accumulate all relevant information. Questionnaire will be distributed to group of individuals selected and thereby feedbacks will be generated. Data collected will be evaluated further so as to judge marketing scenario and consumer behavior prevailing.
It is the method that helps in generating consumer’s feedbacks efficiently since it allows individuals to submit their views without any interference. The methodology eliminates all kind of biasness on the part of researcher and helps in accumulation of all kind of relevant information (Hacklin and Wallnöfer, 2012). A sample of questionnaire that helped in generating feedbacks for behavior of consumer preference is formulated.
It is seen in the table presented above that coca-cola is having higher sales in comparison to Pepsi on monthly basis. This in turn results in higher annual sales for the company during the year. The figures suggest that coca cola is able to earn revenue approximately 100% times of Pepsi. Coca- cola being a market leader is assumed to have performed so efficiently that competitors need to participate actively so as to beat the company (Deichert and et. al., 2006). Certain statistical measures are adopted so as to analyze the revenue and growth of the two competitors.
There are certain measures of dispersion available that determines the manner in which data is spread over a period of time. Range is the measure of difference between smallest and largest value of all the observations. Variance on other hand measures the degree of variation that exists in all values accumulated. Standard deviation is a measure for deviation that may occur in variables that is the values can deviate by plus/minus range of standard deviation. In order to calculate range, variance and standard deviation following formula can be adopted.
The calculation for statistical measures is provided in table of descriptive statistics that shows the figures whereby all the values surrounds. The standard deviation for Pepsi shows that average and median value can vary by approximately +/- £ 43 million. However, the same for coca- cola is estimated at £ 131.86 million. The difference between largest and smallest value is estimated to be at £ 146 and £ 429 million for Pepsi and Coca-cola respectively. It indicates the values for coca-cola is highly dispersed whereas dispersion is moderate in the sales of Pepsi.
Another statistical technique that segregates data collected into various sections or segments is termed as Quartile deviation. The methodology assists in dividing information into four segments; namely first, second, third and fourth quartile. First quartile is equivalent to 25th percentile that calculates value below which 25% of total value lies. Second, third and fourth quartile represents 50th, 75th and 100th percentiles respectively (Jaisankar, 2009).
It is seen that Pepsi is able to achieve maximum sales of £ 251 million whereas minimum sales of £ 105 million. This indicates monthly sales for the business unit moves in the range therefore it should try to capture attention by promoting products so as t o gain large market share. Coca-cola on contrary is achieving minimum revenue of £ 185 million and maximum of £ 614 million. This indicates that the company is growing at large pace and is achieving high growth in monthly sales figure for business unit.
orrelation coefficient is a statistical tool that assists in measuring the degree and direction of relationship between two variables. It identifies that whether two variables are correlated strongly, moderately or weakly. There are kinds of correlation; namely positive correlation, negative correlation, perfect correlation and no correlation (Cohen and et. al., 2013). The value calculated for ascertaining relationship between variables is represented by r. If value of r is positive; it suggests the direct relation between variables. Negative value on contrary indicates inverse relationship and if value equals to zero no relationship exists between variables. The perfect relationship between variables is said to be established when the value of r equals 1.
The value of 0.71 indicates moderate relationship between variables. Moreover, the positive value shows the direct relation that is if sale of one company increases there will be corresponding increase in revenue of another company. This is due to the reason that if there is overall growth in an industry the consumer demand will increase in total. This in turn leads to increase in demand of all participants and business units. The above figure also shows that one unit increase in sales of coca-cola will lead to 0.71 unit increase in sales of Pepsi and vice versa. The direct relation is identified due to operation of both the companies within similar industry.
Adoption of all statistical measures shows that coca-cola is a market leader and is achieving high growth in a period of time (Freedman, Pisani and Purves, 2007). Pepsi is also achieving growth and is striving to face competition but is unable to reach levels of Coca-cola. The industry is highly consumer centric therefore there taste and preferences should be identified beforehand so as to satisfy them with customized products.
Information processing tools
For management of data in an effective manner company is recommended to use information processing tools by considering their viability and utility. Description of information processing tools is as follows-
Management information system- This tool is used to manage internal information of company in order to make suitable decisions. This tool will assist management in company to store and retrieve data in an appropriate manner.
Accounting information system- In order to record financial information of business accounting information system is developed. By this tool, company will be able to prepare financial statements in systematic manner and same can be represented to external stakeholders.
Decision information system- This tool is developed for middle level management so they can compile information which they had collected from various sources. With this tool they are able to analyze data in an effective manner in order to draw valid conclusion.
Resource allocation and project costing
An investment into new project can be done effectively by preparing a proper or adequate project plan. Moreover, resources in the form of time and cost should be allocated appropriately so as to achieve long term and short term business objectives (Chen and Ward, 2000). The allocation of resources and various activities involved is presented in table below. Moreover, through list of activities and preparation of Gantt chart, a critical path is identified. In addition, lowest duration and cost involved is estimated.
The report provided a brief overview of all aspects related to business decision making. Moreover, through application of statistical and financial tools the performance of organizations is analyzed. It is seen that coco-cola is a prominent player in soft drinks company and Pepsi although has significant portion of market is far behind Coca-cola. It is estimated that coke is going to achieve high growth however growth for Pepsi tends to stabilize in future.
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