Business Decision Making – Food Discount Retailing in Greater London

Task 1

P1.1 collection of primary and secondary data

Data are considered to be the basic input in any decision making process in business. The collection of primary and secondary data is very essential in order to undertake proper business decision.

The data which is collected for the first time in order to conduct the research is called primary. The primary data helps a researcher to conduct the research by analysing the current data collected from the research.  The primary data collected in the research will help to address the targeted problems. The primary data is useful for current as well as future studies. The primary data collected can be examined and interpreted by the marketing based on their needs. The primary data is considered to be a very essential tool as they are accurate for analysis. However, the collection of primary data requires great effort of the researcher and is quite time consuming. The primary data collection is also expensive

In the course of market research, the plan for collection of primary of consumer behaviour will involve survey questionnaire which is helpful in deriving knowledge on a matter or a process. We will get a number of solutions from the questions placed on the survey conducted, in a survey questionnaire. The questions will be asked to the people targeted and their responses will be counted for the purpose of reaching a decision and thereby after researching it will help the management of WM Morrison to set the plans and ideas thereby.

Different customer bases have been profiled in Yorkshire and London and the growth of the discounters has also been plotted in Greater London. This will help to throw questions on the target users and non-users regarding their primary food destination.

Secondary data can be defined as the data which has been gathered previously for some another purpose. Thus, secondary data is the data which is being reused. The collection of secondary data required less effort of the researcher. The collection of secondary data is time saving and is not expensive. The secondary data can be gathered from internet, books, magazines, journals.

In the current scenario, the management of Morrison’s can gather the secondary data from journals, internet and web about the different ways to provide food discount retailing that will be able to satisfy their customers.

P1.2 survey methodology and sampling frame used for a survey

In relation with the plan selected to undertake the Food Discount Retailing in Greater London, the management can decide to initiate a survey that will accumulate the opinions of the potential users or non-users of Discount Food Retailers. The survey will be initiated rigorously to accumulate and produce the unbiased views of the target people which in turn will help in getting an idea that whether undertaking the Food Discount Retailing in Greater London will be a helpful step to meet the price wars and also the edge of competition (Groves, 2004).

The management have decided to conduct the survey on nearly 200 people including users and non-users of Discount food retailers, and ask them the below selected questions face to face and their views will be accumulated as responses for the research and that will be used for future analysis by the company. A presentable questionnaire has been framed for carrying out the survey. A questionnaire has been prepared to pick the response of 100 randomly selected people. The survey questionnaire will be set in such a way that the people can easily answer them and the questions are not confusing to them.

Sample frame is said to be the selected quantity of the population upon whom the survey will be taken. The sample frame selected for the purpose of conducting the survey is 100 users and non-users (Mäkelä and Huhtanen, 2010).

P1.3 Questionnaire for a survey

A questionnaire is regarded as a set of questions that are mainly used for the purpose of conducting a survey. Designing a questionnaire requires a definite purpose. The questions that are included in a questionnaire are asked to a selected sample population in order to get their opinion, which are very vital for the market (Survey Questionnaire, 1981). The framing of a questionnaire include three important steps, which are mentioned below:

  • Simple and easy to understand
  • Direct
  • Relevant to the issues.

Everything has its advantage as well as disadvantage. In this case, preparing a questionnaire also includes both the advantages and disadvantages. The advantage of using a questionnaire for conducting a survey is that one can ask various questions to the public over a single topic. On the other hand the disadvantage of using questionnaire is that it is a time consuming activity (Brace, 2008).

In this case, the management of WM Morrison is undertaking a survey with the use of questionnaire. It will contain various questions that will be asked to the selected population and mainly the purpose of the questionnaire is to gather the opinion of the sample population regarding their attitude and behaviour of food discount retailing.

For the purpose of knowing the consumer behaviour and attitude towards food discount retailing by WM Morrison in Greater London the following questionnaire is prepared. The survey questionnaire can be presented as follows:

1. Age of the Customer:

  • 18-27
  • 28- 37
  • 38-47
  • 48 and above

2.  Employment status

  • Student.
  • Employed
  • Unemployed.
  • Others.

3. How much you spend for buying the products in Morrison’s in a month (£)?

  • 55-74
  • 75-94
  • 95-114
  • <115

4. Opinion about the products of WM Morrison:

  • Positive.
  • Partly positive.
  • Indifferent.
  • Negative.

5. Do you use the Food Discount Retailing?

  • -Yes
  • -No

6. How convenient is WM Morrison.

  • Extremely convenient.
  • Moderately convenient.
  • Not at all convenient.

7. Whether the prices of the products of WM Morrison is reasonable.

  • Yes
  • No.

8. Opinion about the prices of WM Morrison and whether they are cheaper as compared to its competitors.

  • Yes.
  • Equal to the competitors.
  • No.

9. Whether the promotional schemes of the company are attractive?

  • Yes.
  • No.

10. How likely to recommend about Food Discount Retailing and the products of WM Morrison to other friends and relatives.

  • 0 Not Likely
  • 1 extremely likely
  • 2 Not Yet Planned

Some other direct questions will include social grade, income, resident or work in Greater London, size of the household, presence of children, tenure, main shopper; distance travelled to regular grocery shop; distance travelled to regular food discount retailer etc.; the reasons for using or not using discount food retailers; frequency of shopping at discount food retailer; length of time shopping at discount food retailers; for how long the main shopper has been shopping at discount food retailers; expenditure on groceries and how much is spent at a discount food retailer. These questions will be directly thrown to those interviewees. They will be finally jotted down and will be prepared for research and analysis.

Task 2

P2.1 decision making by summarizing data using representative values

The survey helped to gather a wide range of response from the people. The age group of 28-37 uses the food discount retailing. The survey showed that 30% were positive about the products of WM Morrison’s Plc, 25% gave their preference for being partly positive, 40% mentioned that they are indifferent, 5% mentioned that they were not happy with the products of Morrison’s. When asked about the use of the food discount retailing, 95% of the sample frame said yes while the rest 5% said no.

When asked about the convenience of WM Morrison’s, 50% found it extremely convenient, 30 people said that it was moderately convenient, 20%said that it was not at all moderate. 75% of the sample frame said that they were satisfied with the price and the rest 25% said that they were not satisfied with the price. The sample frame was asked whether the price of the products in WM Morrison’s is reasonable or not when compared with their competitors, 45% of the sample frame said that the price of products in Morrison’s were cheaper, 40% mentioned that they were same and the rest 15% mentioned that the price in Morrison’s Plc is expensive as compared to its competitors. When the sample frame was asked whether the promotional scheme of the company was attractive or not, 80% 0f the sample frame said yes and the rest said no. When they were asked that they will recommend the products of Morrison’s to their relatives, 10% not likely, 85% said that they will while the rest 5% said that had not yet planned (Durbach and Stewart, 2009).

The information for decision making using Mean, Median and Mode by utilising he data obtained from the survey is provided below:

  Age    
       
18 28 39 49
20 29 40 50
23 31 41 53
24 32 43 67
25 35 44 60
18 28 39 49
20 29 40 50
21 31 42 53
26 32 43 67
25 35 44 60
18 28 45 31
20 29 46 33
23 30 41 35
26 32 43 28
25 35 44 29
18 33 47 34
20 29 40 28
23 31 41 29
22 32 39 31
20 33 44 37
18 28 33 35
20 29 36 35
23 34 29 28
26 32 32 29
25 35 35 33
       
Expenditure      
55 75 96 116
57 80 99 117
58 81 100 119
62 82 101 120
74 89 113 135
55 75 96 150
69 80 99 118
60 81 100 120
62 90 101 125
74 78 113 126
69 75 109 116
57 80 107 117
60 81 100 119
62 82 101 120
74 89 113 135
55 87 104 150
57 86 99 118
71 81 108 120
62 82 101 125
74 89 113 126
88 75 82 80
75 80 89 81
80 81 81 93
81 82 82 80
90 90 75 89
Mean 33.7
Median 32
Mode 29
Mean 91.29
Median 87.5
Mode 81

P2.2 analyse the results

The median calculated showed that the management need to focus on the age group 28-37 in order to increase their sale revenue. As discount food retailing is favoured by 95% of the sample frame, the management should focus to implement this system in this organization. The survey also helped to find out that majority of the people showed indifference to the product quality of WM Morrison’s. As a result, Morrison’s should take steps in order to implement their product in order to upgrade the level of customer satisfaction. However, the customer is satisfied with the product prices.  

P2.3 measures of dispersion

The standard deviation of the age group is given below:

Standard Deviation 10.60446

 The standard deviation of the consumer expenditure on the products of the consumer (Morris, 1970) is shown below:

Standard Deviation 22.15843

P2.4 quartiles, percentiles and the correlation coefficient

Below are the calculations of the Inter-quartile range and also the explanation of the use of quartiles, percentiles and the correlation coefficient of the age group and the consumer expenditure is given below:

Quartiles of Age group

Quartile 1 27.5
Quartile 2 32
Quartile 3 40

 Quartiles of Consumer expenditure

Quartile 1 75
Quartile2 87.5
Quartile 3 108.25

Correlation Coefficient

Correlation 0.737558

Quartiles and percentiles support the management to derive a clear view of the segments of the company. A correlation coefficient can be said as the statistical measurement technique which measures the level of change in the value of one variable that anticipates the variability in the value respective to another variable. If there is a positive correlation within two separate variables then the variation in the variable will change the value of another variable in the same direction while if correlation is negative within two variables then such a change in the value of one variable will result in the change in value of another variable in an opposite direction.

The definition of correlation coefficients is made between the values of +1 and -1 which suggests that:

  1. When the value is +1 it implies two variables have perfect positive correlation
  2. When the value is -1 then it can be said that the variables have perfect negative correlations within them.

A business gets a major help with the support of correlation coefficient as well as from quartiles and percentiles. They help in analysing various financial data needed for the preparation of business decisions; thereby they help in various businesses to grow and bloom (Thomas, 1989).

Task 3

P3.1 GRAPHS

1. Age group

18-27 25
28-37 45
38-47 20
<48 10

2. Employment status

Employed 50
Student 30
Unemployed 20

3. Expenditure

£55-74 20
£75-94 40
£95-114 20
<£115 20

4. Opinion of product

positive 30
partly positive 25
Indifferent 40
Negative 5

5. Use of Food retailing discount

Yes 95
No 5

6.  Convenience of WM Morrison

Extremely convenient 50
Moderately convenient 30
Not at all convenient 20

7. Reasonable price

Yes 75
No 25

8. Opinion of Price

Yes 45
Equal to the competitors 40
No 15

9. Attractive schemes

Yes 80
No 20

10. Recommendation to others

0 Not likely 10
1 Extremely Likely 85
2 not yet planned 5

P3.2 trend lines

The straight line that helps in the connection of two points or more price points and then further extends to predict the future assumption is called trend line.  The trend line is mainly used to forecast the profit, sales, customer satisfaction, expenditure etc. by an organization. The trend line is considered to be a significant tool used for technical analysis for recognizing the trend as well as the conformation of the forecast (Huang and Kahraman, n.d.). The R2 equation in trend line is of immense importance as it helps the management of the business organization to rely on their forecast. If the value of R2 is closer to 1, then the forecast will be true and if the value of R2 is not closer to 1 then the forecast is not reliable.

Morrison

The trend line above represents the sales revenue of WM Morrison’s Plc. Here, as the R2 equation is closer to 1 so it can be concluded that the forecast is reliable.

The trend line above represents the sales revenue of JS Sainsbury. Here, as the R2 equation is closer to 1 so it can be concluded that the forecast is reliable.

The trend line above represents the sales revenue of Lidl Ltd. Here, as the R2 equation is closer to 1 so it can be concluded that the forecast is reliable.

The trend line above represents the sales revenue of Aldi. Here, as the R2 equation is closer to 1 so it can be concluded that the forecast is reliable.

P3.4 Business Report

It has been observed that the food discount retailing in Greater London has increased. This increase is due to the increase in the number of stores as well as favourable trading condition has led to the global financial problems and recessions mainly by the discounters in the late 20th century. This report shows the ways in which Morrison can expand in the near future.

As per the information it is clear that WM Morrison in recent days is facing huge threats with regard to the discounted food retailer. The competition faced by Morrison is high and it has to undertake various researches in the market about the discount food retailers to maintain its position in the market. The company has successfully undertaken the researches that would help them to survive in this global market.

Hence, the company has made uses of various data collection method that would give the company a scope to penetrate though the high competition in the market.

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Task 4

P4.1 usage of information processing tools

Information Technology has evolved as the most valuable inventions in the modern times. In most of the aspect of the modern world IT is required to co-ordinate the infrastructure of the organization in a fast and timely manner.

The evolution of IT has made the managers in the organization for the execution of proper goals and targets in an effective way so as to get the proper impact of the resource in a timely manner. The IT helps the organization to accumulate the data and the co-ordination of the data in the effective place as per the requirement of the organization (Salvador and Ikeda, 2014).

There are total five categories of information processing systems used by an organization in order to take various operational, strategic and tactical decisions making. The five different information processing systems are:

  • Transaction Processing System
  • Decision Support System
  • Management Information System
  • Executive Information System
  • Expert System (Elliott and Wasley, 1975).

P4.2 the critical path

Critical Path is 1>5>8>9>10= 22 Days

P4.3 usage of financial tools for decision making

Year Net Cash flow  A(£’000) Net Cash flow B(£’000) DCF@10% DCF A DCF B
0 (500.00) (500.00) 1.00 (500.00) (500.00)
1 100.00 50.00 0.91 90.91 45.45
2 200.00 150.00 0.83 165.29 123.97
3 400.00 300.00 0.75 300.53 225.39
4 300.00 400.00 0.68 204.90 273.21
5 200.00 300.00 0.62 124.18 186.28
        385.81 354.30
           
IRR 33.21% 28.77%      
NPV 385.81 354.29      


An organization considers a project with a positive NPV. A positive NPV means that the returns generated by the project would exceed the investment. However in case of mutually exclusive projects where the organization has to choose between two projects due to constraint of funds or resources, the organization should choose the project which yields the highest value. In other words the organization should choose the project which has the highest NPV and IRR. AS per the table above project A should be chosen over project B as the same has a higher NPV and IRR. A higher NPV and IRR imply that the organization would be able to increase their worth.

Conclusion

From the above discussion and the graphs that have been presented shows that the company WM Morrison has been successfully understood the consumer behaviour and attitudes towards the food discount retailing. In order to meet the objectives the company has undertaken various strategies that would help them to survive in the high competitive market.

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