Measuring Business Interruption Losses - Research Paper Example

Business Decision Making [The of the will appear here] [The of the id will appear here] [The of the will appear here] [The name of the course number will appear here] Scenario 1: Research Plan Background Facelift Bungee is an innovative anti-ageing product that has developed a great liking in USA. The owner and developer of the product, Kimberly Aschauer developed the product keeping in mind the increasing demand for such products. This product is shaped in the form of a thread with two braids at the end. These braids are attached on either side of the face and hold the face tightly to hide wrinkles. This product can be used occasionally or daily depending on the need of the consumer. Considering the success of the product in USA, the owner is thinking of expanding the product in UK on a large scale. Before this, it is important to understand the UK market. For this market research would be conducted in UK with London chosen as the designated city for the research. London would be used as a point of reference for the entire UK market. Rationale Each market has a different set of consumers who have their own unique needs, cultures, ideas etc. For a product to be successful in a market, it should connect with the consumer. This requires understanding of the consumer through market research. Around 70 percent of the products launched in the market fail to be successful because the marketers were unable to properly understand the market for their product (Schneider and Hall, 2011). Objective of research The objective of the research is to understand the viability and attractiveness of Bungee Facelift in the UK market. The research would try to gain an understanding of the target market for the product. Methodology For this research, a questionnaire would be developed. This questionnaire would be distributed primarily among women over the age of 30. The preferred location for the distribution of questionnaire would be malls, convenience stores, beauty salons etc.; areas where there is a better likelihood of contacting the target market. The questionnaire would be kept short and simple so as not to burden the respondents (Crouch and Housden, 2012). Data Analysis The data would be analyzed through SPSS software. SPSS software has gained popularity in the recent years. This software allows researchers to tabulate large amount of data quickly through a wide range of options and tests. Timeframe and Budget This research would be conducted over a period of 20 days. The five days would be allocated to designing the research and the questionnaire. The actual research would be carried out in 10 days. In the last 5 days, the data collected from the research would be compiled and analyzed. A report of this analysis would also be prepared during the same time. The budget for this research would be allocated as 500 dollars. This would be used to hire market researchers to conduct the research. The benefit of using external researchers is that it saves time for the company and does not require the company to buy the required research software. Sample Questionnaire Name: _______________________________________________________ Contact number (Optional): _______________________________________________________ Email address (Optional):_______________________________________________________ 1. YOUR GENDER a) MALE b) FEMALE 2. INCOME GROUP YOU BELONG TO (Yearly income) a. less than 5,000 pounds b) 5,000-10,000 pounds c) 10,000-20,000 pounds d) more than 20,000 dollars 3. How often do you shop for cosmetics or beauty product? a) Daily b) Weekly c) Monthly d) Rarely 4. How often do you try out a new product? a) Frequently b) Occasionally c) Rarely 5. What influences your decision to try out a new product? a) Promotional Activity b) Packaging Design c) Celebrity Endorsement d) Word of Mouth 6. Have you ever considered buying an anti-ageing cream? a) Yes b) No 7. Have you ever bought an anti-ageing cream? a) Yes c) No 8. Are you satisfied with the quality of these products? a) Yes b) No 9. What improvement should be made in such products (YOU MAY CHOOSE MORE THAN ONE)? a) Design b) Quality c) Price Thank you for your cooperation! Task 2: Mean, Median and Mode and advise him on the best price range. Mean The formula for Mean in Grouped Data is ∑fx/∑f F X (Midpoint) Fx 12 25 300 15 35 525 16 45 720 20 55 1100 14 65 910 10 75 750 7 85 595 6 95 570 ∑f= 100 ∑fx=5470 Thus Mean is 5470/100 Mean= 54.7 Median The formula for Median in Grouped Data is = L + h/f (n/2 - c) where:  L is the lower class boundary of median class  h is the size of median class f is the frequency of median class  c is previous cumulative frequency of the median class  n is the total number of observations Therefore using the formula, the Median Class is The Median Class in 50-60,  50+10/20(100/2-43) Median=53.5 Mode The formula for Mode is Mode = L + [(fm-f1) / (fm-f1) + (fm-f2)] x h  where:  L is the lower class boundary of modal class  fm is the Frequency of the model class  f1 is the previous frequency of the model class  f2 is the next frequency of the model class  h is the size of model class Model class is a class with the maximum frequency, thus Modal Class= 50-60 Now, Mode is 50+ [(20-16)/ (20-16) + (20-14)] x10 Mode=54 Considering the above data, the best price range would be 50-60 dollars. ii. Range and Standard Deviation Range: Highest Value- Lowest Value 100-20= 80 Thus, Range is 80 Standard Deviation F X (Midpoint) Fx (x-Mean)2 f(x-Mean)2 12 25 300 882.09 10585.08 15 35 525 388.09 5821.35 16 45 720 94.09 1505.44 20 55 1100 .09 1.8 14 65 910 106.09 1485.26 10 75 750 412.09 4120.9 7 85 595 918.09 6426.63 6 95 570 1624.09 9744.54 ∑f= 100 ∑fx=5470 ∑=39691 Standard Deviation =√39691/99=√400.9=20.03 Thus, Standard Deviation is 20.03 iii. 25th Percentile (Lower Quartile) and 75th Percentile (Upper Quartile) and explain the use of Percentile for his store. 25th Percentile The Formula for Lower Quartile is: Q1= LQ1 [(n/4-f)/FQ1] x i Where, LQ1is the lower class boundary of the Q1class n is the total number of observations F FQ1is the frequency of the Q1class I is size of the Q1class Thus, Q1= n/4 100/4=25 Thus Q1 class is 30-40. Putting this, in the above formula we get: 30+ (12.5-12/15)10 25th Percentile: 33.3 75th Percentile The Formula for Upper Quartile is: Q3= LQ3 [(3n/4-f)/FQ3] x i Where, LQ3is the lower class boundary of the Q1class n is the total number of observations FQ3is the frequency of the Q1class I is size of the Q1class Thus, Q3= 3n/4 300/4=75 Thus Q3 class is 60-70 Putting this, in the above formula we get: 60+ (75-20/14)10 75th Percentile: 99.3 These values would help the manager is deciding the price range of his products. He should ensure that the prices of his products are between the ranges of the given percentile. iv. Inter-quartile range The formula for Interquartile range is: Q3-Q1 99.3-33.3= 66 Interquartile range is 66 Calculate correlation coefficient using the additional information provided and discuss it advantages to a business. For the purpose of clarity, we would assign x as the original data and y as the additional data. The mean of x is already known. It is 54.7 The mean of y is as follows F X Fx 1 20 20 4 40 160 6 50 300 6 55 330 10 60 600 12 70 840 13 80 1040 14 90 1260 15 100 1500 ∑f= 81 ∑fx=6050 Thus Mean of y is 6050/81= 74.69 A= x-X B= y-Y A×B A2 B2 -29.7 -54.69 1624.293 882.09 2991.00 -19.7 -34.69 683.39 388.09 1203.40 -9.7 -24.69 239.49 94.09 609.60 0.3 -19.69 -5.907 .09 387.70 10.3 -14.69 -151.31 106.09 215.80 20.3 -4.69 95.20 412.09 22.00 30.3 5.31 160.893 918.09 28.20 40.3 15.31 616.99 1624.09 234.40 0 25.31 0 0 640.60 ∑=3263.039 ∑=4424.72 ∑=6332.7 Correlation Coefficient= 3273.039/√ (4424.72+6332.7) = 31.21 Thus, Correlational Coefficient is 31.21 Correlational Coefficient has a number of advantages to offer to businesses. These include: 1. They allow businesses to study links between different variables that would be otherwise difficult or even impossible to understand. Numerical data is available to the users which is more easier to understand; 2. They allow large amounts of data to be easily understood by managers; 3. They allow business to understand how a variable affects another. For instance, they allow business to evaluate the effect of sales return on products sold (Gaughan, 2009). Task 3: Line graph for advertising and sales figures given from 2000 to 2014 Bar Chart for net income generated by the five branches of the company Pie Chart for net income generated by the five branches of the company Histogram Scatter graph of advertising and sales figures 3.2 Trend line on Scatter Graph 3.3 Business Presentation in PPT 3.4: Business Report Introduction Apparel Exporter in London is company that exports clothes from Spain, Italy and France to London. The company has recently compiled data to better understand the position of the company and to plan a way ahead for the future. The managing director of the company understands that the company is experiencing growth since its inception in 2000. Now 14 years later, the company has compiled data regarding its sales, advertising etc. in order to prepare the company for the future. Report Objective The Objective of this report is to evaluate and present the data to the managing director so that he may be more prepared for the future. The idea is to allow the director to develop an effective strategy. Current Scenario Advertising and Sales The sales for the company have continued to increase since 2000. This has been achieved as the company has invested in advertising its products. With an increase in advertising, sales of the company has increased proportionally. A projection of the future suggests that company sales would cross the 50, 00,000 pounds figure. For this to occur, the company would have to increase its advertising expenses to more than 1, 50,000 pounds. Income Distribution by Stores At present, the most profitable store of the company is location in London. The store earns a net income of 2, 40,000 pounds. This is followed by Manchester, Birmingham, Bristol and Leeds. However, it should be noted that all stores of the company are showing profits and bringing in income for the company. Promotional Activity The company periodically holds promotions in its stores. These promotions also have helped in providing insightful data on the consumers. Data suggests that consumers are more willing to buy products priced between the ranges of 20-40 pounds. As the price of the product increases, customer spending decreases. This suggests that customers are price conscious. Recommendation and Conclusion The compiled data suggests a bright picture for the company. Sales for the company are increasing and are expected to increase in the coming years. In order to maintain this growth, the company should continue to invest in advertising its products. Right now, stores outside London are earning fewer profits than stores in London. In order to increases their sales, the company should increase promotional activities in such localities. The company should also reconsider its pricing strategies. It should increase its product range for products priced between the ranges of 20-40 pounds. It should maintain a low inventory of products above the range of 60 pounds since purchases of such products is usually low. Task 4A i. Prepare a network diagram for activities using Microsoft Project or Open Project. (Attached Project File) ii. Calculate the Project Duration. The project duration would be 90 days. iii. Clearly mark the Critical Path (Shown in the Project File) iv. Prepare a Gantt Chart and state the benefits of using it as a Project Management Tool. (Attached Project File) Benefits of Gantt chart The Gantt chart is used commonly by project managers. It provides a variety of benefits to project managers and projects. These include: 1. The chart allows an easy and clear picture of the entire project. It allows even non-managers to understand the project easily; 2. It improves communication and trust among the team members. This increases accountability of team members for their respective tasks; 3. The chart improves time management of the project because every team members is aware of the time duration of each component of the project and the project as a whole; 4. It allows managers to monitor the project. It allows managers to evaluate the difference between actual and planned duration of activities and thus ensure efficiency in the project (Milosevic, 2003) v. Prepare a table showing the Earliest Start Time (EST) and the Latest Finish Time (LFT). Activity Early Start Time Latest Finish Time Physical Preparation 1 4 Organizational Planning 5 7 Personal Selection 5 40 Equipment Installation 8 22 Personal Training 23 26 Detailed System Designing 27 35 File Conversion 36 44 Establishment of Standards 41 44 Program Preparation 41 50 Program Testing 22 30 Finishing Documentation 50 70 Follow up 70 90 Task 4B I. Calculate the NPV and IRR of the proposal. Cost of Capital 12% Cost of Machine $ (1,000,000) Year 1 Year 2 Year 3 Year 4 selling price/unit $ 20.00 $ 20.80 $ 21.63 $ 22.50 V.Cost/unit $ 12.00 $ 12.60 $ 13.23 $ 13.89 Units 35000 53000 75000 36000 Selling Price $ 700,000 $ 1,102,400 $ 1,622,400 $ 809,902 Cost (V) $ 420,000 $ 667,800 $ 992,250 $ 500,094 Total Cash Flow (Reve-cost) $ 280,000 $ 434,600 $ 630,150 $ 309,808 Total Cash Flow (Reve-cost-cost of machine) $ (720,000) $ 434,600 $ 630,150 $ 309,808 NPV= $349, 02.28 IRR is 43% II. Comment on the findings. Since the NPV is positive, it shows that investing in the new machine would generate value for the company. The company would enjoy profits if it invests in the new machine. Therefore, investing in the machine would be feasible for Draco Co. References Crouch, S. and Housden, M. 2012. Marketing Research for Managers, NY: Routledge Gaughan, P. 2009, Measuring Business Interruption Losses and Other Commercial Damages, NJ: John Wiley & Sons Milosevic, D. 2003, Project Management ToolBox: Tools and Techniques for the Practicing Project Manager, NJ: John Wiley & Sons Schneider, J. and Hall, J. 2011, Why Most Product Launches Fail, Harvard Business Review, Retrieved from http://hbr.org/2011/04/why-most-product-launches-fail/ Read More