Research for Managerial Decisions

Specific Instructions:

 Answer all the four questions.

 Marks allotted 100. Each Question carries equal marks.
 Word limit is 250-300 words
General Instructions:
 The Student should submit this assignment in the handwritten form (not in the typed format)
 The Student should submit this assignment within the time specified by the exam dept
 Each Question mentioned in this assignment should be answered within the word limit specified
 The student should only use the Rule sheet papers for answering the questions.
 The student should attach this assignment paper with the answered papers.
 Failure to comply with the above Five instructions would lead to rejection of assignment.
_____________________________________________________

Que 1: Campus Enterprises had formed a partnership with a popular pizza restaurant for the purpose of
selling freshly made pizzas from specially heated trucks on the campus of large public school. The trucks
arrived at numerous convenient locations across the campus at specified timings. Freshly made pizzas
were available from the trucks at prices comparable to a similar pizza delivered to the buyer’s place of
residence. Mr. Sharmesh Sharma, VP, Sales at Campus Enterprises felt that the sales of pizzas from the
trucks were less than what he had expected.

Answer: Any decision regarding the operations of a firm. These decisions include setting target growth
rates, hiring or firingemployees, and deciding what products to sell.

Decision making is crucial for running a business enterprise which faces a large number of problems
requiring decisions.

Which product to be produced, what price to be charged, what quantity of the product to be produced,
what and how much advertisement expenditure to be made to promote the sales, how much investment
expenditure to be incurred are some of the problems which require decisions to be made by managers.

The five steps involved in managerial decision-making process are explained below:

 Establishing the Objective- The first step in the decision-making process is to establish the
objective of the business enterprise. The important objective of a private business enterprise is to
maximise profits. However, a business firm may have some other objectives such as
maximisation of sales or growth of the firm.

But the objective of a public enterprise is normally not of maximisation of profits but to follow
benefit-cost criterion. According to this criterion, a public enterprise should evaluate all social
costs and benefits when making a decision whether to build an airport, a power plant, a steel
plant, etc.
 Defining the Problem- The second step-in decision-making process is one of defining or
identifying the problem. Defining the nature of the problem is important because decision making
is after all meant for solution of the problem. For instance, a cotton textile firm may find that its
profits are declining.

It needs to be investigated what are the causes of the problem of decreasing profits. Whether it is
the wrong pricing policy, bad labour-management relations or the use of outdated technology
which is causing the problem of declining profits. Once the source or reason for falling profits has
been found, the problem has been identified and defined.

 Identifying Possible Alternative Solutions (i.e. Alternative Courses of Action)- Once the
problem has been identified, the next step is to find out alternative solutions to the problem. This
will require considering the variables that have an impact on the problem. In this way,
relationship among the variables and with the problems has to be established.

In regard to this, various hypotheses can be developed which will become alternative courses for
the solution of the problem. For example, in case of the problem mentioned above, if it is
identified that the problem of declining profits is due to be use of technologically inefficient and
outdated machinery in production.

 Evaluating Alternative Courses of Action- The next step in business decision making is to
evaluate the alternative courses of action. This requires, the collection and analysis of the relevant
data. Some data will be available within the various departments of the firm itself, the other may
be obtained from the industry and government.

The data and information so obtained can be used to evaluate the outcome or results expected
from each possible course of action. Methods such as regression analysis, differential calculus,
linear programming, cost- benefit analysis are used to arrive at the optimal course. The optimum
solution will be one that helps to achieve the established objective of the firm. The course of
action which is optimum will be actually chosen. It may be further noted that for the choice of an
optimal solution to the problem, a manager works under certain constraints.

The constraints may be legal such as laws regarding pollution and disposal of harmful wastes; the
way be financial (i.e. limited financial resources); they may relate to the availability of physical
infrastructure and raw materials, and they may be technological in nature which set limits to the
possible output to be produced per unit of time. The crucial role of a business manager is to
determine optimal course of action and he has to make a decision under these constraints.

 Implementing the Decision- After the alternative courses of action have been evaluated and
optimal course of action selected, the final step is to implement the decision. The implementation
of the decision requires constant monitoring so that expected results from the optimal course of
action are obtained. Thus, if it is found that expected results are not forthcoming due to the wrong
implementation of the decision, then corrective measures should be taken.

However, it should be noted that once a course of action is implemented to achieve the
established objective, changes in it may become necessary from time to time in response in
 changes in conditions or firm’s operating environment on the basis of which decisions were
taken.

Small business owners and managers make decisions that affect everyday operations and long-term
profitability. These decisions typically involve making choices to achieve desired outcomes. For example,
a franchiser may decide between two overseas locations for its first overseas expansion, or a company
president may decide how to respond to a sales slowdown. The factors affecting decision-making include
economic conditions, competitive environment and organizational culture.

Cost Benefit

The cost-benefit decision-making approach involves evaluating each alternative on its monetary costs and
benefits. However, benefits and costs can stretch out over several years. This means that the net present
value of each alternative needs to be calculated, and the alternative with the highest net present value is
selected. The net present value is the sum of future cash flows discounted back to the present using a
suitable discount rate, which could be the company's target rate of return or the three-month U.S. Treasury
bill rate plus a discount factor. Cash flows equal benefits minus costs. Cash flow is negative if costs
exceed benefits; otherwise, it is positive.

Que 2: Create a Constant Sum Scale for each one of the following. Marks would be allotted on the basis
of the quality and exhaustiveness of the attributes identified by the candidate.

a. Tennis Wear

b. Toilet Soap

c. LCD TV

d. Laptop

e. Hand Sanitizer

Answer: b) Toilet Soap- In constant sum scaling, respondents allocate a constant sum of units, such as
points, dollars, or chips, among a set of stimulus objects with respect to some criterion. As shown in
Figure, respondents may be asked to allocate 100 points to attributes of a toilet soap in a way that reflects
the importance they attach to each attribute. If an attribute is unimportant, the respondent assigns it zero
points. If an attribute is twice as important as some other attribute, it receives twice as many points. The
sum of all the points is 100. Hence. the name of the scale.
The attributes are scaled by counting the points assigned to each one by all the respondents and dividing
by the number of respondents. These results are presented for three groups. or segments, of respondents in
Figure. Segment I attach overwhelming importance to price. Segment II considers basic cleaning power
to be of prime importance. Segment III values lather. fragrance. moisturizing. and cleaning power. Such
information cannot be obtained from rank order data unless they are transformed into interval data. Note
that the constant sum also has an absolute zero-10·points are twice as many as 5 points, and the difference
between 5 and 2 points is the same as the difference between 57 and 54 points. For this reason, constant
sum scale data are sometimes treated as metric. Although this may be appropriate in the limited context of
the stimuli scaled, these results are not generalization to other stimuli not included in the study.

Hence, strictly speaking, the constant sum should be considered an ordinal scale because of its
comparative nature and the resulting lack of generalization. It can be seen that the allocation of points in
Figure is influenced by the specific attributes included in the evaluation task.

The main advantage of the constant sum scale is that it allows for fine discrimination among stimulus
objects without requiring too much time. However, it has two primary disadvantages. Respondents may
allocate more or fewer units than those specified. For example, a respondent may allocate 108 or 94
points. The researcher must modify such data in some way or eliminate this respondent from analysis.
Another potential problem is rounding error if too few units (e.g., points) are used. On the other hand, the
use of a large number of units may be too taxing on the respondent and. cause confusion and fatigue.

Que 3: Before we start performing the research, the following 6W’s have to be mandatorily clear in the
researcher’s mind: Who, What, When, Where, Why, Way. Mention the 6W’s when you have to perform a
research to know the consumer perception of the respondents for Shoppers Stop.

Answer:

Que 4: The school is divided into 5 different blocks. Sharma could arrange from the school authorities the
figure on average expenditure done by stents in each of the blocks. Below are reproduced the figures:
 Block Number Frequency of Pizza Monthly personal
Consumption per Expenditure
Month (Average)
(in Rs.)
1 200 200
2 100 200
3 300 300
4 600 400
5 400 400

Perform the following instructions:

A. What is the advantage of a Regression Analysis over Correlation Analysis?

B. Develop the regression equation for the given situation.

C. What would be the sales of the pizza if average Monthly personal Expenditure for a specific
block was Rs. 800?