Homework Writing
Business Analytics and Decision making
19 November 2020
Assignment Overview
You are working as a data analyst for the Excellent Consulting
Group. Your client, Buddy’s Floor Barn, wants to analyze how they are doing in
their 18 locations in four regions across their 10 product lines over the last
3 quarters. Each Regional Manager has compiled the data for his/her region
showing the sales revenue for each of the five product lines (premium flooring)
for each of the first three quarters.
Case Assignment
Assemble the data from each Store Manager into a data table in
list format. And then generate Pivot Table Report. Use this report to analyze
the data to answer Buddy’s questions. Write a business report to Buddy’s Floor
Barn that provides the answers and discusses the issues.
Data: attachment-- Case 1-Data.xlsx with
the data from the four regional managers for the first three quarters showing
sales of their five premium flooring products.
Assignment Expectations
Analysis:
·
Accurate and complete analysis in Excel using the MADM model and
theory.
Written report:
·
Length requirements = 4–5
pages minimum(not including Cover and Reference pages)
·
Provide a brief introduction/ background of the problem.
·
Complete and accurate Excel analysis.
·
Written analysis that supports Excel analysis, and provides
thorough discussion and analysis of assumptions, rationale, and logic used.
· Complete, meaningful, and accurate recommendation(s).
Sample written Paper
urate Excel anIntroduction
and Problem Identification
The data analysis conducted for
Buddy’s Floor Barn reveal decreasing sales revenue across the regions in all
the quarters. This underscores the need to strategize and analyze various
recommendations that increase the profitability of the company by maximizing
its market share and sales revenue. In order to maximize the sales revenue, the
Company should invest more so as to expand its business reach into new markets
or increase their market shares in their current stores locations.
Risk
Analysis on Investment Decisions
The current markets are highly
marked by ever-changing technological advancements. The Buddy’s Floor Barn
needs to factor in the volatility of technology before adopting technology
solutions in their business. Moreover, technology is quickly rendered obsolete
thus today’s solutions might not be empirical in tomorrow’s markets. Thus
Buddy’s Floor Barn needs to invest in tenable and futuristic technology
solutions to increase the sales (Keeney & Raiffa, 1976). The use of
sensitive analysis, adopting online marketing and online payment solutions
appeals to more consumers.
The assumption that aggressive
marketing and easy payment solutions based on technology, acts as a pull factor
that the adoption of expertise has the potential of increasing the net value
and sales revenue generated. Additionally, technology increases competitiveness
of the company since it enables the company to engage more with its consumers
as well as increase visibility of the company. An increase in 10% of sales
volume across all the four regions would translate into revenues totaling
$13073084.20 as opposed to the current annual sales revenue of $11884635. As
seen above, Buddy’s Floor Barn is better off in terms of cash flow by adopting
technology in its operations.
Technology can also bring mixed
results depending on its source viz in-house developed solutions and vendor
solutions. In-house solutions are largely customized to bridge an existing gap.
Unlike a vendor solution, an in-house solution benefits from an insider’s perspective
of the workings of the company. Additionally, there is a full support system in
case of any technical mishap. On the other hand, a vendor generated solution is
rarely tailored for a specific problem. However, vendor solutions tend to be
cheaper and easy to learn compared to in house solutions. The cheap cost of
procuring vendor solutions and ease of learning reduces the Company’s
expenditure- a requisite factor in realizing profits.
The expansion of Buddy’s Floor
cannot be expected to bring 100% unit sales per annum immediately. Given that
factors such as the purchasing power of the population and location of a store
can largely influence market dynamics, Buddy’s should only expand in regions
where it has experienced higher sales revenue. This means that the South and
West Regions are the most viable areas into which Buddy can expand into. In
projecting the sales, a sensitivity analysis produces tentative results in
different scenarios. For instance, lowering sales by 50% into new markets
decreases the net present value making expansion unviable. Maintaining the
current stock does not attract new customers.
A large stock with a wide product
variety increases consumer choice and translates to increased sales output.
Coupled with the successes of the stores in the West and South, expanded stores
with a wide variety of products attract more consumers leading to increase in
projected sales by 25%. Expanding existing stores increases sales and reduces
running costs that would be incurred by launching entirely outlets. The optimal
decision thus is not expansion into new market frontiers but rather expansion
in respect of enlarging existing stores and stock.
The regional managers are integral
in the profitability and sustainability of the Company. Goodwin and Wright
(2004) hold that managers should exhibit excellent managerial skills, prudent
business decisions and exceptional interpersonal skills especially when dealing
with the employees. Each manager should be flexible enough to identify the most
widely sold premium product and direct more funds into the product. A
sensitivity analysis that captures the net present value with changes in
variable costs is requisite to identifying the product to trade in.
Based on the assumption that bamboo,
maple and mahogany are the favorite and most consumed type of flooring,
increasing the volumes of these units would produce a positive net present
value. I recommend that the Company conducts a more detailed forecast and
profitability exercise to test the viability of increasing the bamboo units in
the first quarter, mahogany in the second quarter and cherry in the third
quarter. This is based on the fact that the volume of flooring has its own peak
season as seen in the table below:
|
|
Bamboo(1st Quarter) |
Mahogany(2nd Quarter) |
Cherry(3rd Quarter) |
|
East |
208843 |
208301 |
202284 |
|
South |
241860 |
203954 |
229197 |
|
Mid states |
208942 |
208942 |
165731 |
|
West |
221539 |
231173 |
215560 |
To pump up its competitiveness,
Buddy’s Floor needs to expand its services through value-addition (Vincke,
1992). Value-added services translate into increases in revenue and profits.
The Company should start free courier services to its consumers. The delivery
services acts as an incentive for more customers. While the free delivery
services would undoubtedly involve substantial transport fee, it is projected
that the free delivery would lead to a 10% increase in sales volume.
Conclusion
Buddy’s Floor Barn must initialize
strategies that will spur it into economic growth. Expansion is an optimal
choice since it generates increased volume in sales. Coupled with tech
solutions, the Company is strategically situated to offer exciting and
innovative quality services to its customers while remaining profitable. To
reverse the negative sales revenue, the Company needs to expand and widen the
application of technology in its operations.
Overall, I
recommend that Buddy’s conduct periodical evaluations to assess the
implementation of the various proposals put forward. Where proposals have
adverse effects on volume of sales, the project should altogether be dropped if
it proves unviable and unprofitable.
Reference
Goodwin, P., & Wright, G.
(2004). Decision Analysis for Management Judgement. Wiley: Chichester.
Kahneman, D., & Tversky, A. (1979). Prospect theory:
An analysis of decision under risk. Econometrica:
Journal of the Econometric Society, 263-291.
Keeney, R.L., & Raiffa, H.
(1976). Decisions with Multiple Objectives: Preferences and Value Tradeoffs.
Wiley: Chichester.
Vincke, P. (1992). Multicriteria decision-aid. John Wiley & Sons.