Sainsbury BDM Assignment

 


Sainsbury BDM Assignment





Contents












Task-1

Data collection

Data collection process contains the heart of any research whether it is primary data collection or secondary data collection. In order to collect the data there are two important factors which needs to be taken care which are process through which data would be collected and sampling method through which samples for data collection would be chosen among the entire population. There are two objectives for the present research and first aim of the present research is to assess customer satisfaction for the products & services offered by Sainsbury. Sainsbury has been expanded its stores into entire UK hence taking samples from entire UK would be appropriate methodology for carrying out the research (Baumgartner & Steenkamp, 2001). There can be two methods for data collection which are surveys and online data collection. Collecting data through physical contact by the Sainsbury would be better option as with the help of physical contact it would be easy for the organization to control sample size from the particular geographic locations. Entire UK can be considered to be allocated into 15 separate blocks and every block is supposed to be consisting of 10 branches from where data would be collected equally so as to avoid biasness in data. From each block only 10 store would be chosen as the representative of all stores where in sampling would be done to collect the data, at these store 500 customers would be sampled and total of 75,000 customers would be contacted in order to collect the data.
In order to carry out the research pertaining to the profitability of the organization secondary research would be carried out which involve collection of data through internal sources of the organization. For analysis of second factor internal records of the organization would be explored for last 24 years (Alexander, 2001). Research conducted would be qualitative as well as quantitative in nature and major source of data collection would be the annual reports of the organization.

Questionnaire for Customer satisfaction assessment

Questionnaire designed for assessments of the customer satisfaction require rating on a scale of 1 to 5 where in 5 would represent the extremely satisfactory/ convenient situation for the customers while 1 represents extremely inconvenient/ unsatisfactory situation. Below are the set of questions which would help in order to assess customer satisfaction towards products & services of Sainsbury (Allen& Seaman, 2007):
1.    Rate the sectioning and goods availability in Sainsbury store on 1 to 5 scale
1
2
3
4
5

2.    Rate the services changes brought in by Sainsbury in recent time to enhance customer satisfaction such as home delivery, online services and discounts
Home delivery
1
2
3
4
5
Online services
1
2
3
4
5
Discounts
2
2
3
4
5

3.    Rate the customer service quality at Sainsbury store
Highly satisfactory
satisfactory
Neutral
dissatisfactory
Highly dissatisfactory

4.    Please rate the quality of goods sold by Sainsbury at their store
Highly satisfactory
satisfactory
Neutral
dissatisfactory
Highly dissatisfactory

5.    Rate store environment and ability of store to accomplish customer needs
Highly satisfactory
satisfactory
Neutral
dissatisfactory
Highly dissatisfactory

6.    Rate pricing strategy of Sainsbury as compared to other retail store
Highly satisfactory
satisfactory
Neutral
dissatisfactory
Highly dissatisfactory

7.    Rate Sainsbury ability to accomplish customer need as compared to some of the major competitors such as Tesco and Asda
Highly satisfactory
satisfactory
Neutral
dissatisfactory
Highly dissatisfactory

8.    Rate overall store experience in Sainsbury
Highly satisfactory
satisfactory
Neutral
dissatisfactory
Highly dissatisfactory

It is important to safeguard data and maintain secrecy for the results received as present research involves comparative data collection. Further present research should not make any impact on the customers of Sainsbury keeping anonymous customers for the data collection. Present research demand personal views of the customers in order to assess customer satisfaction for Sainsbury and there are no adverse questions included in the questionnaire which might have ethical implications (Tsay, 2005). The data collected would be strictly used for the present research and data would be owned by company and respondents only. Further present data can’t be used for any other purpose accept the objectives of present research work.

Task-2

This task present the comparative analysis of the Sainsbury’s revenue and profitability based on the various statistical parameters. In order to provide the measurement of quartile and dispersion measure several data points such as maximum, minimum and means are calculated which can be given as below:

Sales revenue calculation for Sainsbury

Sr. No
Measurement of data
Values
1
Mean
£18389
2
Maximum
£15147
3
Minimum
£24511
4
Median
£19232

Operating profit calculation for Sainsbury

Sr. No
Measurement of data
Values
1
 Mean
£534
2
Maximum
£15
3
Minimum
£854
4
Median
£470

Measures of dispersion

Measurement of dispersion can be done with the help of below table:

Sales revenue dispersion measurement for Sainsbury

Sr. No
Measurement of data
Values
1
Standard deviation
£2729
2
Range
£9364
3
Inter-quartile range
£3464
4
Variance to mean ratio
£405
5
Count
15

Operating profit dispersion measurement for Sainsbury

Sr. No
Measurement of data
Values
1
Standard deviation
£218
2
Range
£839
3
Inter-quartile range
£209
4
Variance to mean ratio
£89
5
Count
15

Analysis: Looking at the dispersion data for both operating profit and sales revenue it can be observed that sales revenue data is more dispersed in comparison to operating profit. Standard deviation observed in the sales revenue lies in the range of 15% for the mean value of sales revenue. Range for the sales revenue observed remains in 50% in mean value and mean is positively skewed. Comparing sales revenue and operating profit it can be observed that operating profit is more dispersed in terms of the standard deviation and range values. Looking at the inter-quartile data it can be observed that sales revenue is highly dispersed in comparison to the operating profit as sales revenue inter-quartile range is 33% while inter-quartile range for operating profit is just 25%. Looking at this data it can be said that sales revenue data is more skewed in comparison to the operating profit.

Percentiles:


Sales revenue percentile measurement for Sainsbury

Sr. No
Quartile
Values
1
25th Percentile
£16371
2
50th Percentile
£17414
3
75th percentile
£19835

Operating profit percentile measurement for Sainsbury

Sr. No
Quartile
Values
1
25th Percentile
£457
2
50th Percentile
£580
3
75th percentile
£666

Sales revenue measurement for the first 25th percentile and second 25th percentile are spread over the same revenue difference. Third 25th percentile of the sale revenue is spread over double the difference in sales as compared to first and second 25th percentile. Sales revenue difference for the fourth 25th percentile is spread over double the sales difference as compared to the third 25th percentile. Relationship between four 25th percentiles can be given as 1:1:2:4 showing that probability of sales revenue to occur within a small difference is quite high.
Looking at the percentile measurement for operating profit it can be said that first 25th percentile is spread over more than half operating profit. While 2nd and 3rd 25th percentile is showing minimum dispersion, hence it can be said that probability of operating profit to be dispersed around mean of operating profit is quite high.

Correlation analysis

Data pertaining to sales revenue and operating profit has been analyzed with the help of statistical tool and it has been found out that there is correlation of 0.15 between sales revenue and operating profit. The two factors have very low correlation among them and other parameters have important role for deciding operating profit for the organization. Estimating operating profits basis sales revenue would not be an accurate measurement as there would be faulty measurement due to the very low regression constant between the two variables.

Task-3

Statistical graph

1.   Scatter plot
2.   Histogram
3.   Doughnut graph

Operating Profit
Analysis: Analyzing the above mentioned graphs it can be revealed that for the sales revenue graph there is correlation between sales achieved by Sainsbury and year. Sales is moving into steady manner since year 2004 while from year 1998 to year 2004 there is lack of chaotic movement observed in the sales pattern. From the histogram above for the sales revenue and doughnut it can be said that majority sales lies in the range of £15000 to £19000 and having the probability range of 67%. There is clear indication that increases in sales shown by the Sainsbury is not supported by overall data distribution.
As shown above scatter plot that analyzing results through quantitative techniques would not be helpful basis year of operation for the organization. There are several factors which does not have any quantitative variation hence it is advisable to carry out qualitative analysis for the operating profit data. Further histogram and doughnut analysis would be helpful for the quantitative analysis of data. Though there are lot of variations in the data but still probability of operating profit being into range of £400 to £800 is maximum.

Trend line and estimation of value

The two charts below provide the trend line and estimation of value for the sales revenue and operating profit.
From the analysis above sales revenue is estimated as 529*Year- 1,042,191 and on the similar pattern sales revenue estimated for year 2013 is £22626. There is strong degree of correlation between year and sales revenue obtained and quantified by 0.84. From this strong correlation value it can be said that estimates sales value are good measure of revenue in year 2013.
For operating profit estimation operating profit= 8.4*year+17383 and from this operating profit in year 2013 is £466. The correlation between two variables i.e. operating profit and year of operation are -0.17. Hence there is very poor measurement of the operating profit for the year 2013.

Task-4

Part-A

Project activities for the current research were mapped under Microsoft project where in dependencies were marked along with optimal time required for each task. Microsoft project provides the critical paths where in tasks are being followed into sequential manner i.e. A followed by D, followed by G and followed by J. Total time which is assumed to be consumed in the entire project would be 3 months.

C

F
 



J

A
5 Month          2M                         3M                                         1 M

G

D
                           3M                       4M   

E
                             2M

B
1 Month

I

H
                                                                              1 M                                 
                           2 M
Figure 1: Showing network diagram
Critical path would be B-----H-------I--------J

Part-B


Cost of capital 10%
Cost of capital 60%

Project A
Project B
Project A
Project B
0
-£50000
50000
-£50000
50000
1
£31818
£18182
£21875
£12500
2
£24793
£16529
£11,719
£7,813
3
£18783
£18032
£6,104
£5,859
4
£13660
£24588
£3,052
£5,493
5
£6830
£6830
£1,526
£1,526
NPV
£45885
£34161
-£5725
-£16809

From the NPV calculation in the two situations i.e. for 10% capital and 60% capital it has been revealed that NPV is positive for 10% capital while for the 60% capital NPV obtained is negative. Hence in first scenario project should be accepted while for the second situation project should not be accepted.
IRR calculation through interpolation
Cost of capital through interpolation
Project A
NPV
Project B
NPV
35.00%
£11,580
35.00%
-£607
47.50%
£1,646
22.50%
£13,138
53.75%
-£2,298
28.75%
£5,585
50.63%
-£397
31.88%
£2,340
49.06%
£606
33.44%
£831
49.84%
£100
34.22%
£103
50.23%
-£149
34.61%
-£254
50.04%
-£25
34.41%
-£76
49.94%
£37
34.32%
£14
49.99%
£6
34.37%
-£31
50.00%
£0
34.34%
-£9


34.33%
£2


34.33%
-£3
IRR of the project is 50.00%
IRR of the project is 34.33%

Year
Project A
Project B
0
-£50,000
-£50,000
1
£35,000
£20,000
2
£30,000
£20,000
3
£25,000
£24,000
4
£30,000
£46,000

50.00%
34.33%

Management implications and recommendations
Any organization consider two important factors in order to make decision whether a particular project would be profitable or not and these factors are cost of capital and IRR. Cost of capital and IRR for the project in combination would be able to define whether project would result into profit or loss. In the present situation IRR for project A comes out to be 50% while for second project same is 34.3%, it means that both the projects are profitable at cost of capital at 10% while considering cost of capital at 60% then both the projects are loss making for Sainsbury.
Considering cost of capital at 10% then project A would yield higher profits as compared to project B. Hence it is recommended for Sainsbury to invest in project A with cost of capital being at 10% while both the projects are having high profitability at cost of capital at 10%. In case cost of capital would increase to 60% then both the projects would be loss making for Sainsbury and in that situation it is recommended that project A should be preferred as compared to project B due to lesser amount of loss.

References

§  Allen, I. E., & Seaman, C-. A. (2007). Likert scales and data analyses. Quality Progress, 40(7), 6
§  Alexander, C. (2001). Market models: a guide to financial data analysis. John Wiley & Sons.
§  Baumgartner, H., & Steenkamp, J. B. E. (2001). Response styles in marketing research: A cross national investigation. Journal of Marketing Research, 143-156.


Comments