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Business Decision Making

Business Decision Making

Business Decision Making

Contents
Introduction................................................................................................................ 3
Task 1......................................................................................................................... 4
1.1 Research methodology...................................................................................... 4
Research question................................................................................................ 4
Rationale.............................................................................................................. 4
Research methodology......................................................................................... 4
Data analysis technique....................................................................................... 6
Time frame for conducting the research..............................................................6
Budget section..................................................................................................... 7
1.2 Questionnaire.................................................................................................... 7
Task: 2...................................................................................................................... 10
2.1 summarized data of revenue and general merchandise division of Mark and
Spencer:................................................................................................................ 10
2.2 Interpretation of data using Quartiles.............................................................13
2.3 Nature of relationship between total Revenue and General Merchandise of the
M & S..................................................................................................................... 14
Task 3....................................................................................................................... 15
3.1 Time series analysis........................................................................................ 15
(A) Time series for M&Ss total revenue:............................................................15
(B) Time series for M&Ss revenue from general merchandise division:.............16
(C) Relationship between total group revenue and general merchandise
revenue:............................................................................................................. 17
3.2 Trend Line and Revenue Forecasting...............................................................17
(A) Trend line analysis and Forecasting for Total Revenue:.................................18
(b) Trend line analysis and Forecasting for General Merchandise Revenue........20
3.3 PowerPoint presentation:.................................................................................... 21
Slide: 2....................................................................................................................... 22
3.4 Business formal report:...................................................................................... 26
Task: 4...................................................................................................................... 28
Part A..................................................................................................................... 28
Part B..................................................................................................................... 30

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Conclusion................................................................................................................ 34
Reference................................................................................................................. 35

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Introduction
Marks and Spencer plc is a major retail company in the London. It is listed on London stock
exchange. It was a popular brand in teenagers and youth to buy clothing shoes and home ware.
The company is not generating good revenues by the general merchandise division. M&S wants
to achieve competitive advantage through the offer the best products to the customers.
This report includes a research plan for the data collection and conducts survey, which is
significant for the firm to take an effective decision to business growth. This research defines the
various data collection method, sampling method and data analyzing that is important enhance
the knowledge on research methodology. Along with this, this report also includes data analyzing
of total revenue data and revenue data of merchandise division, which is helpful to find out the
relationship between total revenue for the group and revenue for the general merchandise
division.

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Task 1
1.1 Research methodology
This task exhibiting research design for the data collection for the identify the current perception
of customers on the general merchandise division (clothing, shoes, and home ware) and the
relationship between total revenue for the group and revenue for the general merchandise
division.
Research question

1. What is the current perception of customers on the general merchandise division


(clothing, shoes, and home ware)?
2. What is the relationship between total revenue for the group and revenue for the general
merchandise division?
Rationale

This research is enabled to identify the current perception of the customer on the general
merchandise division and identify the relationship between total revenue for the group and
revenue for the general merchandise division. It is effective to know the customer views on the
clothing, shoes, and home ware. This researchs result will be effective to make the marketing
strategy related to the general merchandise division (Mackey and Gass, 2015).
Research methodology

As the research is to know the current perception of customers on the general merchandise
division and identify the relationship between total revenue for the group and revenue for the
general merchandise division, both data collection method are used to analysis the research
problem. Primary data collection method is useful to collect fresh data on the basis of the selfaction. It is important to enhance the focus on the research problem. It is also beneficial to
manage the quality of the research as well as increase the reliability of research (Stevens, et al.,

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2012). To collect the primary data, the researcher can use different sources namely interview,
case studies, survey, action research, questioners, and observation. On the other hand, secondary
data is that data, which is already collected by another research for other purpose. It can be
collected through the articles, official statistics, newspaper, mass media products, books,
government reports and website. Secondary data helps to the researcher to develop the
understanding of the research problem (Palinkas, et al., 2015).
Secondary data is helpful for the researcher to get the information on the potential customer such
as the population of customer, gender, occupation etc. That will help to reach the customer and
conduct the questionnaire. It is also important to find out the relationship between total revenue
for the group and revenue for the general merchandise division. The primary data is helpful to
direct talk with the customer. It will be effective to identify the current perception of the
customer. It will also increase the flexibility and reliability of the research. In the context of this,
survey method will be used to collect the customer perception. The survey method is more
effective and reliable on compared to another primary source. It also provides cost efficiency of
the to the process and also effective to time consuming (Flick, 2015).
For the primary research, it is essential for the researcher to know the views of the customer. But,
it is not possible for the research to reach to each person in the population. Therefore, research
would like to choose sampling method to select the sample size to achieve the objective. The
sampling process makes enable to the researcher to collect necessary information to carry on the
research. The researcher can use probability and non-probability sampling technique to conduct
the sampling. Probability sampling method will be used by the researcher for this research. It is
because it is enabled to reduce the biases in the research. For this research, 100 customers will be

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selected in the sample size. It will be helpful to collect the views of a customer of the on the
general merchandise division (Arens and Lechleiter, 2015).
Data analysis technique

This research study is caring on with the use of both qualitative and quantitative methods for
getting the primary and secondary data, which is helpful in identifying the current perception of
the customer on the general merchandise division. For the data analysis, both qualitative and
quantitative data analysis technique will be used. To analysis of primary data, statistical analysis
will be appropriate to present the quantitative data in the form of charts, graphs, descriptive
statistics, correlation etc (Aoun, et al., 2015). For the secondary data analysis, content analysis
method will be used by the researcher. It enables to support the qualitative data by categorizing
the data adequately.
Time frame for conducting the research
Activities during research
Building clear aim and objectives
Identify the different sources for data

Weeks
4
5

collection
Developing the understanding by secondary
research
Prepare questionnaire
Conducting the survey and data collection
Analyzing the data and provide research
conclusion
Table 1 Time frame for conducting research

Budget section

To conducting the research, approx cost will be


Activities

in

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Cost of collecting data from secondary
resources
Questionnaire printing
Travelling cost
Other expenses
Total

50
200
100
100
450

Table 2 Budget section

1.2 Questionnaire
Below questionnaire is enabled to identify the customer perception on the on the general
merchandise division
(Rate on point 5 scales, 5 = very good, 4 = good, 3 = average, 2 = poor, 1 = very poor)
1. Gender

Male
Female

2. Participator age of customers

15-20
20-25
25-30
30-40
Above 40

3. Occupation

Student
Employees
Businessman
A homemaker

4. What is your annual Income Level?

5000 - 10000
10000 - 15000
15000 - 20000
20000 - 25000
Above 25000

5. What you thing about product price is reasonable?

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Yes
No

6. Purchasing criteria of the customer, which are visited in store?

0%-25%
25%-50%
50%-75%
75%-100%

7. Rate the following parametric quantity


(Sign the relevant column, 4 = excellent, 3 = good, 2 = average, 1 = poor)

SR. No
A
B
C
D
E
F
G

Parameters
Quality of the product
Price of the product
Seasonal offers and discount
Brand availability
Presence of collection
Exchange or change policy
Staff skills and behavior
Table 3 product parameters

8. What the best thing of Marks & Spencer

Product quality
Product price
Seasonal offers
Human resource
Layout of products

9. What product is best in Marks & Spencer?

Clothing
Shoes
Homeware
Food
others

10. Do you think the company store is the right place?

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10

Yes
No

11. Do you think Mark and Spencer fulfill the requirements of customers?

Yes
Yes, not exact all
No, only found allied products
No
Others

12. Any comment that you want to share with Mark and Spencer

Task: 2
2.1 summarized data of revenue and general merchandise
division of Mark and Spencer:
Here identifies the revenue data and merchandise data of Mark and Spencer with the help of
statistical tool from Excel data. Therefore, statistical analysis provides the measures of dispersion
such as mean, median, mode, etc. Along with this measure of dispersion i.e. sample variance,
standard deviation, kurtosis, range, Skewness, etc. In below identifies the various statistical data.

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Table 4 Total revenue of Mark and Spencer

Table 5 Revenue General Merchandise

Total Revenue: from the above table shows the annual revenue of Mark and Spencer, which
shows the annual revenue of 11 years, is 9256.32. While median of given data i.e. 9536.6 at the
same time Mark and Spencer earn the maximum revenue is 10311.4 in 11 years and minimum
revenue of the company is 7490.5
Revenue General Merchandise:
From the above table depicts the annual revenue of General Merchandise is 4001.66, that earns
by the Mark and Spencer in 11 years. On the other hand, the median of given data is 4059.3
whereas maximum revenue is earned by the company is 4233.6 in 11 years and minimum
revenue is earned by the company is 3641.6.
Calculation and analysis of central measures of tendency:
A central location identifies the set of data for identifying the central value (Walker and Maddan,
2012). Consequently, mean, median and mode are included in the measures of centre.
Mean:

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Statistical mean is well-known measures of central tendency. Hence, it is calculated as the


numbers divided by a number of numbers. Therefore, from the above table 1 depicts the annual
average revenue, which is earned by the Mark and Spencer in 11 year time period. Thus, the
average revenue mean is 9256.32 million. Simultaneously, table 2 depicts the average revenue
mean of general merchandise is 4001.66 million in 11 years. As a result, general merchandise
revenue is half as compared to the total revenue of the Mark and Spencer.
Median:
The median is frequently used in the central measure of tendency. Median identifies through
divide the total data by two. Hence, above table 1 depicts the revenue of the company
consequently; median of the Mark and Spencer is 9536.6 million in 11 years. Whereas, table 2
depicts the revenue merchandise division median is 4059.3 million. As a result, median identifies
the better performance of the company. At the same time, the median is better measured as
compared to mean it is because the median cant affect the values (Rubin, 2012). As a result,
general merchandise revenues have decreased more than half as compared to total revenue.
Analyzing Data using Measures of Dispersion:
Measures of dispersion measure the normal values of data set as well it is important to spread the
data, or its variation, around a central value (Terrell, 2012). There are various methods of the
measure of dispersion such as range, standard deviation, etc.
Range:
Range identifies the difference between larger and smaller no of given data. Therefore, above
table 1 identifies the total revenue range data of Mark and Spencer i.e. 2820.9 million. But at
the same time, general merchandise revenue range data is 592 million. As a result, revenue data

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is wider than the revenue of general merchandise. Range determines the highest and lowest
revenue data of Mark and Spencer (Mendenhall, et al., 2012). On the other hand, standard
deviation measures better variation in the data.
Standard deviation:
Standard deviation determines the measures of different sets of data. Or we can say that it
measures the investment returns from average return (Healey, 2014). In above table 1 shows the
standard deviation of total revenues data in Mark and Spencer i.e. 968.18 million, as well as
table 2, shows the standard deviation of general merchandise is 199.41 million. As a
consequence, variation in standard deviation is less than the above range. As a result, the
variability of standard deviation is effective to measure the data.
Skewness:
Skewness determines the asymmetry from the normal distribution data. Skewness measures the
symmetric data in bell curve shape (Hanneman, et al., 2012). Hence, the value of the value of
skewness may be positive or negative. Similarly, table 1 shows the skewness of total revenue in
Mark and Spencer i.e. -0.7649 whereas skewness of general merchandise in table 2 is -1.0498,
which shows the revenue data is extended to left. In consequence, value tends to above and the
upper end of the cluster from the given mean data.

2.2 Interpretation of data using Quartiles


Quartile:
Quartile divides the different values in four quarter. In consequence, there are three quartiles are
existing in the given data such as Q 1, Q2, and Q3. Whereas every quartile represents the data in
different percentage criteria such as Q1 depicts 25% of given data, Q2 depicts the 50% of given

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data and Q3 depicts 75% of data (Levine and Stephan, 2014). Here identifies the quartile of total
revenue and general merchandise in Mark and Spencer as below:

Table 6 Quartile of total revenue and general merchandise

Quartiles determine the different values data, which helps to measure the performance of the
Mark and Spencer over a year.

2.3 Nature of relationship between total Revenue and


General Merchandise of the M & S.
Coefficient correlation measures the correlation between dependent and independent linear
variable. Whereas, correlation coefficient values lies between in +1 and -1, which shows the +1
represents the positive correlation and -1 represents the negative correlation (Berenson, 2012).
Therefore, Mark and Spencer determine their coefficient and correlation of total revenue and
general merchandise revenue is 0.82580, which shows the positive correlation between both
variables. Along with this, it also shows the strong relationship between both variables.

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Task 3
3.1 Time series analysis
The time series analysis refers to the analysis of the quantitative data. It involves the some
method to analysis time series data to identify the meaningful data. The main purpose of this
analysis to predict future values based on previously observed values (Bendat and Piersol, 2011).

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(A) Time series for M&Ss total revenue:

Total revenue
10,500.00
10,000.00
9,500.00
9,000.00
8,500.00
8,000.00
7,500.00
7,000.00
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Years

Graph 1 Time series for total revenue

The time series analysis of total revenue of Marks & Spencer depicts that company has success
to increase in total revenue from last 10 year. But, there is also two slow growth period between
the years 2008 to 2009 and between the years 2014 to 2015. Opposed to this, the general trend
for the remained year is good for the company. Overall, it can be said that the revenue of M&S is
progressive (Downing and Clark, 2010).

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(B) Time series for M&Ss revenue from general merchandise division:

Revenue - general merchandise


4,300.00
4,200.00
4,100.00
4,000.00
3,900.00
3,800.00
3,700.00
3,600.00
3,500.00
3,400.00
3,300.00
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Year

Graph 2: Time series for revenue from general merchandise division

From the above graph; it is assumed that there is fluctuation growth in earned revenue by the
general merchandise division for Marks & Spencer. According to the graph, there is not effective
growth in revenue between the years 2005 to 2006. But, the company has success between the
years 2006 to 2008 due to the company is earned high revenue. Opposed of this, in the next year,
it can be seen there is a decline in the earned revenue and it again picked up the next year 2010
and 2011. After that, the revenue for the general merchandise division is declining continuously
(Black, 2010).

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(C) Relationship between total group revenue and general merchandise


revenue:
4,300.00
4,200.00
4,100.00

R = 0.68

4,000.00
3,900.00
revenue - general merchandise (m)

3,800.00
3,700.00
3,600.00
3,500.00
3,400.00
3,300.00
7,000.00

9,000.00
Total revenue

Graph 3: Scatter plot between total revenue and revenue from merchandise division

From the above graph, it can be conducted that moderate positive correlation is presented
between the total revenue of the group and the general merchandise division revenue of Marks &
Spencer. The above graph shows that the value of R-squared is 0.682, which refers to the
moderately strong relationship between the both revenues of M&S (McClave, et al., 2013). it is
assumed that the total value of the revenue is increased due to increase in revenue from general
merchandise division.

3.2 Trend Line and Revenue Forecasting


A trend line refers to general pattern or direction of a time series data. It is a visual representation
of the support or resistance in any time frame. The revenue forecasting is a significant function
of the business that helps to the company to take an effective decision (Menke, 2012). It helps to
business to predict the future of the business and save the business cost.

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Simple linear regression can be used for the presented data. It will be effective to forecast total
revenues and revenue from the general merchandise division. The equation for this case is below:
^y =ax+b
Where,

eq. 1
^y

= forecasted values i.e. revenue

a = slope of the regression line or regression coefficient


x

= year

b = y-intercept
The value of a and b can be calculated using the following two equations:
xy( x ) ( y )
N

x
,

2
N x ( 2)

a=

x
y a( )

b=

(Miller, 2011)

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(A) Trend line analysis and Forecasting for Total Revenue:


f(x) =
R = 0

Total revenue

12,000.00
11,000.00
10,000.00
9,000.00
8,000.00
7,000.00
6,000.00
0

10

11

12

13

14

15

16

Graph 4 Trend line analysis of total revenue

The trend line analysis of Marks & Spencers data shows a positively sloped trend line with a

strong predictive power corresponding to

R2

= 0.974. The value of R2 is 0.97 or 97% which

is quite close to 1. Along with this, the slope 298.2 means that the total will increase 298.5
million per annual.

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Table 7 Calculation for regression line equation

The using the value of above table and put it in the equation for a and b
a= 298.2 and b= 7331
By using the value of a and b in equation 1, estimated values for y for different values of x is
given in the table below:

Table 8 Estimated values of total revenue

From the above equation it is forecasted that the revenues for the year 2016, 2017 and 2018 are
10909.4, 11207.6 and 11505.8 million respectively.

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(b) Trend line analysis and Forecasting for General Merchandise Revenue

Graph 5

Trend line analysis general merchandise revenue

From the above diagram depicts the General Merchandise revenue of Mark and Spencer. In this
way trend line shows the positive slope with a weak predictive power R 2 = 0.437. So that 43.7%
identifies the relationship between time and vale of revenue (Wang, 2014). In consequence,
general merchandise revenue of the Mark and Spencer is obtained weak in estimated years i.e.
2016, 2017 and 2018. Furthermore, the slope is 39.78 that mean increases the time in every year.
On the other hand, revenue will also increase by 39.78 million. Here identifies the forecast table
of general merchandise revenue of Mark and Spencer as below:

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Table 9 Forecasting for General Merchandise Revenue

Calculation of estimated values of General Merchandise of Mark and Spencer


Note: Year represents through the numbers such as 1, 2, 3, 4, 5 so on.
Forecasting year of 2016, 2017 and 2018
From the above table figure helps to determine the estimated forecast of 2016, 2017 and 2018 as
below:
Mark and Spencer General merchandise revenue:
Y = 39.78x 75956
2016 = (39.78 12 (75956) = 75478.64
2017 = (39.78 13 (75956) = 75438.86
2018 = (39.78 14 (75956) = 75399.08

3.3 PowerPoint presentation:


Slide: 1

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Slide: 2

Slide: 3

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Slide: 4

Slide: 5

25

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Slide: 6

Slide: 7

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Slide: 8

Slide: 9

27

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Slide: 10

28

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3.4 Business formal report:


Introduction:
Mark & Spencer is a retail major retail company in the London, which is listed in the London
Stock Exchange. In consequence, the company provides their specialized products to its
customers such as clothing, home products, and luxury food products. As a result, Mark and
Spencer gain the advantage through offers, discounts, quality foods, etc.
Purpose:
The purpose of the Mark and Spencer to analyses the current taste and preferences, perception,
towards the general merchandise products. Thus, it creates the relationship between total revenue
and general merchandise products. On the hand, the company forecast the total revenue and
general merchandise. At the same time, M & S has conducted a survey of 100 students through
primary and secondary data. Along with this, company uses the probability sampling method for
effective results in general merchandise products. At the same time, it reduces the unfairness of
the customers towards the products, which is helpful in increases the general merchandise
revenue of the company.
Conclusion:
Mark and Spencer need to be increasing its general merchandise revenue through various steps,
which is helpful to make an effective relationship of company dependent and independent
variables such as total revenue and general merchandise of the firm. Furthermore, the company
estimates their general merchandise revenue will be increased in future with the help of product
quality and its services.

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Task: 4
Part A
There are different task and activities are showing in the network diagram with the help of
graphical format. In consequence, on the basis of different activities Network chart are prepared
as below:

ES

Time Period

EF

Name of Activity
LS
Whereas,
ES: early start
EF: early finish
LS: late start
LF: late finish

Slack

LF

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Computation of project time period:


Above network diagram, it can be identified that the different facets are needed for completed
the project (Portny, 2011). Whereas, in the above network diagram critical path is presented in
the red, which shows the different activities are

needed to complete the project on timely.

Here identifies the project duration on the basis of different activities.


Requirement analysis, System design, programming, Telecoms, Hardware installation,
Integration, System testing, Training/Support and Handover and Go-live.
Project duration is calculated from above activities:
A-B-C-F-G-H-I
5+15+25+10+10+5+5= 15 weeks
A-B-D-F-G-H-I
5+15+15+10+10+5+5 = 13 weeks
A-B-E-G-H-I
5+15+30+10+5+5 = 14 weeks
Therefore,
5 working days in a week (given in question)
Therefore,

Total days
Week days

75
5

= 15 weeks
So the project will be completed in 15 weeks
Critical path of the project:
In the project management critical path is the longest period duration that determines the project
completion time period. In above different activities, which are denoted by A, B, C, D, E and so

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on. As a result, activities are considered in the above network diagram. So the project path of the
given project is:
A.B.C.F.G.H.I

Part B
Investment Appraisal Tools: Investment appraisal tools analyze the long-term investment of the
project and its feasibility. As a result, a firm uses NPV and IRR for identifies the project
feasibility.
Net Present Value (NPV): NPV identifies the future cash flow from the present investment in the
project. Formula of NPV is
Net cas h flowInitial investment

(Drury, 2013)

As a consequence,
PV factor: PV factor identifies the present value of cash receipt for a future time period.
PV Factor =

FV
n
(1+r )

Where,
FV = future value of a project
R = cost of capital
N = time period over payment are made
NPV calculation of a project @10%
As a result,
FV = Future value = 1
R = discount rate = 10%
N = time period of machine Years = 4

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1
( 1+0.10 ) 1

= 0.909

+
0.826

1
( 1+0.10 ) 2

0.751

1
( 1+0.10 ) 3

33

1
( 1+0.10 ) 4

0.683

Figure 1 calculation of NPV for project A

Figure 2 calculation of NPV for project B

Internal rate of return (IRR): IRR is used in capital budgeting, which identifies all cash flows of
the project value is 0. Formula of IRR is below
IRR=R 1+

( R 2R 1 ) NPV 1
( NPV 1NPV 2)

In consequence,

(Bierman and Smidt, 2012)

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R1 discount rate (low) = 10% (given)
R2 discount rate (upper) = 60% (given)
NPV1 = net present value (low rate)
NPV2 = net present value (upper rate)
Note: We can take the NPV values from above calculation for the IRR calculation such as
In consequence,
Project A IRR

45860(5765)

( 0.600. 10 ) 45860
IRR=0.10+

= 0.10+

22930
51625

= 0.10+0.4442
= 54.42%
Project B IRR
IRR=R 1+

( R 2R 1 ) NPV 1
( NPV 1NPV 2)

34142(16852)

( 0.600.10 ) 34142
0.10+

=0.10+

17071
50994

= 0.10+0.3348
= 43.47%

34

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Results:
From the above calculation analysis of project A NPV, @10% is 45860 and @60% is -5765.
Whereas, project B NPV @10% is 34142 and @60% is -16852. As a result, it indicates that
project A is more feasible as compared to project B it is because project A (cost of capital10%)
net present value is high. Therefore, Project A will positive impacts on the growth of the firm.
But at the same time if PV ratio @60% NPV of project A is -5765 while Project B is -16852, that
indicates the negative value of both projects, which creates the cost for the company and reduces
the profit of the firm (Damodaran, 2012). As a consequence, the company selects the project A as
compared to project B. It is because project A is less risky as compared to project B. on the other
hand, IRR of project A is 54.42% and project B is 43.47, which indicate the positive value of the
IRR. Thus, it increases the revenue of the firm (Brooks and Mukherjee, 2013). As a result, the
company selects the project A it is because company gains from project A @10%.

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Conclusion
From this report, it can be conducted that the survey method is effective to identify the current
perception of customers on the general merchandise division. A perfect sample size helps to the
researcher to collect the necessary information for achieving the research objective. The
knowledge of the business statistics is a significant aspect of the business management. It
enables the forecasting of revenue, which is effective to save cost and maintain the control on
business activities. In the context of M&S, the total revenue is expected to increase in future.
Along with this, a network diagram is effective to make the future project strategy to given time
period and the NPV technique is helpful to analyze the cost and profit of different projects.

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