StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Business Decision Making - Essay Example

Cite this document
Summary
Decision making is very important in business organization since this identifies the most strategic direction that it can take considering its internal and external environments. Hypothesis testing is a statistical tool which aids managers and other decision makers in coming up and choosing among the various alternatives…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER96.3% of users find it useful
Business Decision Making
Read Text Preview

Extract of sample "Business Decision Making"

Running Head: BUSINESS DECISION MAKING Business Decision Making in APA Style by Decision making is very important in business organization since this identifies the most strategic direction that it can take considering its internal and external environments. Hypothesis testing is a statistical tool which aids managers and other decision makers in coming up and choosing among the various alternatives. Hypothesis testing is defined as "the process of choosing between competing hypotheses about a probability distribution, based on observed data from the distribution" (Hypothesis Testing).

As the name implies, the test utilizes hypotheses in order to come up with a decision. Statistically speaking, there are two types of hypothesis namely, the null and the alternative hypotheses. During a statistical test, the null hypothesis is tested against the alternative hypothesis. It should be noted that "null" means nothing and that null hypothesis means that nothing is present (Hyperstat Online 2008). Statistical tests are conducted in order to test the viability of the null hypothesis.

On the other hand, the alternative hypothesis is an alternative hypothesis which can be assumed if the null hypothesis is rejected. In the case of snack foods, hypothesis testing can be used in order to make business decisions. For example, the company is deciding whether to launch a healthier brand of corn chips to target weight watchers. After an intensive and extensive data gathering, the company wants to test if the introduction will have an impact in their current market share of 35%. Thus, they will need to conduct either one or two tailed test.

A one-tailed test looks for an increase or decrease in the parameter under consideration while a two-tailed test looks for any change in the parameter. We will illustrate this further by applying the five steps in hypothesis testing. The first step in hypothesis testing is stating the null hypothesis. For both one and two tailed test, the null hypothesis that the market share will remain 35% can be stated as Ho: x = 36%. Next step is to state the alternative hypothesis. Since one-tailed test is concerned on increase or decrease of the market share, the Ha or alternative hypothesis can be stated as Ha: x > 36% if the company expects to gain more sales through the brand introduction.

In two-tailed test however, the alternative hypothesis can go in either direction. Thus, market share can increase or decrease. The alternative hypothesis is then stated as Ha: x 36%. The next step is specifying a certain level of significance which the null hypothesis will be tested. The test statistic and the corresponding p value will then be calculated. It should be noted that before a hypothesis test is made, assumptions regarding t and z tests must be understood. Both of these tests assume that the variables are generated from a normally distributed data set.

However, the z-test assumes that the standard deviation is known while the t-test assumes that it is unknown (Walpole et. al, 2001). After which, a conclusion of whether the null hypothesis is rejected or accepted is made. The acceptance of the null hypothesis is not a proof that what it states is true. It simply is an indication that under the specific conditions there are no solid grounds to doubt its truthfulness. Type I risk is the chance of rejecting the null hypothesis when it is true (Walpole 2001).

On the other hand, the alternative hypothesis is considered to be more acceptable if the null hypothesis is rejected. Type II risk is the chance of accepting the alternative hypothesis when it is false (Walpole 2001). ReferencesHypothesis Testing. (n. d). Retrieved 14 March 2008, from www.math.uah.edu/stat/hypothesis/index.xhtml Hyperstat Online. (2008). Retrieved 14 March 2008, from http://davidmlane.com/hyperstat/Walpole, R., et. al. (2001). Probability and Statistics for Engineers and Scientists.

Prentice Hall: New Jersey

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Business Decision Making Essay Example | Topics and Well Written Essays - 500 words”, n.d.)
Business Decision Making Essay Example | Topics and Well Written Essays - 500 words. Retrieved from https://studentshare.org/miscellaneous/1518267-business-decision-making
(Business Decision Making Essay Example | Topics and Well Written Essays - 500 Words)
Business Decision Making Essay Example | Topics and Well Written Essays - 500 Words. https://studentshare.org/miscellaneous/1518267-business-decision-making.
“Business Decision Making Essay Example | Topics and Well Written Essays - 500 Words”, n.d. https://studentshare.org/miscellaneous/1518267-business-decision-making.
  • Cited: 0 times

CHECK THESE SAMPLES OF Business Decision Making

Business Decision Making: Northern Hi-Tec Electronics Limited

In the paper “Business Decision Making: Northern Hi-Tec Electronics Limited” the author explains how to calculate contribution margin.... The second decision variable will be the labor cost.... Contribution margin is the difference between the selling price per unit and the total variable costs....
4 Pages (1000 words) Case Study

Business Decision Making at Lambert Heating

The goal of the study "Business Decision Making at Lambert Heating" is to summarize the most effective existing investment evaluation and project management techniques.... In order to facilitate this process, several criteria are used in making this decision.... In fact, Campbell and Brown (2003) indicate that it performs better than IRR in relation to making choices between mutually exclusive projects but needs to be modified in capital rationing decisions and when project choices have unequal lives....
14 Pages (3500 words) Case Study

Business Decision Making in Car Sales

The assignment "Business Decision Making in Car Sales" tries through the calculation to predict sales of cars of different brands and the certain manufacturer's profit based on a set of restrictions for the manufacturer's dealership on the sale of vehicles.... nbsp;… The manufacturer has set a limitation of supplying the following cars at the beginning of every month....
1 Pages (250 words) Assignment

Accounting the Basis For Business Decision Making

The author of this case study entitled "Accounting the Basis For Business Decision Making" focuses on two distinct types of cost accounting systems: a job order cost system and a process cost system.... Admittedly, both systems produce the same end results.... hellip; Under a job order cost system, the company manufactures the product as per the exact specifications and requirements of individual customers....
8 Pages (2000 words) Case Study

Business Decision Making (Team Work)

A leader of a virtual team should make an effort to ensure that all the team members are given the opportunity to contribute towards the decision making process so that they can develop a sense of belonging to the team.... Lin & Miller (2003) also suggest that when people conduct business across borders, they bring to the negotiation table different cultures....
2 Pages (500 words) Essay

Business Decision Making in Chabros International Group

This paper "Business Decision Making in Chabros International Group" focuses on the supplier of high-quality wood in the Middle East Region, supplying veneer and other wood products to markets like Dubai, Saudi Arabia, Qatar, and other Arab countries.... As such the firm entered into the market without actually making an effort to understand the local dynamics and importance of having local partners.... This, therefore, created strong cultural and interpersonal issues for partners who were not used to the overall culture and business norms of the region....
7 Pages (1750 words) Case Study

Business decision making cast study

However, the company pays fair wages, making its staff loyal.... Information & Decision Processes – Decision-making is rather fast because Klahsen independently takes the decisions.... However, students need to come to a conclusion and make a decision.... What external Macro Environment factors impact this business?... (Based on the details we discussed from the class notes) Staffing & Leadership perspective- Klahsen is a mother and already has a busy life managing both business and family....
1 Pages (250 words) Case Study

Business Decision Making - Investigating the Leisure Industries

The following re the main six sort of division of the Heuristics: the recognition heuristic, the minimalist strategies, the lexicographic strategy, take the last strategy, sequential decision making, and elimination by aspect.... oodwin & Wright (2014) assert that heuristic is used for multiple making decisions that involve several or multiple objectives.... Miao & Mattila (2007) illuminates that information results in confidence in making judgment in reference to the price of the consumers and their decisions....
5 Pages (1250 words) Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us