EXECUTIVE SUMMARY (For Part 1)

Higher Diploma: Business Management 1

EXECUTIVESUMMARY (For Part 1)

Thepaper shows the analysis of United Arab Emirates Amusement andLeisure Industry and how the concept of constructing a large SeaWorldTheme Park would perform in the market. It has been observed that theindustry has significant potential for growth and any new conceptcould sway traffic and hence increase revenue obtained. He market hasalso shown that this concept is unique and there could be a greatnumber of clientele who would be able to spend lots of money in thepackages being offered.

Thedata regarding the market reception of the SeaWorld Theme Park andthe entrance charges could be obtained through a fusion of bothprimary and secondary data. Through the use of questionnaires, thedata on reception and the price the people are willing and able topay could be obtained. The specification on how to competeeffectively and efficiently would be obtained through market analysisand the study of the Amusement and Leisure industry through secondarydata.

Inthe first phases after the commencement of operations, promotionalactivities and subsidies could be used to attract the tourists andtraffic thereafter a slightly lower amount compared to the othertheme parks could follow. Depending on the traffic observed, theprice could be increased on a slightly careful pace to avoid losingloyal and potential customers. Through this strategy, the SeaWorldTheme Park could be constructed in the region observed.

TASKS1:

MIDDLEEAST ENTERTAINMENT LIMITED AMUSEMENT PARK INDUSTRY IN UNITED ARABEMIRATES

Inthe Middle East, theme parks are considered to be the main leisuresceneries and tourist attraction sites as over time they have beenincreasing in number. There are numerous mega-theme parks in theParks and Entertainment sector that are being constructed, some haverecently been completed while others are under planning stage.

Competitionis growing over time as more and more tourists tour into the countryfor the amazing sites and theme parks being constructed in the MiddleEast. The competition acts as an advantage to the customers as theprices become affordable, customers have variety to choose from andthe theme parks are forced to provide quality services in order tolock loyalty from the traffic of tourists[ CITATION UAE15 l 1033 ]. The innovative designs that the theme parks come with are part ofthe creativity and competitive edge that some are banking on asmasses are attracted by the amazing designs.

Inspite of the United Arab Emirates having a small population of2,369,153 people, most of its tourists are external. The country hasbeen developed and due to the application of advanced technology, itattracts numerous people from Europe and United States of America asthey consider the place secure.

Dueto the different number of themes with different concepts, theintroduction of a SeaWorld theme park could have massive appeal tothe clientele of tourists both locally and abroad. The masses areattracted by every new creation and park that is introduced as theyhave massive expectations on what is expected from the park[CITATION Jum15 p 89-124 l 1033 ].Dueto the standard already set in the sector, if adequate investment isdone on the proposed amusement SeaWorld Park, it could generatesignificant revenue. Diversification of the packages sold by the parkcould also create the demand they are seeking as it would not onlydepend on people viewing the SeaWorld but also rides, open aireducational areas, evening shows and having food courts under thesame park.

Datacollection

Primarydata could be emphasized as it would enable the management to obtainpeople’s feedback on what they expect. Reception and things toinclude in the amusement park. Being a new concept, it becomes hardto ascertain whether the public will respond well to the investmentthrough secondary data. Questionnaires to both the locals andvisiting tourists would assist in establishing the reaction of thepublic and also expected charge for entrance.

Samplingframe

Thedata can be collected on strata basis in that groups of 100 peoplefrom the city, 100 from the region around the premise of theamusement park and 100 tourists could be assessed. The City peopleare considered to be high-income earners and hence could be one ofthe targeted clientele while the people around the premises as therereception could indicate the atmosphere around the investment.Tourists, on the other hand, could offer an opinion of the reactionon people from other regions other than UAE.

Marketassessment

Tourismin the United Arab Emirates is ranked as the second largest in theMiddle East after Saudi Arabia. It shows the demand and traffic ofpeople who could be the targeted clientele for the Amusement Park.The data analyzed for the country indicates that by 2020 there willbe $5 billion in revenues due to the increased growth observed.Increased infrastructure development, growth of retail industries andconsideration of UAE as a MICE capital for trade events has enabledthe amusement and leisure industry to growth significantly. Itclearly shows that construction of the SeaWorld concept would behighly advised considering it is a unique package being offered.People love new creations and designs and, therefore, it may be oneof the factors that could cause increased demand[ CITATION Jum15 l 1033 ].

Commencementof business

TheAmusement park could offer promotional activities to the firstcustomers who attend and experience the packages for a specifiedperiod and thereafter the park could charge a slightly lower pricethan that charged by other theme parks. It could be considered as a‘wait-and-see’ approach that could generate loyalty in customers.Thereafter, a gradual but well calculated increase in the price couldbe effected as long as it does not impact adversely on the trafficflow into the Park.

StatisticalAnalysis:

MODE

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

AGE

PEOPLE IN HOUSE HOLDS

MONTHLY INCOME

GENDER

FREQUENCY OF VISITS

PREF

LEVEL OF INTEREST IN PARK

PRICE FOR ENTRY

DISTANCE TO PARK

TIME OF THE YEAR

36-45

0 to 3

20,000-29,999

Male

7 to 9

Outdoor

4

302-352

More than 60km

Doesn`t matter

Itrepresents the number repeated much. It shows that the target groupshould be 36-45 years as most of the people from that age group hadpositive response in regard to the open-air SeaWorld theme park.Mostly were male, with their frequency of visit ranging between 7 and9.

&nbsp

MEAN (Mid points)

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

&nbsp

AGE

PEOPLE IN HOUSE HOLDS

MONTHLY INCOME

FREQUENCY OF VISITS

LEVEL OF INTEREST IN PARK

PRICE FOR ENTRY

1

20.5

2

4,999.50

2

1

225

2

20.5

5

14,999.50

5

3

276

3

30.5

8

24,999.50

8

4

327

4

50.5

10

44,999.50

12

5

429

5

50.5

2

34,999.50

5

3

327

6

60.5

2

4,999.50

5

4

225

7

40.5

12

24,999.50

15

5

429

8

30.5

2

14,999.50

8

4

276

9

40.5

15

24,999.50

8

5

378

10

40.5

2

34,999.50

2

4

327.5

Totals

385.00

60.00

229,995.00

70.00

38.00

3,219.50

mean

38.50

6.00

22,999.50

7.00

3.80

321.95

Usingmid points to represent the ages, the mean would be as shown in thetable above. The descriptive statistic displays that the target ageshould be 38.5 which ranges between 36-45 having household of 6 andmonthly income of 22,999.50 (20,000-29,999). The inference is similarto the one obtained using mode.

Fromthe data obtained from the sample frame selected, there issignificant positive response and feedback as most of the peoplecomment that they do not care the time of the year for their visitfollowed by summer. It shows that as an individual season, there ishigh possibility of increased revenue during the summer but generallythroughout there will be visitors. However, from the ten selectedindividuals, no one was enticed to visit the open-air SeaWorld themepark during the winter, it shows that there is a perspective that theconditions would be cold and the park may not offer activities thatwould brighten or warm them up. It could be a signaling indicator forthe marketing team as during their campaigns, they should broadcastmore on the activities that could warm and excite people during thewinter. It would avoid cases of significant low turnout of visitors.

&nbsp

AGE

PEOPLE IN HOUSE HOLDS

MONTHLY INCOME

FREQUENCY OF VISITS

LEVEL OF INTEREST IN PARK

PRICE FOR ENTRY

Standard deviation

3.85

0.60

2,299.95

0.70

0.38

32.20

Fromthe above table, the standard deviation is obtained through thedivision of mean and the number of samples obtained for the study, inthis case, 10. Standard deviation indicates the deviation around themean that the inference is incorrect.

LinearRegression Analysis

Usingthe statistical relationship between monthly household income and theprice average adult visitor would be willing to pay will be derivedfrom the data below formulated from the sample of questionnairesobtained:

&nbsp

MONTHLY INCOME

PRICE FOR ENTRY

1

4,999.50

225

2

14,999.50

276

3

24,999.50

327

4

44,999.50

429

5

34,999.50

327

6

4,999.50

225

7

24,999.50

429

8

14,999.50

276

9

24,999.50

378

10

34,999.50

327.5

Afterregression:

Regression Statistics

Multiple R

0.804326633

R Square

0.646941332

Adjusted R Square

0.602808999

Standard Error

8297.375499

Observations

10

&nbsp

Coefficients

Standard Error

t Stat

P-value

Intercept

(23,127.86)

12,330.13

-1.875719506

0.097545536

X Variable 1

143.27

37.42

3.8287235

0.005027021

Itmakes the regression equation to be

Y= -23,127.86 + 143.27 X

WhereY = Monthly Household Income.

X= Price average adult visitor would be willing to pay.

Calculatingthe coefficient of correlation and determination

&nbsp

&nbsp

&nbsp

&nbsp

810,908,902.50

&nbsp

3,219.50

&nbsp

229,995.00

&nbsp

10,856,822.50

&nbsp

10,365,180.25

&nbsp

68,497,700,025.00

&nbsp

52,897,700,025.00

&nbsp

70,440,000.00

&nbsp

491,642.25

&nbsp

15,600,000,000.00

&nbsp

7,669,619,100,000,000.00

&nbsp

87,576,361.54

&nbsp

&nbsp

&nbsp

0.80

&nbsp

&nbsp

&nbsp

Coefficientof Determination =

=0.80 *0.80 = 0.64

GraphicalRepresentations:

Belowis the data of monthly household income and the price average adultvisitor would be willing to pay represented using Pie chart, Line andBar graph.

Thegraphs just indicate that people who have greater income arereceptive to a higher price charge than those of lower monthlyincome. The average however could be adopted as the probable optimalprice charge for entrance. The average price charge is 321.95 whichfalls within the range of 302 to 352.

Usingthe equation formulated from the linear regression, one can easilydetermine the price to charge for an individual or individuals whosemonthly household income is not covered by the ranges created in thequestionnaire. If we want to obtain the price range that would bepreferred by an individual with an average income of 60,000, it wouldbe

Y= -23,127.86 + 143.27 X

60,000= -23,127.86 + 143.27 X

60,000+ 23,127.86 = 143.27 X

83,127.86= 143.27X

X= 580.22

TASK2:

QUESTION1:

Activities

Preceding Activities

Duration (Weeks)

A

Check Controls

3

B

Check Propellants

A

5

C

Check Personnel

A

3

D

Assemble Items

C

1

E

Move to launch pad

B

3

F

Run System Tests

B,D

4

G

Check Astronauts

C

2

H

Check Ground Stations

G,F

3

I

Final Checkup

E,H

1

Question(i):

DrawNetwork

Thered line symbolizes a dummy path created as path F depends on B and Dto be complete for it to commence hence creating the need to set adummy path.

Thecritical path is: A-B-F-H-I

Criticalperiod: 16 weeks

Earliestand latest event times are indicated in the circle (Earliest eventtime/Latest event time).

Floats:

C= 4 Weeks

D= 1 Week

E= 4 Weeks

G= 4 Weeks

Question(ii):

Crashingthe Activities

Activity

Normal Duration (weeks)

Crashed Duration (Weeks)

Extra costs per crashed week, GBP

A

3

2

2,000

B

5

4

5,000

C

3

1

1,000

G

2

1

2,000

H

3

2

1,500

Paths

Original Duration

Crashed Duration

Crashed Duration

Crashed Duration

Crashed Duration

A-B-F-H-I

16

13

12

9

6

A-B-E-I

12

9

8

8

5

A-C-D-F-H-I

15

12

12

9

6

A-C-G-H-I

12

9

9

6

3

Crashing Activities

A=3

B = 1

H = 3

B = 3

C = 3

Activities Crashed

Duration Crashed

Extra costs per crashed week, GBP

Totals

A

3

2,000

6,000

B

1

5,000

5,000

H

3

1,500

4,500

B

3

5,000

15,000

C

3

1,000

3,000

Total Crashing Total Cost

33,500

TheCrashing Total Cost will be GBP 33,500, if and only if, the projectcan crash two activities simultaneously as it has been done to B andC each 3 weeks. In a situation where it cannot, the Crashing TotalCost will be:

Activities Crashed

Duration Crashed

Extra costs per crashed week, GBP

Totals

A

3

2,000

6,000

B

1

5,000

5,000

H

3

1,500

4,500

Total Crashing Total Cost

15,500

Question(iii):

Crashingactivity C is the cheapest of all the other activities but it doesnot fall under the critical path. It, therefore, means that theproject cannot crash C only as it has no effect on the criticalproject duration[CITATION SCS06 p 232-289 l 1033 ].

Inthe assumption that C would be in the critical path, it would nothold to the main intention of crashing. Crashing is meant to reducethe duration of completing the project to the shortest period. Ittries to utilize the floats. Crashing C would only reduce the totalcrashing costs but will not have reduced the project’s duration tothe shortest period possible. It would, therefore, mean that thecompany will still incur the normal projects costs. There would be apossibility that the projects’ cost after crashing only C andadding the incurred crashing cost would be high.

Question(iv):

After13 weeks, there is a loss of GBP 5,000 per week.

Crashing(in a situation whereby the activities can be crashedsimultaneously), the total cost = GBP 33,500 while cannotsimultaneously, GBP 15,500.

Theproject duration = 16 weeks using critical path

Strategy:

Crashingthe project up to the point which no simultaneous activities can becrashed will be an effective and efficient point. This will be thepoint where the critical path equals 12 weeks, the total crashingcosts equals GBP 15,500 and there is no loss incurred. Ensuring thatthe crashing ends at the point whereby the critical path becomeslower or equal to 13 weeks will be the viable strategy to apply.

QUESTION2:

Dailydemand = 10 units a day for each of 250 days (50 weeks)

Sales= 400 batches @ GBP 100

OrderingCosts = GBP 50

Stockingcost for one unit = 20% of the unit price.

=20% x 100

=GBP 20 per unit.

Question(i):

Currentannual ordering and holding costs

Currentannual ordering = 400 batches per week for 50 weeks (assumed annualnumber of weeks)

=400 x 50

=20,000 units annually

Holdingcosts = 20% of unit price

=20% x GBP 100

=GBP 20 per unit.

Question(ii):

EconomicOrder Quantity formulae [CITATION DuB08 p 206-210 l 1033 ]

Q= Economic order quantity

d= Annual demand

S= Ordering costs

H= Holding costs.

Q=

=

=

=316.22 equivalent to 316 units.

Totalcost if we apply the Economic Order Quantity:

Totalcost (TC) = (

=(

=3,160 + 3,164.56

=GBP 6,324.56

Totalcost if we do not use the Economic Order Quantity:

Totalcost (TC) = (use Q = 400 units the normally used quantity per week

=(

=4,000 + 2,500

=GBP 6,500

Annualstock cost saving will be:

=GBP 6,500 – GBP6,324.56

=GBP 175.44

QUESTION3:

Question(i)

Calculatethe NPV and IRR of each project, X1 and X2:

Estimated flows (in US $)

X1

X2

Initial cost

(100,000)

(120,000)

1

10,000

20,000

2

40,000

20,000

3

10,000

30,000

4

30,000

30,000

5

60,000

40,000

Parta) Net Present Value and IRR for X1:

Calculatingthe discounting factor values is done through the below formula

R= Rateof return

n= Periodof the year.

Estimated flows (in US $)

X1

Discounting rate (10%)

Net Present Value

Initial cost

(100,000)

0

(100,000)

1

10,000

0.9091

9,091

2

40,000

0.8264

33,056

3

10,000

0.7513

7,513

4

30,000

0.6830

20,490

5

60,000

0.6209

37,254

Total Net Present Value

7,404

IRRfor X1:

Atthe rate of 13%, the project will yield a negative Net Present Value.

IRRis calculated as the rate at which it would make the cash flowsagainst the initial investment equal to zero.

Estimated flows (in US $)

X1

Discounting rate (13%)

Net Present Value

Initial cost

(100,000)

0

(100,000)

1

10,000

0.8850

8,850

2

40,000

0.7831

31,324

3

10,000

0.6931

6,931

4

30,000

0.6133

18,399

5

60,000

0.5428

32,568

Total Net Present Value

(1,928)

IRR=

Thisis defined as:

R1= thelowest discounting rate

R2= thehighest discounting rate

NPV1= Netpresent value generated by R1

NPV2= Netpresent value generated by R2

=

=

=0.10 + 0.024

=0.124

=12.4%

Parta) Net Present Value and IRR for X2:

Estimated flows (in US $)

X2

Discounting rate (10%)

Net Present Value

Initial cost

(120,000)

0

(120,000)

1

20,000

0.9091

18,182

2

20,000

0.8264

16,528

3

30,000

0.7513

22,539

4

30,000

0.6830

20,490

5

40,000

0.6209

24,836

Total Net Present Value

(17,425)

IRRfor X2:

Atthe rate of 4%, the project will yield a positive Net Present Value.

Estimated flows (in US $)

X2

Discounting rate (4%)

Net Present Value

Initial cost

(120,000)

0

(120,000)

1

20,000

0.9615

19,230

2

20,000

0.9246

18,492

3

30,000

0.8890

26,670

4

30,000

0.8540

25,620

5

40,000

0.8219

32,876

Total Net Present Value

2,888

IRR=

Thisis defined as:

R1= thelowest discounting rate

R2= thehighest discounting rate

NPV1= Netpresent value generated by R1

NPV2= Netpresent value generated by R2

=

=

=0.10 + 0.0085

=0.1085

=10.85%

Summary:

NPVX1 = 7,404

NPVX2 = (17,425)

IRRX1 = 12.4%

IRRX2 = 10.85%

Question(ii):

UsingNPV Evaluations and recommendations:

NetPresent Value is a discounting technique that incorporates time valueof money. A viable project is considered to be one that has apositive value as its Net Present Value after the deduction of theinitial investment. In the case whereby the project deduce bothpositive values, the one that has the highest value should berecommended[CITATION Mic08 p 340-352 l 1033 ].

X1has a Net Present Value of 7,404 while X2 has a Net Present Value of(17,425). It creates an easy recommendation using NPV as project X1will be best of the two as it has a positive Net Present Value.

UsingIRR Evaluations and recommendations:

InternalRate of Return is a discounting technique that tries to compare theinitial investment against the cash flows to make it zero. Thedecision rule on Internal Rate of return is that if the internal rateof return is great than the cost of capital or rate of discounting,do not reject project and if internal rate of return is less than thecost of capital or rate of discounting, reject project[CITATION Mic08 p 340-352 l 1033 ].

X1has an internal rate of return of 12.4% while X2 has an internal rateof return of 10.85%. They are both higher than the cost of capital ordiscounting rate of 105. Through this evaluation, both projects areviable and could recommended.

Itis advised that in a situation where there is evaluation of twoprojects, net present value technique is better than internal rate ofreturn technique. The NPV indicates that project X1 is the mostpreferred project option compared to X2 though IRR qualifies both theprojects.

ProjectX1 should be adopted as per the results obtained by Net PresentValue.

QUESTION4:

Usesof MIS

ManagementInformation Systems is an integrated system that provides support todecision making, operations and management functions of a company. Ituses analysis, control, decision making and planning models in itsprocesses and procedures. The main advantages of applying andutilizing management information systems in an organization indecision making are the fact that they offer information on a timelymanner, accurate information that can be relied upon and analyzed. Itreduces manual work on the data obtained as it offers analyzedinformation that only require recommendations and strategies to beimplemented by the management from the data analyzed[CITATION Chr13 p 35-41 l 1033 ].Management information systems can also enable an organization toproject and estimate future expectations through the modules thereinhence enhancing organizational functions such as budgeting.

Typesof information:

Strategic,tactical and operational Information

Strategicinformationit is considered to be major decisions that have impact on the wholeorganization. They are based on the mission of the company and theywill be made with aim of attaining the desired future objectives.They usually have long term consequences on the organization. Theyare dependent on the manager’s judgement and evaluations of theenvironment in question as he/she is expected to formulate thesedecision basing on the circumstances. They are mostly entrusted andformulated by the higher level of management. They include issues ofincreased productivity, profitability and efficiency of theorganization[CITATION Chr13 p 35-41 l 1033 ].

Tacticalinformationit is considered more structured than the strategic information. Theysupport the strategic information as they are specific to thedistinct departments or divisions of the organization. They aim atenabling the departments meet the strategic plans by being specificto their needs and specifications.

Operationalinformationthey are procedures and processes that affect the lowest managementlevels. They can be one-off in that they are meant to tackle ashort-term issues that cannot await top management to convenemeetings. The issues may not be repetitive and hence can be easilytackled by the lower level of management such as supervisors or bydepartmental heads. They are usually the decisions made on dailybasis to enable the company continues with its operations. Theymainly target to minimize costs, increase efficiency and speed upprocesses.

Informationsystems at different levels of management

Executivesupport systemsthey are mainly used by the high-level management (executives) as itoffers communication channels and graphics that enable the company torelate and interact with the external environment. They graphics andcommunication channels are usually set in the board rooms and themanagement’s corporate offices to enable them deal with thestrategic decisions. The executive support system is supported by thetransaction processing system and the management information systems.In summary, the executive support systems enable the seniormanagement to obtain accurate, timely and reliable information attheir point of need to enable them make strategic decisions. It willbe able to perform trend analysis, graphical representation andevaluation of different issues they deem fit for their decisionmaking.

Decisionsupport systemit is a system that assists the senior management in makingnon-routine decisions. The system integrates, displays and obtainsdata from different sources in an aim of empowering the managementwith information from which they can base their decisions from. Thesystem enables people involved in making a specific decision tointeract through the configurations set and solve the issue at hand.It can be used by groups as it would enhance speedy decision making,brainstorming and easy voting in the case where a decision has to bevoted.

Expertsystemit is also referred to as knowledge-based system as it enables thesoftware set to make the decision other than in decision supportsystem which the decision makers are human in nature. The ultimatedecision and judgement are left for the experts (software set) otherthan human expert. The advantage is that it enables the users to gettimely and reliable decision that will suit their need as thesoftware has been tailor-made to fit the needs of the organization.

Transactionprocessing systemthey are systems that are meant to help in day to day transactions aswell as recurrent transactions. They are made in a manner that theycan support large amounts of data as routine transactions arenumerous in nature. Some of the examples of these systems includestock and payroll systems. The system reduces part of the tediousprocesses that employees could be doing such as computations but datainput is still required. The system acts as an updater to themanagement as they are able to assess the daily operations and workof the people involved in data entry. In summary it is a system thatoffers its services to numerous users as it converts the input datato output that can be applied and implemented by the departments.

References

Abdel-Razzaq, Jumana. Dubai`s Theme Park Industry set to Attract Close to $5 b by 2020. June 29, 2015. https://www.thebig5hub.com/news/2015/june/dubais-theme-park-industry-set-to-attract-close-to-5bn-by-2020/.

Bryan, Christiansen and. Cultural and Technological Influences on Global Business. USA: IGI Global, 2013.

DuBrin, Andrew. Essentials of Management. Mason, USA: Cengage Learning, 2008.

Micheal Ehrhardt, Eugene Brigham. Corporate Finance: A Focused Approach. South Western: Cengage Learning, 2008.

Sharma, S.C. Operation Research: Pert, CPM &amp Cost Analysis. New Delhi, India: Discovery Publishing House, 2006.

UAE National Media Council. Dubai Parks Works on Future Connectivity. 05 24, 2015. http://www.uaeinteract.com/docs/Dubai_Parks_works_on_future_connectivity/68692.htm.

USA International Business Publications. Doing Business and Investing in United Arab Emirates Guide. Washington DC: Int`l Business Publications, 2007.