BUSSINES DECISION MAKING

Sainsbury’s was founded in 1869 by John James Sainsbury and his wife Mary Ann Sainsbury in London and has grown to become one of the UK’s largest retailers. J

Sainsbury plc operates over 1,000 stores, including 440 convenience stores. It jointly owns Sainsbury’s Bank with Lloyds Banking Group and has two property joint

ventures with Land Securities Group PLC and The British Land Company PLC.

Two statements on the company’s website read:

1. Our five areas of focus are underpinned by our strong values and culture, as well as our commitment to operational excellence. We put the customer at the heart of

everything we do, aiming to make their lives easier every day by offering great quality and service at fair prices.

2. We have delivered another strong set of results [in 2011]. Good sales growth combined with cost efficiency savings offsetting inflationary increases, helped

deliver growth in both operating margin and return on capital

As a business analyst, you want to investigate the reliability of the two statements above. For this, you develop the following research questions: What is the level

of satisfaction amongst Sainsbury’s customers? What has been the relationship between operating profit and sales for Sainsbury over the last 24 years?

You are required to
1. Create a plan for the collection of data for your research on Sainsbury and present the survey methodology and sampling frame used. (P1, P2)
2. Design a questionnaire that will be administered to Sainsbury’s customers to assess their level of satisfaction. Address any data protection issues and ethical

considerations for your research. (P3)

You have now successfully collected figures for the annual sales and operating profits of Sainsbury’s for the financial years ended 1988 to 2012; and of Tesco for the

financial years ended 1997 to 2012. (Data available in appendix €“ Excel)

You are required to

1. Summarize the data using representative values and measures of dispersion. Analyse the results to draw valid conclusions. (P4, P5, P6, P12)

2. For Sainsbury’s and Tesco, identify the 25th, 50th, 75th percentiles of the
– Sales variables. Explain their use,
– Operating Profit variables. Explain their use (P7, P12)

3. Estimate the correlation coefficient between sales and operating profit for Sainsbury’s and Tesco respectively. For each business, comment on the possible

relationship between these variables (P7, P12)

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