Introduction to Business Methods
Project GuidanceVariables are at different levels of measurementNote that the variables are recorded at different levels of measurement therefore you need to understand what type of summary statistic is most relevant for a particular level of measurement. To give an example, there is no point in computing the mean and the variance for a particular business type that is coded 1, 2, 3 as you would not be able to attach any useful meaning to it.
Summary statisticsThese are things like mean, median, mode, variance, standard deviation and skewness. Go to your lecture notes, statistics textbooks, and anything useful you find on the internet. Frequency distributions and graphs should be used where you believe you can draw out the main characteristic of a particular variable. They are not relevant for every single variable you are analysing. You have to make a judgement.
Missing values in the data setMost analyses in Excel can accommodate missing values. However, it is a good practice to run the analysis on the full set of data including the missing values, and on the set of data that excludes the missing values as a check.
How to measure the size of the firmIf you have done some research, you will have realized that there are two commonly used measures for classifying firm size and that these are output and employment. You have both in the data set (turnover and number of employees) but you are more likely to use turnover as this has already been classified (grouped) in the data set.
Note: SIZEOD is not a measure of firm size. It is a measure of the overdraft limit for the company.
OutliersOutliers (i.e. data that lie outside the range of most observations) are a common feature of many data sets and can affect your analysis. There are several rules for defining an outlier, none being better than the other. A very simple way is to visualise the data graphically. If you have used a particular rule for defining an outlier, make sure you explain the rule (e.g. in the appendix or a footnote) and make a reference to the source. Where you can identify that outliers are causing a problem to your analysis, it is good to point it out. However we do not recommend that you drop these outliers in your analysis.
Using MS-ExcelYou will inevitably have to perform most of your computations in MS-Excel and then type them in MS-Word. For most of the tasks in MS-Excel, you can refer to the help menu at all times. In the computer labs you were taught how to compute things like the mean, median, mode, variance using standard built-in functions in MS-Excel.
What we are expecting from you1. A good understanding of what the question is looking for (lecture notes and extra readings on practical applications of the statistical concepts, or even sources on the internet should help; if you use other sources you must acknowledge them in the text and bibliography/reference section so that you avoid plagiarism). These can improve the content or the rigour of your arguments. You should be particularly careful in identifying the correct test for a particular question.
2. Accurate statistical analysis. Everyone can do this using MS-Excel. The computer lab sessions are very helpful for this.
3. Good presentation, interpretation and explanation of the results obtained. Where tables and graphs are used, label them clearly, making them as informative as possible, while at the same time avoiding less relevant information.
Word LimitThere is a word limit of 3000 for this project. This includes all tables and graphs in the main body of the work but excludes any appendices or bibliography. Note that 3000 words is given only as a maximum but you don’t have to go up to this limit. On the other hand a two or three sentence answer to a question may not be enough.
What to hand in
Two hard copies of your MS-Word document to CELE office.
The ProjectYou have been engaged by the Bank of England to prepare an analysis of the relationship between small businesses and their bank. The Governor of the Bank of England is particularly interested in issues related to borrowing. You have the results of a survey of 200 small businesses and information on their financial arrangements.
You need to address the following issues:
1) Analyse the key features of the sample in terms of age, size, profitability, growth rate, business sector, type of business organisation, owner gender, number of employees and degree of risk associated with the business. You should also comment on the distribution of firms across the main banks and the levels of use of branches, phone and internet banking. (Use summary statistics, graphs or frequency distributions as appropriate and comment on the shape of distributions where relevant). What conclusions can you draw about the characteristics of firms in the sample? [60 marks].
2) Using cross tabulation, compare the size distributions of firms with an overdraft and firms without an overdraft. Is there any evidence to suggest that there is a relationship between size of firm and whether or not the firm has an overdraft? Repeat the analysis for firms that have a loan. What conclusions can you draw? [30 marks].
3) Using cross tabulation, what is the relationship between the bank and the level of customer satisfaction [10 marks].
List of Variables in Excel File
The data were collected from a random sample of small businesses. A questionnaire was mailed to the sample and the data you are provided with are the responses that were received.
There are different types of variables – some variables are categorical or ordinal in which case, value labels are provided. Otherwise, variables are interval or ratio. For interval variables the scale is given, for ratio variables the numbers are exactly as presented in the data file. The sample contains 200 cases but you should note that for some cases, variables will be missing (usually indicated by a blank cell in the Excel Spreadsheet). Most forms of analysis that you undertake will accommodate missing values. Remember to keep back-ups of all analyses.
BUSORGForm of Business Organisation
Value Label
1 Sole Proprietorship
2 Partnership or Joint Proprietorship
3 Limited Liability
BUSACT
Main Business Activity
Value Label
1 Construction
2 Mining
3 Manufacturing
4 Transport
5 Communications
6 Wholesale
7 Retail
8 Agric
9 For/Fish
10 Financial Services
11 Services
12 Professions
13 Other
OWNERGender of Principal Owner
Value Label
1 Male
2 Female
3 Mixed
AGE
Age of Firm in years
FTEMPNumber of Full-Time Employees
PTEMPNumber of Part-Time Employees
TURNOVERSales Turnover Net of Vat
Value Label
1 Less Than £20K
2 £20-£50,000
3 £50K-£150
4 £150-£250K
5 £250K-£500K
6 £500K-£750K
7 £750K-£1m
8 £1m-£3m
9 Over £3m
PROFIT
Profit as a Percentage of Sales
GROWTH
Turnover Change (%) over 12 months
RISKDegree of Risk in Business
Value Label
1.00 Very Low Risk
2.00 Low Risk
3.00 Below Av Risk
4.00 Average Risk
5.00 Above Av Risk
6.00 High Risk
7.00 Very High Risk
BRANCHUse - High Street Branch
PHONE
Use - Telephone Banking
COMPUTERUse - internet banking
Value Label
0 No
1 Yes
PAYCHARBasis on which charges paid
Value Label
1.00 Fixed Tariff
2.00 Negotiation
MVALCHARBank charges are poor or good value
Continuous scale where 1=poor, 5= very good
CHBANK
Considered Changing Bank
Value Label
1 Yes
2 No
COMPLAINHad Cause to Complain
Value Label
1 Yes
2 No
ODRAFTDoes Business Have An Overdraft
Value Label
1 Yes
2 No
ACTODAmount overdrawn
SIZEODOverdraft limit
COLLATODType of Collateral on Overdraft
Value Label
1 Personal
2 Business Assets
3 Business And Personal
4 None
BROIODInterest Margin on Overdraft
LOANFixed Term Loan
Value Label
1 Yes
2 No
VALLOANSize of Loan
COLLOANCollateral on Loan
Value Label
1 Personal
2 Business Assets
3 Business And Personal
4 None
BROILOANInterest Margin on Loan
MSATIS
Satisfaction with Bank
1=low, 7=high
MRELATERelationship with bank manager
1=low, 7=high
MAINBANK
Main Banks
Value Label
1.00 Nat West
2.00 Barclays
3.00 Lloyds/TSB
4.00 HSBC
5.00 RBS
6.00 Bank of Scotland
7.00 Clydesdale
8.00 AIB
9.00 Others
SCOREAG1
Performance index
Scale from 1- 100 - measure of overall bank performance.