Scenario – Ocean World Theme Park

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Middle East Entertainment Ltd (the‘’Company’’) is a real estate development company investing in theme and amusement parks across the Middle East. The Company is considering an investment opportunity to develop a large-scale open-air Ocean World type theme park in the area of Dubai, UAE. The management of the Company seeks information on the amusement park industry sector in the UAE in order to evaluate the investment opportunity and make several important business decisions. The Company has appointed you as their consultant to analyse relevant market data and information and produce a professional report based on your findings.

The proposed Ocean World theme park will offer a variety of experiences for the residents and tourists of the UAE, such as rides and attractions, open-air educational areas and activities for children, evening shows and food courts. There will be more than 30 rides and attractions for different ages of people (for juniors, the park will offer rides and activities starting from the age of two years old).  In addition, the park will host a large-size indoor oceanarium presenting an ocean habitat with marine animals from around the globe. The park is planned to be located in the close proximity to Dubai around 20 minutes’ drive from the center of Dubai.

In order to assess the commercial and financial feasibility of the project, the Company seeks market information on the leisure needs and preferences of residents of the UAE. Also, the Company would like to assess the level of interest in the open-air Ocean World theme park among the residents of the UAE, the potential park traffic (or attendance) and the price an adult visitor would be willing to pay for one-day visit ticket to the park.

  • Your role as the consultant will involve investigating current and possibly future leisure needs and preferences of the residents of the UAE. Your findings must be reported to the Company.
  • The management of the Company has also asked you to evaluate the statistical relationship between the monthly household income and the price an average adult visitor would be willing to pay for a one-day visit ticket to the park.

In order to meet all the learning outcomes (L01-L03) you will be required to:

  1. Learning Outcome LO1: Be able to use a variety of sources for the collection of

                                                data, both primary and secondary.

1.1- Create a plan for the collection of primary and secondary data for a given business problem

1.2 – Present the survey methodology and sampling frame used

1.3 – Design a questionnaire for a given business problem

  1. LO2: Understand a range of techniques for analysing data effectively for a business.

2.1 – Create information for decision making by summarising data using representative values

2.2 – Analyse the results to draw valid conclusions in a business context

2.3 – Analyse data using measures of dispersion to inform a given business scenario

2.4 – Explain how quartiles, percentiles and the correlation coefficient are used to draw useful

conclusions in a business context

  • LO3: Be able to produce information in appropriate formats for decision making in an organisational context

3.1 – Produce graphs using spreadsheets and draw valid conclusions based on the information

derived

3.2 – Create trend lines in spreadsheet graphs to assist in forecasting for specified business

information

3.3 – Prepare a business report using suitable software and techniques to disseminate

information effectively

3.4 – Produce a formal business report.

Guidelines for achieving a Pass Grade for Task 1

  • You will need to produce a detailed plan of how you will collect the data, justifying the usage of primary and secondary sources. Primary data can be collected by administering questionnaires. Data from the Internet or other published sources can be used as examples of secondary data.
  • You will need to present the survey methodology used. Discuss in your report how the sample was selected from a population. You must survey a minimum of 10 respondents.
  • Produce a questionnaire for the investigation into the current and possibly future leisure needs and preferences of the residents of the UAE. The questionnaire may ask 10-15 questions; you can circulate your questionnaire within or outside of the University. You can also work on the design of the questionnaire together with a fellow student, if you wish.
  • You will need to classify, record and present your market findings appropriately.
  • Using market data collected, analyse it by the use of averages (mean, median,mode) and measures of dispersion (standard deviation, inter-quartile range).
  • You are required to estimate the statistical relationship between the monthly household income and the price an average adult visitor would be willing to pay for one-day visit ticket to the park using a linear regression model. For this, you can use the survey collected data. You will need to calculate and interpret the correlation coefficient, coefficient of determination and calculate the constants “a” and ”b” for your linear regression model.
  •  You will need to present your findings appropriately, using Excel spreadsheet graphs (line, pie, bar charts and histograms), tables, scatter XY graphs.
  • You will need to predict the price level for the monthly household income range outside of your collected source data.
  • You will need to produce a formal business report detailing your findings from the tasks above to the Company.

Task 2:

Module LO4: Be able to use software generated information to make decisions in

                       organisations

4.1 – Use appropriate information processing tools

4.2 – Prepare a project plan for an activity and determine the critical path

4.3 – Use financial tools for decision making

To achieve a Pass Grade for Task 2 you are required to answer both of the following questions:

Question 1

Virgin Galactic, an aerospace company, are planning a commercial aerospace launch project to be undertaken in the 3 months’ time. Various activities have to take place before the launch can start, and these are shown in the table below:

 

Activities Preceding activities Duration in 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

Answer the following questions:

  1. Draw the network and show that it is not possible to start a launch within 12 weeks. Determine the earliest and latest event times. What are the critical activities and how much float does each non-critical activity have?
  2. It is possible to “crash” (reduce the duration of) certain activities at increased cost. These activities are shown in the table below:
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
  1. Bob Smith, the launch manager, suggests that only activity C needs to be crashed because this is the cheapest option and allows the greatest reduction in time to be made. Explain why this would not help the situation.
  2. It has been estimated that for every week over 13 weeks that this project takes, a loss of GBP 5,000 is made as a result of lost profits. Decide on the strategy that will minimise the sum of crashed costs and loss of profits.

Question 2

Quickprint LLC are about to replace some of its existing printing equipment. Two printing machine configurations have been designed by the production engineering department – M1 and M2. Each configuration involves significant capital outlay with estimated cash flows over the next five years as follows:

 

Estimated Cash Flows (in US$) Configuration M1 Configuration M2
Initial cost -210,000 -250,000
1 55,000 60,000
2 67,000 62,000
3 70,000 70,000
4 75,000 74,000
5 80,000 80,000

Assume that the machines have a residual value of zero and the company’s cost of capital is 15%.

Answer both the following questions:

(a) Calculate for both machine configurations:

(i)  Net present value (NPV)

(ii)  Internal rate of return (IRR).

(b) Evaluate the configurations using the calculated indicators and provide recommendations on

the machine configurations.

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