DECISION MAKING FOR BUSINESS

Table of Contents Part A: 2 1.0 Analysis of incremental cost for Fleet Ltd.: 2 2.0 Analysis of the reported profit volume: 2 3.0 Consideration of determining factors in decision making process: 2 4.0 Recommendation: 2 5.0 Executive summary: 2 Part B: 2 1 a) Derivation of cash flows for three available options (amounts in , 000): 2 1 b) Derivation of accounting rate of return for three available options (amounts in , 000): 2 1 c) Derivation of payback periods for three available options (amounts in ,000): 2 1 d) Derivation of Net Present Value for three available options (amounts in ,000): 2 1e) Derivation of internal rate of return for three available options (amounts in , 000): 2 2.0 Appraisal methods and discussion of the recommendation: 2 Bibliography: 2

Part A:
1.0 Analysis of the incremental cost for Fleet Ltd.:
The incremental cost analysis of any organization evaluates the changes in organizational effectiveness after incorporating the new strategy for which the cost incurred. Not only that it will also help the organization to find out if it have any other alternatives. In case of Fleet Ltd., there exist three strategies which they incorporated to improve the organization effectiveness. Among those three strategies, the first one involves the changes in the core activities of the organization where as the second activities is mainly concentrating the improvement of the competitive ability of the organization whose results will indirectly help the first strategy adopted by the organization. However, both the first and second activities depend on the UN core activities.
According to the third strategy of the organization, it is found that the organization is going to adopt a decision through which the IT department of the organization able to outsource to a third party. As a result of such