Lecture 1

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McGraw-Hill/Irwin Business Research Methods, 10e Copyright © 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.

Research

in Business

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Mental Challenge

A man and his son are involved in an automobile accident. The man is killed and the boy, seriously injured, is rushed to the hospital for surgery. But the surgeon takes one look at the boy and says, “I am sorry, but I cannot operate on this boy. He is my son.”

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What is your decision?

• A group of children were playing near two railway tracks, one still in use while the other disused. Only one child played on the disused track, the rest on the operational track. The train came, and you were just beside the track interchange. You could make the train change its course to the disused track and saved most of the kids. However, that would also mean the lone child playing by the disused track would be sacrificed. Or would you rather let the train go its way? Let's take a pause to think what kind of decision we could make................

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Four Sources of Information

Decision

Making Authority Experience

Research

Intuition

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“The secret of success is to

know something nobody

else knows.”

Aristotle Onasis

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Understand . . .

• What business research is and how it differs from

business decision support systems and business

intelligence systems.

• Trends affecting business research and the

emerging hierarchy of business decision makers.

• The distinction between good business research

and research that falls short of professional quality.

• The nature of the research process.

Learning Objectives

Research

• Research is a

process through

which new

knowledge is

discovered.

• A systematic and

organized effort to

study a problem/

opportunity that

needs a solution.

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What is not Research?

• Just collecting facts or information with no

clear purpose;

• Re-assembling and re-ordering facts or

information without interpretation;

• As an esoteric activity with no or little

relevance to everyday life;

• As a term to get your product or idea

noticed and respected.

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Business Research Defined

• A process of determining,

acquiring, analyzing,

synthesizing, and

disseminating relevant

business data, information,

and insights to decision

makers in ways that mobilize

the organization to take

appropriate business actions

that, in turn, maximize

business performance.

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Why Study Business Research?

Business

research

provides

information to

guide business

decisions

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Research Should Reduce Risk

The primary

purpose of

research is to

reduce the

level of risk

of a decision

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What’s Changing in Business

that Influences Research

Critical

Scrutiny of

Business

Computing

Power &

Speed

Battle for

Analytical

Talent

Factors

Information

Overload

Shifting

Global

Economics

Government

Intervention

Technological

Connectivity

New

Research

Perspectives

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Interest in research methods

1. Information Overload • Quality and credibility of information

• Ubiquitous access to information

2. Technological Connectivity • Changes in work pattern

• Changes in relationships

• Geography is no longer a barrier

3. Shifting global centers • Rising Asia

• Demographic shifts

– Knowledge of suppliers, talent pools, business models, and

infrastructures

– Research design that can accommodate different norms,

values, technologies and languages

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Interest in research methods

4. Increasing scrutiny of big business • IT makes easier for stakeholder participation

• Interconnection of suppliers, producers and

customers

5. More government intervention • Protection of consumers, rules and regulations,

laws

6. Battle for analytical talents • Mathematical model for complex decisions

• Need more knowledge workers

• Strong analytical skills

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Interest in research methods

7. Greater computing power and speed • Lower cost for data collection (ICT)

• Better visualization tools

• Powerful computations

• More integration of data (electronic store houses)

• Real time access

8. New perspectives on research

methodologies • Older tools replaced with newer ones

• More variety of decision making

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Why research is important?

1. Collect more information before making a decision (Collector)

2. Conduct high quality research (Processor)

3. Understand research designs (User)

4. Evaluate and correct current management dilemma (Evaluator)

5. Make research a career

Use of Social Media – Del Monte

• Invited 300 dog levers

• Ask them questions

– What does your dog eat for breakfast?

– Would you buy more treats for your

dog if they contained vitamins &

minerals?

• Dogs preferred egg and bacon

• Food rich in omega3,

antioxiddants and vitamins

• Shaped like fried eggs and bacon

strips

• It took only six weeks to get to the

market.

• www.snausages.com

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Information Sources

Decision Support

Systems

• Numerous elements of

data organized for

retrieval and use in

business decision making

• Stored and retrieved via

– Intranets

– Extranets

• Real time

Business Intelligence

Systems

• Ongoing information

collection

• Focused on events,

trends in micro and

macro-environments

Should we do business research?

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Sources of Business Intelligence

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Hierarchy of Business Decision Makers

Visionaries

Intuitive Decision Makers

Standardized

Decision Makers

Visionaries

Experience based

Decision supported by

secondary data

Some research based

Tested methods

Limited access

All research based

Develop own method

Access to the whole company

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Two Categories of Research

Applied

Basic (Pure)

• Applied Research

• Evaluate opportunities

• Improve a current situation

• Basic Research

• Solving theoretical problems

• No direct impact to actions,

performance or policy

decisions

Comparison

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Four Types of Studies

•Reporting

•Explanatory •Predictive

•Descriptive

•Provide a summation of data, often recasting

data to achieve a deeper understanding or to

generate statistics for comparison.

•Tries to discover answers to the questions who,

what, when, where, and, sometimes, how.

•Attempts to explain the reasons for the

phenomenon that the descriptive study only

observed

•Attempts to predict when and in what situations

an event will occur. Studies may also be described

as applied research or basic research.

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Reporting

• You work for Classic Toys, a corporation that is considering the acquisition of a toy manufacturer. The senior vice president for development asks you to head a task force to investigate six companies that are potential candidates. You assemble a team composed of representatives from the relevant functional areas. Pertinent data are collected from public sources because of the sensitive nature of the project. You examine all of the following: company annual reports; articles in business journals; trade magazines, and newspapers; financial analysts’ assessments; and company advertisements. The team members then develop summary profiles of candidate firms based on the characteristics gleaned from the sources. The final report highlights the opportunities and problems that acquisition of the target firm would bring to all areas of the business.

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Descriptive

• You are the business manager for MedImage, a large group of physicians specializing in diagnostic imaging (MRI, nuclear, tomography, and ultrasound). A prominent health insurance organization has contacted you to promote a new cost-containment program. The doctors’ committee to which you will make a recommendation will have a narrow enrollment window for their decision. If they choose to join, they will agree to a reduced fee schedule in exchange for easier filing procedures, quicker reimbursement, and listing on a physicians’ referral network. If they decline, they will continue to deal with their patients and the insurance carrier in the current manner. You begin your investigation by mining data from patient files to learn how many are using this carrier, frequency of care visits, complexity of filings, and so on. You then consult insurance industry data to discover how many potential patients in your area use this care plan, or similar care plans with alternative insurance carriers, and the likelihood of a patient choosing or switching doctors to find one that subscribes to the proposed program. You attempt to confirm your data with information from professional and association journals. Based on this information, you develop a profile that details the number of patients, overhead, and potential revenue realized by choosing to join the plan.

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Explanatory

• MoreCoatings, a paint manufacturer is having trouble maintaining profits. The owner believes inventory management is a weak area of the company’s operations. In this industry, many point colors, types of paint, and container sizes make it easy for a firm to accumulate large inventories and still be unable to fill customer orders. You look into the present warehousing and shipping operations and find excessive sales losses and delivery delays because of out-of-stock conditions. An informal poll of customers confirms your impression. You suspect the present inventory database and reporting system do not provide prompt, usable information needed for appropriate productions decisions.

• Based on this supposition, you familiarize yourself with the latest inventory management techniques. You ask the warehouse manager to take an inventory, and you review the incoming orders for the last year. In addition, the owner shows you the production runs of the last year and his method for assessing the need for a particular color or paint type. By modeling the last year of business using production, order, and inventory management techniques, you choose the method that provides the best theoretical profit. You run a pilot line using the new control methodology. After two months, the data show a much lower inventory and a higher order fulfillment rate. You recommend that the owner adopt the new inventory method.

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York College

• You work for the York College’s Alumni association. It is eager to provide a strong stimuli to encourage increased donations and to induce older, nontraditional students to return to supplement enrollment. The president’s office is considering a retirement community geared toward university alumni and asks your association to assess the attractiveness of the proposal from an alumni viewpoint. Your director asks you to divide the study into 4 phases.

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Characteristics of Good Research

Clearly defined purpose

Detailed research process

Thoroughly planned design

High ethical standards

Limitations addressed

Adequate analysis

Unambiguous presentation

Conclusions justified

Credentials

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Characteristics of Good Research

1. Clearly Defined Purpose • Must contain problem, decision to be

made, scope, limitations and definition of key terms

• Ch 4 and 5

Research Problem

• Existing problem that requires solution – Complaint of harassment by senior officers

• Specific areas in the organization requiring improvement – When policy about “harassment” exist but genuine

complaint still occur

• Theoretical or conceptual issue that needs tightening up – What is meant by “harassment”?

• Research questions that basic researcher needs to answer empirically – Impact of “harassment” on performance

Sources of Research Problems

• Journal, article, etc.

• Personal interest and experiences

• Deduction from theory

• Experts

• Conversation with colleagues or at

professional conferences.

• Observation

• Literature reviews.

• Replication of studies

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Characteristics of Good Research

2. Detailed research process • Each step must be detailed with the

sources of data clearly explained

• Acquiring participants, sampling method and representativeness

• Or else the confidence related to the recommendations will be lower

• Ch 4, Appendix A

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… continued

3. Thoroughly planned design • Sampling and observations must be

accurate and carefully designed

• Objective data instead of recollection

• Personal bias

• Ch 3,4,5, 6 - 14

4. High Ethical standards • Must make sure respondents do not

experience physical or emotional pressure

• Ch 2, 20

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… continued

5. Limitations addressed • There is no perfect research

• Ch 6, 14, 15, 20

6. Adequate analysis • Validity and reliability is checked

• Presentation in a way can be

understood be the readers/users

• Ch 15 -20

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… continued

7. Unambiguous presentation

• Style of presentation, language and terms must be simple and concise

• Overgeneralization

• Ch 15 - 20

8. Conclusions justified • Conclusions must be based

on evidence and not experience

• Ch 15 - 20

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… continued

9. Credentials • Experience and credentials of the

researcher plays a role

• Ch 20

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Characteristics of Bad Research

• Fishing Trip

• Plagiarizing others work

• Falsifying data

• Presenting information which

is not true

• Misleading respondents

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When to do research?

Is there

enough

time for

research?

Are

available

information

Sufficient

for making

decision?

Is the

decision

strategic

or tactical?

Is the

value of

the

information

more than

the cost?

Do the

Business

research

Time

Constraint

Availability

data

Type of

decision

Cost vs

benefit

Yes Yes Yes Yes

Business research should not be undertaken

No No No No

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Limitations in doing research

• Time constraint

• Availability of data

• Type of decision to be made

• Cost and Benefit

• Payback

• Improve quality

• Use of resources

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What is Important in this Chapter?

• Definition

• Why research is important?

• Benefits of research knowledge

• Characteristics of good and bad research

• When research is not feasible?