1 brm intro (1)
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BRM
Introduction
Why Research in Business?
• Information
• Interpretation
Example: New Coke in 1985: what went wrong?Before the launch: Survey
• Loyal consumers were divided about the change in taste of Coke
• Loyal consumers also drink Pepsi, for its sweeter taste
Focus Group:
• Dissatisfaction about the taste
After the Launch things didn’t work. Why?
• The research was erroneous/ interpretations were wrong
• They didn’t attach much importance to the consumers’ emotional attachment with the original brand
Stimulators for Business Research
• Internet and information• Stakeholders’ influence• Competition• Government intervention• Complex decisions• Computing power and speed
Computing Power and Speed
Real-time Access
Real-time Access
Lower-cost Data
Collection
Powerful Computation
Powerful Computation
Better Visualization
Tools
Better Visualization
Tools
Integration of Data
Integration of Data
FactorsFactors
Business Research
• A process of determining, acquiring,analyzing, synthesizing, and disseminatingrelevant business data, information, andinsights to decision makers in ways thatmobilize the organization to take appropriate business actions that, in turn, maximize business performance
Relevance & Significance of Research
Relevance• It’s very useful in solving operational and planning problems of
industry and business
• It’s a necessity in today’s business environment as it has become essential for surviving in today’s world
Significance
• It reduces uncertainty by providing information that improves the decision making process
• Its contribution is valuable to the business of the company involved because it unfolds different directions of thinking, adds to existing knowledge and leads to different findings that may be useful for implementation
How to Proceed about Business Research?
• Satisfy customer groups: Consumers, Employees, Shareholders etc.
• Controllable variables: Product, Pricing, Promotion, Distribution
• Uncontrollable factors: Economy, regulations, political and social factors etc.
• The decision maker needs info on customers, competitors and other forces. Sound information is key to the correct management decisions
• Having the info and analysing it: research can provide meaningful insights to facilitate decision making
Business Planning Drives Business Research
Organizational Mission
BusinessGoals: sales, productivity,profitability, efficiency etc.
BusinessStrategies
BusinessTactics:
Activities executing a strategy
Decision Support :DSS, BIS
DSS:Numerous elements of data
organized for retrieval and use inBusiness decision making;
Stored and retrieved via Intranets,Extranets
BIS:Ongoing information
Collection; Focused on events, trends in micro and
macro-environments
Purpose of Business Research
• Identify opportunities/problems
• Defina/ refine strategies
• Define/refine tactics
• Improve understanding about different aspects of business
Hierarchy of Business Decision Makers
Visionaries
Intuitive Decision Makers
Standardized Decision Makers
Visionaries
Who Conducts Research?
• Internal Research Suppliers
• External Research Suppliers – Research Firms– Communication Agencies– Consultants
When to Conduct Research
• Can It Pass These Tests?• Can information be applied to a critical
decision?• Will the information improve managerial
decision making?• Are sufficient resources available?• Will the time permit?
When should Business Research be conducted?
Is sufficient time
available before
a managerial decision
must be made?
Is the information already on
hand inadequate for making the decision?
Is the decision
of considerableStrategic or
Tactical importance?
Does the Value of the
ResearchInformationExceed the
Cost of Conducting research?
ConductBusinessResearch
Business Research Should Not be Conducted
Yes Yes YesYes
No No No No
Time Constraint
Availability of data
Nature of decision
Benefits vs costs
Characteristics of Good Research
Clearly defined purposeClearly defined purpose
Detailed research processDetailed research process
Thoroughly planned designThoroughly planned design
High ethical standardsHigh ethical standards
Limitations addressedLimitations addressed
Adequate analysisAdequate analysis
Unambiguous presentationUnambiguous presentation
Conclusions justifiedConclusions justified
CredentialsCredentials
Problem No. 1
• Want to run a food stall in Alipore?
Problem No. 2
A finance company has its own agents in the rural areas as well as urban areas. Its Fixed Deposit market in rural areas are quite good. Now, the company wants to explore the market for insurance through its own distribution channel. How the company will do it?
Problem No. 3
Why Consumers Prefer Barista to Café
Coffee Day?
Problem No. 4
• Kellogg’s experienced a slump in the market. Why?
Identification
• How to solve the problem?
Solution
Problem No. 5
How to recover old (disconnected) phone sets
from the consumers?
Problem No. 6
• A not-very-much-known pharmaceutical company wants to increase its market share and also make its presence felt in way of some other related products/ services
Research ProblemsResearch ProblemsFrom the research idea one has to think of a general research question and formulate a
research problem. E.g. you are interested about NGOs in India. From this you have to make
a research question like, how their work is doing good to our people and/or how their
fundings are coming
Examples of Research ProblemsExamples of Research ProblemsMarketing Market Potentials/share/segmentation/characteristics Advertising research Product Launching Design of advertisements Purchasing Pattern of Consumers
Finance Credit Card Industry Mergers and acquisitions
General Business Forecasting Industry trends Global environments
Some More Specific Business Research Topics:Marketing
• Factors Influencing Expenditure on Consumption of Milk and Milk Product in Chennai
• Demographic Factor: A Determinant for the Purchase Decision of Motorcycles in Kanchipuram Town (Tamil Nadu)
• A Survey of Consumer Awareness about Consumer Legislations in India.
• Consumer Behavior towards Mobile Service Providers: An Empirical Study
Finance
• Inter - Industry Differences in Capital Structure: Evidence from India
• Accumulation of Market Power in Mergers and Acquisitions: Evidence from the Indian Pharmaceutical Industry
• Effect of Expiration - Day of Derivatives on Price, Volume and Volatility of Cash Segment of Stock Market
HR
• Climate Profile and Organizational Citizenship Behaviors: A Comparative Analysis of Teachers Working in Public and Private Schools
Steps of Research
• Planning
Establish Research ObjectiveFormulation of a Research ProblemPreparation of the Research Design
• Operation
Data CollectionAnalysis of DataInterpretation of Results
• Reporting
Drafting: a summary of the processFindingsSuggestion for further research
Basic Tenets of Research• Scientific Method (sound reasoning)
– Direct observation– Clearly defined variables/methods– Empirically testable hypotheses– Statistical justification of conclusions– Self-correcting process– Sound Reasoning: Exposition and Argument– Deduction (conclusive: strong bond b/w reason
and conclusion)– Induction
Deductive Reasoning
Inner-city household interviewing is especially
difficult and expensive
Inner-city household interviewing is especially
difficult and expensive
This survey involves substantial inner-city
household interviewing
This survey involves substantial inner-city
household interviewing
The interviewing in this survey will be especially difficult and expensive
The interviewing in this survey will be especially difficult and expensive
Inductive Reasoning
• Why didn’t sales increase during the promotional event?– Regional retailers did not have sufficient stock to
fill customer requests during the promotional period
– A strike by employees prevented stock from arriving in time for promotion to be effective
– A hurricane closed retail outlets in the region for 10 days during the promotion
Why Didn’t Sales Increase?
Basic Tenets of Research• Language of Research
– Concepts– Constructs – Definitions – Variables– Propositions
& Hypothesis– Theory– Models
A Variable Is the Property Being Studied
VariableVariable
EventEvent ActAct
CharacteristicCharacteristic TraitTrait
AttributeAttribute
Types of Variables
DichotomousDichotomousMale/Female
Employed/ UnemployedMale/Female
Employed/ Unemployed
DiscreteDiscreteEthnic backgroundEducational level
Religious affiliation
Ethnic backgroundEducational level
Religious affiliation
ContinuousContinuous
IncomeTemperature
Age
IncomeTemperature
Age
Independent and Dependent Variable Synonyms
•Independent Variable (IV)
•Predictor
•Presumed cause
•Stimulus
•Predicted from…
•Antecedent
•Manipulated
•Dependent Variable (DV)
•Criterion
•Presumed effect
•Response
•Predicted to….
•Consequence
•Measured outcome
Relationships Among Variable Types
Relationships Among Variable Types
Relationships Among Variable Types
Moderating Variables (MV)
• The introduction of a four-day week (IV) will lead to higher productivity (DV), especially among younger workers (MV)
• The switch to commission from a salary compensation system (IV) will lead to increased sales (DV) per worker, especially more experienced workers (MV).
• The loss of mining jobs (IV) leads to acceptance of higher-risk behaviors to earn a family-supporting income (DV) – particularly among those with a limited education (MV).
Extraneous Variables (EV)
• With new customers (EV-control), a switch to commission from a salary compensation system (IV) will lead to increased sales productivity (DV) per worker, especially among younger workers (MV).
• Among residents with less than a high school education (EV-control), the loss of jobs (IV) leads to high-risk behaviors (DV), especially due to the proximity of the firing range (MV).
Intervening Variables (IVV)
• The switch to a commission compensation system (IV) will lead to higher sales (DV) by increasing overall compensation (IVV).
• A promotion campaign (IV) will increase savings activity (DV), especially when free prizes are offered (MV), but chiefly among smaller savers (EV-control). The results come from enhancing the motivation to save (IVV).
Hypothesis Formats
•Descriptive Hypothesis–In Detroit, our potato chip market share stands at 13.7%.
–American cities are experiencing budget difficulties.
•Research Question–What is the market share for our potato chips in Detroit?
–Are American cities experiencing budget difficulties?
•Proposition and Hypothesis
Relational Hypotheses
•Correlational•Young women (under 35) purchase fewer units of our product than women who are older than 35.
•The number of suits sold varies directly with the level of the business cycle.
•Causal•An increase in family income leads to an increase in the percentage of income saved.
•Loyalty to a grocery store increases the probability of purchasing that store’s private brand products.
The Role of Hypotheses
Guide the direction of the studyGuide the direction of the study
Identify relevant factsIdentify relevant facts
Suggest most appropriate research designSuggest most appropriate research design
Provide framework for organizing resulting conclusions
Provide framework for organizing resulting conclusions
• Research Hypotheses: The formulation of hypotheses or propositions that may be possible answers to research questions is an important step in the process of formulating the research question. The hypothesis is a testable proposition. This particular aspect needs to be discussed in some detail.
Sources of Hypothesis
• Theory (Testing efficient market hypothesis for Indian data)
• Observation (girls are more serious about attending classes than boys)
• Analogies (Loyal customers expect better post purchase service for consumer durables……..)
• Intuition & experience
• Previous research findings (there exists co-movement in stocks……this motivated me in finding out whether the volatility in those stocks trigger more volty in our market or not)
• Existing literature/ state of knowledge
• Culture / Socio-economic environment
• Continuity of research (FII nature followed by FII volatility)
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Characteristics of a good hypothesis
It should be:• Conceptually clear• Specific• Testable• Should have applicability of techniques• Theoretically relevant• Consistent• Objective• Not very complex
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How to Develop a Hypothesis: The Rules
Take the variable measurements with the most quantitative characteristics available
Make the measurement of the scale (of the variable) explicit and clear
Use the variables which can be clearly defined and commonly accepted, do not use vague terms
Try to be more specific, e.g. link two or more formal propositions through a common variable if possible
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Testing of Statistical Hypotheses
Hypothesis is only a hunch or a provisional idea that should be tested by proper methods and the result may be either acceptance or rejection. The researcher should not try to ‘prove’ the hypothesis, but try to ‘test’ it.
Type I and Type II errors are associated with it:
Type I: Reject the hypothesis when it is true
Type II: Accept the hypothesis when it is false
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Criteria for judging hypothesis
• One can evaluate the hyp. using the criteria suggested by Goode & Hatt whether it is conceptually clear, has empirical reference, specific, related to techniques and related to any theory or not.
• According to Clover & Basley, the criteria are:
whether all the aspects are covered, all the possibilities considered and the hypothesis is strongly related to the research question or the problem.
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Theory & Model• Theory: a set of systematically interrelated
concepts/definitions/propositions to explain facts
• Model: representation of a system
Ref
• Cooper and Schindler, Chaps 1 and 2