RESEARCH METHODS FOR MANAGERS

UNIT -- 1

INTRODUCTION TO BUSINESS RESEARCH

BUSINESS RESEARCH
Business Research covers a wide range of phenomena. For managers the purpose of research is to fulfill the need for knowledge of the Organization, the Market, the Economy, or another area of uncertainty. Literally, research (re-search) means to search again.

 FM-

Will the environment for long-term financing be better 2 years from now ? PM- What is the reason for the company`s high employee turnover ? MM- How can I monitor my retail trade activities ? Requires information about. Environment Employees Customers etc

Business research is one of the principal rule for answering these practical questions.

DEFINE BUSINESS RESEARCH

The systematic and objective process of gathering, recording and analysing data for aid in making business decisions
William G. Zikmund

WHEN IS BUSINESS RESEARCH NEEDED?

A manager has to face the initial decision of whether or not research should be conducted ? So the determination of the need for research centers on the following
1. 2. 3. 4.

Time Constraints Availability of Data Nature of the Decision Benefits Vs Costs

Time Constraints

Availability of Data

Nature of the decision

Benefits Versus Costs

Is the informatio n already on hand Yes inadequat Yes e for making the decision?

Does the Is the value of decision is research of informatio Conduct considera n exceed Yes Business Yes ble the cost Research strategic of on tactical conductin importanc g e? research

No

No

No

No

Business Research Should not be Conducted

1. TIME CONSTRAINTS
Conducting research systematically takes time. As the decision must be made immediately, there will be no time for research.

Consequence. Decisions are some times made without adequate informations. Without thorough understanding of the situation.

2. AVAILABILITY OF DATA
If

a potential source of data exists, managers want to know how can he obtain the data. If the data cannot be obtained, research cannot be conducted.

3. NATURE OF THE DECISION

The

value of business research will depend on the nature of the managerial decision to be made. The more strategically or tactically important the business decision, the more likely it is that research will be conducted.

4. BENEFITS VERSUS COSTS

There

are both costs and benefits in conducting BR Before making decisions, managers must identify alternative courses of action, then weigh the value of each alternative against its cost.

MAKE DECISIONS WITHOUT RESEARCH OR POSTPONE DECISION TO CONDUCT RESEARCH

Will

the payoff or rate of return be worth the investment? Will the information gained by BR improve the quality of the decision to an extent sufficient to reduce the expenditure? Is the proposed research expenditure the best use of the available funds?

RESEARCH AND MANAGERS

Prime

Managerial value of BR -Reduce uncertainty by providing information that improves the decision making process. The decision making process associated with the development and implementation of a strategy involves four interrelated stages..
1.Identifying

problems or opportunities 2.Diagnosing and assessing problems or opportunities 3.Selecting and implementing a course of action 4.Evaluating the course of action

1. IDENTIFYING PROBLEMS OR OPPORTUNITIES

BR helps managers to Plan strategies by determining the nature of situation Identify the existence of problems or opportunities present in the organisation. Provide information about what is occurring within an organisation or in its environment. Once business research indicates a problem or opportunity ....... Managers look. whether the alternatives are clear enough to make a decision based on experience or intuition. Decide that more business research is needed to generate additional information for a better understanding of the situation.

2. DIAGNOSING AND ASSESSING PROBLEMS OR

OPPORTUNITIES

After an organisation recognizes a problem or identifies a potential opportunity, an important aspect of BR is the provision of diagnosing and assessing information that clarifies the situation. If there is a problem, they need to specify what happened and why? If an opportunity exists, they may need to explore, clarify, and refine the nature of the opportunity. If multiple opportunities exist, research may be conducted to set priorities. Qualitative and quantitative investigation may help managers better understand what alternative courses of action are practical.

3. SELECTING AND IMPLEMENTING A COURSE OF

ACTION
After

the alternative courses of action have been clearly identified, BR is often conducted to obtain specific information that will aid in evaluating the alternatives and in selecting the best course of action. eg. Suppose a fax machine manufacturer must decide to build a factory either in Japan or in South Korea. In such case, BR can be designed to supply the relevant information necessary to determine which course of action is best for the organisation. Even the best plan is likely to fail if it is not properly implemented.

4. EVALUATING THE COURSE OF ACTION

After a course of action has been implemented business research may serve as.. A tool to inform managers whether planned activities were properly executed and whether they accomplish what they were expected to accompish. Provide feedback for evaluation and control of strategies and tactics.

MAJOR TOPICS FOR RESEARCH IN BUSINESS

General

business conditions and corporate research Financial and accounting research Management and organizational behaviour research Sales and marketing research Information systems research Corporate Social Responsibility

GENERAL BUSINESS CONDITIONS AND CORPORATE

RESEARCH

Short-range

forecasting (up to 1 year) Long-range forecasting (over 1 year) Business and industry trends Global environments Inflation and pricing Plant and warehouse location Acquisitions etc..

FINANCIAL AND ACCOUNTING RESEARCH

Forecasts of financial interest-rate trends Stock, bond, and commodity value predictions Capital formation alternatives Mergers and acquisitions Risk-return trade-offs Impact of taxes Portfolio analysis Research and financial institutions Expected rate of return Capital asset pricing models Credit risk Cost analysis

MANAGEMENT AND ORGANISATIONAL BEHAVIOR

RESEARCH

Total Quality Management (TQM) Morale and job satisfaction Leadership style Employee productivity Organisational effectiveness Structural issues Absenteeism and turnover Organisational climate Organisational communication Time and motion Physical environment Labor union trends

SALES AND MARKETING RESEARCH

Market potentials Market share Market segmentation Market characteristics Sales analysis Establishment of sales quotas, territories Distribution channels New product concepts Test markets Advertising research Buyer behavior Customer satisfaction Web site visitation rates

INFORMATION SYSTEMS RESEARCH

Knowledge

and information needs assessment Computer information system use and evaluation Technical support satisfaction Database analysis Data mining Enterprise resource planning systems Customer relationship management systems

CORPORATE RESPONSIBILITY RESEARCH

Ecological

impact Legal constraints on advertising and promotion Sex, age, and racial discrimination/ worker equity Social values and ethics

BUSINESS RESEARCH IN THE 21ST CENTURY

BR has been strongly influenced by 2 major trends in business. Increased globalisation Rapid growth of the Internet and other information technologies These trends will continue, and likely accelerate, as the 21st century progresses.

SIGNIFICANCE FOR BUSINESS RESEARCH IN THE 21 ST CENTURY

1. GLOBAL BUSINESS RESEARCH research has become increasingly global and will become more in 21st century. Some companies have extensive international business research operations eg: Upjohn conducts business research in 160 different countries. A.C.Nielsen International, with its television ratings, is the worlds largest business research company. Two thirds of its business comes from outside the United States

Companies that conduct business in foreign countries must understand the nature of those particular markets and judge whether they require customized strategies. Europeans do not share identical tastes for many consumer products. eg:- Differences in Europeans preferences concerning medicines. The French-purple pills The English and Dutch-white pills US bright red capsules (other 3 dislike bright red) This illustrates that companies that do business in Europe must judge whether they need to adapt to local customs and buying habits. Although the nature of BR can differ around the globe, the need for BR is Universal.

2. GROWTH OF THE INTERNET Internet is transforming society Time is collapsing Distance is no longer an obstacle Crossing oceans requires only a mouse click People are connected 24 hours a day, 7 days a week. The internet is a worldwide network of computers that allows users access to facts and figures, information from distant sources quickly than by visiting a library. Researcher who is questioning people from around the globe and get responses24 hours a day,7 days a week. In the 21st century, business research on the internet is moving out of the introductory stage of its products life cycle into the growth stage. BR via the internet has come of age.

TYPES OF BUSINESS RESEARCH-APPLIED &BASIC

Applied research- R done with the intention of applying the results of the findings to solve specific problems currently being experienced in the organisation. Eg:- a particular product may not be selling well and the manager might want to find the reasons for this in order to take corrective action. Basic/Fundamental/Pure research-Research done chiefly to enhance the understanding of certain problems that commonly occur in the organisational setting, and seek method of solving them. The findings of such research contribute to the building of knowledge in the various functional areas of business. Such knowledge generated is usually later applied in organisational settings for problem solving.

THE BUILDING BLOCKS OF SCIENCE IN RESEARCH

The deduction and induction are two important aspects of the scientific research through which the answers to a research question can be arrived at. Deduction is a process by which the researchers arrive at a reasoned conclusion by logical generalization of a known fact. Deduction leads to conclusions, which should be necessarily based on reasons. The reasons are said to imply the conclusions and represent a proof. A deduction should be both valid and true. True in the sense that the reasons given for the conclusions must agree with the real world. Valid means the conclusion must necessarily be arrived from the reasons.

Induction is a process where certain phenomenon is observed and on this basis conclusions are arrived at. The conclusions are drawn from one or more facts or pieces of evidence. The conclusions in induction result in hypotheses. Induction leads to establish a general proposition based on observed facts. For example the researcher understand that production processes is the prime feature of factories. It is therefore concluded that factories exist for production purposes. Research is based on both deduction and induction. It helps us to understand, explain and predict business phenomena.

One of the primary methods of scientific investigation is the hypothetico-deductive method. The method of starting with a theoretical framework, formulating hypotheses and logically deducing from the results of the study is known as hypothetico-deductive method. The 7 step process in the H-D method are as follows: 1. Observation 2. Preliminary information gathering 3. Theory formulation 4. Hypothesizing 5. Further scientific data collection 6. Data analysis 7. Deduction

1. OBSERVATION
Observation

is the first stage in scientific investigation. In this process, the researcher takes into account the changes that are occurring in the environment. To proceed further the changes observed in the environment should have important consequences. Eg:- The changes may be in the form of sudden drop in the sales, increase in the employee turnover, decrease in the number of customer etc.

2. PRELIMINARY INFORMATION GATHERING

This

involves seeking in depth regarding the facts being observed.

information

The

information may be gathered through formal questionnaires, interview schedules or through informal or causal talk with the concerned people.

The next step is to make sense out of the factors identified in the information gathering stage by assembling them together in a meaningful manner.

3. FORMULATION OF THEORY
Theory

formulation enables to integrate all the information in a logical manner so as to conceptualize and test the factors responsible for problem. The critical variables contributing to the problems are examined. The association or relationship among the variables contributing to the problem is studied in order to formulate the theory.

4. DEVELOPING HYPOTHESES Next logical step leads to framing of testable hypotheses. Hypotheses testing are called deductive research. Sometimes it may so happen that the hypotheses, which are not originally formulated, get generated through the process of induction. After the collection of data an insight may occur based on which new hypotheses can be formulated. Thus hypotheses testing through deductive research and hypotheses generation through induction are both common.

5. SCIENTIFIC DATA COLLECTION The primary and secondary sources can both be explored in order to collect the data Data on every variable in the theoretical framework from which the hypothesis is generated should be collected.
After

the hypothesis is developed, the data with respect to each variable in the hypotheses needs to be obtained in a scientific manner so as to test the hypotheses.

6. DATA ANALYSIS The data gathered are to be statistically analyzed to validate the hypothesis postulated. Both qualitative and quantitative data needs to be analyzed. Qualitative data refer to information gathered through interviews and observations. Through scaling techniques the qualitative data can be converted into quantifiable form and subjected to analysis. Appropriate statistical tool should be used to analyze the data

7. DEDUCTION
Deduction

is the process of arriving at conclusions by interpreting the meaning of results of the data analysis. Based on the deduction recommendations can be made to solve the problem encountered.

Case studies and action research are sometimes used to study certain types of issues. Case studies- involves in-depth, contextual analyses of similar situations in other organisation, where the nature and definition of the problem happen to be the same as experienced in the current situation. Authentic case studies are difficult to find because many companies prefer to guard them as proprietary data. By carefully scrutinizing documented case studies, the manager is in a position to obtain several clues as to what factors might be operating in the current situation and how the problem might be solved.

OTHER TYPES OF RESEARCH

 Picking

the right cases for study, and understanding and correctly translating the dynamics to one`s own situation, are critical for successful problem solving.. Case studies usually provide qualitative rather than quantitave data for analysis and interpretation. The application of case study analysis to certain organisational issues is relatively easy.

eg:- A study of what contributes to the successful installation of a good MIS system in organisations similar to the one that is planning to install it, and the practical application of that knowledge would be very functional

ACTION RESEARCH Is sometimes undertaken by consultants who want to initiate change processes in organisations. Here, the researcher begins with a problem that is already identified. And gathers relevant data to provide a tentative problem solution. This solution is then implemented. The effects are then evaluated ,defined, and diagnosed, and the research continues on an ongoing basis untill the problem is fully resolved.