SOURABH BISHNOI 1

PROCESS OF DECISION MAKING

 Decision making is the Process of resolving a
problem or choosing among alternative
opportunity.
 Key To Decision Making:
Recognizing the nature of the problem/ opportunity
Identifying how much information is needed
Determining what information is needed

SOURABH BISHNOI 2
CLASSIFICATION OF BUSINESS
PROBLEM/ DECISION MAKING SITUATION
 Decision are not all the same:
A Continuum of Decision Making
Certainty
Uncertainty
Ambiguity

SOURABH BISHNOI 3
CLASSIFICATION OF BUSINESS
RESEARCH
 Business Research can be classified on the basis of either
technique or function.
 Experiments, Surveys, and observational studies are just
a few common research techniques.
 Function or purpose allow us to understand how the
nature of the problem influences the choice of research
method. The nature of the problem will determine the
type of research:
 Exploratory
 Descriptive
 Causal

SOURABH BISHNOI 4
DEGREE OF PROBLEM DEFINITION
Exploratory Research
(Unaware of Problem)
“Our sales are declining and
we don’t know why.”
“Would people be interested
in our new product idea?”
Descriptive Research Causal Research
(Aware of Problem) (Problem Clearly Defined)
“What kind of people are buying “Will buyers purchase more of
our product? Who buys our our products in a new package?
competitor’s product?”
“Which of two advertising
“What features do buyers prefer campaigns is more effective?”
in our product?”
SOURABH BISHNOI 5
EXPLORATORY RESEARCH
Provide information to use in analyzing a situation.
Initial research conducted to clarify and define the
nature of a problem
Does not provide conclusive evidence
Subsequent research expected

SOURABH BISHNOI 6
DESCRIPTIVE RESEARCH

Describes characteristics of a population or

phenomenon
Seeks to Determine the answer to who, what, when,
where and how question.
Based on some understanding of the nature of the
problem

SOURABH BISHNOI 7
 EXAMPLE:
Business research conducted descriptive survey to identify
the characteristics of consumers who purchase organic food
products. Such consumers tend to live in larger cities, those
with population over 500, 000. More than half live on the
Coasts. The most frequent buyers of organic foods are
affluent men and women ages 45-54(36%) and 18-34 (35%).
Interestingly, consumers who buy organic foods are not very
brand –oriented – 81 % of them cannot name a single
organic brand.

SOURABH BISHNOI 8
 CAUSAL RESEARCH
 The main goal of causal research is to identify cause –
and- effect relationships among the variables.
(Exploratory and descriptive research precede cause- and
–effect relationship studies)
 Changing one variable (training) and then observe the
effect on another variable (productivity).
 Concomitant variation: Occurrence of two phenomena
that vary together.
 Both the event may be influenced by third variable.

SOURABH BISHNOI 9
 CAUSAL RESEARCH
 Research with the purpose of inferring causality should do
the following:
Establish the appropriate causal order or sequence of event
Measure the concomitant variation between the presumed cause and
the presumed effect
Recognize the presence or absence of alternative plausible explanations
or causal factors.

SOURABH BISHNOI 10
RESEARCH PROCESS

SOURABH BISHNOI 11
 DECISION ALTERNATIVE IN
THE RESEARCH PROCESS
The research process can be compared with a guide or a map. On
a map some paths are better charted than others some are difficult
to travel, some are more interesting and scenic than others.
Rewarding experiences may be gained during the journey. It is
important to remember there is no single right path or best path
for all journeys. The road one takes depend on where one wants to
go and the resources (money, time, labor, and so on) one has
available for trip.
At each of research process there are several paths to follow.

SOURABH BISHNOI 12
MANAGEMENT-RESEARCH
QUESTION HIERARCHY

SOURABH BISHNOI 13
FORMULATING THE
RESEARCH QUESTION

SOURABH BISHNOI 14
 MANAGEMENT QUESTIONS CAN
BE CATEGORIZED:
 Choice of purposes or objectives: “What do we want to
achieve?”
Example question: “What goals should XYZ try to achieve in its next
round of labor negotiations?”
 Generation and evaluation of solutions: “How can we achieve
the ends we seek?”
Research projects in this group usually deal with concrete problems.
Example question: “What should be done to reduce post-purchase
service complaints?”
 Troubleshooting or control situation: The problem usually
involves monitoring or diagnosing ways in which an organization is
failing to achieve its goals.
Example question: “How well is our program meeting its goals?”

SOURABH BISHNOI 15
BankChoice has done no formal research in the past. It has little specific
information about competitors or customers and has not analyzed its internal
operations. To move forward in the management- research question
hierarchy and define the research question, the Clint needs to collect some
exploratory information on:
What factors are contributing to the banks’ failure to achieve a stronger
growth rate in deposits?
How well is the bank doing regarding work climate, efficiency of operations
compared to industry norms, and financial conditions compared to industry
norms and competitors?
A small focus group is conducted among employees, and trade association
data are acquired to compare financial and operating statistics company
annual reports and end - of – year division reports. Form the results of these
two exploratory activities; it is obvious that BankChoice’s operations are not
as progressive as it has its costs well in line. So the revised management
question becomes,
“What should be done to make the bank more competitive?”
SOURABH BISHNOI 16
EXAMPLE: BANK’S PROFITABILITY (THE
MANAGEMENT DILEMMA)
 Consider this management question: “How can we improve our profit
picture?”
It does not specify what kind of research is to be done.
It is broad in nature.
It doesn’t propose a particular action or solution.
 This question must be narrowed by asking more specific sub-
questions by looking for the underlying causes of the problem:
“How can we improve deposits?”
“How can we reduce costs?”

SOURABH BISHNOI 17
 EXPLORATION
 BankChoice has done no formal research in the past.
 To move forward in the management-research question
hierarchy, information must be collected on:
The factors that are contributing to the bank’s failure to achieve a
stronger growth rate in deposits
How well the bank is doing in terms of work climate, efficiency of
operations compared to industry norms, and financial condition
compared to industry norms and competitors
 First, a small focus group is conducted among employees
and trade association data are acquired, in order to compare
financial and operating statistics.
Thisresults in the discovery that BankChoice’s operations are not as
progressive as its competitors. However, it has costs well in line.

SOURABH BISHNOI 18
Revised management question

 The revised management question becomes, “What

should be done to make the bank more competitive?”
The exploration process may surface at multiple points within the
research process.
 An exploration typically begins with a search of
published data.
It may also include seeking out subject matter experts.

SOURABH BISHNOI 19
EXAMPLE
 Consider the example of TechByte, a company
interested in enhancing its position in a given
technology.
This interest may prompt a number of questions:
How fast might this technology develop?
What are the likely applications of this technology?
What companies now possess it, and which ones are likely to make
a major effort to get it?
How much will it take in resources?
What are the likely payoffs?

SOURABH BISHNOI 20
 Researchers would likely begin by searching books and
periodicals for such things as:
Recent developments
Predictions by experts
Identification of other companies in the field
 The next step would likely be interviewing subject
matter experts.
Special attention would be paid to those who represent the two
extremes of opinions.
If possible, they would talk to those with information on
particularly thorny problems in development and application.

SOURABH BISHNOI 21
 THE RESEARCH QUESTION
 Once a researcher has a clear statement of the management
question, it must be translated into a research question.
At this point, the expertise of the manager comes into play.
Only reasonable alternatives should be considered.
The researcher’s task is to help the manager formulate a research
question that will help resolve the management dilemma.
 A research question is the hypothesis of choice that best
states the objective of the research study.
It may be more than one question.
Research question to be fact –oriented, information –gathering question.

SOURABH BISHNOI 22
 THE RESEARCH QUESTION

The president has agreed to be have research guided by

this question:
“Should BankChoice position itself as a modern,
progressive institution (with appropriate changes in
services and policies), or maintain its image as the oldest,
most reliable institution in town?”

SOURABH BISHNOI 23
 FINE-TUNING THE RESEARCH
QUESTION
 The refined question(s) will have better focus and will move
the research forward with more clarity.
 Research question-related activities
Examine the concepts and constructs to be used in the study.
If hypotheses are used, be certain that they meet the quality tests.
Determine what evidence must be collected to answer the questions and
hypotheses.
Set the scope of the study by stating what is not part of the research
question.
 When the characteristics or plausible causes of the problem
are well defined, and the research question is clearly stated, it
is possible to deduce the essential subquestions that will guide
the project planning.

SOURABH BISHNOI 24
 INVESTIGATIVE QUESTIONS

 Once the research question(s) has been selected, the

researcher moves to the level of investigative questions.
These questions reveal the specific pieces of information needed to
answer the research question.
 Investigative questions are those that must be answered to
satisfactorily arrive at a conclusion about the research
question.
To formulate them, the researcher takes a general research question
and breaks it into more specific questions.
They should be included in the research proposal, because they guide
the development of the research design.

SOURABH BISHNOI 25
EXAMPLE

 The BankChoice project has two major investigative

questions, with several subquestions each.
What is the public’s position regarding financial services and their use?
 What specific financial services are used?
 How attractive are various services?
 What bank-specific and environmental factors influence a person’s use of a particular service?

SOURABH BISHNOI 26
 CONT..
 What is the bank’s competitive position?
What are the geographic patterns of our customers and of our
competitors’ customers?
What demographic differences are revealed among our customers
and those of our competitors?
What words or phrases does the public (both customers and
noncustomers) associate with BankChoice? With BankChoice’s
competitors?
How aware is the public of the bank’s promotional efforts?
What opinion does the public hold of the bank and its competitors?
How does growth in services compare among competing
institutions?

SOURABH BISHNOI 27
 MEASUREMENT QUESTIONS
 Measurement questions should be outlined by completion
of the project-planning activities, but usually await pilot
testing for refinement.
 There are two types of measurement questions:
Predesigned: formulated and tested by previous researchers are recorded
in the literature and may be applied for the project at hand.
Custom-tailored questions: designed specifically for the project based on
the investigative questions.
Measurement questions are the questions actually appear on the
questionnaire.

SOURABH BISHNOI 28
MEASUREMENT QUESTIONS
 Predesigned questions:
Have enhanced validity
Can reduce the cost of the project.
 Custom questions:
The resources for this task will be the collective insights from all
the activities in the research process completed to this point,
particularly exploration.
These questions will be refined during pilot testing of the data
collection instruments.

SOURABH BISHNOI 29
 SCENARIO

The college has a problem: Too few students are taking

Operations Research as a course. The college board
has explored the dilemma and come up with the
management question, “How can enrollment in this
course be increased?” Now formulate 5 research
questions, each of which is an action that management
might take to solve the dilemma. Then specify which
proposed action is the most plausible.

SOURABH BISHNOI 30
 RESEARCH PROCESS ISSUES
 The Favored-Technique Syndrome
Some researchers are method-bound; they recast the management
question so that it is amenable to their favorite methodology.
Persons knowledgeable about, and skilled in, some techniques, but
not others, are often blinded by their special competencies.
Since the advent of total quality management (TQM), many
standardized customer satisfaction questionnaires have been
developed.
Managers must not let researchers steamroll them into use of an
instrument, even if it was successful for another client.

SOURABH BISHNOI 31
 Company Database Strip-Mining
Managers may mistakenly believe that a pool of information or a
database reduces (or eliminates) the need for further research.
Managers frequently hear from superiors, “We should use the
information we already have before collecting more.”
Having a massive amount of information is not the same as having
knowledge.
Each field in a database was created for a specific reason, which may
or may not be compatible with the management question facing the
organization.

SOURABH BISHNOI 32
 Unresearchable Questions
Not all management questions are researchable, and not all
research questions are answerable.
To be researchable, a question must be one for which observable
or other data collection can provide the answer.
Many questions cannot be answered on the basis of information
alone.

SOURABH BISHNOI 33
 Questions of value and policy often factor into management
decisions.
 Example: In the MetalWorks study, management may be asking,
“Should we hold out for a liberalization of the seniority rules in our
new labor negotiations?”
Additional considerations, such as “fairness to workers” or “management’s
right to manage” may be important to the decision.
 Questions of value can often be transformed into questions of fact.
Example: As it related to worker fairness, it may be able to estimate the extent
to which workers will be affected by a rule change. Then, one could gather
worker opinions about the fairness of seniority rules.
Even if a question can be answered by facts alone, it might not be
researchable because currently accepted and tested procedures or techniques
are inadequate.

SOURABH BISHNOI 34
 Ill-Defined Management Problems
Some problems are so complex, value-laden, and bound by
constraints that they are intractable to traditional forms of analysis.
Ill-defined research questions may have too many interrelate facets
to be measured accurately.
Methods may not presently exist to handle questions of this type.
Even if such methods were invented, they might not produce the
data necessary to solve such problems.

SOURABH BISHNOI 35
Politically Motivated Research
A manager’s motivation for seeking research may not always be
obvious.
Hidden agendas may include:
Presence of research may help win approval for pet idea.
Authorizing research is a measure of personal protection for decision
maker.
In these situations, it may be harder to win the manager’s support for
an appropriate research design.

SOURABH BISHNOI 36
DESIGNING THE STUDY
The research design is the blueprint for fulfilling objectives and answering questions.
Selecting a design may be complicated by the availability of a large variety of
methods, techniques, procedures, protocols, and sampling plans.

SOURABH BISHNOI 37
EXAMPLES:
If a survey is selected, will be it be conducted by mail, computer,
telephone, the Internet, or personal interview?
Should relevant data be collected once, or at regular intervals?
How will the questions be worded?
Should responses be scaled or open-ended?
This confusing array of options can be used to construct alternative
perspectives on the same problem.
Creating a design using diverse methodologies can help researchers
achieve greater insight than if they followed the most frequently
used method or that suggested by a disciplinary bias.
The advantages of several competing designs should be considered
before settling on a final one.

SOURABH BISHNOI 38
SAMPLING DESIGN

Another step in planning the design is to identify the target population and to select
the sample if a census is not desired.
Who and how many people will be interviewed?
What events will be observed, and how?
Which, and how many, records will be inspected?

SOURABH BISHNOI 39
A sample is a part of the target population, carefully selected to represent that
population.
When researchers undertake sampling studies, they are interested in estimating one or
more population values and/or testing one or more statistical hypotheses.

SOURABH BISHNOI 40
 EXAMPLE:

If a study’s objective is to examine the attitudes of U.S.

automobile assemblers about quality improvement, the
population may be defined as the entire adult population of
auto assemblers employed by the auto industry in the
United States.

Defining the terms adult and assembler, and the relevant job
descriptions related to “assembly” and “auto industry,” may
further limit the population under study.
Every person within the target population must then be
assigned a nonzero chance of selection, if probability
sampling is used.
If there is no feasible alternative, a nonprobability approach
may be used.
SOURABH BISHNOI 41