Chapter 1

The Role of Business Research

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 Business Research Defined
• The systematic & objective process of gathering,
recording, & analyzing data for aid in making business
decisions.
- Research information is nether intuitive nor
haphazardly gathered. Literally, research (re-search)
-“search again”
- Researcher must be objective to ensure accuracy to
generate information/collect data. Detached &
impersonal rather than biased.
- Research facilitates the managerial decision-making
(DM) process for all aspects of a business.
- Research should be an aid to managerial judgement,
not a substitute for it.
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 Basic & Applied Research
• Basic (pure) research: Research that is intended to
expand the boundaries of knowledge itself or to verify
the acceptability of a given theory;
• e.g. Is executive success correlated with high need for
achievement? Are members of highly cohesive work
groups more satisfied than members of less cohesive
work groups?

• Applied research: Research undertaken to answer

questions about specific problems or to make
decisions about a particular course of action or policy
decision;
• e.g. Should McDonald’s add Italian pasta dinners to its
menu? Business research told McDonald’s it should
not. 3
• Scientific method: Techniques or procedures
used to analyze empirical evidence in an
attempt to confirm or disprove prior
conceptions. Both basic & applied
researchers employ scientific method to
answer the questions at hand.

"The secret of success is to know something

nobody else knows. "
Aristotle Onassis

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 Managerial value of a BR
• Research facilitates effective management.
• It reduces uncertainty by providing pertinent
information.
• It improves the decision-making process.
• Decision-making process involves four interrelated
stages:
- Identifying problems/opportunities.
- Diagnosing & assessing problems/opportunities.
- Selecting & implementing a course of action.
- Evaluating the course of action.

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 Evaluating the course of action
• Evaluation research is the formal, objective
measurement and appraisal of the extent to
which a given activity, project, or program has
achieved its objectives.
• Performance-monitoring research:
- Research that regularly provides feedback for
evaluation and control.
- Indicates things are or are not going as planned.
- Research may be required to explain why
something “went wrong”. 6
 Total Quality Management (TQM)
• A business philosophy that embodies the belief
that the management process must focus on
integrating customer-driven quality throughout
the organization. quality (TQM) is a bodies belief
that the:
- Stresses continuous improvement of product
quality and service.
- Managers improve durability and enhance
features as the product ages.
- Managers strive to improve delivery and other
services to keep their companies competitive.7
 When is BR Needed?
• The determination of the need for research focuses
on:
1. Time constraints,
2. Availability of data,
3. Nature of the decision, &
4. Benefits versus costs.
• Time constraints:
- Conducting research takes time.
- Decisions must be made immediately.
- As a consequence, decisions are sometimes made
without adequate information.
- Sometimes, the urgency of a situation precludes
the use of research. 8
 When is BR needed? (Cntd)
• Availability of data:
- Lacking adequate information leads to conduct a
research.
- Research should provide relevant information to
answer the basic questions required for a decision.
- In case of availability of data, cost should be
considered.
• Nature of the decision:
- A routine tactical decision does not require research.
- Decision for a new product development warrant a
substantial expenditure for research.
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 When is BR needed? (Cntd)
• Benefits versus costs
- Conducting research to obtain benefits requires an
expenditure.
- Thus, there are both costs & benefits in conducting BR.
- In any decision-making situation, managers must
identify alternative courses of action.
• Whether to make a decision without research or to
postpone the decision, managers should ask:
- Will the payoff/rate of return be worth the investment?
- Will the information gained by BR improve the quality
of the decision?
- Is the proposed research cost the best use of the
available funds? 10
Potential value of a business research effort should exceed its
estimated costs

Costs
Value •Research
Expenditures
• Decreased Certainty •Delay of Marketing
•Increased Likelihood
Decision and
of a Correct Decision
Possible Disclosure
•Improved Marketing
of Information to
Performance and
Rivals
Resulting Higher •Possible Erroneous
Profits
Research Results

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 Determining when BR should be conducted

Benefits
Time Nature
Availability versus costs
constraints of decision
of data Does the
Is sufficient Is the
Is the value of the
time available decision of Conduct
information research
before a Yes already on considerable Business
Yes information Yes
managerial strategic or Yes Research
hand exceed the
decision tactical
adequate cost of
must be importance?
for DM? research?
made?

No No No No

Business Research Should Not Be Conducted

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 Major Topics For Research in Business
General Business Conditions & Corporate Research
Short-range forecasting (up to 1 year); Long-range forecasting (over 1 year);
Business & industry trends; Global environments; Inflation & pricing; Plant &
warehouse location; Acquisitions.

Financial & Accounting Research

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

Management & Organizational Behaviour Research

Total quality management (TQM); Morale & job satisfaction; Leadership
style; Employee productivity; Organizational effectiveness; Structural issues;
Absenteeism & turnover; Organizational climate; Organizational
communication; Time & motion; Physical environment; Labour union trends
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 Major Topics For Research in Business (cntd)
Sales & 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 behaviour; Customer
satisfaction
Information Systems Research
Knowledge & information needs assessment; Computer information
system use & 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 & promotion;
Gender, age, & racial discrimination/worker equity; Social values &
ethics 14
 Cross-functional teams

• Cross-functional teams are composed of

individuals from various organizational
departments such as engineering,
production, finance, & marketing who share
a common purpose.
- To focus on a core business process, such
as: customer services or new product
development.
- To improve product quality & increase
customer value.
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 BR in the 21st Century
• BR has been strongly influenced by:
- Increased globalisation, &
- Rapid growth of Internet & other information technologies
• Global BR:
- BR has become increasingly global
- Some companies have extensive international BR operations;
e.g. Upjohn, A.C. Nielsen International (more than 60%)
• Growth of the Internet:
- The Internet is a worldwide network of computers
- It allows users access to information & documents from
distance sources
- It is the most important communications medium since TV
- It has certainly changed the way millions of people think about
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getting & distributing information