e-School of Business and Quality Management

CAPSTONE Project

Fall 2010

RESEARCH METHODOLOGY

Dr. Abdullah AlSagheer

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What is Business Research?

Business Research may be defined as the “systematic and objective process of gathering, recording and analyzing data for aid in making business decisions” (Zikmund, Business Research Methods, 2002, p. 6)

Systematicness and Objectivity are its distinguishing features of Business Research, which is important tool for managers and decision-makers in corporate and non-corporate organizations

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When is Business Research Used?

Typically, business research methods are used in situations of uncertainty, that is, when decision-makers face two or more courses of action and seek to select the best possible alternative under the circumstances. Business Research is hence aimed at improving the quality of decision-making which, in turn, benefits the organization and helps ensure its continuity and efficiency

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Typical Users of Business Research Methods

Businesses and Corporations Public-Sector Agencies Consulting Firms Research Institutes Non-Governmental Organizations Non-Profit Organizations Independent Researchers and

Consultants

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Common Business Research Methods & Techniques

Surveys Interviews Observation Experiments Archival and Historical Data Qualitative Analysis Quantitative Analysis

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Fields Where Business Research is Often Used – (1)

General Business Conditions and

Corporate Research

Short- & Long-Range Forecasting,

Business and Industry Trends Global Environments Inflation and Pricing Plant and Warehouse Location Acquisitions

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 portfolio analysis impact of taxes research on financial institutions expected rate of return capital asset pricing models credit risk cost analysis

Management and OrganizationalBehaviour Research

• Total Quality Management• Morale and Job Satisfaction• Leadership Style• Employee Productivity• Organizational Effectiveness• Structural ssues• Absenteeism and turnover• Organizational Climate

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Fields Where Business Research is Often Used – (2)

Sales and Marketing Research

Market Potentials Market Share Market segmentation Market characteristics Sales Analysis Establishment of sales quotas Distribution channels New product concepts Test markets Advertising research Buyer behaviour Customer satisfaction Website visitation rates

Information Systems Research

Knowledge and information needs assessment

Computer information system use and evaluation

Technical suppot 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

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Selected Examples of Real-Life Situations in Which Business Research

Methods are Used A firm wants to produce and market a new product but first

wants to ascertain if there is a potential consumer demand for this product in markets x,y and z

a multinational firm wants to establish a production facility in another country after determining its technical and economic feasibility

A government agency wants to ascertain the satisfaction level of its employees, the causes for any possible discontent, and propose a scheme for enhancing this level

A financial institution wants to invest in commodities and commissions a study to determine the past trends and forecast future returns in a portfolio of commodities

The CEO of a firm wants to undertake a SWOT-Analysis as part of his plan to redefine his organization’s priorities

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Basic and Applied Research

Basic Research aims to expand the frontiers of science and knowledge by verifying or disproving the acceptability of a given theory or attempting to discover more about a certain concept (non-specificity)

Example: How does motivation affect employee performance?

Applied Research focusses on a real-life problem or situation with a view to helping reach a decision how to deal with it (Specificity)

Example: Should Corporation X adopt a paperless office environment?

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Science and the Scientific Method

Science has been defined as “the methodological and systematic approach to acquisition of new knowledge” (Geoffrey Marcyzk, David DeMatteo, David

Festinger, Essentials of Research Design and Methodology, John

Wiley & Sons, 2005, p. 4)

The scientific method, which has evolved since the 13th century, concerns the set of tools, techniques and procedures used by basic and applied researchers to analyze and understand phenomena and prove or disprove prior conceptions

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The Essence of the Scientific Method

Characteristics of the Scientific Method

ObjectivitySystematic Analysis

Logical Interpretation of Results

Elements of the Scientific Method

Empirical ApproachObservations

QuestionsHypothesesExperiments

AnalysisConclusionReplication

Basic Research

Applied Research

Sci

enti

fic

Meth

od

Information or Ideas for alternative

Courses of action

General Laws

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The Value of Business Research for Managers – (1)

Reduction of uncertainty and improvement in the quality of decision-making with several consequent advantages (e.g. strategic, operational) and benefits for organizations

Business Research Methods can be employed in each of the following four stages:

(1) Identification of problems and/or opportunitiesUseful for strategy planning, analysis of internal and external organizational environment.

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The Value of Business Research for Managers – (2)

(2) Diagnosing and Assessment of problems and/or opportunities

Its purpose is to gain insight into the underlying reasons and causes for the situation. If there is a problem, it asks what happened and why? If there is an opportunity, it seeks to explore, clarify and refine the nature of the opportunity and, in the case of multiple opportunities, seeks to set priorities

(3) Selection and Implementation of Courses of Action

After alternative courses of action have been determined, selection of the best possible course.

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The Value of Business Research for Managers – (3)

An important consideration is the quality of forecasting which is an essential tool of research

(4) Evaluating the Course of Action

Business Research Methods are used after a course of action has been implemented in order to determine whether activities have been properly implemented and have accomplished what they intended to do

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The Value of Business Research for Managers – (4)

Evaluation Research – It is the formal objective measurement and evaluation of the extent which an activity, project or programme has achieved its goal, and the factors which influence performance (e.g. audits). It is also the formal objective measurement and evaluation of the extent to which on-going activities, projects or programmes are meeting their goals (performance-monitoring research)

Examples of performance-monitoring research:

(1) Are railway passengers satisfied with the level of service the railway company is providing? If not, then research may need to be undertaken to ascertain the reasons for customer dissatisfaction and propose corrective measures

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The Value of Business Research for Managers – (5)

(2) What are the trends in retail and wholesale sector? Can research suggest new ways to improve efficiency in purchase transactions?

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When Should Business Research be Undertaken?

Is sufficient timeavailable?

Is information inadequate?

High importance of decision?

Research benefits greater than costs?

Yes

Yes

Yes

Undertake Business Research

NO Do notundertake Business Research

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Value and Costs of Undertaking Business Research

VALUE

Decreased Uncertainty

Higher Likelihood of Correct Decisions

Better Business performance

Higher Profits

Better Reputation

COSTS

Research Costs

Delay in Making Business Decisions

Disclosure of Information to Rivals

Possibility of Error

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The Building Blocks of Research

Measurements of phenomena (e.g. sales statistics of a department store)

DATA

Determination of relationship amongst data with a view to facilitating understanding of the phenomena,

their relationships and decision-making(e.g. past and predicted future sales trends)

INFORMATION

KNOWLEDGE

Blend of information, experience and in-sights that provides a framework that can be thoughtfully evaluated

when assessing new information or evaluating relevant situations

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Demands on Data & Information

Relevance to the problem or situation at hand Must be available in a timely manner to the right person

(manager or decision-maker) Completeness Accuracy Accessibility Affordability Integrateability into a broader global information or

decision-support system

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Global Information Support Systems

A Global Information System may be defined as “ an organized collection of computer hardware, communication equipment, software, data, and personnel designed to capture, store, update, manipulate, analyze, and immediately display information about worldwide business activities”

A Global Information System is a tool for providing past, current and projected information on internal operations and external activity. It organizes and integrates data from production, operations, marketing, finance, accounting and other business functions

(Zikmund, p. 22)

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Decision-Support System

A computer-based system that helps decision makers confront problems through direct interaction with databases and analytical software programs

The purpose of a decision support system is to store data and transform them into organized information that is easily accessible to decision-makers

Decision-Support Systems are integrated in Global Information Systems. They are aimed usually for assisting managers and decision-makers in specific organizational business units (e.g. divisions, departments and functional areas) by providing organized and adaptable information

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Databases & Software

Databases are collections of raw data which have been arranged in a logical manner and which can be stored and processed electronically

Software are programmes that allow complex operations to be undertaken on data and which give information for managers and decision-makers

Data Warehousing & Data Mining

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Data and Information Sources for Business Researchers – (1)

Internal Records

Example: Data about costs, shipments, inventory, sales, and other aspects of regular operations which are collected from various functional areas of an organization

Proprietary Business Research

Example: New data and information from projects which are undertaken ad hoc to study specific company problems

Business intelligence Systems

Example: Information about nonrecurring developments in the external business environment stemming from a network of sources and regular procedures

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Data and Information Sources for Business Researchers – (2)

On-Line Databases

Examples: PROQUEST, INFOTRAC, DIALOG, LEXIS-NEXIS, Dow Jones News Retrieval Services, CompuStat

Internet

Examples: World Wide Web search engines (Google, Yahoo, Altavista, Lycos, Excite etc.)

All Other Sources

Examples: Research Institutions, Libraries, Books, Journals, Periodicals,

Newspapers, Chambers of Commerce and Industry

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Business Research in the International Context

Business Research is being increasingly applied in an international context in the wake of globalization and the consequent freedom of movement of the resources of labour, capital and information of businesses and corporations:

Overseas market potential Joint ventures and relocating production lines overseas Framework considerations for investment and trade (e.g.

culture, legal environment, security, physical infrastructure, availability and quality of human resources, logistics, political stability, trade and investment incentives)

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Business Recorder(www.brecorder.com)