Session 2&3

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Decisions need support!

Decision Support Systems (DSS)

Helps decision makers confront problems through direct interaction with
computerized databases and analytical software programs.
Stores data and transforms them into organized information that is
easily accessible to managers.
A customer relationship management (CRM) system is the part of
the DSS that addresses exchanges between the firm and its customers.

Decision Support System

Databases and Data Warehousing

Database
A collection of raw data arranged logically and organized in a form that
can be stored and processed by a computer.
Data warehousing
The process allowing important day-to-day operational data to be stored
and organized for simplified access.
Data warehouse
The multitiered computer storehouse of current and historical data.

Input Management

Input
All numerical, text, voice, and image data entered into the decision
support system.
Major Sources of Input
Internal records
Proprietary business research
Salesperson input
Behavioral tracking
Outside vendors and external distributors

Internal Records

Contain data that may become useful information for managers.

Accounting reports of sales and inventory figures
Costs, orders, shipments, inventory, sales, and other aspects of
regular operations
Customer profiles

Proprietary Business Research

Studies specific company problems.

Emphasizes the companys gathering of new data.
Is not conducted regularly or continuously.

Salesperson Input

Sales representatives reports:

Can alert managers to changes in competitors prices and new product
offerings.
May involve the types of complaints salespeople are hearing from
customers.
As trends become evident, this data may become business intelligence.

Behavioral Tracking

Modern technology provides new ways of tracking human behavior.

Global positioning satellite (GPS) systems
Click-through sequences
Scanner data
Single-source dataa systems ability to gather several types of interrelated
data.
Type of purchase
Use of a sales promotion
Advertising frequency data

Outside Vendors and External Distributors

Market information as their products.

e.g., ACNielsen Company provides television program ratings, audience
counts, and information about the demographic viewer groups.
Data specialists record and store certain business information.

Computerized Data Archives

Data Wholesalers
Companies that put together consortia of data sources into packages
that are offered to municipal, corporate, and university libraries for a fee.
EBESCO
PROQUEST
JSTOR
CMIE( Centre for monitoring Indian Economy)
Thomson Reuters
Economist Intelligence

Business Research in the 21st Century

Communication Technologies
Always connectedtime, place, and distance are irrelevant.
Decreases in information acquisition, storage, access, and transmission
costs.
Global Business Research
Business research is increasingly global.
Must understand the nature of particular markets.
Cross-validation
Verify that the empirical findings from one culture also exist and
behave similarly in another culture.

Nothing So Practical as Theory?

Theories provide a starting place, indicating what should be observed,

and show how these things should relate.

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 Attribution Theory is used to explain reasons for

observed phenomena by attributing it to internal
or external causes.
The three main dimensions include locus
(internal vs. external), stability (change over time
or not), and controllability (degree to which
individual has control over behavior).

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What is a Theory?
Theory
A formal, logical explanation of some events that

includes predictions or how things relate to one

another. ( JD-R theory)
Built through a process of reviewing previous findings
of similar studies, simple logical deduction and
knowledge of applicable theoretical areas.

Goals of Theory
Understanding
Predicting

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Research Concepts
Concept (or construct)
A generalized idea about a class of objects,

attributes, occurrences or process that has been

given a name.

Examples:

leadership
morale
gross domestic product
assets
customer satisfaction
market share

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Ladder of Abstraction
Ladder of Abstraction
Organization of concepts in sequence from the most concrete

and individual to the most general.

Abstract Level
The level of knowledge expressing a concept that exists only as

an idea or a quality apart from an object.

Empirical Level
The level of knowledge that is verifiable by experience or

observation.

Latent Construct
A concept that is not directly observable or measurable, but can

be estimated through proxy measures.

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A Ladder of Abstraction for Concepts

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Concepts are Abstractions of Reality

320

Research Propositions and Hypotheses

Propositions
Statements explaining the logical linkage among

certain concepts by asserting a universal connection

between concepts.( Happy employees are loyal
employees)

Example: Treating employees better will make them more

loyal employees.

Hypothesis
Formal statement of an unproven proposition that is

empirically testable.

Example: Giving employees one Friday off each month will

result in lower employee turnover.

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Empirical Testing
Empirical Testing
Examining a research hypothesis against reality using

data.

Variables
Anything that may assume different numerical values.
The empirical assessment of a concept.

Operationalizing
The process of identifying the actual measurement

scales to asses the variables of interest.

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EXHIBIT 3.3

Hypotheses Are the Empirical Counterparts of Propositions

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Theory Building
Deductive Reasoning
The logical process of deriving a conclusion about a

specific instance based on a known general premise

or something known to be true.

Inductive Reasoning
The logical process of establishing a general

proposition on the basis of observation of particular

facts.

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The Scientific Method

Scientific Method
A set of prescribed

procedures for establishing

and connecting theoretical
statements about events,
for analyzing empirical
evidence, and for predicting
events yet unknown.
Techniques or procedures
used to analyze empirical
evidence in an attempt to
confirm or disprove prior
conceptions.

Suggested steps:
1. Assess relevant existing
2.
3.
4.
5.
6.
7.

knowledge of phenomenon
Formulate concepts and
propositions
State hypotheses
Design research to test the
hypotheses
Acquire empirical data
Analyze and evaluate data
Propose an explanation of
the phenomenon and state
new problems raised by
the research
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Decision making and research

Key ways in which researchers contribute to
decision making:
1.

Helping to better define the current situation

2.

Defining the firmdetermining how consumers, competitors,

and employees view the firm

3.

Providing ideas for enhancing current business practices

4.

Identifying new strategic directions

5.

Testing ideas that will assist in implementing business

strategies for the firm

6.

Examining how correct a certain business theory is in a

given situation

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Decision Making Terms

Business opportunity
A situation that makes some potential competitive

advantage possible.

Business problem
A situation that makes some significant negative

consequence more likely.

Symptoms
Observable cues that serve as a signal of a problem

because they are caused by that problem.

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Decision Making
Decision making defined
The process of developing and deciding among

alternative ways of resolving a problem or choosing

from among alternative opportunities.

Researchs role in the decision making process

Recognizing the nature of the problem or opportunity.
Identifying how much information is currently

available and how reliable it is.

Determining what information is needed to better deal

with the situation.

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Conditions Affecting Decision Making

Certainty
The decision maker has all information needed to

make an optimal decision.

Uncertainty
The manager grasps the general nature of desired

objectives, but the information about alternatives is

incomplete.

Ambiguity
The nature of the problem itself is unclear such that

objectives are vague and decision alternatives are

difficult to define.
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Describing Decision-Making Situations

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Types of Business Research

Exploratory
Descriptive
Causal

431

Exploratory Research
Exploratory Research
Conducted to clarify ambiguous situations or discover

ideas that may be potential business opportunities.

Initial research conducted to clarify and define the
nature of a problem.
Does not provide conclusive evidence
Subsequent research expected

432

Descriptive Research
Describes characteristics of objects, people,
groups, organizations, or environments.
Addresses who, what, when, where, why, and how

questions.
Considerable understanding of the nature of the
problem exists.
Does not provide direct evidence of causality.

Diagnostic analysis
Seeks to diagnose reasons for market outcomes and

focuses specifically on the beliefs and feelings

consumers have about and toward competing
products.

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Descriptive Research (contd)

Examples
The average Weight Watchers customer

Is a female about 40 years old

Has a household income of about $50,000

Has at least some college education

Is trying to juggle children and a job

Characteristics of leaders

Empathetic

Resourceful

Ability to delegate

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Causal Research
Research conducted to identify cause and effect
relationships (inferences).
Evidence of causality:
Temporal sequencethe appropriate causal order of

events.
Concomitant variationtwo phenomena vary

together.
Nonspurious associationan absence of alternative

plausible explanations.

435

The Spurious Effect of Ice Cream

436

Degrees of Causality
Absolute Causality
The cause is necessary and sufficient to bring about

the effect.

Conditional Causality
A cause is necessary but not sufficient to bring about

an effect.

Contributory Causality
A cause need be neither necessary nor sufficient to

bring about an effect.

Weakest form of causality.

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Experiments
Experiment
A carefully controlled study in which the researcher manipulates

a proposed cause and observes any corresponding change in

the proposed effect.

Experimental variable
Represents the proposed cause and is controlled by the

researcher by manipulating it.

Manipulation
The researcher alters the level of the variable in specific

increments.

Test-market
An experiment that is conducted within actual market conditions.

438

Characteristics of Different Types of Business Research

Uncertainty Influences the Type of Research Conducted

439

Stages in the Research Process

Process stages:
1. Defining the research objectives

2. Planning a research design

3. Planning a sample
4. Collecting the data
5. Analyzing the data
6. Formulating the conclusions and preparing the

report
Forward linkageearlier stages influence later stages.
Backward linkagelater stages influence earlier
stages.
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Backward Research Process

Determine how the research results will be
implemented
To ensure implementation, what should the report
contain?
Specify the necessary analysis
Determine the kind of data needed
Scan secondary sources and look for available data
Design sampling and instrument
Collect data
Perform analysis and write the report

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Stages of the Research Process

442

Flowchart of
the Business
Research
Process

Note: Diamond-shaped boxes indicate stages in the research process in which a choice of one or more
techniques must be made. The dotted line indicates an alternative path that skips exploratory research.

443

Defining the Research Objectives

Research objectives
The goals to be achieved by conducting research.

Deliverables
The consulting term used to describe research

objectives to a research client.

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Exploratory Research Techniques

Previous Research
Literature review

A directed search of published works, including periodicals and

books, that discusses theory and presents empirical results that are
relevant to the topic at hand.

Pilot Studies

A small-scale research project that collects data from respondents

similar to those to be used in the full study.

Pretest
A small-scale study in which the results are only preliminary and intended
only to assist in design of a subsequent study.

Focus Group
A small group discussion about some research topic led by a moderator
who guides discussion among the participants.

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Example Decision Statements, Research Objectives, and

Research Hypotheses

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Planning the Research Design

Research Design
A master plan that specifies the methods and

procedures for collecting and analyzing the needed

information.
Basic design techniques for descriptive and causal
research:
Surveys
Experiments
Secondary data
Observation

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Selection of the Basic Research Method

Survey
A research technique in which a sample is

interviewed in some form or the behavior of

respondents is observed and described.

Telephone

Mail

Internet

In person

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Sampling
Sampling
Involves any procedure that draws conclusions based

on measurements of a portion of the population.

Sampling decisions
Who to sample?target population

What size should the sample be?

How to select the sampling units?

Random sample

Cluster-sample

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Gathering Data
Unobtrusive Methods
Methods in which research respondents do not have

to be disturbed for data to be gathered.

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Processing and Analyzing Data

Editing
Involves checking the data collection forms for

omissions, legibility, and consistency in classification.

Codes
Rules for interpreting, categorizing, recording, and

transferring the data to the data storage media.

Data analysis
The application of reasoning to understand the data

that have been gathered.

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Drawing Conclusions and Preparing a

Report
Steps in communicating the research findings:
Interpreting the research results
Describing the implications
Drawing the appropriate conclusions for managerial decisions

Reporting requirements
Conclusions fulfill the deliverables promised in the research

proposal
Consider the varying abilities of people to understand the
research results
A clearly-written, understandable summary of the research
findings

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The Research Program Strategy

Research project
A single study that addresses one or a small number

of research objectives.

Uses specific techniques for solving one-dimensional

problems, such as identifying customer segments, selecting
the most desirable employee insurance plan, or determining
an IPO stock price.

Research program
Numerous related studies that come together to

address multiple, related research objectives.

Because research is a continuous process,
management should view business research at a
strategic planning level.
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