Part One
Introduction
Chapter 1
The Role of Business Research
AT-A-GLANCE
I. The Nature of Research
A. Business research defined
B. Applied and basic business research
C. The scientific method
II. Managerial Value of Business Research
A. Identifying problems or opportunities
B. Diagnosing and assessing problems or opportunities
C. Selecting and implementing a course of action
D. Evaluating the course of action
III. When Is Business Research Needed?
A. Time constraints
B. Availability of data
C. Nature of the decision
D. Benefits versus costs
VI. Business Research in the 21st Century
A. Communication Technologies
B. Global business research
LEARNING OUTCOMES
1. Understand how research contributes to business success
2. Know how to define business research
3. Understand the difference between basic and applied business research
4. Understand how research activities can be used to address business decisions
5. Know when business research should and should not be conducted.
6. Appreciate the way that technology and internationalization are changing business research.
CHAPTER VIGNETTE: ESPN Hits a Home Run by Leveraging the
Power of its Business Research
The Entertainment and Sports Programming Network (ESPN) was launched in 1979 and has become a
media juggernaut, expanding globally and in every possible outlet. ESPN.com is one of the most visited
sites on the World Wide Web. Information has been slowly accumulating as people interact with ESPN
content, but this information was located in separate databases and across different operating units. ESPN
partnered with Quaero, a business research company that specializes in customer intelligence, integrating
databases and learning more about how fans use their media, and what specifically they were looking for.
Enhancing the fan’s experience had bottom-line implications for their revenue and the revenue of their
advertisers. It was business research that made this possible.
SURVEY THIS!
This feature allows students to better understand the researcher’s job in determining what information is
needed so that data can be analyzed and become intelligence. This first interaction with the “Survey
This!” feature is for students to play the role of respondent and respond to the survey. Instructors need to
provide instructions to access the questionnaire via the Internet.
RESEARCH SNAPSHOTS
Harley-Davidson Goes Abroad
Before Harley-Davidson goes overseas, it must perform considerable research on that market.
Consumers in some countries might prefer economical and practical motor bikes (e.g., France or
Italy); others might find Harley more prestigious. Harley learned that positive consumer opinions
and a booming economy were not enough to move into India because high duties and emission
rules would make them cost prohibitive. One opportunity for Harley to investigate is the growing
U.S. women’s market for bikes, which has nearly doubled since 1990.
Business Class Success?
Overseas business class airfares often cost between $5,000 and $10,000. Research shows that
business class travelers want comfort, quality food, and convenience on boarding. A few startup
airlines are offering “discount” business-class only airlines. That is, no coach class seats and
business class seats with fares ranging between $1,600 and $3,800. However, the startups failed.
Could more effective business research have determined these were not feasible business
ventures?
“Jacques” Daniels
U.S. distilled spirits sales have declined over the last 10-15 years as more Americans turn to wine
or beer. As a result, these marketers have increased efforts to expand into international markets.
The producers of Jack Daniels conducted research and learned that (1) Japanese consumers use
Jack Daniels as a dinner beverage, (2) Australian consumers mostly consume distilled spirits in
their homes, (3) British consumers also like mixed drinks, but they usually partake in bars and
restaurants, and (4) in China and India, consumers more often choose counterfeit or “knock-offs”
to save money. One-half of all Jack Daniels sold is now sold outside of the U.S.
OUTLINE
I. THE NATURE OF BUSINESS RESEARCH
Business research covers a wide range of phenomena.
For managers, the purpose of research is to provide knowledge regarding the
organization, the market, the economy, or another area of uncertainty.
While researchers in different functional areas may investigate different phenomena, they
are similar to one another because they share similar research methods.
The ultimate goal of research is to supply accurate information that reduces the
uncertainty in managerial decision making.
Business Research Defined
Business research is the application of the scientific method in searching for the truth
about business phenomena.
The process includes:
idea and theory development
problem definition
searching for and collecting information
analyzing data
communicating the findings and their implications
This definition suggests that business research:
information is not intuitive or haphazardly gathered
is accurate and objective, using the scientific method
is designed to facilitate the managerial decision-making process for all aspects of
the business: finance, marketing, human resources, and so on.
is limited by one’s definition of business
Applied and Basic Research
Applied business research is conducted to address a specific business decision for a
specific firm or organization.
Basic business research (sometimes referred to as pure research) is conducted without a
specific decision in mind and it usually does not address the needs of a specific
organization.
Attempts to expand the limits of knowledge in general, and as such it is not aimed at
solving a particular pragmatic problem.
However, there are very few aspects of research that apply to only basic or only applied
research.
This text uses the term business research more generally to refer to either type of
research.
The Scientific Method
All research, whether basic or applied, involves the scientific method.
Scientific method is the way researchers go about using knowledge and evidence to
reach objective conclusions about the real world.
Involves developing hypotheses and testing them against empirical evidence (facts from
observation or experimentation). From these results, new knowledge is acquired.
Use in basic research leads to inferences and conclusions about phenomena and leads to
the establishment of general laws.
Use in applied research ensures objectivity in gathering facts and testing creative ideas
for alternative business strategies.
.
II. MANAGERIAL VALUE OF BUSINESS RESEARCH
In all of business strategy, there are only a few business orientations:
Product oriented – the firm prioritizes decision making in a way that emphasizes
technical superiority in the product. Research is not a priority.
Production oriented – the firm prioritizes efficiency and effectiveness of the production
processes in making decisions (i.e., drive costs down). Research is not a priority.
Marketing oriented – focuses on how the firm provides value to customers more than on
the physical product or production process.
The prime managerial value of research is that it provides information that improves the
decision-making process.
The decision-making process associated with the development and implementation of a
business strategy involves four inter-related 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.
Identifying Problems or Opportunities
Business research can help managers plan strategies by determining the nature of
situations or by identifying the existence of problems or opportunities.
Business research may be used as a scanning activity to provide information about
what is occurring within an organization or in its environment.
Diagnosing and Assessing Problems or Opportunities
After a problem or opportunity is identified, business research can help clarify the
situation by revealing underlying factors causing the situation, exploring, refining,
and quantifying an opportunity, or assist in setting priorities.
Selecting and Implementing a Course of Action
After the alternative courses of action have been clearly identified, business research
is often conducted to obtain specific information that will aid in evaluating the
alternatives and in selecting the best course of action.
Evaluating the Course of Action
Business research may serve as a tool to tell managers whether or not planned
activities were properly executed and if they accomplished what they were expected
to accomplish.
Evaluation research—the formal, objective measurement and appraisal of the extent
a given activity, project, or program has achieved its objectives.
Performance-monitoring research refers to research that regularly, sometimes
routinely, provides feedback for evaluation and control of recurring business activity.
III. WHEN IS BUSINESS RESEARCH NEEDED?
The determination of the need for research centers on:
1. time constraints
2. availability of data
3. nature of the decision
4. value of the research information in relation to costs
Time Constraints
Systematic research takes time.
Sometimes the urgency of a situation precludes the use of research.
Availability of Data
When managers lack adequate information, research must be considered.
Data need to be collected from an appropriate source and in a timely fashion.
Nature of the Decision
The more strategically or tactically important the decision, the more likely it is that
research will be conducted.
Benefits versus Costs
When deciding whether to make a decision without research or to postpone the decision
in order to conduct research, managers should ask three questions:
1. Will the payoff or rate of return be worth the investment?
2. Will the information gained improve the quality of the managerial decision enough to
warrant the expenditure?
3. Is the proposed research expenditure the best use of the available funds?
IV. BUSINESS RESEARCH IN THE TWENTY-FIRST CENTURY
Business research, like all business activity, continues to change, largely due to changes in:
Communication technology
Global marketplace
Communication Technologies
Virtually everyone is “connected” today.
The expressions “time is collapsing” and “distance is disappearing” capture the
tremendous revolution in the speed and reach of our communication technologies.
Technology has made for easier data collection and data analysis.
Global Business Research
Companies that conduct business in foreign countries must understand the nature of
those particular markets and judge whether they require customized business strategies.
Places greater demands for research tools that allow us to cross-validate research
results, meaning that the empirical findings from one culture also exist and behave
similarly in another culture.