978-1111826925 Chapter 4 Solution Manual

QUESTIONS FOR REVIEW AND CRITICAL THINKING/ANSWERS

1. List five ways that business research can contribute to effective business decision making.

Researchers contribute to decision makers in several key ways. These include:

(1) Helping to better define the current situation.

2. Define business opportunity, business problem and symptoms. Give an example of each as it

applies to a university business school.

A business opportunity is a situation that makes some potential competitive advantage possible.

An example of this for a university business school is technology, which could make distance

learning possible for students who otherwise would not be able to get an education. A business

3. Consider the following list, and indicate and explain whether each best fits the definition of a

problem, opportunity, or symptom:

a. A 12.5 percent decrease in store traffic for a children’s shoe store in a medium-sized city

mall.

b. Walmart’s stock price has decreased 25 percent between 2007 and 2009.

c. A furniture manufacturer and retailer in North Carolina reads a research report indicating

consumer trends toward Australian Jara and Kari wood. The export of these products is very

limited and very expensive.

This could be viewed as a business opportunity because it is a situation that makes some potential

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Chapter Four: The Business Research Process: An Overview 32

d. Marlboro reads a research report written by the U.S. FDA. It indicates that the number of

cigarette smokers in sub-Saharan Africa is expected to increase dramatically over the next decade.

4. What are the three types of business research? Indicate which type each item in the list below

illustrates. Explain your answer.

The three types of business research are exploratory, descriptive, and causal. Exploratory

a. Establishing the relationship between advertising and sales in the beer industry.

Causal research. Establishing the functional relationship between advertising and sales is the

b. Ranking the key factors new college graduates are seeking in their first career position.

c. Estimating the five-year sales potential for CAT scan machines in the Ark-La-Tex

(Arkansas, Louisiana and Texas) region of the United States.

d. Testing the effect of “casual day” on employee job satisfaction.

Causal research. This research can “manipulate” the employee dress code and compare job

e. Discovering the ways that people who live in apartments actually use vacuum cleaners,

and identifying cleaning tasks for which they do not use a vacuum.

5. Describe the type of research evidence that allows one to infer causality.

The critical pieces of causal evidence are: (1) temporal sequence, (2) concomitant variation, and

(3) nonspurious associations. Temporal sequence deals with the time order of events. Thus,

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6. What is an experimental manipulation? A business researcher is hired by a specialty retail

firm. The retailer is trying to decide what level of lighting and what temperature they should

maintain its stores to maximize sales. How can the researcher manipulate these experimental

variables within a causal design?

Manipulation means that the researcher alters the level of the variable in specific increments. In

7. A business researcher gives a presentation to a music industry executive. After considering

the results of a test-market examining whether or not lowering the price of in-store CDs will

lower the number of illicit downloads of the same music, the executive claims: “The

test-market was conducted in eight cities. In two of the cities, lowering the price did not

decrease illicit downloading. Therefore, lowering the price does not decrease this behavior

and we should not decide to lower prices based on this research.” Comment on the

executive’s conclusion. What type of inference is being made? Will the decision not to lower

prices be a good one?

A causal inference is being made. In this case, the executive concluded that since illegal

downloads did not decrease in two markets that prices were lowered, that lowering the price does

not cause a decrease in the undesired behavior. Is the decision not to lower price a good one?

8. We introduced the scientific method in Chapter 3. Do the stages in the research process seem

to follow the scientific method?

The scientific method is broadly described as a set of techniques and procedures that are utilized

to know and understand business phenomena. Individuals observe facts and usually state a prior

conception of the nature of a given phenomenon. Then, empirical evidence is gathered and

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9. Why is the “defining research objectives” of the research process probably the most

important stage?

Research objectives are the goals to be achieved by conducting research. The genesis of the

research objectives lies in the type of decision situation faced. In research, the adage “a problem

10. Suppose Auchan (http://www.auchan.fr), a hypermarket chain based out of France, was

considering opening three hypermarkets in the midwestern United States. What role would

theory play in designing a research study to track how the shopping habits of consumers from

the United States differ from those in France and from those in Japan? What kind of

hypothesis might be examined in a study of this topic?

Theory plays a role in determining the appropriate research objectives. A theory is a formal,

logical explanation of some events that includes predictions of how things relate to one another.

11. Define research project and research program. Referring to the question immediately above,

do you think a research project or a research program is needed to provide useful input to the

Auchan decision makers?

When the researcher has only one or a small number of research objectives that can be addressed

in a single study, that study is referred to as a research project. However, if you think about a

firm’s business activity in a given period of time, you’ll realize that business research is not a

12. What type of research design would you recommend in the situations below? For each

applied business research project, what might be an example of a “deliverable”? Which do

you think would involve actually testing a research hypothesis?

a. The manufacturer of flight simulators and pilot training equipment wishes to forecast

sales volume for the next five years.

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Descriptive Research. Initially the study will identify past sales and the variables associated with

sales of pilot training equipment (e.g., number of licensed pilots, number of airplanes sold, gross

It is very likely that both sales of flight simulators and sales of pilot training equipment are highly

b. A local chapter of the American Lung Association wishes to identify the demographic

characteristics of individuals who donate more than $500 per year.

Descriptive Research. This answer depends upon the nature of records kept by the local

organization. It may be that this information can be obtained from internal sources. However, if

c. Caterpillar, Inc. is concerned about increasing inventory costs and is considering going

completely to a just-in-time inventory system.

d. A food company researcher is interested in knowing what types of food are carried in

brown-bag lunches to learn if the company can capitalize on this phenomenon.

Exploratory research can be conducted to observe consumers at lunchtime (i.e., in cafeterias).

e. A researcher wishes to identify who plays bingo.

Descriptive research. A researcher can observe bingo players or conduct surveys of bingo

RESEARCH ACTIVITIES

1. [Internet Question] Look up information about the online MBA programs at the University of

Phoenix (http://www.mba-online-program.com/university_of_phoenix_online_mba.html).

Compare it to the traditional MBA program at your university. Suppose each was looking to

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Chapter Four: The Business Research Process: An Overview 36

expand the numbers of students in their programs, how might the research design differ for

each?

A research design is a master plan that specifies the methods and procedures for collecting and

analyzing the needed information; it is a framework for the research plan of action. There are

2. [Internet Question] Use a Web browser to go to the Gallup Organization’s home page at

(http://www.gallup.com). The Gallup home page changes regularly. However, it should

provide an opportunity to read the results of a recent poll. For example, a poll might break

down American’s sympathies toward Israel or the Palestinians based on numerous individual

characteristics such as political affiliation or religious involvement. After reading the results

of a Gallup poll of this type, learn how polls are conducted. You may need to click “About

Gallup” and/or on the Frequently Asked Questions (FAQs) to find this information on how

polls are conducted. List the various stages of the research process and how they were (or

were not) followed in Gallup’s projects.

3. Any significant business decision requires input from a research project. Write a brief essay

either defending this statement or refuting it.

The need for research depends on the situation. Situations can be characterized by complete

certainty or absolute ambiguity. Complete certainty means that the decision maker has all

CASE 4.1 A New “Joe” on the Block

Joe Brown, a 30-year veteran market researcher, is ready to enter the coffee shop business. He

has some key research questions:

What markets in the United States hold the most promise for a new coffee shop?

What type of location is best for a coffee shop?

What is it that makes a coffee shop popular?

What coffee do Americans prefer?

The Internet offers considerable information from studies on taste done by individual researchers,

usually themselves as the only sample respondent. Joe doesn’t find much on consumption

patterns and the number of coffee shops around the United States. Joe wonders about the

relevance of previous research and questions whether he is capable of doing any primary research

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Chapter Four: The Business Research Process: An Overview 37

himself. He considers hiring someone to do a feasibility study for him. Maybe doing research is

easier than using research.

Questions

1. What are the top three key decisions faced by Joe?

Joe has many decisions to make, and students’ responses will vary. One is the decision regarding

where to locate his business, and once that is decided, he must determine the type of outlet (i.e.,

2. What are the key deliverables that an outside researcher should produce to help Joe with the

key decisions?

One key deliverable might be the market potential in a given geographic market Joe is

3. How relevant are the coffee taste studies cited above? Explain.

The relevance of the coffee taste studies cited depends on how Joe will position his coffee shop.

4. What flaws in the coffee taste studies should Joe consider in trying to weigh the merits of

their results?

The sample used in each study is important. How large is it? Who are the respondents? Are they

5. Briefly relate this situation to each of the major stages of the business research process.

The stages of the business research process are:

1) Defining the research objectives

2) Planning a research design

Joe is clearly at the first stage of the business research process: defining the research objectives.

He must decide what he wants to learn by conducting or commissioning research before he can

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6. Try to do a quick search to explore the question: “Are American consumer preferences the

same all across the United States?”

Students’ responses will vary, but merely searching “US coffee consumption” in Google provides

considerable information. For example, one source indicated that over half of the U.S. population

7. Would it be better for Joe to do the research himself or have a consultant perform the work?

Students’ opinions will vary. Some may argue that Joe has research experience, so there is no

8. If a consultant comes in to do the job, what are three key deliverables that would likely be

important to Joe in making a decision to launch the “Cup of Joe” coffee shop?

Joe needs to know information so that he can develop an adequate business strategy, and he

duplicated, or posted to a publicly accessible website, in whole or in part.