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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
31
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duplicated, or posted to a publicly accessible website, in whole or in part.
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,
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter Four: The Business Research Process: An Overview 33
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
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter Four: The Business Research Process: An Overview 34
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.
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter Four: The Business Research Process: An Overview 35
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
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
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
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
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
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter Four: The Business Research Process: An Overview 38
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
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or
duplicated, or posted to a publicly accessible website, in whole or in part.
