Methods for Business research, Assignments of Business Research Methods for Managers

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Business Research Methods

Contents

• 1 Introduction to Business Research. Part I Overview of Business Research
  • 1.1 Scope of Business Research
  • 1.2 Basic Research and Applied Research
  • 1.3 Role of Business Research in Decision-Making
    • 1.3.1 Problem/Opportunity Identification
      • and Selection 1.3.2 Problem/Opportunity Prioritization
    • 1.3.3 Problem/Opportunity Resolution
    • 1.3.4 Implementing the Course of Action.
  • 1.4 Factors Affecting Business Research
    • 1.4.1 Time Constraint
    • 1.4.2 Availability of Resources
    • 1.4.3 Nature of Information Sought
    • 1.4.4 Benefits Versus Cost
  • 1.5 Globalization and Business Research.
  • 1.6 Business Research and the Internet
    • 1.6.1 Primary Research
    • 1.6.2 Secondary Research.
  • 1.7 Summary
• 2 Business Research Process
  • 2.1 Steps in the Research Process. - the Problem/Opportunity 2.1.1 Identifying and Defining
    • 2.1.2 Exploratory Research.
    • 2.1.3 Preparing the Statement of Research Objectives
    • 2.1.4 Developing the Hypotheses
    • 2.1.5 Planning the Research Design.
    • 2.1.6 Selecting the Research Method
    • 2.1.7 Surveys
    • 2.1.8 Experiments

1.2 Basic Research and Applied Research

Business research is conducted either to expand knowledge about a particular aspect or to find a solution to a particular problem. Business research studies can be classified into two categories—basic research and applied research. Basic research refers to a focused, systematic study or investigation undertaken to discover new knowledge or interpretations and establish facts or principles in a particular field. In other words, it is a research aimed primarily at gaining knowledge rather than solving a pragmatic problem. The underlying motive is to increase knowledge about particular phenomena by testing, refining and elabo- rating theory without concern for practical application. Examples of such basic research include the following:

1. Understanding the consumer buying process
2. Examining the consumer learning process.

Applied research refers to investigation undertaken to discover the applications and uses of theories, knowledge and principles in actual work or in solving problems. In other words, it is any research that is used to answer a specific question, determine why something failed or succeeded, solve a specific, prag- matic problem, or to gain better understanding. Examples include the following: Evaluating the impact of a training programme on employee performance. Examining consumer response to direct marketing programmes Although the purpose of these two research forms varies, there is not much difference in the research methods and tools used for their conduct. Both these research forms use scientific methods in various stages of the research process. The scientific method refers to a systematic approach towards observing phenomena, drawing conclu- sions and testing hypotheses. Scientific methods involve systematic analysis and logical interpretation of empirical evidence to establish facts or to prove a theory. In basic research, first the hypothesis is tested through experimentation and observation. Then, logical interpretations and conclusions are made about a par- ticular phenomenon. These conclusions lead to the formation of general laws about that phenomenon. However, applied research involves developing alternatives to a particular problem and finding the best alternative among them.

1.3 Role of Business Research in Decision-Making

For effective planning and implementation of business decisions, accurate infor- mation about the internal business environment and the external business envi- ronment is of primary importance. The key objective of any business research is to provide accurate, relevant and timely information to the top management, so that they can make effective decisions. The business decision-making process in an organization goes through these key interrelated stages (see Fig. 1.1). They are:

4 1 Introduction to Business Research

• Problem/opportunity identification
• Problem/opportunity prioritization and selection
• Problem/opportunity resolution
• Implementing the course of action.

Business research helps the management in each of these stages by providing useful and timely information.

1.3.1 Problem/Opportunity Identification

Problem/opportunity identification involves scanning and monitoring the internal and external business environment. Such an analysis helps in identifying oppor- tunities and threats that a company is facing and also in understanding the market trends. The role of business research at this stage is to provide information about the problems and the opportunities. For example, an Indian apparel company that wants to enter the US market can undertake business research in areas, such as identifying the fashion trends in the market, determining the brand awareness about the company among the customers, perception about the company among the potential employees, examining the competitors and their characteristics and understanding American consumer behaviour.

Problem/Opportunity Identification

Problem/Opportunity Selection Prioritize problems or opportunities Select major problem/opportunities

Problem/Opportunity Resolution Develop alternative course of action Choose the best course of action

Implement the Course of Action

Fig. 1.1 Steps in the decision-making process

1.3 Role of Business Research in Decision-Making 5

By forecasting the revenue potential of each investment option, the company can select the investment option, which has the highest revenue potential.

1.3.4 Implementing the Course of Action

After deciding upon the best course of action, the organization has to effectively implement it. At this stage, business research is mainly used to monitor and control the programmes that are being implemented. Evaluative research studies are undertaken at this stage. One type of evaluative research study used is performance research. In this type of research, the performance of a particular activity is measured, so that it can be compared with the objectives set for that activity. For example, if a company has offered a discount coupon scheme in the market, the coupon redemption rate at the end of the scheme is measured and compared with the objectives that were set for this scheme. This helps in evaluating the perfor- mance of the scheme. Companies also monitor the performance of a particular activity continuously so as to identify the opportunities and detect the problems at an early stage. This helps a company in altering the plans or developing new programmes. For example, certain companies continuously track the sales at retail stores, so that they can identify which products are registering higher sales, the buying behaviour of consumers, and consumer preference towards the company’s products.

1.4 Factors Affecting Business Research

Although business research provides many benefits to an organization, it is not a panacea for all the problems that an organization faces. And conducting business research also involves cost, time and effort. Therefore, an organization should decide upon the option of conducting business research after considering various factors. These include time constraints, availability of resources, availability of data, nature of information that the organization is expecting and the costs involved.

1.4.1 Time Constraint

Time constraint is a key factor that influences a company’s decision regarding whether to conduct a business research study or not. In certain cases, lack of time prompts a company to take decisions without making any research study. Sudden changes in competitors’ strategies, regulatory changes, change in the market environment, or changes in the company’s operations, require immediate action.

1.3 Role of Business Research in Decision-Making 7

For example, P and G drastically cut the prices of its detergents in India, in May

2004. HLL responded to the price cuts without making any study on the impli- cations of the price cuts on its product sales or image.

1.4.2 Availability of Resources

Another factor that influences the decision to undertake business research or not is the availability of resources. The availability of resources can be either in terms of budgetary allocations or human resources. Lack of financial resources may lead to improper conduct of a business research study. The results obtained from such research, in turn, will be inaccurate. Lack of financial resources forces a company to compromise on the way its research project is undertaken, such as taking a smaller sample size where the project demands a larger sample size, using cheaper methods of data collection and even comprising on the data analysis process that is crucial for any business research study. Therefore, before conducting the business research, the company needs to consider the issue of availability of financial resources. A company also needs to consider the availability of human resources while taking a decision about the business research study. Lack of qualified personnel may affect the data collection and data analysis processes in a business research study. Lack of qualified personnel may lead to selection of improper sample, improper filling of data and inaccurate analysis of data. Therefore, a company needs to look for well-qualified and well-trained personnel before conducting a business research study.

1.4.3 Nature of Information Sought

The information or input that a company wants to obtain from the research study also influences the decision of whether to conduct the business research study or not. If the information that a company wants to obtain from the research study can be obtained from the internal records of the company, or from prior studies con- ducted by the company, then conducting business research is a waste of time and effort. For example, if a company like Pepsi is launching a new fruit drink in India and wants information about the market potential of the product, it can use its knowledge and its prior studies regarding the beverages market in India, rather than conducting a new market study. In certain cases, the management’s experi- ence and intuition is enough to take a particular decision and there is no need for a business research study.

8 1 Introduction to Business Research

Unlike in western markets where quantitative research techniques are used more, qualitative and observation studies are effective in emerging markets. Researchers can use innovative tools like videotaping techniques to understand consumer behaviour in these markets. Researchers can use focus groups to understand views, preferences and cultures. Companies can also use projective and elicitation techniques like collage, picture completion, analogies and metaphors and psycho drawing to gain a deeper understanding about these markets. Use of technology can aid the researchers in effectively implementing the research activities. Researchers can make use of technologies like Computer- Assisted Telephone Interviewing (CATI), and Computer-Assisted Personal Inter- viewing (CAPI) and the Internet to make the research process faster, efficient and effective.

1.6 Business Research and the Internet

Use of the Internet in business research studies is increasing. The declining costs of conducting online research activities coupled with the increasing number of Internet users have made the Internet a cost-effective alternative to traditional research methods for business research organizations. The following sections discuss the role of the Internet in primary and secondary research.

1.6.1 Primary Research

Primary data are collected directly from respondents using data collection methods like survey interviews, questionnaires, measurements, direct observation or tabu- lation. Use of the Internet for primary data collection is still in its infancy. Although there have been satisfying results of its initial implementation and the future prospects look good it is still used cautiously. There are various advantages in conducting online surveys compared with traditional survey methods. These include the following:

• The responses and feedback can be obtained faster.
• Costs for conducting online surveys are less compared with traditional survey methods.
• Questionnaires can be delivered to the respondents faster.
• Confidentiality is maintained as only the recipients read the questionnaire.
• Respondents can reply to the questionnaire at their convenience.
• Apart from online surveys, organizations are also conducting online focus group studies.

10 1 Introduction to Business Research

• Although there are several advantages in using the Internet, there are certain drawbacks as well. Online surveys lack face-to-face interaction. Also, lack of accessibility of the Internet among the population compared with other media is a major limitation.

1.6.2 Secondary Research

Secondary data are the data that already exist which have been collected by some other person or organization for their use and are generally made available to other researchers free or at a concessional rate. Major use of the Internet in business research is in the area of secondary research. The research reports and databases maintained by major research companies are also available on the net. This makes it faster, economical and reliable for companies to know about competitor activ- ities. The very essence of the Internet as a major source of secondary information probably springs forth from the advantages of its broad scope, covering virtually every topic and the reasonable cost in acquiring them.

1.7 Summary

Business research can be defined as a systematic and objective process of gath- ering, recording and analysing data to guide business decision-making. Business research is mainly used to reduce the uncertainty of decisions. Business research encompasses various facets of business in an organization including marketing, finance, human resources and manufacturing. Three types of business research studies are mainly employed by organizations: market research, operations research and motivational research. Business research studies can be classified into two categories—basic research and applied research. Basic research refers to a focused, systematic study or investigation undertaken to discover new knowledge or interpretations and establish facts or principles in a particular field. Applied research refers to investigation undertaken to discover the applications and uses of theories, knowledge and principles in actual work or in solving problems. The key objective of any business research is to provide accurate, relevant and timely information to the top management, so that they can make effective decisions. In business, decision-making goes through four key interrelated stages: prob- lem/opportunity identification, problem/opportunity selection, problem/opportu- nity resolution and implementing the course of action. Business research helps the management in each of these stages by providing useful and timely information. Organizations should decide upon the option of conducting business research after considering various factors. These include time constraints, availability of resources, availability of data, nature of information that the organization expecting and the costs involved.

1.6 Business Research and the Internet 11