Saturday, December 2, 2006

To Make or Buy Research

Managers are continually faced with the decision to make or buy research to support important decisions. Managers need to know how research is conducted and how good research can be identified. Buying research requires that the research methodology and all phases of the collection and analysis of the research data be understood by the managers in order to make an informed decision about the value of the study -- the study might be inappropriate with respect to scope or may not have been conducted scientifically. If good research is not available or affordable within the manager’s budget, research of some kind must be undertaken. Conducting their own research requires time to properly structure the research, carefully consider the goals of the research, plan, and execute the data gathering phase, and analyze the collected data -- the study must be conducted with a clear idea of the research problem (i.e., it must be a researchable question) and by a person with the skills necessary to undertake such a study. If the study is to be conducted in house, the delegation of research to another party besides the manager often sheds bias and leads to results that are more relevant.

Researchable Questions

Consider also that some questions are answerable by research and others are not. In order to fall into the category of a researchable problem, a problem must be subject to data collection in the “real world” or least the procedures designed to perform data collection must be possible to execute. One general example is that of an ill-defined problem -- so little may be known about the exact size and scope of the problem (as it has been initially stated or understood) that it is not possible to form clear hypotheses for testing because of the existence of too many interrelated variables. That is, with some problems, it is impossible to hold a variable constant through assumption to test other related variables through data collection.

Examples of unresearchable management problems:

a. If iBOX corporation spends $5 million to develop and launch the new iBOX, the first product of its kind, will it succeed and make money?

b. How much money should we spend on marketing our products?

c. Should we risk announcing the development a new product to foil our competitors even though we have not yet begun the design phase?

Examples of unresearchable management problems altered/restated in researchable form:

a. In order to break even in the first year, iBOX corporation must sell 50,000 units of the iBOX to its five major market segments -- estimate the size of these market segments, and assuming a 1% penetration of these segments, is it possible to exceed 50,000 units in sales in all market segments combined?

b. At what point does the use of a particular marketing medium such as the trade show or print advertising to provide sales leads that close within 90 days appear to plateau or cease to scale up?

c. What effect on our competitor’s actions have previous pre-announcements of new products in the industry had?

Researchable Applied Studies

The following are researchable applied studies that managers in various contexts may find useful:

a. A Descriptive study by a manager of the men’s furnishings department at a national chain: Product Sales Analysis for previous year grouped by male demographic group. This study would help the manager to understand which clothing lines are selling well to his target customer.

b. A Predictive study by a plant manager at a Ford auto assembly plant: Quality Circles Implementation and Impact Study. This study will help the plant manager to raise quality levels at the assembly plant by understanding when, how, and why the workers strive toward higher quality.

c. A descriptive study by a director of admissions at a large state university: Regional demographic studies of high school seniors and their corresponding college selection in the surrounding geographic area for the last four years. This study will help the director understand how college selections are made among his/her target audience and perhaps learn enough to make related changes at the university.

d. A predictive study at an investment analyst at an investment firm: Economic Forecast for the coming year. This study will help the analyst to understand in what ways the economic indicators will unfold into the future economic outlook, and therefore guide investments based on that knowledge.

e. A reporting study for the director of personnel at a large metropolitan hospital: Regional Medical Worker Wage and Benefit Survey. This study will assist the director in understanding how other similar hospitals are compensating their workers.

f. An explanatory study for the product manager for Crest toothpaste at Procter & Gamble: Study of Relationship between Water Fluoridation in Urban Water Systems and Tooth Decay among the Local Citizenry. This study will give the product manager the empirical backing to request that more fluoride be added to Crest in order to enhance its cavity fighting power.

Reference

Cooper, D.R., & Schindler, P.S. (2003). Business research methods, (8th ed.). Boston, MA: McGraw Hill.

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