Scientific method:
It explains that:
• “The scientific method is a systematic way researchers use knowledge and evidence to reach objective conclusions
about the real world.”
• Research in both social sciences (like business) and physical sciences (like physics) follows the same scientific method.
• The process starts with prior knowledge and observations, leads to hypotheses, then to testing through observation or
experimentation, and finally to conclusions (new knowledge).
• Basic research uses this method to develop general theories and laws.
• Applied research uses it to find objective, practical solutions to real-world problems.
When Business Research is Needed:
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4.
Time Constraint
Availability of Data
Nature of the Decision
Value of Business Research
Business strategy involves four interrelated stages:
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4.
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Identifying problems or opportunities
Diagnosing and assessing problems or opportunities
Selecting and implementing a course of action
Evaluating the course of action
Identifying Problems Or Opportunities:
Before an organization can make strategies, it must first know its direction and situation. Business research helps
managers by identifying whether there are problems to solve or opportunities to pursue.
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Research acts like a scanning tool, giving information about what is happening inside the organization or in the
environment.
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Even a simple description of activities (social or economic) can help managers understand situations better.
Examples:
1. Analyzing dividend history in an industry may show a good investment opportunity.
2. Employee interviews at an airline may reveal that clerks focus more on issuing tickets efficiently but less on
customer friendliness—showing a problem.
Once research points to a problem or opportunity, managers may make quick decisions using their experience. But often,
they conduct more research to gain deeper insights before taking final action.
 Diagnosing and Assessing Problems or Opportunities:Diagnosing and assessing problems or opportunities means
looking deeper into a situation once an organization realizes that something is either wrong (a problem) or
something good could be achieved (an opportunity).
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If it’s a problem, managers need to understand what exactly happened and why it happened. For example, if
sales are dropping, research can show whether it’s because of poor marketing, strong competition, or changing
customer preferences.
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If it’s an opportunity, managers need to explore, refine, and measure how good that opportunity really is. For
example, if there’s demand for eco-friendly products, research can estimate how big the demand is and whether
the company can profit from it.
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If there are multiple opportunities, research helps the managers set priorities—which one is more valuable or
urgent to pursue first.
👉 In short: diagnosing and assessing is about finding the root cause of problems or the real value of opportunities so
managers can make informed decisions.
 Selecting and Implementing a Course of Action:
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After identifying alternatives, business research helps managers compare them using forecasts, market potential,
and performance criteria.
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Example: Harley-Davidson deciding between China or India; research shows which market is more profitable and
less risky.
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Once the best option is chosen, research also guides how to implement it effectively (e.g., pricing, distribution,
marketing).
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In short, research supports both decision-making and successful execution of the plan.
 Evaluating the course of action:
Evaluation research helps managers check if the plans and actions they implemented are actually working. It tells
them whether goals are being met and what needs improvement.
1. Evaluation Research:
 It measures how well a project, program, or activity is performing.
 Shows what factors are affecting results.
 Used by businesses, nonprofits, and government programs (like OSHA or Job Corps).
2. Performance-Monitoring Research:
 A type of evaluation research that tracks activities regularly.
 Helps spot problems early, like drops in sales.
 Example: Stores use barcodes and scanners to see which products sell well.
3. Example – United Airlines:
 They do surveys on flights every few months.
 Check service quality, food, and customer satisfaction.
 If something goes wrong (like a menu change), they can fix it quickly.
In short:
Evaluation research tells managers what is working, what is not, and helps them make quick decisions to improve
their business or service
When Business Research is Needed:
1.
2.
3.
4.
Time Constraint
Availability of Data
Nature of the Decision
Value of the Research information in relation to cost
 Time Constraints
 Research takes time: Systematic research involves problem identification, data collection, analysis, and
recommendations.
 Manager’s urgency vs. researcher’s rigor: Managers may need quick decisions due to competition or unexpected
problems, while researchers prioritize accuracy through scientific methods.
 Decisions without research: Sometimes, managers must act quickly with limited information (e.g., reacting to a
competitor’s sudden discount campaign).
 Key point: Best results are achieved when there is enough time for thorough research.
 Availability of Data
 Existing information may suffice: Internal data like sales records, customer feedback, or financial statements
may allow decision-making without additional research.
 Limits of data availability: Research is not feasible if necessary data is unavailable, cannot be collected in time,
or is too costly relative to its usefulness.
 Example: Developed countries (e.g., USA) have abundant market data; in some developing countries, reliable
data may be sparse.
 Key point: Reliable and timely data is essential for meaningful research.
 Nature of the Decision
 Decision type matters:
 Routine or low-cost tactical decisions may not justify research.
 Strategic, high-cost, or long-term decisions require careful research.
 Routine vs. Strategic:
 Routine: Minor changes (e.g., updating a product manual) need minimal research.
 Strategic: New market entry, mergers, or product launches involve high risks; research reduces uncertainty.
 Connection to cost-benefit: The more important the decision, the more worthwhile it is to invest in research.
 Value of Business Research
 Research as an investment: Managers must weigh the cost, time, and resources against the expected benefits.
 Key questions:
 Will the payoff or return justify the investment?
 Will the information significantly improve decision quality?
 Is research the best use of funds?
 Example – TV-Cable Week: Managers decided against costly test marketing since research costs exceeded potential
benefits.
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Decision Criteria (Exhibit 1.3)
Managers should conduct research only if all of the following are satisfied:
Time Constraints – Sufficient time exists to conduct research.
Availability of Data – Relevant data can be feasibly obtained.
Nature of the Decision – Decision has strategic or tactical importance.
Benefits vs. Costs – Expected benefits exceed research costs.
If any factor is No, research should not be conducted.
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✅ In Short:
Business research is worthwhile only when:
There is enough time to conduct it,
Reliable data is available,
The decision is significant, and
The expected benefits outweigh the costs.
Knowledge Management:
 Knowledge: "Knowledge is accumulated not just from a single individual, however, but from many sources. Financial
managers, human resource managers, sales managers, customer reports, economic forecasts, and custom-ordered
research all contribute to an organization’s knowledge base."Knowledge in a company doesn’t come from just one
person. It comes from many sources—like managers from different departments, customer feedback, economic
predictions, and research done specifically for the company. All of these contribute to the organization’s knowledge
base.
 Knowledge management: Knowledge management is described as the process of building an inclusive,
comprehensive, and easily accessible organizational memory, often referred to as the organization’s intellectual
capital. The goal is to organize this intellectual capital formally so it can be easily used. This means converting the
collective knowledge of the organization into a structured form that supports understanding and decision-making.
 Purpose: It helps managers understand information and make better decisions.
 Integration: KM shares knowledge across departments like marketing, management, and finance.
 Innovation: KM supports new product development and faster innovation.
 Research: Research is the systematic and scientific process of identifying a business problem or opportunity,
collecting relevant data, analyzing it, and drawing conclusions to support decision making.
 Business Research: Business research is the application of the scientific method in searching for the truth about
business phenomena. These activities include defining business opportunities and problems, generating and
evaluating ideas, monitoring performance, and understanding the business process.
 Types of Business Research:
 Basic Business Research
 Applied Business Research
Applied Business Research:Applied Business Research is the Research conducted to address a specific business decision
for a specific firm or organization.
Basic Business Research: Basic Business Research is the research that conducted without a specific decision in mind that
usually does not address the needs of a specific organization. It attempts to expand the limits of knowledge in general
and is not aimed at solving a particular pragmatic problem.