WORKSHOP 2Page 1 of 40

SECTION 2

A- SECONDARY DATA COLLECTION IN BUSINESS INQUIRY

2.1 SECONDARY DATA IN BUSINESS RESEARCH

The net result is that there exists a tremendous amount of secondary data that is relevant to today's decision-making problems. If the data is applicable to our specific decision problem, it becomes secondary information. This information, if used wisely, can be of considerable importance, for two reasons:

a)Time savings. If there exists data that solves or lends insight into our research problems, then little primary research has to be conducted. Typically, secondary data takes less time to collect than does primary data.

b)Cost effectiveness. Similarly, secondary data collection in general is less costly than primary data collection. All things being equal, we would prefer to use secondary data if it helps researchers to solve the research problem

2.1.1 Uses of Secondary Data

The uses of this type of information can be conveniently arranged into four categories:

  • Problem recognition
  • Problem clarification
  • The formulation of feasible alternatives
  • The actual solution of the research problem

2.1.1.1 Problem Recognition.

A constant monitoring of secondary data can provide theimpetus for problem recognition. Problem recognition is essential before any decision making can take place.

2.1.1.2 Problem Clarification

Secondary data can also be fruitfully used to help clarify the specific problem that an organization may be facing. Clarification usually means making the decision problem more researchable by delineating the components of the situation.

2.1.1.3 Formulation of Feasible Alternatives

Alternatives must exist before decision making can take place. Secondary data is usually very useful in generating viablealternatives to solve problems.

2.1.1.4 Problem Solution

Secondary data is often sufficient in and of itself to generate a problem solution. Many secondary sources in each of the functional areas of business provide insight and sometimes solutions to business problems.

2.2 DEVELOPMENT OF A SEARCH STRATEGY

The question of how to find secondary information can best be answered by developing a search strategy. Figure 2-1 diagrams a generic search strategy to find information that can be applied in the uses previously outlined.

From the standpoint of thoroughness and efficiency, it is generally desirable to use some combination of manual and online methods to ensure that all pertinent information is gathered in the search process.

2.2.1 Manual Methods

The manual process usually leads through a maze of indexes, bibliographies, references, and all types of literature in search of relevant information. Perhaps the best way to organize the manual search is by the location of the data itself. We can systematically identify where data is expected to be and then begin our journey there.

From a researcher's standpoint, secondary data locations can be classified as either internal or external to the firm. Internal data is secondary data availablewithin the company, and external data is secondary data obtained from any other source.

2.2.1.1 Internal Locations

Internal locations can be categorized according to whether the information comes from the unique database or the common database. The distinction is whether the data is generally publicly available or not.

The unique database typically includes accounting, financial, personnel, sales, and other information that is not readily available to external entities. The common database is composed of data that is not unique to the company but has been collected and stored within the organization for decision-making purposes.

2.2.1.2 External Locations

The diversity of external secondary information sources is end- less, and the amount of published data is staggering. Data of all types is published by government agencies, corporations, trade associations, universities, and commercial information services.

A number of search aids can help the information seeker:

  • Research guides and bibliographies
  • Encyclopedias, dictionaries, and handbooks
  • Indexes
  • Statistical sources
  • References for individual companies
  • Other sources

Figure 2.2 indicates that information location aids can be used to identify data sources that may be helpful in the decision-making process.

2.2.2 Online Methods

An article written by Walter Kiechellll in Fortune magazine in 1980, "Everything You Always Wanted to Know May Soon Be On-Line," described the potential importance of online information searching to business.

The arguments for the use of online retrieval services in business inquiry are convincing indeed. Essentially, the arguments can be enumerated as follows:

  • Timesaving
  • Thoroughness
  • Increased relevance
  • Cost effectiveness.

2.3 THE INTERNET

“The Internet is, by far, the greatest and most significant achievement in the history of mankind” With these words, Harley Hahn opens his Internet "how-to" text, The Internet Complete Reference.

2.3.1 Background

The roots of the Internet lie in a United States Department of Defense computer network created in the early 1970s. That network was referred to as the ARPANET. The ARPANET was originally intended to support the technology research and data-sharing efforts of the Defense Advanced Research Projects Agency (DARPA).

2.4 MANAGERIAL CONSIDERATIONS

In particular, managers need to address three major concerns in the collection and use of secondary information.

  • The question of whether your organization should compile or buy its secondary information should be addressed periodically.
  • Require a thorough secondary information search to be conducted before any primary data is collected in a research project.
  • The nature and value of secondary data should be evaluated before it isused in a particular decision-making context.

The primary criteria for evaluating secondary data are as follows:

a)Timeliness. Is the data timely? Is it up to date? Is it available when we need it? If it is not all available, or if it is outdated, the data should not be used for decision- making purposes.

b)Relevance. Is the data relevant to our particular needs? We may have timely data that does not apply to our decision-making needs. Relevance implies the ability of the data to satisfy the needs of the user.

c)Accuracy. Are there sources of error in the data that affect its accuracy? As we have seen, sources of error may affect a study's validity and reliability.

d)Cost. How much does the data cost? Here, the primary question is whether the data is cost-effective for what you get. If secondary data is available, but not as relevant as you would like it to be, you may be better off conducting primary research at a higher cost. In other words, it may be more cost-effective.

e)Purpose. What is the point of view or purpose of the data? The final concerns of management can be expressed as a set of questions (see Exhibit 2-5).

Exhibit 2.5 Key Managerial Questions Pertaining to Secondary Data Collection.

Not all the questions are relevant for each and every research project, but they should be asked as necessary to ensure that secondary data collection is done appropriately in the organization.

B- PROBLEM AND PROPOSAL DEVELOPMENT AND MANAGEMENT

2.5 PROBLEM IDENTIFICATIONAND FORMULATION

2.5.1 Problem Identification

Problem identification involves becoming aware that an undesirable or potentially undesirable situation exists for the firm. Identifying some situations is simple (for example, high personnel turnover rates, discontent of the work force as evidenced by strike, declining profitability of a product line, selection of three alternative investment options).

A secondary concern in identification is in management's initial specification, or misspecification, of the problem. One example of this is in the field of banking. How do concerns turn into problems? Several factors may be involved:

a)Management awareness. "Aware" manager is more adept at identifying problems than either the neophyte or the poorly informed manager.

b)Urgency of concerns. In industries where little is changing, there is little perceived urgency to identify concerns that may become future management problems.

c)Research orientation. If an organization possesses a strong research and development orientation, future and present managerial concerns are more likely to be identified and converted into problem statements.

Figure 2.4 illustrates that not all concerns are converted into management problems, and not all management problems are converted into research.

Overall, effective problem identification requires a mixture of creativity, knowledge, experience, and sometimes sheer luck. Also, proper problem identification usually requires much communication between the manager and the researcher.

2.5.2 Problem Formulation

Once a problem is properly identified, it must go through a "screen" that converts the general statement of management's problem into a researchable question that is capable of being investigated.

Not all management problems are translated into research problems. Some of the reasons for this are as follows:

a)Lack of value. The research costs more than the benefits it is expected to produce.

b)Priorities. A problem is not of sufficient importance to require researching at the present time.

c)Researchability. Some problems are inherently unresearchable. In the pharmaceutical industry, management may be interested in testing the effectiveness of a newly developed cancer drug on humans. Not only would this be illegal; it would be unethical as well.

d)Limited resources. A number of problems do not get research attention simply because the research money or time is exhausted.

An example of a complete problem definition is presented in the following exhibit (Exhibit 2-7) in a large Computer Firm.

Following exhibit (Exhibit 2-8) lists a series of questions pertaining to the problem formulation and selection processes that will help promote critical thinking in the area of problem formulation.

2.5.3 The Question of Value

Once a problem is adequately identified and defined, an assessment of the value of the research is needed. Is the study of sufficient value for it to be undertaken?

In applied business research settings, the general principle for making this assessment is: The expected value of the information obtained from a particular study should exceed the costs of obtaining it. If the research endeavor fails this test of the value of its information, then management should seriously question the desirability of conducting the study.

2.6 PROPOSAL DEVELOPMENT

The proposal is a formal means of communication between the requestor and the proposer of research. From the manager's perspective, a well-written proposal can provide the following benefits.

  • Guarantees that the researcher understands the managerial problem
  • Acts as a control mechanism
  • Allows the manager to assess the proposed research methods
  • Helps management judge the relative value and quality of the proposed investigation

Researchers also gain substantial benefits if their proposals are well thought out:

  • Ensures the researcher that the problem being investigated is the one management wants investigated
  • Requires the researcher to think critically through the research process prior to the initiation of the study
  • Provides the researcher with a plan of action
  • States the agreement between the manager and researcher

2.6.1 A Typology of Business-Related Research Proposals

Proposals vary in length and complexity, depending on the topic, the initiator of the research, and the audience. One useful way to study proposals is through the typology presented in Figure 2.5.

Figure 2.5 A Typology of Business-related research Proposals

The four types of offerings can be characterized as follows:

a)Type I: In House Proprietary Proposals. These proposals originate inside the firm and are destined for use by management in the organization.Such proposals are usually the briefest and least complex of all types.A short memo may be all that is required to initiate a research project in house.

b)Type II: Research contractor proposals. A decision maker in an organization requests bids on a particular research project, or else an unsolicited proposal is received. Type II and Type IV proposals are midrange: They strike a balance between the terse Type I and the extremely detailed Type III proposals.The arrow in Figure 2.5 indicates this increasing complexity.

c)Type III: Public domain proposals. These proposals are usually the longest and most detailed. A study that may be relevant to the organization is commissioned by an agency of the federal government with someoutside research supplier (private or otherwise).

d)Type IV: Extended proprietary proposals. This type of proposal is also a mid- range proposal. The decision maker in the organization may find a request for research from a company affiliate (such as another division in the same organization). The characterizations of these types are obviously generalities, but they do serve to highlight the wide variety of research proposals that the businessperson may find when attempting to obtain information for decision making.

2.6.2 Structure of a Proposal

Exhibit 2.9 out- lines the major structural components of a typical midrange proposal.

2.6.3 A Sample Research Proposal

To illustrate the key structural elements and format of a business research offering, an actual proposal for a feasibility study for a large land development is presented in Exhibit 2.10.

The proposal is a midrange Type II proposal. It should be regarded as a sample rather than a definitive outline for all proposals.

2.7 MANAGERIAL CONSIDERATIONS

Management must take an active role in the research endeavor to ensure that the study is conducted as planned and delivers the results desired. This role is described succinctly as follows:

  • If research is to be fruitful, it must be a daily concern of top management, and if it is to succeed, those who conduct the research must have a solid understanding of the true needs of their company, of its industry, and of its customers. Unless the top management of a company and its research staff are in the most constant and intimate kind of communication, research will amount to littleand can be a great drain on any company.

2.7.1 Proposal Evaluation Mechanisms

All business research proposals are subjected, either implicitly or explicitly, to some sort of evaluative process during the course of their development.

Usually, proposals are submitted to middle or top management for review before approval is given to conduct the investigation. If a requestor of research demands a highly structured bid, the evaluation process is usually similarly formal.

Informal evaluation procedures may consist of an evaluator reading a proposal and ranking it against others submitted for funding.

More formal procedures usually require the identification and selection of evaluative criteria, weighting of these criteria, and the determination of some numerical value representing the score or grade the proposal receives.

Figure 2.6 shows a sample evaluative framework developed to grade the Project 530 proposal in Exhibit 2.10 of this section.

Let us suppose you are the general manager for Project 530. You have recently put out for bid a feasibility study that is supposed to answer the research problem and achieve the objectives stated in the proposal in Exhibit 2-10.

You receive a number of proposals, including the one prepared by E.S. & D. Research Associates. You are now faced with the task of evaluating the various bids and recommending a research contractor to the board of directors. What do you do?

A good first step would be to develop a list of criteria on which you want to evaluate each of the proposals. The criteria should be closely related to the factors that are considered important to the generation of timely and usable decision-making information. These factors were identified in Exhibit 2.9, which outlined the major structural components of a midrange business proposal.

Given the general components, you would now want to develop an expanded evaluative instrument to rate each proposal. Without getting into the details of instrument design until later in the book, a possible evaluative framework is laid out in Figure 2.6.

The next step you would probably take is to read each proposal thoroughly, then rate each one on the criteria identified in the evaluative framework. For instance, after reading the E.S. & D. proposal, you may rate item la as only fair because the background of the problem is not as fully developed as you thought it would be. Each successive item would be rated according to your judgment of how well the proposal met the criteria set forth.

Once all the items have been rated for each proposal, you would be faced with the overall evaluation. Although you may want to weight each component differently to reflect its relative importance to you, let us say each item is of equal value, for simplicity's sake. Scoring might go from 1 to 5 (for weak to excellent). The overall evaluative score would thus be found by adding up the individual item scores as indicated at the top of the evaluation instrument.

For example, if item la received a fair evaluation, it would receive a score of 3. Similarly, if item 1b received a good evaluation, the score assigned would be a 4. You would then add up all the item scores to arrive at an overall evaluative score (ranging from 15 to 75). This rating could be compared to the other proposals' scores for selection purposes.

This relatively simple example gives you an idea of one possible method of proposal evaluation. The important ideas to get from this brief discussion of evaluation are as follows:

  • All proposals go through some type of evaluation process.
  • The type of evaluation is usually associated with the type of proposal requested.
  • The evaluator should develop a logical evaluation procedure for choosingamong alternative proposals.
  • For all intents and purposes, the evaluation of the proposal sets the standards for controlling the research project.

2.7.2 Other Control Mechanisms

a)Gantt Charts

A Gantt chart is designed to provide management with a basic means of comparing planned to actual performance.

Figure 2.7 is a Gantt chart for "A Proposal for a Feasibility Study for Project 530."