Research and Analysis for Management

MGMT 6272Aug 25 – Nov 7, 2014

Dr. Dennis E. Clayson

The class can be found online atwww.business.uni.edu/clayson/mba

A business manager must be able to make decisions

To make good decisions a manager must have

information

To use information to make decisions, a manager must know what

information is!

To use information to make decisions, a manager must know what information is

And how information is created

To use information to make decisions, a manager must know what information is

And how information is created

And used

Mistake: Not knowing what information is!

Managers should not act like this……….

Mistake: Not knowing what to do with information!

Or like this….

Mistake:

Not seekingInformation!

Much of the information that is utilized for management decisionscomes from numbers….

OR is calculated from numbers, OR is explainedby numbers….

Most people are, however,

Inumerate…

Most people are, however,

Inumerate…

i.e.

They are illiterate with numbers.

Numerical concepts to them are very confusing….

Some Americans were very impressed when the government

promised to cut $100 million in spending from $2 trillion in spending.

Why?

Because $100 is larger than $2.

They are not quite sure what to do with numbers when they get them……

How tall is the Sears Tower?

How tall is the International Finance Centre

in Hong Kong?

Never been there….

No problem….

How fast does your hair grow in MPH?

Logic and Research

For example:

What does your experience tell you about this person?

What do statistics tell usabout this person?

Would you change your mind if the statistics tell a different story than your

impressions?

What is knowing?

What are we doing when we are knowing?

Everything weKNOW about theoutside world comes from our own brains.

There is no exceptionto this!

Everything we KNOW has to come from a perception formed by ourown mind.

Descartes wrote:

“Our inquires should be directed not to what others have thought, not to what we ourselves conjecture, but to what we can clearly and perspicuously behold and with certainty deduce; for knowledge is not won in any other way.”

Rene Descartes (1596 – 1650)

Giambattista Vico (1668 – 1744)

Vico states:

“The criterion and rule of the true is to have made it.”

The principle states that truth is verified through creation or invention and not through observation.

The difference:

1. Knowing something….

The difference:

1. Knowing something….

or

2. Knowing how to do something….

1.Knowing something: implies that we know facts. There are three bones in the inner ear. The equatorial radius of the earth is 6,378.14 meters. The value of pi is 3.14159….

2. Knowing how to do something:

Suppose a student “knew that” the value of pi was 3.14159…, does the student know what the circumference of a circle is which has a radius of 4.0 meters?

2. Knowing how to do something:

Suppose a student “knew that” the value of pi was 3.14159…, does the student know what the circumference of a circle is which has a radius of 4.0 meters?

Not necessarily.

Vico made the argument that the student’s knowledge was incomplete until he or she could use that knowledge to

create something.

In business, it could be argued that both types of knowledge are valuable. Emphasis on one without the other leads to problems when people get lazy.

In business, it could be argued that both types of knowledge are valuable. Emphasis on one without the other leads to problems when people get lazy.

“Knowing something” tends to rely on ideology.

In business, it could be argued that both types of knowledge are valuable. Emphasis on one without the other leads to problems when people get lazy.

“Knowing something” tends to rely on ideology.

“Knowing how to do something” tends to put more trust in tradition.

For example, “How should people be paid?”

“Knowing something” would encourage a company or government officer to insist that there be “equal pay for equal work.” This is ideology.

It could guide or correct very little, because there are many things which determine salary including other ideologies.

For example:

Should experienced workers make more than newworkers?

Should workers with better social skills be paid more?

Should someone with a special need be paid more?

“How should people be paid?”

“Knowing how to do something,” on the other hand,may predispose a company to pay workers in a traditional fashion that has worked well in the past,

but which should be replaced by a better system.

Knowledge creates knowledge

Knowledge creates knowledgebecause proper knowing creates more knowing!

Logic and Research

Opinion = Belief or

Guess

Logic and Research

Opinion = Belief or

Guess

Are all opinions equal?

What is this?

Knowledge creates knowledgebecause proper knowing creates more knowing!

Yes! In that everyone can have them.

No! In that every opinion has to be based on something.

Whose opinion would you trust if your automobile needed repair?

Opinions about my car needing repair are NOT equal.

Some persons’ opinion about the stock market are more valuable than others!!

Logic and Research

Opinion = Belief or

Guess Hypothesis = Opinion that can be tested

Hypo = Under

Thesis = Idea or thought

Hypothesis = Underlying idea

Logic and Research

Opinion Hypothesis =

Statistic = Method of calculating probability

Logic and Research

Opinion Hypothesis =

Statistic = Method of calculating probability

Characteristic of a sample

A statistic is a characteristic of a group.

It tells you nothing about an individual

except for a probability.

Men are taller than women…

This is statistically true….

Asian Americans have an average IQ higher than African Americans

What does this tell you about Thomas Sowell?

What do statistics tell usabout this person?

She is 40 years old.

She is 40 years old. She has a MD degree.

She is 40 years old. She has a MD degree. She works in Vancouver.

Can you now make a good guess about her income and position?

Statistic: Education majors have the lowest standardized scores(ACT, Iowa Basic, etc.) of any majors on campus.

Statistic: Education majors have the lowest standardized scores(ACT, Iowa Basic, etc.) of any majors on campus.

An education major says, “That can’t be true. Both my friend and I had the highest ACT scores in my high school and we areboth education majors. I am highly offended by your slur.”

Statistic: Education majors have the lowest standardized scores(ACT, Iowa Basic, etc.) of any majors on campus.

An education major says, “That can’t be true. Both my friend and I had the highest ACT scores in my high school and we areboth education majors. I am highly offended by your slur.”

What is wrong with this logic?

Logic and Research

Opinion Hypothesis =

Statistic = Method of calculating probability Characteristic of a sampleResearch findings

= Results of controlled research procedures

Be careful here…..

Research findings do not mean that somethingis true!

They simply increases the probability….

Fact = Reality

An unmarried women with a child hasan average income of X Dollars.

An married woman with a child hasan average income of 10X Dollars.

An unmarried women with a child hasan average income of X Dollars.

An married woman with a child hasan average income of 10X Dollars.

What are these statements?

What can you tell me about this woman?

What can you tell me for sure?

Is this woman poor?

How would you wager?

Now I tell you that she has a husband.

How would you wager now?

Logic and statistics are sometimesdifficult in the real world….

The ratio of Afro-American to Euro-Americansin the NBA is about 4:1

The ratio of Afro-Americans to Euro-Americansin the USA is about 1:6

The probability of an Afro-American child becomes a NBAstar is 24 times larger than an Euro-American child….

Why?

Theory is fun…

Reality can be very hard and messy….

American Social Security

When to Start Collecting?

At 66, you will get about $2,200/month…At 70, you will get about $3,000/month…

But you would have to give up $2,200/monthfor 4 years, or $105,600….

After 70, it would take 132 months (11 years) to make upthe difference …

So, if you thought you would die before you are 81…take the money now….

What decision will you make??

But……….

How long do people actually live?

http://www.ssa.gov/OACT/STATS/table4c6.html

http://www.goiam.org/images/articles/news/iam-news/multimedia.htm

Unemployment by County 2008

Global Warming

Co2

Temp

Sun SpotNumber

“Al Gore Not Worried About Sea Level Rising: Buys 8.8 Million Dollar Ocean-View Villa: News 4/49/10

http://www.youtube.com/watch?v=VgVDugSuPOo

Decision makers follow the data……