Research and Analysis for Management

MGMT 6272Fall 2014

Dr. Dennis E. Clayson

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

The first part of this module will be morephilosophical than others.

The second half will be more practical than other modules.

A business manager must 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

And Used !

Mangers typically makefour mistakes….

Mistake 1: Not knowing what information is!

Mistake 2: Not knowing what to do with information!

Mistake 3:

Not seekingInformation!

Mistake 4: Not knowing when information is good or bad!

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

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

This, however, creates a fundamental problem!

Most people are:

Inumerate…

i.e.

They are illiterate with numbers.

Numerical concepts to them are very confusing….

We had to have the garage door repaired. The Sears repairman told us that one of our problems was that we did not have a 'large' enough motor on the opener. I thought for a minute, and said that we had the largest one Sears made at that time, a 1/2 horsepower. He shook his head and said, 'Lady, you need a  1/4 horsepower.' I responded that 1/2 was larger than 1/4. He said, 'NO, it's  not..' Four is larger than two.'        

My daughter and I went through the McDonald's take-out window and I gave the clerk a $5 bill. Our total was $4.25, so I also handed her a quarter. She said, 'you gave me too much money.' I said, 'Yes I know, but this way you can just give me a dollar bill back.  She sighed and went  to get the manager, who asked me to repeat my request. I did so, and he handed me back the quarter, and said 'We're sorry but we could not do that kind of thing.' The clerk then proceeded to give me back $1 and 75 cents in change. 

Actual Examples

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

Introduction

Section 2

Topic:

What is knowing?

What are we doing when we are knowing?

Phrenology: A science? based on the shape of your head.

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….

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?

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.

“Knowing something” tends to rely on ideology.

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

“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.

“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

because proper knowing creates more knowing!

Topic:Logic and Research

Logic and Research

Opinion = Belief or

Guess

Are all opinions equal?

Yes! In that everyone can have them.

No!

In that every opinion has to be based on something.

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.

In the U.S.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 has a MD degree. She works in Vancouver.

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

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

Can you make a good guess about whether she is married?

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 increase 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.

What are these statements?

What can you tell me about this woman?

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….

Take the NBA as an example!

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??

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

What decision will you make??

What information do you wantbefore you make this decision?

But……….

How long do people actually live?

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

Global Warming

Co2

Temp

Sun SpotNumber

1,122 Record Cold Temps in the U.S. in

one week

July in the USA ends on a frigid note as record cold outpaces warmth nearly 10 to 171% Of The US Below Normal Temperature in 2013

South America in massive deep freeze

July 20, 2013