FINANCIAL
MANAGEMENT
352
CRASH COURSE NOTES
FOCUS ON KEY CHAPTER
OUTCOMES BASED ON
REGULARLY ASKED PAST
QUESTIONS
, INTRODUCTION
THE ROLE OF BUSINESS
RESEARCH
APPLIED BUSINESS RESEARCH
Applied business research: conducted to address a specific business decision for
a specific firm or organisation
BASIC BUSINESS RESEARCH
Basic business research (pure research): conducted without a specific decision
in mind, and it usually does not address the needs of a specific organisation. It
attempts to expand the limits of knowledge in general, and as such it is not
aimed at solving a particular problem.
Basic research can be used to test the validity of a general business theory
or to learn more about a particular business phenomenon.
The two types of research are not completely independent, as basic research
often provides the foundation for later applied research.
THE SCIENTIFIC METHOD
The scientific method: the way researchers go about using knowledge and
evidence to reach objective conclusions about the real world.
, SECTION 1
CH4: THE BUSINESS
RESEARCH PROCESS
DECISION-MAKING
The process of developing or deciding among alternative ways of resolving a
problem or choosing from alternative opportunities.
BUSINESS OPPORTUNITY, BUSINESS PROBLEM &
SYMPTOMS
Business opportunity: a situation that makes some potential competitive
advantage possible.
Business problem: a situation that makes some significant negative consequence
more likely.
Symptoms: observable cues that serve as a signal of a problem because they are
caused by that problem.
CERTAINTY, UNCERTIANTY & AMBIGUITY
Certainty (complete): decision-maker has all information needed to make an
optimal decision, including the exact nature of the business opportunity or
problem. Perfect certainty is rare.
Uncertainty means the manager grasps the general nature of desired objectives,
but information regarding alternatives is incomplete. Under conditions of
uncertainty, managers recognize that spending time to gather additional data
that clarifies the nature of a decision is needed.
Ambiguity: the nature of the problem itself is unclear, objectives are vague, and
decision alternatives are difficult to define. This is the most difficult decision
situation and the most common.
, SECTION 1
CH4: THE BUSINESS
RESEARCH PROCESS
TYPES OF BUSINESS RESEARCH
EXPLORATORY RESEARCH
Conducted to clarify ambiguous situations or discover business opportunities.
Not intended to provide conclusive evidence.
Usually first step, and additional research will be needed.
Often used to guide and refine these subsequent research efforts.
DESCRIPTIVE RESEARCH
Describes characteristics of objects, people, groups, organisations or
environments. (Paints a picture)
Unlike exploratory research, conducted after the researcher has gained a
firm grasp of the situation being studied.
This understanding (Possibly coming from exploratory research) directs the
study toward specific issues.
Research questions and hypotheses.
Mostly survey research
Diagnostic analyses seek to detect reasons for market outcomes focusing
specifically on beliefs, feelings and reactions.
CAUSAL RESEARCH
If you know what causes a specific outcome, you have powerful information.
Causal research seeks to identify cause-and-effect relationships.
When something causes an effect, it makes it happen. The effect is the
outcome.
Building blocks – exploratory builds descriptive which builds causal.
Can take long and be very expensive.
THREE CRITICAL PIECES OF CAUSAL EVIDENCE
Temporal sequence: Time order of events. Cause must come before effect.
Concomitant variation: when a change in the cause occurs, a change in the
outcome is also observed.
Nonspurious association: means any covariation between a cause and an
effect is true, rather than due to some other variable.
MANAGEMENT
352
CRASH COURSE NOTES
FOCUS ON KEY CHAPTER
OUTCOMES BASED ON
REGULARLY ASKED PAST
QUESTIONS
, INTRODUCTION
THE ROLE OF BUSINESS
RESEARCH
APPLIED BUSINESS RESEARCH
Applied business research: conducted to address a specific business decision for
a specific firm or organisation
BASIC BUSINESS RESEARCH
Basic business research (pure research): conducted without a specific decision
in mind, and it usually does not address the needs of a specific organisation. It
attempts to expand the limits of knowledge in general, and as such it is not
aimed at solving a particular problem.
Basic research can be used to test the validity of a general business theory
or to learn more about a particular business phenomenon.
The two types of research are not completely independent, as basic research
often provides the foundation for later applied research.
THE SCIENTIFIC METHOD
The scientific method: the way researchers go about using knowledge and
evidence to reach objective conclusions about the real world.
, SECTION 1
CH4: THE BUSINESS
RESEARCH PROCESS
DECISION-MAKING
The process of developing or deciding among alternative ways of resolving a
problem or choosing from alternative opportunities.
BUSINESS OPPORTUNITY, BUSINESS PROBLEM &
SYMPTOMS
Business opportunity: a situation that makes some potential competitive
advantage possible.
Business problem: a situation that makes some significant negative consequence
more likely.
Symptoms: observable cues that serve as a signal of a problem because they are
caused by that problem.
CERTAINTY, UNCERTIANTY & AMBIGUITY
Certainty (complete): decision-maker has all information needed to make an
optimal decision, including the exact nature of the business opportunity or
problem. Perfect certainty is rare.
Uncertainty means the manager grasps the general nature of desired objectives,
but information regarding alternatives is incomplete. Under conditions of
uncertainty, managers recognize that spending time to gather additional data
that clarifies the nature of a decision is needed.
Ambiguity: the nature of the problem itself is unclear, objectives are vague, and
decision alternatives are difficult to define. This is the most difficult decision
situation and the most common.
, SECTION 1
CH4: THE BUSINESS
RESEARCH PROCESS
TYPES OF BUSINESS RESEARCH
EXPLORATORY RESEARCH
Conducted to clarify ambiguous situations or discover business opportunities.
Not intended to provide conclusive evidence.
Usually first step, and additional research will be needed.
Often used to guide and refine these subsequent research efforts.
DESCRIPTIVE RESEARCH
Describes characteristics of objects, people, groups, organisations or
environments. (Paints a picture)
Unlike exploratory research, conducted after the researcher has gained a
firm grasp of the situation being studied.
This understanding (Possibly coming from exploratory research) directs the
study toward specific issues.
Research questions and hypotheses.
Mostly survey research
Diagnostic analyses seek to detect reasons for market outcomes focusing
specifically on beliefs, feelings and reactions.
CAUSAL RESEARCH
If you know what causes a specific outcome, you have powerful information.
Causal research seeks to identify cause-and-effect relationships.
When something causes an effect, it makes it happen. The effect is the
outcome.
Building blocks – exploratory builds descriptive which builds causal.
Can take long and be very expensive.
THREE CRITICAL PIECES OF CAUSAL EVIDENCE
Temporal sequence: Time order of events. Cause must come before effect.
Concomitant variation: when a change in the cause occurs, a change in the
outcome is also observed.
Nonspurious association: means any covariation between a cause and an
effect is true, rather than due to some other variable.
