RESEARCH DESIGN

Causal Research

• One variable directly or indirectly influences another in a causal relationship
• Change in one variable's value directly or indirectly causes a change in another's value
• Causal relationships can be unidirectional or bidirectional
• Unidirectional: Variable A influences Variable B, but not vice versa
• Bidirectional: Each variable influences the other
• Causal research helps identify causes and effects behind processes
• Causal research can be replicated
• Causal research helps identify the impacts of changing processes and existing methods
• Causal research uses systematically selected subjects, increasing internal validity
• Causal research is difficult to administer due to challenges in controlling extraneous variables
• Causal research is one of the most expensive research methods
• Causal research can reveal business plans to competitors
• Causal research requires other types of research to confirm its output

Correlational Research

• Determines if two or more variables covary, and establishes the relationships' directions, magnitudes, and forms
• Observing the values of two or more variables determines the relationships between them
• It involves observing variables "as is" without manipulation
• Some correlational research compares a variable's average value across preformed groups
• Establishing a correlational relationship between variables allows prediction of one variable's value from another
• The variable used for prediction is called the predictor variable
• The variable being predicted is called the criterion variable
• Causal link between correlated variables remains an open question
• Correlational research allows for the collection of much more data than experiments
• Since correlational research happens outside the lab, the results apply more to everyday life
• Correlational research serves as a good starting point when investigating a phenomenon or relationship
• It helps determine the strength and direction of relationships, paving the way for later studies to narrow findings and determine causation
• Correlation research only uncovers a relationship without clear reasoning
• It does not reveal which variable influences others

Experimental Research

• Manipulating one or more independent variables and controlling extraneous variables are defining characteristics
• Values of an independent variable are chosen and set by the experimenter
• To manipulate an independent variable, participants must be exposed to at least two levels of that variable
• These levels are called the treatments of the experiment
• The dependent variable is observed and measured in experimental designs.
• If a causal relationship exists, the dependent variable's value depends on the level of the independent variable
• Extraneous variables may affect the target behavior of the experiement
• Uncontrolled extraneous variables can produce uncontrolled changes in the dependent variable's value
• Effects are controlled by holding extraneous variables constant
• Effects also controlled by randomizing their effects across treatments
• The experimental approach identifies and describes causal relationships
• The experimental approach identifies whether changes in one variable cause changes in another
• Usage is restricted because of limits to identify causal relationships
• The experimental method cannot manipulate hypothesized causal variables
• Tight control over extraneous variables is a limitation
• Control reduces the ability to apply findings to situations differing from the original experiment's conditions
• Increasing control over extraneous variables decreases the ability to generalize findings

Market Analysis

• Used to determine the best possible action course for business decisions
• Incorporates quantitative and qualitative data for a comprehensive view
• Market analysis consists of an industry overview, target market analysis, competition, and pricing/forecast

Industry Overview

• The current state of the industry and future trends
• Key industry metrics such as size, trends, and projected growth

Target Market

• Identifying the customers researchers aim to reach
• Market size - The amount of potential customers for a product or service
• Demographics - Potential customers' age, gender, education, income, and more
• Location - Where customers are found
• Psychographics - Customers' likes, dislikes, lifestyle, and personality
• Behaviors - How customers shop for and purchase products/services
• Trends - Changes in customer behavior

Competition

• Includes a detailed report of a competitor's positioning, strength, and weakness
• Direct competition
• Indirect competitors
• Competitive advantages
• Barriers to entry

Pricing and Forecast

• Aids in determining a business's position in the market
• Forecast displays the desired market share

Financial Analysis

• Financial analysis evaluates businesses, projects, budgets, and finance-related transactions
• Determines their performance and suitability
• Financial analysis is also used to analyze stability, solvency, liquidity, or profitability for monetary investment
• Also used to assess economic trends, set financial policy, and build long-term plans
• It synthesizes financial numbers and data, performing corporate and investment finance activities
• Financial analysts examine a company's financial statements
• Includes the income statement, balance sheet, and cash flow statement
• Financial data can be analyzed by calculating ratios from financial statements

Basic Financial Ratios

• Working capital ratio measures a company's ability to turn assets into cash to pay short-term obligations
• Calculated by dividing current assets by current liabilities
• Quick ratio (acid test) subtracts inventories from current assets before dividing by liabilities
• Shows coverage of current liabilities by cash and readily cashed items
• Earnings per share (EPS) measures net income earned on each share of common stock
• Calculated by dividing net income by the weighted average number of common shares outstanding
• Price-earnings ratio (P/E) reflects investors' assessments of future earnings
• Calculated by dividing company's stock price by EPS
• Debt-equity ratio gauges the the safety margins
• Return on equity measures the profitability of shareholders' capital investment
• Calculated by dividing net earnings (after taxes), subtracting preferred dividends by common equity dollars

Competitor Analysis

• Competitors are placed in strategic groups by how directly they compete for the customer's money
• Their product/service, profitability, growth pattern, marketing, strategies, structure, strengths, weaknesses, and size, are documented
• Key questions to address include: who the competitors are, products/services they offer, market share, past and current strategies, media for marketing, advertising frequency, strengths/weaknesses, potential threats/opportunities