Research Methods for Managerial Decisions - Essay Example

RESEARCH METHODS FOR MANAGERIAL DECISIONS a) Laura obtained the following results under the two cases, using normal and lagged Values independently:Multiple R = 0.738R-square = 0.546By using lagged values she came up with the following:Multiple R = 0.755R-square = 0.570. The answer to this the difference between the two sets of results is because of the type of variables chosen. For the first approach, the data was collected from normal values, which are independent variables as they are obtained from current observations.

Whereas, the second approach using lagged values produces slightly different results because by definition, lagged values are a type of variables, which are dependent during the current time period, but are found to have been independent variable in a previous time period. Therefore, the observed values would be different for each case, hence the difference in the results. Coming to the problem of optimization, the only variable that is used for estimating the optimal values is known as the coefficient of multiple determinations, which is denoted by R2.

According to theory, R2 is used to determine the proportion of the variation in the dependent variable that is explained by the set of independent variables. For the above 2 cases, R2 was found to be 0.546 & 0.570 respectively. This signifies that in the analysis, only 54.6% and 57% of the variation in the revenue can be accounted for by the 3 variables taken into consideration. If indeed one were to make the solution optimal, then it can only be done if the model were to explain the results in terms of the largest variation in the dependent variables along with the use of the fewest number of independent variables.

As such, it would be optimal to include all the lagged values in the regression equation (as they are dependent variables), but along with this it would also be necessary to include the normal values (current advertising expenditure as well as the price index). The estimated advertising costs (under normal values) must be excluded, as it is not required. Under this scheme, the R2 turns out to be 0,756, which is the largest obtained among all possible combinations, and hence the most optimal. b) Let p1=the proportion that 10% visited the caf and,Let p2=the proportion of people who visit the caf is not equal to 10%.

In other words, p1p2.Level of Significance=0.05. Under the following scenario, we adopt the Normal distribution function, wherein the z-value is calculated and evaluated to find whether it is within the allowed limits (as allowed by the levels of confidence). If it lies within the limits (that is between the shaded area in the two-sided test, then the hypothesis is accepted. The z value is 0.015 and the corresponding normal value from the z-tables is found to be 0.004, which lies between 1.

96 (for 95% level of confidence). Therefore, Laura's claim is valid. The CoffeeTime's key decision maker regarding its decisions in India should not concentrate entirely on the amount of money being spent and should instead devise strategies to use the money for advertising in such mediums, which reach out the most to people. As is well known, every region has its own traits, which determine the mode of popularity. Research on India's consumers has shown that the popular mode of reaching out to them is through television and the Newspapers.

But an interesting fact here is that we must try to gain popularity in the Indian market by resorting to heavy advertising in the most popular form of entertainment in India-CRICKET (the gentleman's game). Today, cricket in India can only be compared to soccer in Brazil. Key market players in India resort to huge amounts of sponsors and advertisements that focus on cricket and which ultimately run into millions of dollars every year. CoffeeTime does not have to invest millions, but if it could invest its money allocated for the purpose of advertising, in areas related to cricket, then it would do wonders to our sales, so much so that in due course CoffeeTime would be on everybody's lips.

Another major change that CoffeeTime needs to adopt is to stop completely relying on selling coffee in India. In addition, CoffeeTime needs to introduce tasty and popular food items of the west into the Indian markets (products which were earlier lesser known to Indian people). Then appropriate advertising of these products would ensure that people feel the urge to taste these new products, which would eventually result in a rise in CoffeeTime's revenues.