Research and Analysis for Management MGMT 6272 Fall 2014 Dr. Dennis E. Clayson

The class can be found online at

The first part of this module will be more philosophical 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 make four mistakes….

Mistake 1: Not knowing what information is!

Mistake 2: Not knowing what to do with information!

Mistake 3: Not seeking Information!

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

Much of the information that is utilized for management decisions comes from numbers…. OR is calculated from numbers, OR is explained by 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 we KNOW about the outside world comes from our own brains. There is no exception to this!

Everything we KNOW has to come from a perception formed by our own 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, meters. The value of pi is ….

2. Knowing how to do something: Suppose a student “knew that” the value of pi was …, 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

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 us about 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 are both 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 are both 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 sample Research findings = Results of controlled research procedures

Be careful here….. Research findings do not mean that something is true! They simply increase the probability….

Fact = Reality

An unmarried women with a child has an average income of X Dollars. An married woman with a child has an 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 sometimes difficult in the real world….

Take the NBA as an example!

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

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

The probability of an Afro-American child becomes a NBA star 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/month for 4 years, or $105,600…. After 70, it would take 132 months (11 years) to make up the 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 want before you make this decision?

But………. How long do people actually live?

Global Warming

Co2 Temp Sun Spot Number

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 1 71% Of The US Below Normal Temperature in 2013 South America in massive deep freeze July 20, 2013