Business Problem Proposal Mba 510

Topics: Regression analysis, Correlation and dependence, Pearson product-moment correlation coefficient Pages: 9 (4343 words) Published: November 30, 2008
Running head: BUSINESS PROBLEM PROPOSAL Business Problem Proposal University of Phoenix Business Problem Proposal Wal-Mart is a worldwide retail company. In 2008, Wal-Mart operated 971 discount stores, 2,447 super centers, 132 neighborhood markets, and 591 Sam’s Clubs in the United States (MarketLine, 2008). The company is headquartered in Bentonville, Arkansas and employs about 2.1 million people worldwide. The business problem to be illustrated is the high employee turnover that Wal-Mart experiences. A look into why employee retention is so high and the associated costs of this high turnover will be explored. Illustrations will show Wal-Mart’s problem of high turnover in statistical terms and list a set of recommendations to reduce employee turnover. Dependent and independent variables will be illustrated, the null and alternative hypothesis and the theories to support these hypotheses will be evaluated, primary and secondary data sources will be defined, how samples were selected and produced will be reviewed and finally recommendations will be made for improvement. Problem Statement Wal-Mart has a current need to change their organizational culture in a manner that the change will lead to an increase in employee retention and productivity. Analysis of Importance of the Problem The current situation at Wal-Mart is low paying wages and high turnover rate. Inadequate pay can be a major factor driving and organization’s turnover rate. A high turnover rate can be very costly to any organization, as the organization is constantly spending funds to train new employees. The higher the turnover rate the more funds are spent on training a higher number of new employees each year. These are unnecessary costs that Wal-Mart can invest in other areas of the business. Independent and Dependent Variables: Supported Evidence Wal-Mart’s turnover rate is the dependent variable. The dependent variable is defined as “the variable that is being predicted or estimated” (Lind, Marchal & Wathan, 2004, p. 431). Several independent variables can be found that influence the dependent variable. Independent variables are the variables that provide the basis for estimation, such as the predictor variable. (Lind et al.) Many different factors can contribute to the employee turnover rate at Wal-Mart Corporation. Examples could include the expensive healthcare costs, the inadequate pay, being asked to work off the clock, working conditions, stress level, employing mainly part-time positions, better offers within the industry, bad management, or bad company policy. The independent variables for the purpose of this illustration will be inadequate pay, high benefit costs, and lack of full time employment. Use of Correlation in Making Business Decisions Correlations can be used in making many business decisions. “Correlation analysis is the study of the relationship between variables” (Lind et al., 2004, p. 429). The usual first step for correlation analysis is to plot the related data in a scatter diagram. Here the independent and dependent variables are identified. The coefficient of correlation describes the strength of the relationship between two sets of interval-scaled or ration-scaled variables. Designated r, it is often referred to as Pearson’s r and as the Pearson product-moment correlation coefficient. It can assume any value from – 1.00 to + 1.00 inclusive. A correlation coefficient of - 1.00 or + 1.00 indicates perfect correlation. (Lind et al.) Scatter diagrams can show positive or negative correlations for data. “If there is no relationship between the two sets of variables, Pearson’s r is zero. A coefficient of correlation r close to zero shows that the linear relationship is quite weak” (Lind et al., p. 432). The strength of the correlation between two sets of variables does not depend on the direction in a positive or negative direction. (Lind et al.) The coefficient of determination “is computed by squaring the...
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