4. Data Analysis and Implications (15 points)

Nordique Products, Inc. is trying to decide which of two available strategies it will implement

company-wide in the future - Strategy A or Strategy B.

To identify the best strategy, managers selected two samples of store locations (20 locations in each

sample) and implemented one strategy in each sample.

After several months, the firm has compiled data from the different locations within each sample,

and has run regression analyses using this data. A variety of independent / explanatory factors are

included in the regression models. The main dependent variable of interest is store profit. (You can

assume that lag between the implementation of the strategy and financial results is minimal.)

Relevant information from the regression analysis for stores implementing Strategy A is as follows:

Count = 20

R-squared = 0.692

Adjusted R-squared = 0.651

Coefficient Std Error t-value p-value

Intercept 101,452 9,546 8.24 < 0.01

Strategy A implementation score 9,659 946 4.10 0.01

Experience score 4,500 321 3.96 0.01

Market size (population) 0.453 0.042 0.97 0.21

Customer satisfaction 25,409 3,422 2.24 0.04

Relevant information from the regression analysis for stores implementing Strategy B is as follows:

Count = 20

R-squared = 0.679

Adjusted R-squared = 0.623

Coefficient Stnd Error t-value p-value

Intercept 94,440 8,200 7.04 < 0.01

Strategy B implementation score 10,099 1,031 9.28 < 0.01

Experience score 3,228 546 4.00 < 0.01

Market size (population) 0.672 0.100 2.10 0.05

Customer satisfaction 31,094 3,652 2.95 0.03

Required

1. Suppose you are making a prediction about financial profit for a future month, based on the

analysis from Strategy A. What would your next step be in relying on regression analysis to

assess the effectiveness of Strategy A?

2. Suppose you are making a prediction about financial profit for a future month based on the

analysis from Strategy B. What would be your prediction based on a store with the following

characteristics:

o Strategy implementation score = 83

o Experience score = 9.2

o Market size = 20,000

o Customer satisfaction rating = 8

3. In interpreting and/or relying on regression analysis (in general), what qualitative concerns

should Nordique managers consider?