A company is considering setting up new locations in countries in which legislation and institutional setup affecting its business is basically the same. Preliminary information on similar ventures gathered from specialized publications suggests there may be differences in the profitability of each country, considering all other factors equal, associated with differences in tastes and or in the proportion of household owners to those who live in rented apartments.

For the purpose of optimizing its decision on where to setup its plants, management needs to have a clearer picture of the situation. Above all, it needs to find out if the preliminary finding of differences in profitability among countries is a fact (regarding all other circumstances equal) and, if so, what of the two factors considered (differences in tastes / proportion of household owners in relation to those renting an apartment or house) could be the explanation.

a.) What are the reasons for using ANOVA or regression analysis in this case?

b.) What type of test or correlation should be explored and their consistency?

c.) How would you formulate this and how would you go about applying it to which variables?

d.) What type of result or outcome would be expected, and how could this result be interpreted in terms of clarifying a strategy for possible future expansion of the company?

e.) How would you complement your study (briefly) with the other approach (either the ANOVA or the regression analysis)?