Commissioner of Income Tax:

He is an important income tax authority which has executive and judicial powers. The central board of revenue is the appointing authority for commissioner of income tax. Normally commissioner is appointed as an incharge of a zone. He is responsible for the administration of the area assigned to him. He is subordinate regional commissioner income tax.

Appointment of Income-Tax Authorities [Sec. 117]

1. Power of Central Government: The Central Government may appoint such persons as it thinks fit to be income-tax authorities. It kept with itself the powers to appoint authorities upto and above rank of an Assistant Commissioner of Income-Tax [ Sec. 117 (1) ]
2. Power of the Board and Other Higher Authorities: Subject to the rules and orders of the Central Government regulating the conditions of service of persons in public services and posts, the Central Government may authorize the Board, or a Director-General, a Chief Commissioner or a Director or a Commissioner to appoint income-tax authorities below the rank of an Assistant Commissioner or Deputy Commissioner.  [ Sec. 117 (2) ]
3. Power to appoint Executive and Ministerial Staff: Subject to the rules and orders of the Central Government regulating the conditions of service of persons in public services and posts, an income-tax authority authorized in this behalf by the Board may appoint such executive or ministerial staff as may be necessary to assist it in the execution of its functions.

Control of Income: Tax Authorities [ Sec. 118 ]

The Board may, by notification in the Official Gazette, direct that any income-tax authority or authorities specified in the notification shall be subordinate to such other income-tax authority or authorities as may be specified in such notification.

Jurisdiction:

1. In a specific area which is assigned to him, he performs both the function judicial and executive.
2. If specific area is not assigned then he performs his duties according the directions of central board of revenue.

Function and powers of commissioner of income tax:

The commissioner exercises the power to control the staff of income tax department working in his jurisdiction. He is also responsible for the efficiency of work in all respect in his zone.

Following are the important functions and powers of commissioner of income tax.

1. Determine The Jurisdiction:

He has the power to determine the jurisdiction and assign the work to subordinate inspecting additional commissioners income tax and deputy commissioners.

2. Final Authority To Decide The Dispute:

Commissioner income tax is the final authority to decide the disputes if two subordinate income tax authorities are not in agreement regarding their areas of juries diction or the assessment of a person.

3. Transfer Of Jurisdiction:

He is empowered to transfer the jurisdiction from one income tax authority to another.

4. Revision Of Orders:

He may revise any other passed by his subordinates however these orders should not be prejudicial to the assessee.

5. Power To With Held The Refund:

The commissioner of income tax is empowered to order that the refund must be with held if the department wants to appeal against the refund.

6. Refer The Case To High Court:

If he is not satisfied with the decision of appalled tribunal, he can request the tribunal to refer the case to high court provided that the decision involves the point of law.

7. Power To Compound Offence:

He may either before or after the institution of proceedings compound such offence where a person has committed any offence under the income tax law.

8. Order To Person For Payment:

He may order a person who has committed an offence to pay the amount for which the offence may not compound.

9. Power To Disqualify The Practitioners:

If he finds any practitioners qualify of misconduct, he may disqualify an income tax practitioner to appear before any income tax authority.

10. Power To Amend His Orders:

To rectify any mistake from the record the commissioner income tax may amend his orders passed by him.

11. Power To Receive Evidence:

The commissioner has the power to receive the evidence on affidavit.  For the examination of witness he can issue the orders to commissioners.

12. Power To Demand Documents:

He can compel any person to produce his books of accounts or any other documents for investigation. He can also enforce any person to attend his office and he can examine him.

13. Power to Extend the Petition Period:

He can extend the normal period for filling a revision petition, If he is satisfied about the cause of delay.

14. Power to Decide the Revision Petitions:

Against the decision of his subordinates he entertains, hears and decides the revision petitions of aggrieved assesses.

15. May Direct for Appeal:

The commissioner of income tax (Head quarter) may direct the deputy commissioner to appeal to appellate tribunal against the decision made by the commissioner income tax (appeal).

16. Penalty:

If the notice has been issued to any taxpayer but he has failed to obey the notice. In this case commissioner income tax may impose penalty on that person.

17. Best Judgement Assessment:

If any person fails to file the return of income tax with in due date then the commissioner can make the best judgement of assessment.

18. Power of Recovery Of Tax:

The commissioner income tax can take various steps to recover the amount if any person fails to pay the due tax.

19. Inventory of Articles:

If any article is not entered and it is found in the premises the commissioner can make inventory of that article.

20. Provisional Assessment:

The commissioner income tax has the power to make the provisional assessment if any person fails to file the return.

21. Notice for Tax:

The commissioner income tax can issue the notice to any person for filling the return or for the collection of tax from the tax payer.

22. Retain The Documents:

The commissioner income tax is empowered to retain the important documents of the taxpayers for the purpose of prosecutions.

23. Change The Method Of Accounting:

If any person wants to change his method of accounting, the commissioner income tax may allow him to change.

Every assessee, who earns income in excess of the basic exemption limit in a Financial Year (FY), must file a statement containing details of his income, deductions, and other related information. This is called the Income Tax Return. Once you as a taxpayer file the income returns, the Income Tax Department will process it. There are occasions where, based on set parameters by the Central Board of Direct Taxes (CBDT), the return of an assessee gets picked for an assessment.

The various forms of assessment are as follows:

1. Self Assessment

The assessee himself determines the income tax payable. The tax department has made available various forms for filing income tax return. The assessee consolidates his income from various sources and adjusts the same against losses or deductions or various exemptions if any, available to him during the year. The total income of the assessee is then arrived at. The assessee reduces the TDS and Advance Tax from that amount to determine the tax payable on such income. Tax, if still payable by him, is called self assessment tax and must be paid by him before he files his return of income. This process is known as Self Assessment.

2. Summary Assessment

It is a type of assessment without any human intervention. In this type of assessment, the information submitted by the assessee in his return of income is cross-checked against the information that the income tax department has access to. In the process, the reasonableness and correctness of the return are verified by the department. The return gets processed online, and adjustment for arithmetical errors, incorrect claims, disallowances etc are automatically done. Example, credit for TDS claimed by the taxpayer is found to be higher than what is available against his PAN as per department records. Making an adjustment in this regard can increase the tax liability of the taxpayer.

After making the aforementioned adjustments, if the assessee is required to pay tax, he will be sent an intimation under Section 143(1). The assessee must respond to this intimation accordingly.

3. Regular Assessment

The income tax department authorizes the Assessing Officer or Income Tax authority, not below the rank of an income tax officer, to conduct this assessment. The purpose is to ensure that the assessee has neither understated his income or overstated any expense or loss or underpaid any tax.

The CBDT has set certain parameters based on which a taxpayer’s case gets picked for a scrutiny assessment.

• If an assessee is subject to a scrutiny assessment, the Department will send a notice well in advance. However, such notice cannot be served after the expiry of 6 months from the end of the Financial year, in which return is filed.
• The assessee will be asked to produce the books of accounts, and other evidence to validate the income he has stated in his return. After verifying all the details available, the assessing officer passes an order either confirming the return of income filed or makes additions. This raises an income tax demand, which the assessee must respond to accordingly.

4. Best Judgement Assessment

This assessment gets invoked in the following scenarios:

1. If the assessee fails to respond to a notice issued by the department instructing him to produce certain information or books of accounts
2. If he/she fails to comply with a Special Audit ordered by the Income tax authorities
3. The assessee fails to file the return within due date or such extended time limit as allowed by the CBDT
4. The assessee fails to comply with the terms as contained in the notice issued under Summary Assessment

After providing the assessee with an opportunity of being heard, the assessing officer passes an order based on all the relevant materials and evidence available to him. This is known as Best Judgement Assessment.

5. Income Escaping Assessment

When the assessing officer has sufficient reasons to believe that any taxable income has escaped assessment, he has the authority to assess or reassess the assessee’s income. The time limit for issuing a notice to reopen an assessment is 4 years from the end of the relevant Assessment Year. Some scenarios where reassessment gets triggered are given below.

1. The assessee has taxable income but has not yet filed his return.
2. The assessee, after filing the income tax return, is found to have either understated his income or claimed excess allowances or deductions.
3. The assessee has failed to furnish reports on international transactions, where he is required to do so.

Assessment, in the case of some taxpayers, could close quickly while for some, it could prove to be quite gruelling. In case you are not comfortable dealing with income tax officers, it is suggested that you take the help of a Chartered Accountant to help you with your case.

Set off of losses means adjusting the losses against the profit/income of that particular year. Losses that are not set off against income in the same year, can be carried forward to the subsequent years for set off against income of those years. A set-off could be:

1. An intra-head set-off
2. An inter-head set-off

1. Intra-head Set Off

The losses from one source of income can be set off against income from another source under the same head of income.

For eg: Loss from Business A can be set off against profit from Business B where Business A is one source and Business B is another source and the common head of income is “Business”.

Exceptions to an intra-head set off:

1. Losses from a Speculative business will only be set off against the profit of the speculative business. One cannot adjust the losses of speculative business with the income from any other business or profession.
2. Loss from an activity of owning and maintaining race-horses will be set off only against the profit from an activity of owning and maintaining race-horses.
3. Long-term capital loss will only be adjusted towards long-term capital gains. Interestingly, a short-term capital loss can be set off against long-term capital gain or short-term capital gain.
4. Losses from a specified business will be set off only against profit of specified businesses. But the losses from any other businesses or profession can be set off against profits from the specified businesses.

2. Inter-head Set Off

After the intra-head adjustments, the taxpayers can set off remaining losses against income from other heads.

Eg. Loss from house property can be set off against salary income

Given below are few more such instances of an inter-head set off of losses:

1. Loss from House property can be set off against income under any head
2. Business loss other than speculative business can be set off against any head of income except income from salary.

One needs to also note that the following losses can’t be set off against any other head of income:

1. Speculative Business loss
2. Specified business loss
3. Capital Losses
4. Losses from an activity of owning and maintaining race-horses

Carry forward of losses

After making the appropriate and permissible intra-head and inter-head adjustments, there could still be unadjusted losses. These unadjusted losses can be carried forward to future years for adjustments against income of these years. The rules as regards carry forward differ slightly for different heads of income. These have been discussed here:

Losses from House Property:

• Can be carry forward up to next 8 assessment years from the assessment year in which the loss was incurred
• Can be adjusted only against Income from house property
• Can be carried forward even if the return of income for the loss year is belatedly filed.

Losses from Non-speculative Business (regular business) loss:

• Can be carry forward up to next 8 assessment years from the assessment year in which the loss was incurred
• Can be adjusted only against Income from business or profession
• Not necessary to continue the business at the time of set off in future years
• Cannot be carried forward if the return is not filed within the original due date.

Speculative Business Loss:

• Can be carry forward up to next 4 assessment years from the assessment year in which the loss was incurred
• Can be adjusted only against Income from speculative business
• Cannot be carried forward if the return is not filed within the original due date.
• Not necessary to continue the business at the time of set off in future years

Specified Business Loss under 35AD:

• No time limit to carry forward the losses from the specified business under 35AD
• Not necessary to continue the business at the time of set off in future years
• Cannot be carried forward if the return is not filed within the original due date
• Can be adjusted only against Income from specified business under 35AD

Capital Losses:

• Can be carry forward up to next 8 assessment years from the assessment year in which the loss was incurred
• Long-term capital losses can be adjusted only against long-term capital gains.
• Short-term capital losses can be set off against long-term capital gains as well as short-term capital gains
• Cannot be carried forward if the return is not filed within the original due date

Losses from owning and maintaining race-horses:

• Can be carry forward up to next 4 assessment years from the assessment year in which the loss was incurred
• Cannot be carried forward if the return is not filed within the original due date
• Can only be set off against income from owning and maintaining race-horses only

Points to note:

1. A taxpayer incurring a loss from a source, income from which is otherwise exempt from tax, cannot set off these losses against profit from any taxable source of Income
2. Losses cannot be set off against casual income i.e. crossword puzzles, winning from lotteries, races, card games, betting etc.

Wealth tax is imposed on the richer section of the society. The intention of doing so is to bring parity amongst the taxpayers. However, wealth tax was abolished in the budget of 2015 (effective FY 2015-16) as the cost incurred for recovering taxes was more than the benefit is derived. Abolishing the wealth tax also simplified the tax structure. As an alternative to the wealth tax, the finance minister hiked the surcharge from 2% to 12% for the super rich section. Individuals with an income of above Rs.1 crore and companies with an income of over Rs.10 crore fall under the ambit of the super-rich segment.

Wealth tax is applicable to individuals, HUFs, and companies. The deciding factor for applicability of wealth tax is the residential status. The thumb rule is the resident Indians are subject to wealth tax on their global assets. However, NRI’s fall under the ambit of wealth tax for the assets held in India.

If the total net wealth of an individual, HUF or company exceeds Rs. 30 lakhs, on the valuation date, tax @1% will be leviable on the amount in excess of Rs. 30 lakhs.  Every person whose net wealth exceeds such limit shall furnish a return of net wealth. The due date is same as that of Income tax return.

Components of Wealth

Assets:An asset is a resource which is held and has future economic benefit

1. Any building or land appurtenant whether used for residential/ other purposes, but doesn’t include:
2. House allotted by accompanying/ employer to be used exclusively for residential purposes, where the gross total salary of the assessee is less than Rs.10 lakhs
3. House which forms part of Stock in trade
4. House occupied by the assessee for business/ professional purpose
5. Residential property let out for minimum of 300 days in the previous year
6. Property in the nature of commercial establishment or complex
7. Motorcars, other than those used for running them on hire or those held as stock in trade
8. Jewellery, bullion, furniture, utensils or other articles made fully/ partly of gold, silver, platinum or such precious metals
9. Yachts, boats and aircrafts other than those used for commercial purpose
10. Urban land situated in the Specified area, other than:
11. Those classified as agricultural land and used for such purpose
12. Those in which building construction is not permissible
13. Land occupied by building, which was constructed with the approval of the appropriate authority
14. Unused land held by assessee for industrial purposes for a period of 2 years from the date of acquisition.
15. Land held by the assessee as stock in trade for over 10 years from the date of acquisition
16. Cash in hand in excess of Rs. 50,000

Deemed Assets: These are assets, though not legally belonging to the assessee, are clubbed as his assets while computing his net wealth

1. Assets transferred to Spouse otherwise than in connection with agreement to live apart.
2. Assets transferred to a person/ Association of Persons for the immediate or deferred benefit of assessee or spouse.
3. Assets transferred to son’s wife.
4. Assets transferred to a person/ Association of Persons for the immediate or deferred benefit of son’s wife.
5. Assets held by minor child other than those acquired using the skills of minor or those belonging to a minor with disability.
6. Interest of assessee in the asset of a firm/association of people where he is a partner or member.
7. Self-acquired property that is converted as the property of the family/transferred with inadequate consideration.
8. Assets transferred under revocable transfer.
9. Gift of money made in books maintained by assessee, by way of mere book entries.

• Impartible assets held by assessee
• Building allotted to assessee under a Homebuilding scheme.
• Building in which a person is allowed to take/ retain possession in part performance of a contract.
• Building for which assessee has acquired the rights.

Exempted Assets: Assets which are not considered as a part of wealth for the computation of wealth tax

1. Property held under trust/ for the purpose of charitable/religious purposes.
2. Interest in coparcenary property of Hindu Undivided family.
3. Jewellery in possession of ruler not being his personal property.
4. Money/Asset brought by a person of Indian origin/by an Indian citizen.
5. In case of an Individual/HUF, a house/ part of house or plot of land not exceeding 50sq.mtr in area.

Wealth tax Rules

According to Wikipedia, Exploratory research is carried out for a difficulty which has not been clearly defined. It helps in figuring out the best research design, data collection method and choice of subjects.

It should draw definitive conclusions only with extreme caution. Given its basic nature, it usually concludes that an identified problem doesn’t actually exist. The purpose is to find out ideas and information.

Types of Exploratory Research Design

Some of the more popular methods of exploratory research design include literature searches, depth interviews, focus groups, and case analyses.

Literature Search: It is one of the fastest and least expensive means to discover hypotheses. There is enormous quantity of information available in libraries, via internet sources, in commercial data bases, and so on. The literature search may include newspapers, magazines, trade literature, academic literature, or published statistics from research organizations or governmental agencies Census Bureau.  Example: Assume an issue is “Why are product sales lower?” This can easily be evaluated with the aid of published data which should indicate “whether the issue is an “industry problem” or a “firm problem”.

If we acknowledge the specific situation that our company’s sales and profits are lower regardless of the market showing an up trend, then we must evaluate the marketing mix variables.

Depth Interviews: It’s important to start with a good literature search, but at some point it is desirable to talk to persons who are well informed in the area being investigated. These people could be professionals or persons outside the organisation. Here, we don’t need questionnaire. The approach adopted should be highly unstructured, so that the participant can give divergent views.

Depth interviews are widely used to tap the knowledge and experience of individuals with information strongly related the situation or opportunity at hand. Anybody with related information is a potential candidate for a depth interview, such as existing clients, members of the target market, executives and supervisors of the client organization, sales representatives, suppliers, retailers, and so on.

Focus Group: Yet another frequently used method in exploratory research is the focus group. In a focus group, only a few people are brought together to study and talk over some theme of interest. The discussion is directed by a moderator who is in the room with the focus group participants. The group usually is of 8-12 persons. While choosing these individuals, care must be taken to see that they should have a common background and have comparable experiences in buying. This is certainly needed since there should not be a conflict among the group members on the common problems that are being talked about. Throughout the discussion, future buying attitudes, present buying opinion etc., are collected.

Case Analyses: Researchers can understand a lot in regards to a problem by studying carefully selected examples or cases of the phenomenon. Case histories of businesses that have gone through an identical problem may be available. These case studies are suitable to undertake exploratory research. A researcher must examine carefully the previously published case studies with regard to variables like price, advertisement, changes in the trend, etc.

Examples of Exploratory Research

Literature Search Examples

Example 1: A Washing machine producing firm feels that its share of the market is decreasing whereas the overall industry is thriving.

Example 2: As a result of a trade restriction imposed by a country, auto exports are down and hence sales of a company making cars for exports is on the decline.

The above mentioned information enables you to pinpoint the reason for declining sales.

Depth Interviews

For example, a children’s book publisher obtained useful information regarding a sales decline by speaking with librarians and school teachers who revealed that increasing numbers of people were using library facilities and possibly buying fewer books for their children.

Case Analyses

For example, L.L.Bean is recognized for its exceptional order fulfillment.  Even during the busy Christmas season, the corporation usually fills over 99 % of its orders correctly. For that reason, various other businesses have sought to improve their own order fulfillment by benchmarking L.L.Bean.

This research is conducted to clarify ambiguous problems. In this article, we have discussed about the different types of exploratory research design, its examples, and methods. Post your feedback or queries in comments.

Research Design is defined as a framework of methods and techniques chosen by a researcher to combine various components of research in a reasonably logical manner so that the research problem is efficiently handled. It provides insights about “how” to conduct research using a particular methodology.

Types of Research Design

A researcher must have a clear understanding of the various types of research design to select which type of research design to implement for a study. Research design can be broadly classified into quantitative and qualitative research design.

1. Qualitative Research Design

Qualitative research is implemented in cases where a relationship between collected data and observation is established on the basis of mathematical calculations. Theories related to a naturally existing phenomenon can be proved or disproved using mathematical calculations. Researchers rely on qualitative research design where they are expected to conclude “why” a particular theory exists along with “what” respondents have to say about it.

2. Quantitative Research Design

Quantitative research is implemented in cases where it is important for a researcher to have statistical conclusions to collect actionable insights. Numbers provide a better perspective to make important business decisions. Quantitative research design is important for the growth of any organization because any conclusion drawn on the basis of numbers and analysis will only prove to be effective for the business. 

Further, research design can be divided into five types:

(I) Descriptive Research Design: In a descriptive research design, a researcher is solely interested in describing the situation or case under his/her research study. It is a theory-based research design which is created by gather, analyze and presents collected data. By implementing an in-depth research design such as this, a researcher can provide insights into the why and how of research. 

(II) Experimental Research Design: Experimental research design is used to establish a relationship between the cause and effect of a situation. It is a causal research design where the effect caused by the independent variable on the dependent variable is observed. For example, the effect of an independent variable such as price on a dependent variable such as customer satisfaction or brand loyalty is monitored. It is a highly practical research design method as it contributes towards solving a problem at hand. The independent variables are manipulated to monitor the change it has on the dependent variable. It is often used in social sciences to observe human behavior by analyzing two groups – effect of one group on the other.

(III) Correlational Research Design: Correlational research is a non-experimental research design technique which helps researchers to establish a relationship between two closely connected variables. Two different groups are required to conduct this research design method. There is no assumption while evaluating a relationship between two different variables and statistical analysis techniques are used to calculate the relationship between them.

Correlation between two variables is concluded using a correlation coefficient, whose value ranges between -1 and +1. If the correlation coefficient is towards +1, it indicates a positive relationship between the variables and -1 indicates a negative relationship between the two variables. 

(IV) Diagnostic Research Design: In the diagnostic research design, a researcher is inclined towards evaluating the root cause of a specific topic. Elements that contribute towards a troublesome situation are evaluated in this research design method.

There are three parts of diagnostic research design:

• Inception of the issue
• Diagnosis of the issue
• Solution for the issue

(V) Explanatory Research Design: In exploratory research design, the researcher’s ideas and thoughts are key as it is primarily dependent on their personal inclination about a particular topic. Explanation about unexplored aspects of a subject is provided along with details about what, how and why related to the research questions.

Features of a Good Research Design

The features of good research design is often characterized by adjectives like flexible, appropriate, efficient, economical and so on. Generally, the design which minimizes bias and maximizes the reliability of the data collected and analyzed is considered a good design. The design which gives the smallest experimental error is supposed to be the best design in many investigations. Similarly, a design which yields maximal information and provides an opportunity for considering many different aspects of a problem is considered most appropriate and efficient design in respect of many research problems. Thus, the question of good design is related to the purpose or objective of the research problem and also with the nature of the problem to be studied. A design may be quite suitable in one case, but may be found wanting in one respect or the other in the context of some other research problem. One single design cannot serve the purpose of all types of research problems.

A research design appropriate for a particular research problem, usually involves the consideration of the following factors:

1. The means of obtaining information;
2. The availability and skills of the researcher and his staff, if any;
3. The objective of the problem to be studied;
4. The nature of the problem to be studied; and
5. The availability of time and money for the research work.

A hypothesis is a tentative statement about the relationship between two or more variables. It is a specific, testable prediction about what you expect to happen in a study. For example, a study designed to look at the relationship between sleep deprivation and test performance might have a hypothesis that states, “This study is designed to assess the hypothesis that sleep-deprived people will perform worse on a test than individuals who are not sleep-deprived.”

Hypothesis Used in the Scientific Method

In the scientific method, whether it involves research in psychology, biology, or some other area, a hypothesis represents what the researchers think will happen in an experiment.

The scientific method involves the following steps:

1. Forming a question
2. Performing background research
3. Creating a hypothesis
4. Designing an experiment
5. Collecting data
6. Analyzing the results
7. Drawing conclusions
8. Communicating the results

The hypothesis is what the researchers predict the relationship between two or more variables, but it involves more than a guess. Most of the time, the hypothesis begins with a question which is then explored through background research. It is only at this point that researchers begin to develop a testable hypothesis.

In a study exploring the effects of a particular drug, the hypothesis might be that researchers expect the drug to have some type of effect on the symptoms of a specific illness. In psychology, the hypothesis might focus on how a certain aspect of the environment might influence a particular behavior.

Unless you are creating a study that is exploratory in nature, your hypothesis should always explain what you expect to happen during the course of your experiment or research.

Remember, a hypothesis does not have to be correct. While the hypothesis predicts what the researchers expect to see, the goal of the research is to determine whether this guess is right or wrong. When conducting an experiment, researchers might explore a number of factors to determine which ones might contribute to the ultimate outcome.

In many cases, researchers may find that the results of an experiment do not support the original hypothesis. When writing up these results, the researchers might suggest other options that should be explored in future studies.

Researchers Come up With a Hypothesis

In many cases, researchers might draw a hypothesis from a specific theory or build on previous research. For example, prior research has shown that stress can impact the immune system. So a researcher might for a specific hypothesis that: “People with high-stress levels will be more likely to contract a common cold after being exposed to the virus than are people who have low-stress levels.”

In other instances, researchers might look at commonly held beliefs or folk wisdom. “Birds of a feather flock together” is one example of folk wisdom that a psychologist might try to investigate. The researcher might pose a specific hypothesis that “People tend to select romantic partners who are similar to them in interests and educational level.”

Elements of a Good Hypothesis

When trying to come up with a good hypothesis for your own research or experiments, ask yourself the following questions:

• Is your hypothesis based on your research on a topic?
• Can your hypothesis be tested?
• Does your hypothesis include independent and dependent variables?

Before you come up with a specific hypothesis, spend some time doing background research on your topic. Once you have completed a literature review, start thinking about potential questions you still have.

How to Form a Hypothesis

The first step of a psychological investigation is to identify an area of interest and develop a hypothesis that can then be tested. While a hypothesis is often described as a hunch or a guess, it is actually much more specific. A hypothesis can be defined as an educated guess about the relationship between two or more variables.

For example, a researcher might be interested in the relationship between study habits and test anxiety.

The researcher would propose a hypothesis about how these two variables are related, such as “Test anxiety decreases as a result of effective study habits.”

In order to form a hypothesis, you should take these steps:

• Start by collecting as many observations about something as you can.
• Evaluate these observations and look for possible causes of the problem.
• Create a list of possible explanations that you might want to explore.
• After you have developed some possible hypotheses, it is important to think of ways that you could confirm or disprove each hypothesis through experimentation. This is known as falsifiability.

Falsifiability

In the scientific method, falsifiability is an important part of any valid hypothesis. In order to test a claim scientifically, it must be possible that the claim could also be proven false.

Students sometimes confuse the idea of falsifiability with the idea that it means that something is false, which is not the case. What falsifiability means is that if something was false, then it is possible to demonstrate that it is false.

One of the hallmarks of pseudoscience is that it makes claims that cannot be refuted or proven false.

The Role of Operational Definitions

In the previous example, study habits and test anxiety are the two variables in this imaginary study. A variable is a factor or element that can be changed and manipulated in ways that are observable and measurable. However, the researcher must also define exactly what each variable is using what is known as operational definitions. These definitions explain how the variable will be manipulated and measured in the study.

In the previous example, a researcher might operationally define the variable “test anxiety” as the results of a self-report measure of anxiety experienced during an exam. The variable “study habits” might be defined by the amount of studying that actually occurs as measured by time.

These precise descriptions of each variable are important because many things can be measured in a number of different ways. One of the basic principles of any type of scientific research is that the results must be replicable. By clearly detailing the specifics of how the variables were measured and manipulated, other researchers can better understand the results and repeat the study if needed.

Some variables are more difficult than others to define. How would you operationally define a variable such as aggression? For obvious ethical reasons, researchers cannot create a situation in which a person behaves aggressively toward others. In order to measure this variable, the researcher must devise a measurement that assesses aggressive behavior without harming other people. In this situation, the researcher might utilize a simulated task to measure aggressiveness.

Taking Stock of the Industry

Conducting research to better understand the industry your company operates in is integral to success. Knowing who your competition is, who your customers are and what products or services to offer will help you to develop a solid plan. In addition, business research helps organizations avoid future failures. Organizations can determine whether they should expand operations or scale back based on how the industry is doing as a whole. They can even decide if they should apply for a new loan or pay back debts sooner based on current interest rates. Understanding the industry also helps businesses price their products or services effectively, ensuring they are in line with market rates and competitors.

Understanding Your Customers

Your customers are the reason your business exists. As a result, it’s vital to know who they are, how they think, how they feel and why they might need your products or services. Organizations conduct market research in various ways, such as through phone or online surveys, and can also purchase research that has already been published for their industry. It’s a great way to understand what your customers’ biggest challenges are so that you can determine how to help them. Market research is also vital to new product development. Research helps to reduce risk when making a big investment in creating a new product or offering a new service.

Knowing your customers also helps to fine-tune marketing campaigns. This way, you can target customers effectively, really honing in on their pain points and offering your organization as a viable solution. Brand research helps organizations to understand how their customers view them and shows any changes needed to improve the business’ overall image.

Competing Effectively and Efficiently

Every business has some kind of competition; no one operates alone. As a result, it’s important to know who your true competitors are and how you compare. Companies that are honest about their strengths and weaknesses as compared to their competitors have a higher chance of success. Through effective competitor analysis and research, organizations can determine if they need to develop new products or services, whether they should consider new marketing strategies or if their pricing plan needs some tweaks. By understanding the competition better, organizations also can develop new ways to increase market share.

To Remain well-informed

During the process of research, a business would acquire key information related to different areas of the business which the business would analyze, strategize and use the collected business information for improving the efficiency and performance of the business. Reports sent to the top-level management usually have information about the employee preference, consumer likes and dislikes and the different channels that are available effective sales, finance, production, and marketing.

To develop the best strategy

The information so gathered by a business about different areas aids in determining the ideal and best strategy suited to the organization. Say for instance, before initially starting an organization, research helps in evaluating whether the said business if started would be a profitable venture and whether there really exists a demand for the product manufactured by the company. Thus effective research conducted helps in every phase or stages of the business operations by helping in good decision-making.

In ascertaining staff satisfaction level

A clearly carried out research aids in not only uncovering but even in a thorough understanding of the level of staff satisfaction. The management through well-conducted research comes to know of the difficulties experienced by the staff along with getting a clear picture about how to handle the situation at the place of work. Thus it is true that well-conducted research helps the management and the organization in undertaking the needed changes for the efficient, smooth and successful functioning of the organization and in providing satisfaction level to its employees at the workplace. This helps to increase their motivational level as they get coached and trained in their line of need. This helps improve the personal as well as the professional performance of the employees thus improving the overall performance of the organization.

Effective managerial decision-making

By undertaking effective research in different areas, all the areas of the business get thoroughly analyzed and evaluated thus helping in picking up the good techniques for better and more efficient ways that would help in increasing the productivity and profitability of the organization.  In short, it cannot be denied that effective research undertaken provides an answer to all the problems of a business.