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# FACTOR analysis (July 2014 updated)

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• 1. FACTOR ANALYSIS July 2014 updated Prepared by Michael Ling Page 1 QUANTITATIVE RESEARCH METHODS SAMPLE OF FACTOR ANALYSIS PROCEDURE Prepared by Michael Ling
• 2. FACTOR ANALYSIS July 2014 updated Prepared by Michael Ling Page 2 PROBLEM 1. Objectives of the tutorial for this week:- 1. Learn how to run a Factor Analysis. 2. Understand Varimax Rotation. 3. Application of Factor Analysis as a Data Reduction Technique. 2. Kay Sealey is the news director for KASI-TV, the local NBC affiliate for a large South-Western city. Sealey believes that the most important quality of an on-air newscaster is credibility in the eyes of the viewer. Accordingly, surveys are undertaken every six months that attempt to evaluate the credibility of the newscaster. One of the survey instruments used by the station is given below:- 3. Questionnaire Evaluate the anchorperson on the news broadcast that you reviewed by completing the following series of scales. Place a check mark on the scale position that most nearly matches your feelings about this anchorperson. For example, if you thought that in this anchorperson was extremely likeable, you would place a check mark in the blank nearest “likeable” (in this case, the far left blank). 1. likeable __ __ __ __ __ __ __ not likeable 2. knowledgeable __ __ __ __ __ __ __ not knowledgeable 3. unattractive __ __ __ __ __ __ __ attractive 4. intelligent __ __ __ __ __ __ __ not intelligent 5. good looking __ __ __ __ __ __ __ bad looking 6. not believable __ __ __ __ __ __ __ believable 4. This questionnaire was administered to 12 individuals. The following table contains the responses of the 12 people surveyed. The data was coded between 1 and 7. For example, a check mark closest to likeable would be coded as 1 and not likeable as 7. 1. likeable _1 _2 _3 _4 _5 _6 _7 not likeable ID Q1 Q2 Q3 Q4 Q5 Q6 1 1 2 5 3 3 6 2 1 2 5 3 3 6 3 5 6 5 5 5 5 4 2 2 5 2 3 5 5 2 2 5 2 3 5
• 3. FACTOR ANALYSIS July 2014 updated Prepared by Michael Ling Page 3 6 4 5 3 3 5 4 7 3 3 5 5 3 4 8 1 1 6 1 2 7 9 5 4 3 3 5 2 10 3 3 5 1 2 7 11 3 3 5 4 4 5 12 2 5 6 4 3 1 Step 1:-Produce a correlation matrix. Which variables are correlated? Does it appear that factor analysis would be appropriate for this data? Step 2:-Carry out a principal component factor analysis with unrotated factor analysis. How many factors? How many relevant factors? Use only Eigenvalue criterion to evaluate this. Also try a Scree plot using these Eigenvalues for different factors. How many factors should be retained (using Eigenvalue criterion)? Step 3:-Using Varimax rotation and the number of factors retained, run a factor model again. Are the unrotated factor loadings different from Varimax? Why or why not?? Try and interpret the results. Step 4:-Interpret the factors. Questions 1. Interpret the correlation matrix. (2Marks) 2. How many relevant factors are there? Use both Eigenvalue and Scree criteria to evaluate this. Provide a figure for the Scree plot. (3Marks) 3. How are the Varimax rotation factor loadings different from unrotated factor loadings? Which one makes more sense? Interpret the factors using Varimax rotation factor loadings. (2Marks) 4. Estimate Reliability for the factors identified in Question 3? (1Mark) 5. Why is factor analysis used for this data? Provide some tests to indicate the appropriateness of data for factor analysis. (2Marks) 6. Provide managerial recommendations to Kay Sealey. (5Marks)