There is a linear correlation between two variables if changes in one variable are associated with changes in the other variable in a linear fashion. The Pearson correlation coefficient measures the strength and direction of this linear relationship between -1 and 1. A value above 0.396 for a sample size of 25 indicates a statistically significant linear correlation between the age and distance moved for adults relocating to Phoenix. The coefficient of determination shows that 17.54% of the variation in distance moved can be explained by the linear relationship with age.
Linear Correlation A correlation exists between two variab.docx
1. Linear Correlation
A correlation exists between two variables where one of the
variables is related to the
other in some way. Linear correlation is when the relationship
that exists between the
two variables is linear.
The degree of linear correlation is found by calculating the
Pearson’s Correlation
Coefficient.
2 22 2
n xy x y
r
n x x n y y
2. Where x and y are the variables whose relationship is in
question. The value of r will
always be between -1 and 1 inclusive.
Remember r is a measure of the strength of a linear association
between two variables.
Example
Suppose the age and distance (to the nearest mile) moved was
recorded for 25 adults
who moved to Phoenix from outside the state of Arizona. Is
there a significant linear
correlation between the age of the adult and the distance
moved?
Age
Distance
(mi.)
25 1852
37 1603
72 450
47 975
72 373
4. 48 1001
31 1725
48 1075
Let the ages be X and the distances be Y. To calculate the
Correlation Coefficient make
a table.
X=Age Y=Distance (mi.) X Y 2X 2Y
25 1852 46300 625 3429904
37 1603 59311 1369 2569609
72 450 32400 5184 202500
47 975 45825 2209 950625
72 373 26856 5184 139129
41 1336 54776 1681 1784896
59 586 34574 3481 343396
6. 22 2721 59862 484 7403841
45 2341 105345 2025 5480281
44 2455 108020 1936 6027025
48 1001 48048 2304 1002001
31 1725 53475 961 2975625
48 1075 51600 2304 1155625
Sum 1168 30509 1292656 61102 52601255
We need a column for the X values, the Y values, X times Y, X
squared, and Y squared.
Find the sum of each of these columns. Then these values are
plugged into the formula.
7. 2 22 2
2 2
25 1292656 1168 30509
25 61102 1168 25 52601255 30509
32316400 35634512
1527550 1364224 1315031375 930799081
3318112 33318112
404.1361157 19601.84415163326 384232294
3318112
7
n xy x y
r
n x x n y y
r
r
9. there is a significant linear
correlation present, we must have something to compare this to.
Use the table of critical
values for Pearson Correlation Coefficient.
For a significance level of 0.05, the critical value for a sample
size of 25 is .396.
If the absolute value of r is greater than the critical value from
the table, then we
conclude there is significant linear correlation.
level of significance at a
sample size of 25, then there is a significant linear correlation
between the age and the
distance moved.
Coefficient of Determination
Can the correlation coefficient be used to explain the variation?
Yes, the Coefficient of Determination is the proportion of
variation in Y that is explained
by the linear association between x and y.
The Coefficient of Determination is the square of the Pearson
Correlation Coefficient.
10. Where r is the Pearson Correlation Coefficient.
Example
Suppose the age and distance moved was recorded for 25 adults
who moved to
Phoenix from outside the state of Arizona. What proportion of
variation in the distance
moved can be explained by the linear relationship between the
distance moved and the
ages of those moving?
Pearson’s Correlation Coefficient was calculated above to be
We can say that .17544 or 17.54% of the variation in the
distance moved can be
explained by the linear relationship between the distance moved
and the age of the
adult moving.
11. MGT/576 v1
Porter’s Five Forces
MGT/576 v1
Page 2 of 3
Porter’s Five Forces
Complete the table below
. For the company you’ve decided to assess in week
1, determine the strength of each of Porter’s Five Forces and of
the complementors.
Justify your determination with examples.
Industry force
Strength
Provide a justifying your determination with examples
High
Medium
Low
Example
x
This is why I believe it is medium.
Threat of new entrants
X
The existence or absence of new enterprises or new entrants in
the consumer products industry affects Procter & Gamble's
12. success. The impact of new entrants on existing businesses and
the industry as a whole is analyzed in this section of Porter's
Five Forces Model. It is essential that Procter & Gamble's plans
take into account the following external elements that
contribute to the mild severity of the threat of new entrants:
· There aren't many fees involved with making a change (strong
force)
· Average Investment Prices (moderate force)
· Small- to Medium-Sized Scale Economies (moderate force)
Power of buyers
X
To increase sales of its consumer products, the Procter &
Gamble Company concentrates on meeting the wants and
requirements of its target market. The level of customer
satisfaction is one of the five factors evaluated in Porter's Five
Forces Model of Industry Analysis. This factor accounts for the
effects of consumers and purchasers on businesses and the
industry as a whole. Customers or purchasers' negotiating power
is modest because of the following external issues, all of which
Procter & Gamble must handle.
· There aren't many fees involved with making a change (strong
force)
· Lack of readily available alternatives (weak force)
· Strong consumer interest in general (weak force)
Power of suppliers
X
Procter & Gamble relies on its suppliers to provide the company
with the raw and intermediate materials necessary to run its
business. Porter's Five Forces Analysis includes a consideration
of how suppliers affect the state of the industry's overall
environment. The lackluster impact of suppliers' negotiating
13. strength on Procter & Gamble and the consumer products sector
may be traced to the following exogenous factors:
· Slightly integrated into the future (moderate force)
· Ample supply in general (weak force)
· Supply-side population density somewhat high (weak force)
Power of substitutes
X
Products from Procter & Gamble have alternatives on the
market. This part of Porter's Five Forces Analysis looks at how
the threat of substitute products affects both individual
businesses and the overall market for the sector. Procter &
Gamble faces a modest level of substitutes threat as a result of
the following external factors:
· There aren't many fees involved with making a change (strong
force)
· Lack of readily available alternatives (weak force)
· a scarcity of viable alternatives (weak force)
Rivalry among competitors
X
Procter & Gamble's competitive advantage and how the
company grows competitive in the consumer goods market are
both influenced by the company's competitive rivals.
Competition's impact on the industry environment is analyzed in
this section of Porter's Five Forces Model. Procter & Gamble
faces fierce competition due in part to the following external
factors:
· Massive Variety of Businesses
· Extremely Diverse Number of Businesses (strong force)
· Low barriers to entry (strong force)
Complementors
14. X
Colgate-Palmolive, Church-Dwight, and Unilever are just a few
of P&G's main rivals. P&G obtains about two-thirds of its sales
from established countries, whereas Unilever gets the bulk of its
income from developing markets, which are rising at a quicker
pace.
References:
Han, C., Thomas, S., Yang, M., & Cui, Y. (2019). The ups and
downs of open innovation efficiency: the case of Procter &
Gamble.
European Journal of Innovation Management.
Day, G. S., & Shea, G. P. (2021). Innovating how innovation
works at Procter & Gamble.
Strategy & Leadership.
Copyright 2020 by University of Phoenix. All rights reserved.
Copyright 2020 by University of Phoenix. All rights reserved.
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MGT/576 v1
Title
ABC/123 vX
Page 2 of 2
Entrepreneurial Strengths and Actions to Increase Value
Creation
Complete the table below, assessing the company’s strengths
and weaknesses and describing the company’s approach to
innovation.
Company name:
15. Company website URL:
3 to 5 entrepreneurial strengths of the company (90 – 175
words)
Major elements of the company’s approach to entrepreneurship
and value creation (175 words)
1 action the company could take to increase entrepreneurial
value creation
References:
Copyright 2020 by University of Phoenix. All rights reserved.
Copyright 2019 by University of Phoenix. All rights reserved.
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