PROBLEM 3 - PERCEIVED COMPANY REPUTATION

Situation:

Does the perceived reputation of a company depend on the perceived quality of management? The Wall Street Journal conducts an annual Perceptions Study where it surveys readers and asks how each selected reader rates the reputation of the company and quality of management for over 200 global organizations. Both variables were rated on a categorical scale where the levels were excellent, good and fair.

Action:

Use the Chi-square Test of Independence, a = .01, and the following contingency table to determine whether the reputation of a company depends on the perceived quality of management. Show the steps of hypothesis testing relevant to this problem and its type of test statistic and make a decision. Explain what that decision means.

Reputation of Company

Quality of Management Excellent Good Fair

Excellent 40 25 5

Good 35 35 10

Fair 25 10 15

a. SHOW THE Ho AND Ha APPROPRIATE FOR THIS PROBLEM

b. WHAT IS THE P-VALUE FOR THIS PROBLEM?

c. COMPARE P-VALUE TO PROBLEM STATEMENT SPECIFIED SIGNIFICANCE VALUE AND STATE WHETHER Ho SHOULD OR SHOULD NOT BE REJECTED

d. BASED ON WHETHER Ho IS REJECTED/NOT REJECTED, STATE WHETHER THE REPUTATION OF A COMPANY DEPENDS ON THE QUALITY OF MANAGEMENT.

e. WHAT IS THE PROBABILITY VALUE ASSOCIATED WITH THE ABOVE CONCLUSION BEING A WRONG CONCLUSION? JUSTIFY YOUR ANSWER.