The Impact of Increasing Oil Prices on Selected Sector/S of International Business or Travel - Coursework Example

 Evaluation of the impact of increasing oil prices on selected sector/s of international business or travel. Name Course Tutor Date Executive summary This is a research proposal and is all about investigating how different industry sectors tend to be affected by the increase of the oil prices. The proposal shows the background information about the impact of high oil prices allover the world. The proposal shows the research questions that ought to be answered by the researchers as they conduct their study. It highlights the objectives and hypothesis which the researchers would use in carrying out the study. The type of study which this study is going to take is shown in the research design which includes both primary and secondary data sources. The proposal shows the targeted population and the sample size that the researchers would use when in the field. Some of the specific research instruments that would be employed during the study have been highlighted and the analysis procedures that would be used after data collection. The importance of the research is shown on different user of the information. The proposal shows the approximate budget which the study may need and also the time which as about two weeks. Table of content 1. 0.Executive summary…………………………………………… 2.0 Research problem definition…………………………………… 2.1. Research questions…………………………………………….. 2.2. Research objectives……………………………………………. 2.3. Research Hypothesis…………………………………………… 3.0. Type of study………. ……………………………………….. 3.1. Research design………………………………………………… 3.2. Primary and secondary sources………………………………… 3.3. Target population and sample size……………………………… 3.4. Ethical consideration……………………………………............. 3.5 Sampling plan and data collection………………………………. 4.0. Specific research instruments…………………………………… 5.0. Proposed data analysis procedures ……………………………… 6.0. Significance of the study………………………………………… 6.1. Research limitation………………………………………………. 6.2 Project management………………………………………………. 6.2.1.0. Time schedule………………………………………………… 6.2.2 Cost of the study…………………………………………………   Purpose and literature review The study about automobile fuel is not a new phenomenon. Many researches have been conducted on this topic, and most of them have shown that the volatility of automobile fuel tends to affect different sectors of the economy in different ways. While the purposes of various studies conducted were varied, one specific concern was to analyze the impact of oil consumption resulting from the fact that there is an increasing fuel energy scarcity compared to the increasing demand (Espey, 1996, pp102). Many researchers have concentrated in assessing the oil price elasticity and income elasticity. These two facts are the integral part of the studies because they capture the potential effects of price and income changes in oil demand (Bonface, 2007, pp34). There is assumption that an increase in oil prices triggers a decrease in the quantity demanded which is known as negative price elasticity while the rise in income would stimulate the oil usage; this is called positive income elasticity (Dees, Karadeloglou, Kaufmann.& Sanchez, 2007, pp181). Therefore, when income decreases, the demand for oil would decrease since there would be less demand of transport activities in some lower income economies. Some industries are heavily affected when there is a small increase of the oil prices than others. The prices of oil on the world markets is always increasing, the year 2012 recorded the highest crude oil prices in history hitting hundred dollars mark per barrel (Congressional Digest. 2012, pp1). The rate of consumption of oil is quite high world-wide due to the expansion of industrialization and the ever increasing world population (Espey, 1996, pp102). Moreover, most of the oil sources have been exploited, and some are even exhausted. Therefore, there is scarcity in the production of oil; most countries rely heavily on others for every drop of oil that they use (Degiannakis, Filis,& Kizys, 2014, pp42). Therefore, it is likely that most sectors of the economies can easily affected adversely if there is a slight disruption of the supply of these energy resources (Başkaya, Hülagü, & Küçük, 2013, pp171). When oil producing countries get disrupted in terms of lack of peace, natural catastrophes or political instability, then other dependant countries suffer a lot. Oil as a source of energy plays a central role in every sector of the economy (Bonface, 2007, pp34). However, some sectors get affected much than others whenever there is a disruption in the supply or the prices of oil (Dees, et al., 2007, pp181). Therefore, the purpose of this proposal is to investigate the impact of the increase of oil prices to various sectors of the economy. Research problem definition As mentioned earlier, the impacts of the rise of the oil prices is not uniform to all industries, there are those that are heavily affected than others even when there is a slight increase on the oil prices. It implies that some sectors are much sensitive to the small decrease or increase of oil prices. Thus, the research problem is to find out why there is a variation in the impacts of the increase in the oil prices in different sectors of the economy yet all these sectors thrive in the same environment. Research questions Some of the research questions that would drive the researchers to find out why there is variations of impacts of oil prices among industries are as follows a) What characteristics do most reactive or sensitive industries to oil prices do have? b) What is the rate of consumption or demand of oil do most affected and less affected industries need? c) Do similar industry sectors in different countries affected at the same level? d) Do what extents do the most affected industries by increase in oil prices affect the entire economy? e) How do the most affected industries of the economy recover from the adverse effects of the high oil prices? f) What measures should be taken to reduce the magnitude of the impact of high oil prices among industries? Research objectives 1. To find out what features the most affected and less affected sectors of the economy by the rise of the oil prices have. 2. To identify some of the mitigating strategies that can be used to shield the most impacted industries by increase in oil prices from collapsing. 3. To ascertain the major factors that triggers the volatility of the oil prices around the world. 4. To determine whether there is a substitute of oil as a source of energy that can be used alternatively by the most effected industries by the increase in oil prices. Hypothesis i).The persistence increase in the oil prices is caused by high population growth and high rate of industrialization all over the world. ii). Industries that involve much transport and processing of raw materials highly depends on oil as a source of energy and thus, they are highly impacted when there is a slight increase in the prices of the oil. Study Research design This research would employ the survey method as a basic research design. Respondents would be given survey forms to complete mainly on voluntarily basis. After filling these survey forms, they would return them back to the researchers. The survey would comprise of twenty questions revolving around the issue of oil prices and how their organizations tend to be affected whenever they prices changes. A fraction of the questions would be closed-ended while other would be open-ended requiring the respondents to explain briefly. The survey would be distributed to the respondent in their respective workplaces, and they would be requested to take approximately two days to complete and return them back to the researchers. Primary and secondary data requirement The primary data for this study would mainly be collected by the survey that would be conducted. The information that would be filled in the forms by the respondents would be recorded and kept well to wait for the analysis. The secondary data would be found in the literature reviews of the previous research contained in articles, books, journals, and Newspapers. The need of using secondary data is due to the time constraints the study would be having. It would be hard to rely only on primary data since it may not be quite comprehensive to cover all the aspects required. Therefore, secondary data would enable the researchers to find addition and useful information that would help in drawing up of credible conclusion. Target population and sampling size The targeted population of this research will be the managers of different firms in different industries. The target population of this study would comprise of both international and domestic managers so as to get quality information needed to make the right judgment. It can also capture the former managers of firms to mine enough information that is required in the research. This targeted population has been selected because it the one that has the first-hand information concerning how organizations tend to be affected by the regular increase of oil prices. Moreover, the targeted population has been selected because of the budget constraints and, accessibility and time constraints. It is for this reason that the researcher would work with a small sample size of about 100 to 120 respondents a group which would be composed of only managers and former managers of various firms from different sectors of the economy. This sample size is believed to represent well the target population; thus, the information that would get from these respondents would show the real picture of how various sectors of the economy are impacted by the increase of the oil prices. Ethical consideration The world oil market has a lot of challenges and most of these challenges are related to ethical conducts of the traders. It is obvious that oil prices are varied in different parts of the world. This is because the traders in this business offer different prices for their oil. Prices of barrel of crude oil in the United States are quite different from those in the Europe and other developing nations in Africa (Shojai, 1995, pp67). One of the factors that cause this is corruption and bribery among the traders and the government agencies. Therefore, many sectors of the economy encounter hardships of high prices of oil because of the rampant corruption that exists in most of the countries. In this research, we shall consider sampling the respondent from organizations that exists in countries that have less corruption so that we can get the real information on the ground on how industries are affected by the increase in oil prices (Bonface, 2007, pp43 It would be unethical to sample our respondents from corrupt nations because the results could not be more useful to the users of the information. To ensure ethics in this research, we shall adhere to law of the land, we shall seek permission from the authorities in regions where we are going top choose our respondents (Bonface, 2007, pp43). It ethically required that researchers seek permission from the authority before conducting any research. Moreover, to uphold ethics in this research, we shall assure the respondents their privacy and keep the information they give us confidential. Confidentiality of the mined information is highly regarded to safeguard the respondents from being attacked by external forces (Zikmund, Babin, Carr, &Griffin, 2013, pp11). Thus, as any other research, this research would uphold this ethical conduct. Sampling plan and data collection As mentioned earlier, individuals who would the respondents be the people that hold managerial positions in local and international companies; they will the unit of analysis. The primary data would be gathered through the survey technique where printed and self-administered questionnaires would be served to the respondents (McNeill, &Chapman, 2005, pp12). The respondents would read and answer the questions in the survey booklets or forms. In this study, the data collection and sampling would occur at the same time. Therefore, the researchers would travel around and approach the respondents in their offices serve them with the survey forms so that they can fill them at their convenient time but not later than two days. These respondents would be selected using non-probability method that involves the combination of the quota sampling, convenience, and accessibility (Zikmund, Babin, Carr, &Griffin, 2013). This implies that the probability of the respondent of being selected is not known because there are so many managers and former managers in the targeted population. For instance, convenience sampling is applicable in this study because managers’ availability and accessibility are central to the selection process. Quota sampling is also appropriate to ensure equal representation of gender, regions, and industries. Critics may argue that using non-probability sampling method has high risk of biases since the researchers are the ones that are responsible for selecting the respondents (McNeill, &Chapman, 2005, pp12). However, non-probability technique remains to be a low-cost technique given that the study has limited time, resources, and even ethical constraints. The technique can still yield valuable information that can be beneficial in the process of decision making. Research instruments The survey instruments will be composed on of questions that may require about 30 to 40 minutes to answer. However, the respondents would be given enough time so that they can do it at their own free time. The survey forms would have structured questions that are straight forward with specific allowable responses (Zikmund, Babin, Carr, &Griffin, 2013, pp36). Some qualitative data will also be collected by using open ended questionnaires to give the respondents the freedom o express their views wit fewer constraints. Unstructured questions would also be in the questionnaires to reduce the risk of respondents biases a situation where the respondents tend to show tendency towards accepting or not accepting with most of the questions (Zikmund, Babin, Carr, &Griffin, 2013). At the end of the survey, demographic data and numerical data would be obtained. This survey instrument is being designed and may also include some form of interviews that would be conducted to refine its design to built in ethical constraints of the study (McNeill, &Chapman, 2005, pp12). This survey would be pretested with other researchers to ensure that its format is easily understood by the respondents so that to generate the date that would address all the research objectives. Proposed data analysis When the process of data collection is complete, coding and inputting of the collected data will be done using statistical analysis of computer programs. Statistical package for the social science (SPSS) would be employed to analyze the collected data. Some of the analysis that would be undertaken includes T-test analysis, descriptive, and the combination of tables and graphical representations (McNeill, &Chapman, 2005, pp12). The numerical data would be presented using graphs, histograms, tables and pie charts. Given that in this research the numerical data would be of large amounts, tables would be used to do comparison of the averages of various numerical data to show the opinion or explanation that is commonly held by many respondents. The categorical data would be represented using the bar graphs and pie charts. Example 1 Pie charts (Categorical data) Example 2 Graphs (numerical data) Example 3 Bar graphs (Numerical data) Benefits of the research To the Managers Most managers find it difficult when the oil prices regularly fluctuate. This makes it a bit impossible to make an accurate prediction of their firms’ future profits. One interesting thing is that when the price of oil increases abruptly without any warning. Such a situation make some firms to adjust their budgets to accommodate the situation for continued production. Therefore, the understanding of the impact of the oil prices on various sectors of the economy would help the managers to put in place the precautionary measures that would help their organizations to pull through the hard times of high oil prices. Therefore, the research would be of big importance of the managers of various firms who usually become stranded on which steps to take to shield the firm from the shocks of high oil prices. Moreover, the research would enable the managers to look for alternative sources of energy so that they do not depend much on oil to avoid hard times in case there is a sharp increase in oil prices. To the investors This study would be of beneficial to the investors. In most cases, investors tend to look for industries that have fewer risks so that when they invest their money, they are sure of recovering and additional profits. Therefore, firms or industries that are hit hard by the slight increase in the oil process are much avoided by the investors. Thus, this research would show the investors the best decisions they can make basing on the impacts the oil prices do have to each industry. To the government This study would be of benefit to the governments. They would identify those industries that are hard hit by the increase of oil prices. The government can design some mechanisms to shield these firms so that they can sustain their businesses even in case of the increase of the oil prices. Moreover, the government can fund the production of the alternative sources of energy that can be used in place of oil when the prices become unbearable. To the sellers The study would also of big importance to the firms that sell oil world-wide. From the statistical information that would be contained in the research, these firms would be able to discover the indicators of high demand in future and try to stock enough of the oil in their stock to avoid scarcity and disruptive supply that leads to hiking of the prices. The firms would also know the industry sectors that demand much on oil energy so that they develop smooth chain of supply to ensure a steady supply of the oil to such industries. Research limitations Like any other researches, this study also has its limitation. First we have time limitation, where the research need not take a lot of time to be completed. The researchers would be required to complete their study within the time frame. Another limitation is that there are little resources in terms of finance to fund the research (Zikmund, Babin, Carr, &Griffin, 2013, pp4). This is why we resorted to a small sample size of 100 to 120 respondents so that the research can fit into the budget. Thus, due to time and resource constraints, the study would only focus on managers or former managers of firms in different sectors of the economy so because they are the ones that have first and information about the relationship between the oil prices and the performances of the business firms. Project management Time schedule The research would have to take a two week time frame. It would start 1st February 2015 and concluded on 15 February 2015. Date Project tasks 1st -3rd February 2015 Designing survey questions 4th February 2015 Sampling and supplying survey questions to respondents 5th – 7th February 2015 Collection of data from the field 8th -10 February 2015 Coding and imputing data 11th -12th February 2015 Analyzing the collected data 13th 14th February 2015 Preparing report 15th February 2015 Presenting the report Personnel requirement A small team of the researchers of about ten people would carry out all these process of the study. Their responsibilities would be -Liaising with the respondents in advance -Designing survey questions -Research supervision and data collection -Data processing and analyzing - Report presentation and delivery. Cost structure The total cost of the two week research would be approximately $12,000.00; the cost of the breakdowns is as shown in the table. Type Cost ($) Consultation fee 8,000.00 Utilities 500.00 Transport 1,500.00 Stationery 300.00 Office supplies 500.00 Food 850.00 Miscellaneous 900.00 Total Apprx 12,000.00 Bibliographic references Bakhat, M & Rossello, J. (2011). “Tourism induced contribution to diesel oil and Gasoline consumption.” Accessed on 9 December 2014. Retrieved from http://www.eforenergy.org/docpublicaciones/documentos-de-trabajo/WP05-2011-1.pdf Başkaya, Y, Hülagü, T, & Küçük, H. (2013). “'Oil Price Uncertainty in a Small Open Economy', IMF Economic Review, 61, 1, pp. 168-198, viewed 9 December 2014. Baumeister, C &Kilian, L. ( 2014). “Real time analysis of oil price risk using forecast oil scenarios”. IMF Economic Review. Apr2014, Vol. 62 Issue 1, p119-145. 27p. Viewed on 9 December 2014. Bonface, E. (2007). “Economy-wide and distributional impacts of an oil price shock on the South African economy.” New York; World Bank publications. Braginskii, O. 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