Answer to Question #189104 in Finance for Lamya

Question

Exclusive Footwear Ltd experiencing profit declining in recent times...

1. Discuss which type of research approach is appropriate and why? [Hint: Consider formal, qualitative, quantitative, exploratory, explanatory, causal, descriptive researches].

2. In the light of the above research, suggest a list of variables (e.g. IV, DV, or MV), develop conceptual model, and discuss their nature and potential relation to each other with proper justification. Develop relevant hypothesis for the variables.

3. Discuss measurement concept in order to measure the above-mentioned variables and discuss how you should measure all the variables that you have identified. Need proper justification for your proposed measurement technique as well.

4. As the firms may have resource constraint, management is keen on knowing the most critical factors out of the list of factors that are discussed above so that they immediately can start addressing those areas. Hence, discuss how you can respond to this request of the management?

Answer 1

1.

This will be a causal research using quantitative and qualitative data on sales and cost of raw material, marketing strategy and cost of capital

2.

The dependent variable is the profit which is affected by the independent variables are cost of raw material and product variants, the mediating variable is the marketing strategy. We are studying the reason of a dip in profits and hence, it becomes our dependent variable. It is directly affected by the increase or decrease in the raw material cost and hence, the raw material cost becomes our independent variable. The product variants also affect the sale of the product and ultimately affecting the overall profits and hence, they are also independent variable. This can further be affected by the type of marketing strategy which the company is deploying as it may increase awareness or reach to customers and hence, may further the effect of sales which makes it the moderating variable. The hypothesis which we will be testing will be "If there is an increase in raw material cost, the profits decrease however, a new marketing strategy may increase the sales and overall profits". "If there is an increase in the variety of products then it will improve sales and profits with an added advantage of a new marketing strategy"

3.

Raw material cost will be measured as is available in the procurement list. The effect of marketing strategy will be understood through the qualitative analysis which can be conducted through surveys and interviews. Product variety effect can be observed by studying the sales and profits from each product in different markets.

4.

 The most critical factors which need to be addressed is the profit per product and raw material cost which can be looked at immediately. The company can look for alternate suppliers who can supply good quality material at lower costs and the company can look at products with higher profits and try to sell them more than products with lower profit margins.