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Answers for MBA Assignment Sem-III, SET 2 MI0050 – Research Methodology

SMU
Answers for MB0050 Assignment
Semester III Set 2

RESEARCH METHODOLOGY
(MB0050)
Q1. Discuss the relative advantages and disadvantages of the different methods of
distributing questionnaires to the respondents of a study.

Answer: There are some alternative methods of distributing questionnaires to the


respondents. They are: (1) personal delivery, (2) attaching questionnaire to a product (3)
advertising questionnaire in a newspaper of magazine, and (4) news stand insets.

Personal Delivery: The researcher or his assistant may deliver the questionnaires to the
potential rests with a request to complete them at their convenience. After a day or he can
collect the completed questionnaires from them. Often referred to as the self-administered
questionnaire method, it combines the advantages of the personal interview and the mail
survey. Alternatively, the questionnaires may be delivered in person and the completed
questionnaires may be returned by mail by the respondents.

Attaching Questionnaire to a Product : A firm test marketing a product may attach a


questionnaire to a product and request the buyer to complete it and mail it back to the firm.
The respondent is usually rewarded by a gift or a discount coupon.

Advertising the Questionnaires : The questionnaire with the instructions for completion
may be advertised on a page' of magazine or in section of newspapers. The potential
respondent completes it tears it out and mails it to the advertiser. For example, the

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Answers for MBA Assignment Sem-III, SET 1 MB0050 – Research Methodology

committee of Banks customer services used this method. Management studies for collecting
information from the customers of commercial banks in India. This method may be useful for
large-scale on topics of common interest.

News-Stand Inserts : This method involves inserting the covering letter, questionnaire and
self addressed reply-paid envelope into a random sample of news-stand copies of a
newspaper or magazine.

Disadvantages of Questionnaires
The advantages of mail surveys are:
• They are less costly than personal interviews, as cost of mailing is the same through out
the country, irrespective of distance.
• They can cover extensive geographical areas.
• Mailing is useful in contacting persons such as senior business executives who are
difficult to reach in any other way.
• The respondents can complete the questionnaires at their convenience.
• Mail surveys, being more impersonal, provide more anonymity than personal interviews.
• Mail surveys are totally free from the interviewer's bias, as there is no personal contact
between the respondents and the investigator.
• Certain personal and economic data may be given accurately in an unsigned mail
questionnaire

Disadvantages of Questionnaires
The disadvantages of mail surveys are:
1. The scope for mail surveys is very limited in a country where the percentage of
literacy is very low.
2. The response rate of mail surveys is low. Hence, the resulting sample will not be a
representative one.
Q2. In processing data, what is the difference between measures of central tendency and
measures of dispersion? What is the most important measure of central tendency and
dispersion?

Answer: Measures of Central Tendency: Analysis of data involves understanding of the


characteristics of the data. The following are the important characteristics of a statistical
data: -
• Central tendency
• Dispersion
• Skewness
• Kurtosis

In a data distribution, the individual items may have a tendency to come to a central position
or an average value. For instance, in a mark distribution, the individual students may score
marks between zero and hundred. In this distribution, many students may score marks,
which are near to the average marks, i.e. 50. .Such a tendency of the data to concentrate to
the central position of the distribution is called central tendency. Central tendency of the data
is measured by statistical averages. Averages are classified into two groups.
1. Mathematical averages
2. Positional averages

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Answers for MBA Assignment Sem-III, SET 1 MB0050 – Research Methodology

Statistical Averages

Mathematical Averages Positional Averages

Arithmetic Mean Median


Geometric Mean Mode
Harmonic Mean
Arithmetic mean, geometric mean and harmonic mean are mathematical averages. Median
and mode are positional averages. These statistical measures try to understand how
individual values in a distribution concentrate to a central value like average. If the values of
distribution approximately come near to the average value, we conclude that the distribution
has central tendency. Arithmetic mean is the most commonly used statistical average. It is
the value obtained by dividing the sum of the item by the number of items in a series.

Dispersion : Dispersion is the tendency of the individual values in a distribution to spread


away from the average. Many economic vari8bleSilke income, wage etc., are widely varied
from the mean. Dispersion is a statistical measure, which understands the degree of
variation of items from the average.
Objectives of Measuring Dispersion: Study of dispersion is needed to:
1.To test the reliability of the average
2.To control variability of the data
3.To enable comparison with two or more distribution with regard to their variability
4.To facilitate the use of other statistical measures.

Measures of dispersion points out as to how far the average value is representative of the
individual items. I f the dispersion value is small, the average tends to closely represent the
individual values and it is reliable. When dispersion is large, the average is not a typical
representative value. Measures of dispersion are useful to control the cause of variation. In
industrial production, efficient operation requires control of quality variation. Measures of
variation enable comparison of two or more series with regard to their variability. A high
degree of variation would mean little consistency and low degree of variation would mean
high consistency.
Properties of a Good Measure of Dispersion : A good measure of dispersion should be
simple to understand.
1. It should be easy to calculate
2. It should be rigidly defined
3. It should be based on all the values of a distribution
4. It should be amenable to further statistical and algebraic treatment.
5. It should have sampling stability
6. It should not be unduly affected by extreme values.
Measures of Dispersion:
1. Range
2. Quartile deviation
3. Mean deviation
4. Standard deviation

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Answers for MBA Assignment Sem-III, SET 1 MB0050 – Research Methodology

5. Lorenz curve

Range, Quartile deviation, Mean deviation and Standard deviation are mathematical
measures of dispersion. Lorenz curve is a graphical measure of dispersion. Measures of
dispersion can be absolute or relative. An absolute measure of dispersion is expressed in
the same unit of the original data. When two sets of data are expressed in different units,
relative measures of dispersion are used for comparison. A relative measure of dispersion is
the ratio of absolute measure to an appropriate average.
The following are the important relative measures of dispersion.
1. Coefficient of range
2. Coefficient of Quartile deviation
3. Coefficient of Mean deviation
4. Coefficient of Standard deviation

Q3. What are the characteristics of a good research design? Explain how the research
design for exploratory studies is different from the research design for descriptive
and diagnostic studies.

Answer:
The need for the methodologically designed research:
a. In many a research inquiry, the researcher has no idea as to how accurate the
results of his study ought to be in order to be useful. Where such is the case, the
researcher has to determine how much inaccuracy may be tolerated. In a quite few
cases he may be in a position to know how much inaccuracy his method of research
will produce. In either case he should design his research if he wants to assure
himself of useful results.
b. In many research projects, the time consumed in trying to ascertain what the data
mean after they have been collected is much greater than the time taken to design a
research which yields data whose meaning is known as they are collected.
c. The idealized design is concerned with specifying the optimum research procedure
that could be followed were there no practical restrictions.
Characteristics of Good Research Design :

1. It is a series of guide posts to keep one going in the right direction.


2. It reduces wastage of time and cost.
3. It encourages co-ordination and effective organization.
4. It is a tentative plan which undergoes modifications, as circumstances demand, when
the study progresses, new aspects, new conditions and new relationships come to
light and insight into the study deepens.
5. It has to be geared to the availability of data and the cooperation of the informants.
6. It has also to be kept within the manageable limits

Research design in case of exploratory research studies : Exploratory research studies


are also termed as formulative research studies. The main purpose of such studies is that of
formulating a problem for more precise investigation or of developing the working
hypothesis from an operational point of view. The major emphasis in such studies is on the
discovery of ideas and insights. As such the research design appropriate for such studies
must be flexible enough to provide opportunity for considering different aspects of a problem
under study. Inbuilt flexibility in research design is needed because the research problem,

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Answers for MBA Assignment Sem-III, SET 1 MB0050 – Research Methodology

broadly defined initially, is transformed into one with more precise meaning in exploratory
studies, which fact may necessitate changes in the research procedure for gathering
relevant data. Generally, the following three methods in the context of research design for
such studies are talked about:

1. The survey of concerning literature happens to be the most simple and fruitful
method of formulating precisely the research problem or developing hypothesis. Hypothesis
stated by earlier workers may be reviewed and their usefulness be evaluated as a basis for
further research. It may also be considered whether the already stated hypothesis suggests
new hypothesis. In this way the researcher should review and build upon the work already
done by others, but in cases where hypothesis have not yet been formulated, his task is to
review the available material for deriving the relevant hypothesis from it. Besides, the
bibliographical survey of studies, already made in one's area of interest may as well as
made by the researcher for precisely formulating the problem. He should also make an
attempt to apply concepts and theories developed in different research contexts to the area
in which he is himself working. Sometimes the works of creative writers also provide a fertile
ground for hypothesis formulation as such may be looked into by the researcher.

2. Experience survey means the survey of people who have had practical
experience with the problem to be studied. The object 'of such a survey is to obtain inSight
into the relationships between variables and new ideas relating to the research problem. For
such a survey, people who are competent and can contribute new ideas may be carefully
selected as respondents to ensure a representation of different types of experience. The
respondents so selected may then be interviewed by the investigator. The researcher must
prepare an interview schedule for the systematic questioning of informants. But the interview
must ensure flexibility in the sense that the respondents should be allowed to raise issues
and questions which the investigator has not previously considered. Generally, the
experience of collecting interview is likely to be long and may last for few hours. Hence, it is
often considered desirable to send a copy of the questions to be discussed to the
respondents well in advance. This will also give an opportunity to the respondents for doing
some advance thin1<ing over the various issues involved so that, at the time of interview,
tfie1 may be able to contribute effectively. Thus, an experience survey may enable the
researcher 'to define the problem more concisely and help in the formulation of the research
hypothesis. This, survey may as well provide information about the practical possibilities for
doing different types of research.
3. Analyses of 'insight-stimulating' examples are also a fruitful method for
suggesting hypothesis for research. It is particularly suitable in areas where there is little
experience to serve as a guide. This method consists of the intensive study of selected
instance of the phenomenon in which one is interested. For this purpose the existing
records, if nay, may be examined, the unstructured interviewing may take place, or some
other approach may be adopted. Attitude of the investigator, the intensity of the study and
the ability of the researcher to draw together diverse information into a unified interpretation
are the main features which make this method an appropriate procedure for evoking
insights. Now, what sorts of examples are to be selected and studied? There is no clear cut
answer to it. Experience indicates that for particular problems certain types of instances are
more appropriate than others. One can mention few examples of 'insight-stimulating' cases
such as the reactions of strangers, the reactions of marginal individuals, the study of
individuals who are in transition from one stage to another, the reactions of individuals from
different social strata and the like. In general, cases that provide sharp contrasts or have

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Answers for MBA Assignment Sem-III, SET 1 MB0050 – Research Methodology

striking features are considered relatively more useful while adopting this method of
hypothesis formulation. Thus, in an exploratory of formulative research study which merely
leads to insights or hypothesis, whatever method or research design outlined above is
adopted, the only thing essential is that it must continue to remain flexible so that many
different facets of a problem may be considered as and when they arise and come to the
notice of the researcher.

Research design in case of descriptive and diagnostic research studies :


Descriptive research studies are those studies which are concerned with describing the
characteristics of a particular individual, or of a group, where as diagnostic research studies
determine the frequency with which something occurs or its association with something else.
The studies concerning whether certain variables are associated are the example of
diagnostic research studies. As against this, studies concerned with specific predictions,
with narration of facts and characteristics concerning individual, group of situation are all
examples of descriptive research studies. Most of the social research comes under this
category. From the point of view of the research design, the descriptive as well as diagnostic
studies share common requirements and as such we may group together these two types of
research studies. In descriptive as well as in diagnostic studies, the researcher must be able
to define clearly, what he wants to measure and must find adequate methods for measuring
it along with a clear cut definition of population he wants to study. Since the aim is to obtain
complete and accurate information in the said studies, the procedure to be used must be
carefully planned. The research design must make enough provision for protection against
bias and must maximize reliability. With due concern for the economical completion of the
research study, the design in such studies must be rigid and not flexible and must focus
attention on the following:

1.Formulating the objective of the study


2. Designing the methods of data collection
3.Selecting the sample
4. Collecting the data
5. Processing and analyzing the data
6. Reporting the findings.

In a descriptive I diagnostic study the first step is to specify the objectives with sufficient
precision to ensure that the data collected are relevant. If this is not done carefully, the
study may not provide the desired information. Then comes the question of selecting the
methods by which the data are to be obtained. While designing data-collection procedure,
adequate safeguards against bias and unreliability must be ensured. Which ever method is
selected, questions must be well examined and be made unambiguous; interviewers must
be instructed not to express their own opinion; observers must be trained so that they
uniformly record a given item of behaviour.

More often than not, sample has to be designed. Usually, one or more forms of probability
sampling or what is often described as random sampling, are used. To obtain data, free from
errors introduced by those responsible for collecting them, it is necessary to supervise
closely the staff of field workers as they collect and record information. Checks may be set
up to ensure that the data collecting staffs performs their duty honestly and without
prejudice. The data collected must be processed and analyzed. This includes steps like
coding the interview replies, observations, etc., tabulating the data; and performing several

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statistical computations.
Last of all, comes the question of reporting the findings. This is the task of communicating
the findings to others and the researcher must do it in an efficient manner.

Q4. How is the Case Study method useful in Business Research? Give two specific
examples of how the case study method can be applied to business research.

Answer:
Meaning of Case Study:
Case study is a method of exploring and analyzing the life of a social unit or entity, be it a
person, a family, an institution or a community. The aim of case study method is to locate or
identify the factors that account for the behaviour patterns of a given unit, and its relationship
with the environment. The case data are always gathered with a view to attracting the
natural history of the social unit, and its relationship with the social factors and forces
operative and involved in this surrounding milieu.
Case Study as a Method of Business Research : In-depth analysis of selected cases is of
particular value to business research when a complex set of variables may be at work in
generating observed results and intensive study is needed to unravel the complexities. For
instance, an in-depth study of a firm's top sales people and comparison with the worst sales
people might reveal characteristics common to stellar performers. The exploratory
investigator is best served by the active curiosity and willingness to deviate from the initial
plan, when the finding suggests new courses of enquiry, might prove more productive.

Examples of Case Study method applied to Business Research:


Example 1.

Bajaj Auto: Evaluating the Working Capital Requirements:

Over the past two decades, the Indian automobile industry has grown leaps and
bounds, at a Compound Annual Growth Rate (CAGR) of 9%. At present, it is the
second-largest two-wheeler and fourth-largest commercial vehicle manufacturer
in the world. The automotive industry in India is intensely competitive and highly
fragmented, with number of players operating in more than one segment of the
industry. The nature of the industry accounts for high capital expenditures and
may not generate high returns on the capital invested, but over the past few
years, the players in this industry have been giving high returns to shareholders
and operating on negative working capital. One such dominant player in the auto
industry, Bajaj Auto is experiencing negative working capital for the past 5 years
and giving high returns to its shareholders. However, since the impact of working
capital fluctuations depends on the nature of the industry, for how long can Bajaj
Auto continue to have negative working capital?

Indian Automobile Industry: An Overview :


The automobile sector is a key driver of industrial growth in the global and Indian
economy. According to the Organization International des Constructeurs
d'Automobiles,s 2006, annual turnover of the global auto industry is around
$5.09 trillion, which is equivalent to the sixth largest economy in the world.2
Moreover, the industry is an indirect contributor to several other sectors of the
economy and it is treated as a leading economic sector. The Indian automotive

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industry is distinguished as a key component and core driver of national


economy. Over the decades, the industry has undergone rapid transformation,
witnessed enormous prospects and emerged as most attractive markets in the
world.
During 1980s, there were very few players in the Indian automotive sector with
low volumes of production, old and substandard technologies. The industry took
a new dimension when Indian government de-licensed and opened up the
industry to Foreign Direct Investments (FDIs) in 1993 which encouraged many
global players to enter the Indian auto industry. Further, economic liberalisation
reforms contributed to the robust growth of the industry. At that time, a total of
17 new ventures came up which included General Motors, Ford, Toyota, Honda,
Hyundai and Fiat, resulting in rapid expansion and growth of the industry.
During 1980s, there were very few players in the Indian automotive sector with
low volumes of production, old and substandard technologies. The industry took
a new dimension when Indian government de-licensed and opened up the
industry to Foreign Direct Investments (FDIs) in 1993 which encouraged many
global players to enter the Indian auto industry. Further, economic liberalization
reforms contributed to the robust growth of the industry. At that time, a total of
17 new ventures came up which included General Motors, Ford, Toyota, Honda,
Hyundai and Fiat, resulting in rapid expansion and growth of the industry.
The Indian auto industry constitutes two set of players - automobile component
manufacturers (involved in manufacturing parts, components, bodies and
chassis) and the vehicle manufacturers (engaged in assembling all the
components into an automobile), which are also referred to as Original
Equipment Manufacturers (OEMs). The Indian auto industry is highly competitive
with large number of players in each segment of the industry manufacturing
commercial vehicles, passenger vehicles, two-wheelers, three-wheelers and auto
components.

Most of the players are present in more than one segment of the industry . The
industry is fragmented and is mainly dominated by small-scale and unorganized
players. There are nearly 6,400 players, of which 6% belong to organized sector
and the remaining belong to unorganized sector.3 However, in terms of value
addition organized players represent nearly 77% of the output in the sector.4
Over the past years (2000-2001 to 2004-2005) the domestic auto industry has
been growing at 14.2% CAGR.5 India holds the highest position in the three-
wheeler market and occupies fifth largest commercial vehicle market in the
world. India is one of the global giants in the two-wheeler industry manufacturing
motorcycles, scooters and mopeds. In the last decade, two-wheeler industry in
India grew at a CAGR of more than 10%. This growth was fuelled by shift in the
demand mix, increasing income, rapid urbanization and changing spending
patterns.
The auto industry has been performing well in both domestic and international
markets. During 2005-2006, exports of the industry comprised about 5% of total
exports from India, their total value was around INR 16,09,400, of which INR
7,97,400 were vehicle exports and INR 8,12,000 were auto component exports.6
According to the Society of Indian Automobile Manufacturers (SIAM), automobile
sales (including passenger vehicles, commercial vehicles, two-wheelers and
three-wheelers) in the overseas markets increased to 1.53 million units in 2008-

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09 from 1.23 million units in 2007-2008. In spite of the global slowdown, exports
of Indian auto vehicles increased - export of passenger vehicles increased from
2,18,401 units in 2007-2008 to 3,35,739 units in 2008-2009. A total of 2,30,000
commercial vehicle (cars, vans, Sports Utility Vehicles and trucks) were exported
between January and July 2009, resulting in a growth of 18%.
Despite the economic downturn during 2007-2009, overall production
(passenger vehicles, commercial vehicles, two-wheelers and three-wheelers)
increased from 10.85 million vehicles in 2007-2008 to 11.17 million vehicles in
2008-2009.7 Production of passenger vehicles increased from 1.77 million to
1.83 million while two-wheelers touched 8.41 million from 8.02 million.8
According to an analyst at Ernst & Young, passenger vehicle sales in the country
will grow at a CAGR of 12% to touch 3.75 million units by 2014 as against 1.89
million units at the end of 2008-2009.9 Similarly, as per CARE Research, a credit
rating agency, domestic two-wheeler sales will grow at a CAGR of 8.8% by 2014
i.e., 11.3 million.
Two-wheelers, which account for a major share of industry volume has been
growing at a CAGR of 9.6%. Until late 1990s, two-wheeler market was dominated
by scooters, contributing higher percentage of sales. However, with changing
times, with the focus driven on better fuel efficiency and faster mobility, a
structural shift towards motorcycle which constitutes 80% of the market
Within the two-wheeler segment, motorcycles occupy 80.6% and their sales
account for around 80% of total sales . Cost, ownership and economies of scale
are the key purchase criteria of this segment. Though the industry witnessed a
slowdown in Financial Year (FY) 2008, it picked up in the subsequent year and
grew by 2.6%. Ernst & Young analysts state that, "Though FY09 was a tough year
for two-wheelers like it was for other automotive sectors, the variation in growth
with respect to the five-year CAGR was the lowest comparatively. Considering
the demographics and income levels in the country, the purchase of two-
wheelers for regular mobility is very high, thus the domestic potential needs no
reaffirmation. We believe that focusing on rural potential will pay dividends for
the domestic market and the export volume growth should remain intact." The
exports of this segment are moving at a CAGR of 31% in FY2005-2009, crossing
the 1 million mark in FY2009
Hero Honda is the market leader with a market share of 42% in Indian two-
wheeler segment followed by Bajaj Auto, the second largest with 27% share.
There are only few established players in this segment and they pose tough
competition to each other.
In an emerging economy like India, three-wheelers are a low cost means of
transport in cities and towns. India is the largest three wheeler market in the
world. These vehicles are used as passenger vehicles (auto-rickshaws) as well as
small capacity commercial vehicles (pick-up vehicles). It is a small but fast
growing segment, with production increased from 2,03,234 vehicles in 2001 to
3,74,414 vehicles in 2005. Three-wheeler sales in India touched a new record of
0.36 million registering a growth of 10.5% CAGR over the last 6 years (2004-
2009).11 Ernst & Young viewed this growth as, "Three-wheelers have played an
important role in the last-mile connectivity both for passenger as well as
commercial purposes. The existence of a large number of small-businesses
promises a sustainable demand in the domestic market. Very little has been
done in terms of product innovation and manufacturers will have to focus on it.

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Going forward, this segment will face competition from small commercial
vehicles in the commercial space, for which the manufacturers have to rethink
product positioning and marketing strategies.
Bajaj Auto is an established player in both two-wheeler and three-wheeler
market segment. It is one of the leading players (41.3%) in the three-wheeler
segment. Total exports of the three wheelers reached 141.24 thousand units,
registering a growth of 44.5% CAGR over the last 6 years (2003–2009) with a
large contribution i.e., 97% being accounted by Bajaj Auto.

Bajaj Auto's Working Capital Requirement: Is Negative Working Capital


Positive?
Bajaj Auto is a flagship company of the Bajaj Group which is amongst the top 10
business houses in India. Bajaj Auto is ranked as the world's fourth largest two
and three-wheeler manufacturer and is well known exporter (it exports to several
countries - Latin America, Africa, Middle East, South and South East Asia). The
history of the company dates back to 1965, when Rahul Bajaj (present chairman
of the Group) took charge of the business and turned the company into new
heights.
The predecessor of Bajaj Auto was formed on November 29th 1945 as M/s
Bachraj Trading Ltd. In 1948, it started selling imported two- and three-wheelers
and in the subsequent year, it became public limited company. After obtaining
manufacturing license from the Indian government in early 1960s, the company
started manufacturing its own two-wheelers and by 1970 it reached a mark of
10,000 vehicles. In the same year, it introduced new models of two-wheelers and
launched three-wheeler vehicles. Based on the consumer categories and
approximate price points, Bajaj Auto classifies motorcycles into three segments -
Entry segment (these are typically 100 cc motorcycles at a price point of INR
35,000, Bajaj Auto is in this segment through the Platina), Executive segment
(they comprise 100 cc to 135 cc motorcycles and priced between INR 40,000 to
INR 50,000, it has two brands in this segment - XCD and Discover) and
Performance segment (these are sleek and high performing motorcycles with
price points in excess of INR 50,000 and Pulsar is the flagship brand in this
segment).
During 1980s with the entry of Japanese and Italian scooter companies into the
Indian market, domestic players like Bajaj Auto faced tough competition as the
foreign companies adopted sophisticated technology while the latter used low-
end technology. However, Bajaj Auto, with its strong brand image and other
competency features maintained dominant position in the Indian auto industry.
Soon, the company started investing in high-end technologies and focused on
high-end offering, particularly in high-powered motorcycles. Year-on-year the
company increased its production size and attained economies of scale.
In fiscal year 1994-1995, it produced 1 million vehicles and became a well-
established exporter to several countries. It is India's largest exporter of two- and
three-wheelers. In 2006-2007, exports of Bajaj motorcycles grew by 82% to
3,00,656 units and three-wheelers by 87% to 1,40,645 vehicles. In the same
financial year, over 1,50,000 two-wheelers and three-wheelers sales were made
to Sri Lanka and also over 1,00,000 vehicles were sold to Latin America.
Besides, establishing an assembly plant in Nigeria, Bajaj Auto in FY2006-2007
established a 95% owned joint venture in Indonesia which in coming years will

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play a key role in expanding the company's footprint in South-East Asia.


The global turmoil and resultant low demand affected the Indian auto industry.
Though the production volume increased, the third quarter of FY2008-2009 was
particularly tough. Average monthly sales of motorcycles in India plunged by
over 17% in the 3rd quarter of 2008-2009 with that of 2nd quarter - from an
average of 5,24,939 units per month to 4,35,114 units. The sales and profits of
Bajaj Auto tumbled - net sales and other operating income fell by 2.6% to INR
88.11 billion in 2008-2009. However, the company succeeded in maintaining
double-digit operating Earning Before Interest, Tax, Depreciation and
Amortisation (EBITDA) margin of 13.6% of net sales and other operating income
for 2008-2009 rising to 15.2% margin for the fourth quarter (2008-2009). In
addition, the robust exports of the company made some positive news. During
2008-2009, it exported an all-time high of 7,72,519 units of two and three-
wheelers, representing a growth of 25% over the previous year (2007-2008).
However, since past 5 years, current liabilities of the company exceeded current
assets resulting in a negative working capital . Nevertheless, Bajaj Auto is taking
necessary measures to improve its working capital. But the company is not
considering this as negative remark as the other players in the industry are also
experiencing negative working capital. Experts viewed that the top Indian
companies with high return on capital have operated on negative working
capital. Interestingly, companies belonging to FMCG and auto industry are known
for good returns to their shareholders (both in terms of dividends and capital
gains) though they showed a negative working capital. In addition to Bajaj Auto,
Hero Honda which is the market leader and TVS, the third largest in this segment
are also operating on negative working capital but are giving high returns to
their shareholders. Due to the improved inventory turnover ratio and better
working capital management cycles, these companies are enjoying the wide gap
between the days of cash receipts from their debtors to payment days to their
creditors. In short, they are enjoying the time period between number of days
the payment to creditors and their receivables.

Since, the nature of the industry has a considerable influence in the working
capital management, for how long can the nature of auto industry allow these
companies to continue negative working capital? However, the big question is to
what extent the nature of industry will determine the working capital
requirement?
Example 2.

India's Suguna Poultry Farm Ltd.: Can it Go Pan- India with its Current
Business Model?
The Indian poultry industry plays a prominent role in the agriculture sector
contributing 2.5%to the country's GDP. In just a few decades, the industry has
transformed from a backyard activity to a highly technology-driven industry. This
rapid growth was aided by the development of the contract farming model.
Adopting this model, the Coimbatore based Suguna Poultry Farm Ltd. (Suguna)
stumbled upon its unique business model while trying to find a solution to the
problems it faced in the course of its operations. It has successfully established
itself in the Indian poultry industry and is currently the world's fourth largest
player in the broiler segment. Its operations are, however, centred in the

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southern part of India. In 2008, Suguna announced its plans to expand across
India along with its efforts to strengthen its backward and forward integration
processes. With competition getting intensified, will the company be able to
sustain its current rate of growth if it expands across the country? What possible
challenges could the company face?

Indian Poultry Sector: Structure and Performance


India has a cultivable land of 184 million hectares, which helps in producing
various items. Despite the boom in the service sectors (software and IT),
agriculture is still considered as the backbone of the Indian economy with more
than half of the population associated with it. The percentage share of
agriculture in GDP was 18.5% in 2006-2007. Out of the agriculture sub sectors,
livestock is one of the major contributors. The contribution of livestock sector to
agricultural GDP grew from 22.51% in 1999-2000 to 24.72% in 2004–2005. The
contribution of livestock output to the country's GDP was 6% in 2003-2004.
The share of poultry in the livestock sector is significant compared to other sub-
sectors like buffalo, goat and sheep. Out of the total meat production in the
country, poultry meat comprises of 25%. By 2004, the annual growth rate of
poultry was moving at 15%per annum whereas growth rates of other meats were
advancing at only 5%per annum. The poultry industry contributed 2.5% to the
country's GDP, which amounted to INR 29,000 crore in 2004.
Over the years, the poultry industry underwent tremendous changes in its
structure and operations. In just four decades (beginning from 1960's), the
industry has grown from a subsistence activity into an organised, scientifically
oriented and technologically-driven industry. The structure of the poultry
industry, however, is not uniform and differs region wise within the country.
Broadly, the poultry industry in India consists of two groups – organised and
unorganised sectors. The contribution made by the organised sector accounts to
70%and the remaining 30%is contributed by the unorganised sector. The
organised sector uses intensive farming, modern technology and sophisticated
breeding systems to generate greater productivity. The unorganised sector, on
the other hand, has little or no promotion for brands. Indeed, most of them do
not sell under any brand. The poultry sector has evolved through three definite
phases namely traditional, semi-commercial and commercial system.
Phases in the Evolution of Poultry Sector : The traditional system of farming
was regarded as a 'backyard business', where small-scale farmers raised the fowl
(poultry birds) for self-consumption and occasionally sold the surplus at
neighbourhood/local markets. Farmers were disenchanted with agriculture due to
irregular (uncertain) income, erratic climatic conditions, inadequate irrigation
facilities, limited credit sources and increased debt burden. Farmers, it was
argued, were gambling with monsoons. As a result, the farmers took active
interest in non-crop sector (poultry and dairy). Although unorganised poultry
farming did not follow any organised form of production, it played an important
role in the rural environment, as it was a source of income as well as
employment. The traditional system, however, faced several limitations like
unawareness of veterinary services, limited/inadequate infrastructure, high
incidence of disease, poor quality of inputs, etc., which did not enable
farmers/cultivators to achieve optimum level of productivity.
The commercial system of farming adopted more specialised and sophisticated

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Answers for MBA Assignment Sem-III, SET 1 MB0050 – Research Methodology

techniques focusing on bulk production and required low levels of labour. By


adopting modern technology, farmers were able to produce poultry for specific
uses - layers for eggs, broiler for meat etc. To further encourage them, the
government offered several incentive schemes. For instance, incentives were
given to players who adopted modern technologies and achieved higher
productivity. In addition, many research institutions were set up and other
facilities like training, veterinary care, technical support and insurance schemes
were provided, which helped the growth of commercial farmers/integrators.
The fast growing market prompted integrators to look for ways and means to
increase market share, maintain low transportation costs, achieve economies of
scale and high productivity. However, small farmers could not fully participate in
the rapidly growing poultry market, due to the challenges like diseconomies of
scale, poor infrastructure, lack of proper transportation channels, etc., they
found it hard to survive independently. To fill this gap between the integrators
and small farmers, the 'contract farming model' emerged. The model involves an
agreement between company and farmer, wherein the company agrees to
supply all the necessary inputs to the farmers at a predetermined price for the
production of a specific product. The integrator supplies inputs (Day-Old-Chicks
(DOC), medicines and feed) to the contract farmers for the production of broiler
and/or eggs. After the conversion process, which takes an average period of 6
weeks (42-45 days) poultry farms take back the end products from the farmers
by paying a price (growing charges). Contract farming in the poultry industry
follows the centralised model, which involves vertical integration with strict
quality control and high level of processing.

Q5. What are the differences between observation and interviewing as methods of
data collection? Give two specific examples of situations where either observation or
interviewing would be more appropriate.
Answer: Observation as a method of data collection has certain characteristics.
1. It is both a physical and a mental activity: The observing eye catches many things
that are present. But attention is focused on data that are pertinent to the given study.
2. Observation is selective: A researcher does not observe anything and everything, but
selects the range of things to be observed on the basis of the nature, scope and objectives
of his study. For example, suppose a researcher desires to study the causes of city road
accidents and also formulated a tentative hypothesis that accidents are caused by violation
of traffic rules and over speeding. When he observed the movements of vehicles on the
road, many things are before his eyes; the type, make, size and colour of the vehicles, the
persons sitting in them, their hair style, etc. All such things which are not relevant to his
study are ignored and only over speeding and traffic violations are keenly observed by him.
3. Observation is purposive and not casual: It is made for the specific purpose of noting
things relevant to the study. It captures the natural social context in which persons behaviour
occur. It grasps the significant events and occurrences that affect social relations of the
participants.

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Answers for MBA Assignment Sem-III, SET 1 MB0050 – Research Methodology

4. Observation should be exact and be based on standardized tools of research and


such as observation schedule, social metric scale etc., and precision instruments, if
any.

The main virtue of observation is its directness: it makes it possible to study behaviour as it
occurs. The researcher need not ask people about their behaviour and interactions; he can
simply watch what they do and say.

Data collected by observation may describe the observed phenomena as they occur in their
natural settings. Other methods introduce elements or artificiality into the researched
situation for instance, in interview; the respondent may not behave in a natural way. There is
no such artificiality in observational studies, especially when the observed persons are not
aware of their being observed. Observations is more suitable for studying subjects who are
unable to articulate meaningfully, e.g. studies of children, tribal, animals, birds etc.

Observations improve the opportunities for analyzing the contextual back ground of
behaviour. Further more verbal resorts can be validated and compared with behaviour
through observation. The validity of what men of position and authority say can be verified
by observing what they actually do.

Observations make it possible to capture the whole event as it occurs. For example only
observation can provide an insight into all the aspects of the process of negotiation between
union and management representatives. Observation is less demanding of the subjects and
has less biasing effect on their conduct than questioning. It is easier to conduct disguised
observation studies than disguised questioning. Mechanical devices may be used for
recording data in order to secure more accurate data and also of making continuous
observations over longer periods.

The observation method thus involves human or mechanical observation of what people
actually do or what events take place during a buying or consumption situation. “Information
is collected by observing process at work”. The following are a few situations:-
1. Service Stations-Pose as a customer, go to a service station and observe.
2. To evaluate the effectiveness of display of Dunlop Pillow Cushions-In a departmental
store, observer notes:- a) How many pass by; b) How many stopped to look at the
display; c) How many decide to buy.
3. Super Market-Which is the best location in the shelf? Hidden cameras are used.
4. To determine typical sales arrangement and find out sales enthusiasm shown by
various salesmen-Normally this is done by an investigator using a concealed tape-
recorder.
Interviewing on the other hand is one of the prominent methods of data collection. it may be
defined as a two way systematic conversation between an investigator and an informant,
initiated for obtaining information relevant to a specific study. It involves not only
conversation, but also learning from the respondent's gesture, facial expressions and
pauses, and his environment. Interviewing requires face to face contact or contact over
telephone and calls for interviewing skills. It is done by using a structured schedule or an
unstructured guide.
Interviewing may be used either as a main method or as a supplementary one in studies of
persons. Interviewing is the only suitable method for gathering information from illiterate or

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Answers for MBA Assignment Sem-III, SET 1 MB0050 – Research Methodology

less educated respondents, It is useful for coli a wide range of data from factual
demographic data to highly personal and intimate information relating to a person's
opinions, attitudes, values, beliefs past experience and future intentions. When qualitative
information is required or probing is necessary to draw out fully, and then interviewing is
required. Where the area covered for the survey is a compact, or when a sufficient number
of qualified interviewers are available, personal interview is feasible.
Interview is often superior to other data-gathering methods. People are usually more willing
to talk than to write. Once report is established, even confidential information may be
obtained. It permits probing into the context and reasons for answers to questions.
Interview can add flesh to statistical information. It enables the investigator to grasp the
behavioural context of the data furnished by the respondents.
Merits of Interview Method
 First, the greatest value of this method is the depth and detail of information that can
be secured. When used with well conceived schedules, an interview can obtain a great deal
of information. It far exceeds mail survey in amount and quality of data that can be secured.
 Second, the interviewer can do more to improve the percentage o~ responses and
the quality of information received than other method. He can note the conditions of the
interview situation, and adopt appropriate approaches to overcome such problems as the
respondent's unwillingness, incorrect understanding of question, suspicion, etc.
 Third, the interviewer can gather other supplemental information like economic level,
living conditions etc. through observation of the respondents environment.
 Fourth, the interviewer can use special scoring devices, visual materials and the like
in order to improve the quality of interviewing.
 Fifth, the accuracy and dependability of the answers given by the respondent can be
checked by observation and probing.
 Last, interview is flexible and adaptable to individual situations. Even more, control
can be exercised over the interview situation.
Q6. Case Study: You are engaged to carry out a market survey on behalf of a leading
Newspaper that is keen to increase its circulation in Bangalore City, in order to
ascertain reader habits and interests. What type of research report would be most
appropriate? Develop an outline of the research report with the main sections.
Answer:
Research report is a means for communicating research experience to others. A research
report is a formal statement of the research process and it results. It narrates the problem
studied, methods used for studying it and the findings and conclusions of the study.
Types of Research Report
Research reports can be classified as:
 Technical reports
 Popular reports
 Summary reports
 Research abstract
 Research article
In the context of carrying out a market survey on behalf of a leading Newspaper that is keen
to increase its circulation in Bangalore City, in order to ascertain reader habits and interests
a technical report will be most appropriate.
It will be important to define first what a technical report is.
Technical Report
In a technical report a comprehensive full report of the research process and its outcome are
included. It covers all the aspects of the research process. A description of the problem
studied, the objectives of the study, method and techniques used, a detailed account of

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Answers for MBA Assignment Sem-III, SET 1 MB0050 – Research Methodology

sampling filed and other research procedures, sources of data, tools for data collection,
methods of data processing and analysis, detailed findings and conclusions and suggestion.

The Research Report is given below :


Readership survey table and Chart
Newspaper Readership No

Indian Express 9
Financial Express 2
Times of India 14
Economic Times 2
Business Standard 4
Deccan Herold 32
The Hindu 23
Dyvya Bhaskar 14

Survey Chart
Readership No

35
30
25
20
15 32
10 23
5 14 14
9 4
2 2

The Hindu
0
Times of

Economic

Business
Financial

Standard

Bhaskar
Express

Deccan
Express

Herold

Dyvya
Indian

Times
India

Fragmentation of Market Share

Fragmentation of Market share

9.00% Indian Express


Financial Express
14.00% 2.00%
Times of India
14.00%
Economic Times
23.00% 2.00% Business Standard

32.00% 4.00% Deccan Herold


The Hindu
Dyvya Bhaskar

Questionnaire Analysis :

Gender : Male / Female

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Answers for MBA Assignment Sem-III, SET 1 MB0050 – Research Methodology

No. of respondents : Male – 76 Female – 24

No

24

Male
Female

76

Q. Do you read the newspaper regularly?

Yes No
96 4

Yes
No

96

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Answers for MBA Assignment Sem-III, SET 1 MB0050 – Research Methodology

Q. How many members in your family read newspaper?

1 2 3 4 More than 4
43 31 14 8 4

4
8

1
14
43 2
3
4
>4
31

Q. On the basis of which parameters you select the News papers ?


Type of News Respondants
Reliability of News 25
Corporate news 8
Availability 15
Brand Name 4
Entertainment 7
Sports News 8
Share Market 10

Supplements 10
Case Studies 2
Price 15

Respondants
Reliability of News
Corporate news
15 Availability
25
2 Brand Name
10 Entertainment
Sports News
8
10 Share Market

15 Supplements
8
7 4 Case Studies
Price

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Answers for MBA Assignment Sem-III, SET 1 MB0050 – Research Methodology

Q. Where do you prefer to read the newspaper?

At home 85
At office 12
At library 3

Respondants
12 3

At home
At office
At library
85

Q. In which media do you believe the most?

Newspaper 55
News channel 25
Both 20

Respondants Newspaper
News channel
Both
20

55
25

Limitation of Study :


The respondents may not have given correct

answer due to personal bias.

Because of time constraint, the number of respondents of survey was kept 100
which might
• not be enough for the study
• The research was limited to Bangalore city only so there is limitation of area for an
approximate
• analysis
Suggestions :
• Expand the sales by institutional selling in as schools and colleges.

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Answers for MBA Assignment Sem-III, SET 1 MB0050 – Research Methodology

• Increase the level of advertisement through hoardings, T.V. advertisement.


• Give the ‘Appointments and Requirements’ section in Sunday Express.
• They can do product enhancement by adding new weekly supplements for Company
news and for political news only.
• Social and political news can be main factors for enhancing sales. So, promotional
strategy should more focus on Providing Local and political news.
• Finding shows that 51% are satisfied with their current newspaper, so there should
be some increment in their satisfaction level by providing some good news content.
• Newspaper Company should organize events, increase distribution points, put
hoardings and banners to create awareness because to win heart you have to go
through mind.

SWOT analysis of Indian Express :

STRENGTHS WEAKNESSES
Lack of proper awareness
Qualitative content
A narrow market segment
Detailed analysis
An unmatched editorial team, seasoned
A third party publication, so less
professionals and stimulating set of
control over publication process
columnist.
Recognised and respected by leaders and
industry leaders

Opportunity Threat

Market increasing satellite


penetration and growing for
Very growing financial market
dependence on television news.

Easy accessibility of news through


Untapped market, so greater market
substitutes like T.V., Radio etc.
opportunities
Growing competition through new
entrants

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