Read the following passage carefully and answer questions given below.

Business research provides opportunity to managers and executives of business enterprises to study and understand
root causes of existing problems and collect data for finding viable solutions in order to achieve set goals and
objectives in effective manner. Contemporary challenges face by business organizations are cut throat competition and
hyper inflation, all kinds of manufacturing and service enterprises working through survival strategies to retain
customers abreast reducing cost of production and achieving profitable objectives. All stakeholders and shareholders
cannot be satisfied simultaneously; as on one side price cuts demanding by customers and on other side shareholders
asking for surplus dividends. This problem needs to be discussed and studied in best interest of organization to acquire
and nurture new customers as well as preventing organization from agency problems created through differences
between shareholders and top management over share in profits paid as dividends. To know loop holes in maintaining
relationship with both extremes, customers and shareholders, top management explore factors affecting rise in cost of
production and study in detail the impact of these factors on sales and profitability of organizations. Managers collect
data related to direct and indirect costs incurred in the production department, set an objective of analyzing collected
data using different data analysis techniques and interpret findings. Results and conclusion must be communicated to
customers and shareholders as well as to all other stakeholders for regaining lost trust and confidence on top
management. It will enhance goodwill of the corporation in views of all stakeholders and uphold status of firm in
particular industry.

Q#1 Make a brief problem statement after thorough study of above passage and write down two research
objectives. (5 Marks)

Problem Statement:
Under globalized trading, as companies have become more competitive, challenges faced by business organizations
have increased too mainly comprising of; competition and inflation. A large number of organizations are devising
organizational strategies to lessen the cost of manufacturing amidst this competition and inflation and increase profits
while simultaneously retaining customers. All partners and investors can't be fulfilled at the same time and this may
end up imposing major financial issues for the organization as shareholders want high shares as dividends while
customers want products/services at reasonable costs. Therefore, this impels the need to perform a study of factors
affecting rise in cost of production that would ultimately have an impact on sales and profits of organization.

Research Objectives:
Following are the research objectives of this investigation:
- To understand the effect of inflation on cost of production.
- To understand the effect of labor productivity cost on cost of production.

Q#2 Do you think exploratory and descriptive research methods are appropriate to conduct research on
problem or situation discussed in above passage? If Yes, answer Why? If No, suggest other methods. (5 Marks)
Yes, exploratory and descriptive research methods both would be appropriate to conduct research on the problem
discussed in above passage as the key variables that increase cost of production are not identified. Exploratory
research can be conducted because the research is still in the initial stage and also because in this we use qualitative
approaches which are related to the quality of research. As the problem has just arisen, and the managers need to
analyze direct and indirect costs that would ultimately have an impact of cost of production which will in return have
an impact of overall profitability of the organization. Same goes for descriptive research, which aims to explore and
explain while providing additional information about a topic in numbers. This is where research is trying to describe
what is happening in more detail, filling in the missing parts and expanding understanding which is exactly what this
study aims to provide best interest of organization to acquire and nurture new customers as well as preventing
organization from agency problems created through differences between shareholders and top management and to
identify possible loop holes in maintaining relationship with both extremes, customers and shareholders, top
management explore factors affecting rise in cost of production and study in detail the impact of these factors on sales
and profitability of organizations. Therefore, both of these research methods are applicable.

Q#3 What type of surveys recommended to conduct research on above problem; Cross sectional or
Longitudinal? Justify your answer with appropriate reasons. (5 Marks)

Longitudinal research would be more appropriate and is recommended in this context. As the business environment is
dynamic and cross sectional studies are conducted at a given point in time and cannot pin down cause and effect
relationship. In the above case, the study is aimed at providing the significant impact of certain factors that would
cause a rise in cost of production which will alternatively have an impact on overall profitability of an organization.
This calls for a detailed study that would be able to identify cause and effect relationship that’s why longitudinal
research sounds more reasonable in this situation. Although, cross sectional are not that effective in identifying cause
and effect relation but it’s comparatively cheaper and quick to conduct so if there are financial or time constraint than
managers can also opt for this option.