BMP6001 Research Proposal Assignment sample

Introduction of BMP6001 Research Proposal Assignment

Background

Finance is the crucial element that required for setting, operating and expansion of the business entity. Automotive industry of UK is aiming at providing the large number of services that includes repairs, cars parts, equipment, system services, testing and electronic manufacturing. The industry is contributing over 14.1billion towards country’s GDP and provides employment opportunity to over 781800 workers (UK’s automotive industry, 2023). As finance is the major requirement of each firm so it is necessary to identify financial challenges that create barriers in setting-up organization. Thematic analysis will be used to shed light on various financial challenges faced by SMEs in UK’s automotive industry.

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Research aims and objectives

Aim

The aim behind initiating current study is to identify the challenges faced in arranging finances for establishing small car parts businesses in UK.

 Objective

• To investigate the growth of SME within automotive industry.
• To ascertain funding sources available to SME operating within automotive industry.
• To evaluate challenges facing by automotive firm in raising funds.
• To recommended competent strategies for effectively arranging finances within SMEs.

Research questions

Q1. What is the growth of small businesses within automotive industry?

Q2. What are various funding sources present for small business within UK’s automotive industry?

Q3. Which issues are facing by the small businesses within UK automotive industry?

Literature Review

According to view point of Albulescu (2021), small business has high growth within UK’s automotive industry. It has been identified that over 3980 small businesses are present in the car parts industry. Further, it is expected that industry will grow by 1.4% in the year of 2024 (Growth rate of UK’s automotive industry, 2024). This denotes that setting small business in this industry will help in gaining the high amount of profits and indicates the future growth. Further, Banga (2019) claimed that SME’s in automotive industry is contributing over 4 billion towards the industry’s revenue (Economic contribution of UK’s automotive industry, 2023). It has been identified that 90% of the supplier of cars parts belongs to SMEs. This indicates high growth potential for small business in the automotive industry.

Bollaert, Lopez-de-Silanes and Schwienbacher (2021) stated that venture capital is the most effective funding source in the automobile industry. This funding source is effective as it help in providing early stage finance and support in enhancing networking for the firm. Venture capitalist also provides assistance to the business owners that guide them in effectively setting up organisation. However, Brown, Rocha and Cowling (2020) found that this source of funding dilutes control of business entity as venture capitalist charge very high share of equity.

Corbet et al, (2019) explicated that bank loan is another source of funds that should be used for financing SME. Banks in UK has initiated a policy of providing loans at lower interest for the start ups which help in fulfilling the financial need of the business entity and result in economic development. On the other hand, D’Orazio and Popoyan (2019) professed that loan creates fixed interest obligations that results in increasing overall financial burden on business entity. Further Hudson (2020) claimed that leasing is also most effective method for financing equipment for the small enterprises. This form of finance helps in providing tax benefits as occupancy cost in leasing is tax deductible element. However, Husna and Satria (2019) mentioned in their study that leasing method provides ownership of the assets and also increases upfront cost as well as fees.

Ji and Zhang (2019) investigated that selecting source of fund is the major issue while raising funds. Small business faces difficulty in managing an effective balance between debt, equity and creating optimal capital structures. Firm faces challenges in deciding structure by which cash inflow could be maximized. Additionally, La Torre et al, (2020) depicted that lack of investors trust is also creating obstacles in raising effective funds. Investors and financial institution generally did not lend money in start-up due to lack of trust and confidence in business ides. This creates issue for firm in fulfilling financial needs and effectively setting up business.

Olabi, Wilberforce and Abdelkareem (2021) analysed that lack of adequate collateral is another challenge creating obstacles in raising funds by small businesses. Banks and financial institution only lends money against mortgages and lack of collateral results in facing financial issues. Further, Ozili (2021) argued that increase in competition is another issue that is creating financial problem for the business entity. Due to large number of automotive companies, investors did not consider the business idea as viable that result in rising financial issues for the start-ups.

Literature gap

Earlier studies has been conducted for determining the process of setting up business but emphasis not been paid over identifying the financial issues that is impacting in establishment of SMEs (Zhang, Zhang and Managi, 2019). The current report will discuss on various challenges and various strategies through which issues could be overcome.

Conceptual framework

Methodology

Research approach

Research approach refers to the systematic inquiry and procedure to describe, predict, explain and control the particular phenomena. The two crucial types of research approaches include the inductive approach and deductive research approach (Ahmad et al, 2019). In the context of determining difficulty and challenges in setting up car parts business, inductive research will be used by the researcher. This method provides broader view of the research issues that aids in exploring new theories. Further this approach starts with observing phenomena based on which theories are formed that results in gaining in-depth information. Additionally, Interpretivism philosophy will be used by researcher as it focuses over social construction that helps in better understanding the issue.

Research strategy

Research strategy is the scheme or plan through which the activity of assessing information is carried out. Two methods for the search strategy include the quantitative and the quantitative research (Alharahsheh and Pius, 2020). For identifying financial challenges in establishing business, qualitative research strategy will be adopted. This method will be used as it promotes flexibility which allow respondent to express their thought and feeling. The current study is undertaken by inductive approach which effectively supported by the qualitative strategy. Further the perception and issues could not be recorded in quantifiable manner that results in undertaking qualitative strategy.

Data collection

The process of gathering and evaluating information related to variable for determining specific outcome is known as data collection (Bauer et al, 2021). The two major types of data collection methods which can be used by the scholar are primary and secondary. In the context of determining challenges in setting up of business, secondary method will be used. This method assists in exploring the perception of large number of authors and support in gaining wide data. Secondary method support in timely completion of the research as it provides huge amount of data quickly. Premium quality information could be gained as data is provided by specialised researcher. Various books, journals and scholarly articles will be analysed for gaining outcome.

Sampling

For collecting secondary data, goggle scholar will be used by the researcher. Through this researcher will able to get access to the large number of books, articles and journal. All the data before 2020 will not be taken due to high risk of unrealistic information.

Data analysis

Data analysis refers to process of cleansing; inspecting, modelling and transforming data with the aim to identify useful information (Bloomfield and Fisher, 2019). SPSS and thematic are the two methods of identifying accurate information regarding the research issue. For evaluating challenges in setting up business, thematic data analysis will be initiated by the researcher. This method will be used as qualitative data is effectively evaluated through thematic analysis. Further, thematic method simplifies process of interpretation as themes will be initiated which will be evaluated by referring to various journals and articles.

Ethical consideration

For maintaining ethnicity of the research, university guidelines will be effectively followed. Researcher will also focus on citing all the information appropriately and thereby gives credit to the researchers. For ensuring accuracy of data, a reference list will be attached in the end of the study.

Conclusion

Limitation of proposed approach

Lack of effective time and budget are the major issues that impact the research efficiency. For overcoming the same, secondary research has been initiated as it is cost and time effective method of collecting information (Chandra et al, 2019). Due to the financial constraint various updated tools will not be used for analysing data. However, in qualitative research thematic approach provides effective outcome. Various themes will be formed by referring to articles which assist in gaining accurate information regarding the problem.

Expected research outcome:

From the secondary analysis, it has found that there is high growth potential of the small business within Automotive industry. Venture capitalist, bank loan and leasing are the most effective sources of finances. It has further depicted that lack of investor’s trust, inadequate collateral and high interest rate on debt are major financial challenges faced by SMEs in automotive industry.

References

Books and Journals

• Ahmad, S., Wasim, S., Irfan, S., Gogoi, S., Srivastava, A. and Farheen, Z., 2019. Qualitative v/s. quantitative research-a summarized review. population, 1(2), pp.2828-2832.
• Albulescu, C.T., 2021. COVID-19 and the United States financial markets’ volatility. Finance research letters, 38, p.101699.
• Alharahsheh, H.H. and Pius, A., 2020. A review of key paradigms: Positivism VS interpretivism. Global Academic Journal of Humanities and Social Sciences, 2(3), pp.39-43.
• Banga, J., 2019. The green bond market: a potential source of climate finance for developing countries. Journal of Sustainable Finance & Investment, 9(1), pp.17-32.
• Bauer, G.R., Churchill, S.M., Mahendran, M., Walwyn, C., Lizotte, D. and Villa-Rueda, A.A., 2021. Intersectionality in quantitative research: A systematic review of its emergence and applications of theory and methods. SSM-population health, 14, p.100798.
• Bloomfield, J. and Fisher, M.J., 2019. Quantitative research design. Journal of the Australasian Rehabilitation Nurses Association, 22(2), pp.27-30.
• Bollaert, H., Lopez-de-Silanes, F. and Schwienbacher, A., 2021. Fintech and access to finance. Journal of corporate finance, 68, p.101941.
• Brown, R., Rocha, A. and Cowling, M., 2020. <? covid19?> Financing entrepreneurship in times of crisis: exploring the impact of COVID-19 on the market for entrepreneurial finance in the United Kingdom. International Small Business Journal, 38(5), pp.380-390.
• Chandra, Y., Shang, L., Chandra, Y. and Shang, L., 2019. Inductive coding. Qualitative research using R: A systematic approach, pp.91-106.
• Corbet, S., Lucey, B., Urquhart, A. and Yarovaya, L., 2019. Cryptocurrencies as a financial asset: A systematic analysis. International Review of Financial Analysis, 62, pp.182-199.
• D’Orazio, P. and Popoyan, L., 2019. Fostering green investments and tackling climate-related financial risks: Which role for macroprudential policies?. Ecological Economics, 160, pp.25-37.
• Hudson, A., 2020. The law of finance. In Lessons of the Swaps Litigation (pp. 62-83)
• Husna, A. and Satria, I., 2019. Effects of return on asset, debt to asset ratio, current ratio, firm size, and dividend payout ratio on firm value. International Journal of Economics and Financial Issues, 9(5), pp.50-54.
• Ji, Q. and Zhang, D., 2019. How much does financial development contribute to renewable energy growth and upgrading of energy structure in China?. Energy Policy, 128, pp.114-124.
• La Torre, M., Sabelfeld, S., Blomkvist, M. and Dumay, J., 2020. Rebuilding trust: sustainability and non-financial reporting and the European Union regulation. Meditari Accountancy Research, 28(5), pp.701-725.
• Olabi, A.G., Wilberforce, T. and Abdelkareem, M.A., 2021. Fuel cell application in the automotive industry and future perspective. Energy, 214, p.118955.
• Ozili, P.K., 2021, October. Financial inclusion research around the world: A review. In Forum for social economics (Vol. 50, No. 4, pp. 457-479). Routledge.
• Pichler, M., Krenmayr, N., Schneider, E. and Brand, U., 2021. EU industrial policy: Between modernization and transformation of the automotive industry. Environmental Innovation and Societal Transitions, 38, pp.140-152.
• Roychowdhury, S., Shroff, N. and Verdi, R.S., 2019. The effects of financial reporting and disclosure on corporate investment: A review. Journal of Accounting and Economics, 68(2-3), p.101246.
• Zhang, D., Zhang, Z. and Managi, S., 2019. A bibliometric analysis on green finance: Current status, development, and future directions. Finance Research Letters, 29, pp.425-430.

Online

• Economic contribution of UK’s automotive industry. 2023. Online. Available through: < https://www.invoca.com/blog/uk-automotive-industry#:~:text=Contribution%20to%20the%20U.K.%20Economy,reach%20%24226%20billion%20by%202027. >
• Growth rate of UK’s automotive industry. 2024. Online. Available through: < https://www.statista.com/outlook/io/manufacturing/automotive-products/united-kingdom#:~:text=Automotive%20Products%20%2D%20United%20Kingdom&text=Value%20added%20in%20the%20Automotive,(CAGR%202024%E2%80%932029). >
• UK’s automotive industry. 2023. Online. Available through: < https://www.smmt.co.uk/industry-topics/uk-automotive/ >

Author Bio

Jordan Smith   7 years | MBA

I have completed my MBA in Management from the University of Manchester. I have started my academic writing around 7 years ago. Students can connect with me for any type of management task for their academics. I pay attention to every detail provided by students and give them the desired results.