Applied Business Research

Abstract

This research study is based on the fluctuation in the Australian dollar and it supports evaluating the impact of the rising Australian dollar (AUD) against the United States dollar (USD). This study is going to give special consideration towards analysing the impact of AUD fluctuation on education in Australia. For this purpose, a quantitative research approach will be utilized in the research which will support to analyse of the study on the basis of figures and facts. This research focuses to give understanding regarding the reason behind the upwards movement of the Australian dollar while giving consideration to the issues that take place due to this increase. Furthermore, this study will allow determining the fee structure and course facilities the colleges and universities should offer the overseas and domestic students in a country with a strong and growing currency value. Additionally, this study also enables to evaluate the relationship between facilities and pricing to students and parents to consume educational services in Australia which is a strong currency economy. Furthermore, this study will also focus on the factors that lead to the perception of students and parents to switch costs in the education sector. In like manner, this study will also give consideration to hypotheses and will judge the approval and rejection. Moreover, it will give special consideration towards ethical concerns too.

Research problem

The research problem of this study is to identify the impact of fluctuation in the Australian dollar. This study will give special consideration to the education business. It is identified that although Australia has a stronger economic condition the fluctuation in the exchange rate creates the issue of challenge for the country and the businesses. So, in this perspective, this study will remain helpful to analyse the business, economic and social issues related to AUD. In the context of this study, this research focuses to answer the research questions which are as follow:

• What is the business, economic and social issues related to the strong Australian dollar?
• What is the impact of continuous appreciation in the AUD value against the USD value?
• How do the fluctuations in the Australian dollar impact the education business?
• What fee structure and course facilities the colleges and universities should offer overseas and domestic students in a country with a strong and growing currency value?
• How facilities and pricing relates to students and parents to consume educational services in a strong currency economy and is there sufficient demand for these services?
• What are the factors that lead to the perception of students and parents to switch costs in the education sector?

Answering these questions of the study will remain supportive to achieve the research objectives.

The hypotheses of this study are as follow:

• H1: New fee structure will increase demand from foreign students.
• H2: New fee structure will not show any increase in the demand from foreign students.
• H3: New fee structure will show no impact on demand from foreign students.

This research will focus on getting answers to the questions while achieving the research objectives. Moreover, the researcher will give consideration to judge the hypotheses on the basis of selection and rejection.

To get the answer to the study, the researcher will focus on critically analyse the research topic on the basis of past studies which will support to offer in-depth knowledge regarding the research topic and will allow analysing the research topic on the basis of the various point of views of different authors. Furthermore, the researcher will collect the data, facts and figures while utilizing past reports related to the AUD and its fluctuation trend. This study will give special consideration towards the education sector and has supported to analyse of the issues of AUD fluctuation in this sector. This study focuses on the business, economic and social issues related to the strong Australian dollar while focusing on the impact of continuous appreciation in the AUD value against the USD value. Moreover, it has supported to emphasize the impact of fluctuations in the Australian dollar impact towards the education business while focusing on the fee structure and course facilities the colleges and universities should offer the overseas and domestic students in a country with a strong and growing currency value. Additionally, this study is also going to discuss the facilities and pricing relates to students and parents consuming educational services in a strong currency economy and is there sufficient demand for these services and the factors that lead to the perception of students and parents to switch costs in the education sector. Overall this study will remain highly assistive to show a clear picture of the effect of fluctuations in the AUD on the education business.

Research Background

In the current scenario, it is identified that the Australian dollar (AUD) is showing an increasing trend against the United States dollar (USD)(Bishop, et al., 2013). This fluctuation has directly affected the economic system of the country. Australia has a resource-rich economy which has supported the country to show the increased value of AUD in the global market. It is identified that currency shows fluctuation on the basis of rising and fall in the commodities prices and the current upwards movement of AUD is reflecting the growing trend of the economic, social and business environment in the Australian markets (Kortt, Pervan and Hogan, 2016). This study supports offer an understanding regarding the impact of fluctuations in the Australian dollar in the business, especially in the context of the education business. It is analysed that AUD has shown the trend of huge fluctuation which directly impacts the education business. The Australian currency appreciates its value with the rise in commodities and stocks however it depreciates with the decrease in demand of the commodities in the global markets and with the increase in geopolitical risk(Monadjemi and Lodewijks, 2017). Due to this huge fluctuation, the Australian currency can be considered a risk currency. However, it is identified that the economic growth of Australia is highly dependent on export commodities such as iron-ore and copper. These export commodities remain supportive for the Australian market to control the nation in the situation of recession for more than 25 years(Bishop, et al., 2013).In the current scenario, AUD is showing the hike by about 80 US cents. In the year 2014-15, the value of AUD has dropped against USD butin August 2017, it is at a high level by 80.28 US cents. Although this hike has made the Australian economy stronger simultaneously it has created a situation of risk for the weak economy. So, in this context, this study will remain quite assistive to show a clear picture of the fluctuations in the Australian dollar and its effect on the education business.

This study will remain helpful to give understanding regarding the impact of a stronger Australian currency while focusing on economic and business issues in Australia. For this purpose, this study highlights the research on the educational sector. In this research, the researcher will also recommend ways to conduct the study while focusing on the structural approach.

Ethical considerations

In this research, there is huge consideration will be given towards ethical parameters. While collecting the data from the past studies, the researcher will give consideration towards collecting the data from the relevant data sources(Baskerville and Wood-Harper, 2016). Moreover, the researcher will focus on eliminating the situation of any kind of issues related to copyright and patents. Furthermore, there will be a huge focus taken place from the side of the researcher in the context of the plagiarism issue. Additionally, this study will be designed while focusing on referencing the data which are collected from the previous study to give adequate respect to the authors whose past studies are included by the researcher in this study. Moreover, there will be consideration given while collecting the information which will remain supportive to increase the reliability of the study(Flick, 2011). Moreover, the researcher will give consideration towards achieving the research objectives to a greater extent while collecting the data from the data sources which are authentic and can offer an effective understanding regarding the research topic.

Literary Review

This section of the research is based on the theoretical concepts and has supported to offer the understanding regarding the research objectives. This section of the research is based on a critical analysis of the research topic. It supports understanding the research on the basis of various past researches. This section focuses to achieve the research objectives to a greater extent.

To identify the business, economic and social issues with the fluctuation of the Australian dollar

In the views of Kotey & Sorensen (2014), there are various issues that are raised for the Australian business, economic and social etc, due to frequent fluctuation of the AUD value. The main issue which occurs for the domestic business that performs their operations overseas has a major impact in regards to suppliers, clients. However, if the currency of the nation fluctuates then business entities faced the problem of making deals with international suppliers or clients. Such limitation of business directly affects the economy in a bad manner. This is because, due to fluctuation in currency, the global market stops their dealing with the particular economy. Thus, this makes the economic failure. Similarly due to the rise and fall of the currency rate of Australia, the local business of Australia get affected as the global market is never interested in making investments into the fluctuation currency. Then it directly affects Australia imports and exports which influences their economy. In the case of clients, Australian businesses could face various issues to make proper dealing with their international clients. It could the paying foreign salaries, timely supply of products or services to clients. The cause of arises such practices is due to the exchange rate. According to Carson (2011), exchange rates play a vital role in the global transaction as to make a transaction; this is because it converts one country currency into another. The main cause of the fluctuation is the rise and fall in the exchange rates and it has a negative effect. In the case of the Australian dollar, when the currency value gets less than it directly affects the imports and exports of the country as company imports get rise and exports gets cheaper. Thus, this will weakness of the currency of Australia and its economic condition gets poor.

In the findings of Davis et al., (2016), it is identified that there is also a social issue get occur with the fluctuation in the currency. Likewise, if the Australian currency value is gets depreciated then, in that case, society faces problem-related to the high price of products which directly affects the purchasing power of Australian local people. Thus, it can be stated fluctuation in the currency does not contribute benefit to the country economy so in such a case, it is quite necessary to make balances in the currency exchange rate.

To identify the impact of continuous appreciation in the AUD value against the USD value

Exchange Rate

The exchange rate is the value of one currency in the context of conversion to another (Hajkowicz, Heyenga and Moffat, 2011). Exchange rates can be defined as relative prices which take place between two currencies. Due to this reason, they always express in pairs such as AUD/USD is the code which is used to pair the Aussie dollar with the US dollar.

AUD/USD

According to the views of Cole and Nightingale (2016), the Australian economy is showing an improved trend in recent months, and according to the experts, it will continue to improve. However, it is identified that there is a consequence of this parameter as it has created the situation of tightening the monetary policy sooner. It is identified that like any other major currency, AUD plays a crucial role in the economic and financial system. It directly affects the exports and imports as well as it also impacts the domestic and international investors due to fluctuation in the exchange rate. In support of this, from CommBank (2017), it is analysed that the reason found behind the increase in AUD against USD is due to weaker US dollar which is encouraging Australian economic conditions. Additionally, it is identified that the firmer iron ore prices are also the reason behind it. The current increase in AUD is quite surprising as well as shocking as AUD was trading at80.28 US cents on 1 August 2017. This was the level that was not achieved by AUD since May 2015. According to the views of Davis, McCarthy and Bridges (2016), the value of the AUD rises and falls relative to other currencies at a global platform. However, in the current scenario, a weaker US dollar is encouraging AUD which has lifted it by 4.1%. It is identified that AUD has eased against the USD in the starting August however CommBank currency strategists are expecting to consolidate the Aussie for the recent gains.

In the research of Cole, and Nightingale (2016), it is mentioned that the continuous appreciation in the AUD has a both positive as well as negative impact on Australia. The positive impact is reflecting in a way like low-interest-rate environment, rise in commodity prices etc. however, the interest rate is the major factor that attracts and influences the global investors as with the low-interest rate Australia economy could appeal to large investors as compared to the US. So this is a major advantage that provides a positive impact on the Australian economy (Gallifa & Batallé, 2010). Other than that appreciating value also provide support to the economic factors of the country. In that situation, Australia also achieves positive and healthy responses from the larger audiences through giving them high employment opportunities, impart high investment chances to the investors. Thus, these are the facilities that would be provided by Australia with the currency value appreciation. In support of this Saunders & Deeming, (2011) stated that appreciating the value of AUD against USD is also provide benefit to the Australian economy as every individual is interested to make an investment in the high valued currency. So this practice enhances the demand of the AUD among the global public which raise the Australian exports price. It proves to be effective for Australia in terms to achieve a strong economy. At the same time, their impact of the Australian dollar will benefit buyers buying/shopping from overseas, travelling to countries with different exchange systems like in US dollars and other weaker currencies and gain to importers getting goods at a cheaper price.

On the contrary of this Fidrmuc, (2010) argued that appreciation in the AUD value against USD is contributing negatively to the Australian market as with the decline in the value of USD dollar, consumers more prefer to buy the USD dollar as it has a low price compared to AUD. It is a fact that in the future USD will again raise due to the USA make more investment in the steel and ore segment which will increase the USD value in future. So, in regards to this, the public is buying more of the USD currency compared to the AUD currency. Moreover Reitz et al., (2011), AUD has less market competitiveness in the international market for the exports such as agricultural exports (but positive for imports) and less growth and productivity in industries like retail, education, tourism and manufacturing business in the domestic market. This indicates that the AUD will have less currency value in future so in that case in spite of having high valued currency. But still, AUD has fewer buyers and investors in regards to USD. Such exercise has a negative impact on Australian consumers or manufacturers.

To evaluate the impact of the fluctuations in the Australian dollar on the education business

According to Paradiso et al., (2013), the education business has got affected largely by the fluctuation of the Australian dollar. It is because the high value of the dollar makes it appeals less to overseas students in spite of there is a good quality of education exist. Similarly, Australian students also prefer to study abroad like in the USA and UK. Thus, it is clearly indicated that the consumer in every sector prefers to buy that brands which are affordable to them. So high-value dollar has a negative influence in the case of the education business. In regards to this, the Australian education business should develop strategies so that overseas and domestic students get attracted and Australia economy gets strong. For that, it is recommended that the Australian education business should design a new fees structure that is affordable for students and require developing a new course for the colleges and universities. This allows both the domestic and global students to appeal to them (Nagle et al., 2016). At the same time, the education system should focus on the quality offering rather than on cost as this rise the opportunity of attracting global students. Moreover, it is also recommended to the Australian education business that they should provide an effective pricing policy to attract students. Likewise, the price of the education courses should reduce which can attract the student to complete their education and can learn the different courses with less price. Similarly, the education department will also be able to increase their profit by getting high registration of courses. The education department should also provide an attractive facility on the course to the students.

In the views of fall, & Roberts, (2012), there are various factors that affect the perception of students and parents such as education quality, cost, scholarship, extracurricular activities etc. It influences the students’ perception. However, if any student perceives a positive education environment, quality education, practical knowledge etc, as per this students get easily attracted towards the university. So there is largely recommended to the Australian education business to improve education quality rather than focusing on the price. Thus this will attract overseas students and make the economy strong as compare to the USA, Japan and UK.

Aims/Objectives of the Research

This research aims to evaluate the impact of the fluctuations in the Australian dollar on business, especially in the context of the education sector. This study will support exploring the challenges and opportunities of the recent state of the Australian dollar.

The objectives of this study are as follow:

• To investigate the business, economic and social issues related to the strong Australian dollar
• To identify the impact of continuous appreciation in the AUD value against the USD value
• To evaluate the impact of the fluctuations in the Australian dollar on the education business

This study will focus on achieving the research objectives while focusing on the critical analysis which will support to the discussion of the objective in an effective manner.

Research design

This section of the research will remain highly assistive to conduct the study in a systematic manner while selecting effective methods. In this section, the researcher will discuss the methods which will support collecting the data and developing the research outcomes in an effective manner.

Research Approach

There are basically three research approaches, i.e. quantitative, qualitative and mixed research approaches (Brymanand Bell, 2015). In this study, the researcher will utilize a quantitative research approach as it will remain supportive to analyse the research findings on the basis of figures and facts. It will allow understanding the study findings at a glance and will support concluding the study in the right direction. It will also support representing the study in an effective manner. Moreover, the quantitative method is more structured as compare to the qualitative method so it will support offer the facility of evaluating the data in a calculative manner.

Data Collection

There are basically two types of data collection methods, i.e. primary data collection method and secondary data collection method(Flick, 2011). In this study, the researcher has utilized the secondary data collection method as it will support to analyse of the study on the basis of facts and figures and will enable to conclude the study in the right direction. It will also support increasing the reliability of the research outcomes. Furthermore, the findings from the facts and figures will be correlated by the researcher with the literature findings which will support to offer in-depth knowledge regarding the research topic. For the purpose of data collection, this study will reference various novels, magazines, articles, journals, reports, etc.

Data Analysis

There are basically two types of data analysis methods, i.e. quantitative and qualitative data analysis methods (Davies, et al., 2003). In this study, the researcher will utilize the quantitative data analysis method. The data which will be collected from the secondary analysis will be evaluated in this section while developing the interpretation on the basis of the findings. Furthermore, on the basis of the interpretation, the research outcomes will be concluded.

Research Limitations

The research limitation of this study is that it will focus on only the secondary data collection method (Baskerville and Wood-Harper, 2016). However primary data collection method will remain supportive to collect the data directly from the respondents. Furthermore, this study only focuses on quantitative approach and has not focused on the qualitative approach. However, the utilization of a qualitative approach can remain supportive to analyze the study from the subjective perspective. So, in this context, there is an opportunity for future researchers.

References

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Cole, D. and Nightingale, S. (2016) Sensitivity of Australian trade to the exchange rate. Reserve Bank of Australia Bulletin, pp. 13-20.

CommBank. (2017) What makes the Australian dollar move? [Online] Available at: https://www.commbank.com.au/guidance/economy/what-makes-the-australian-dollar-move–201605.html (Accessed: 24 August 2017).

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