Research

Applied Business Research

 

 Abstract

This research study is based on the fluctuation in Australian dollar and it supports to evaluate the impact of rise of Australian dollar (AUD) against the United Statesdollar (USD). This study is going to give special consideration towards analysing the impact of AUD fluctuation towards education in Australia. For this purpose, quantitative research approach will be utilized in the research which will support to analyse the study on the basis of figures and facts. This research focuses to give understanding regarding the reason behind the upwards movement of Australian dollar while giving consideration towards the issues takes 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 relation between facilities and pricing to students and parents to consume educational services in Australia which is strong currency economy. Furthermore, this study will also focus towards the factors that lead to perception of students and parents to switch cost in education sector. In like manner, this study will also give consideration towards 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 towards education business. It is identified that although Australia has stronger economic condition but 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 the 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 strong currency economy and is there sufficient demand of these services?
  • What are the factors that lead to perception of students and parents to switch cost in 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 towards getting answers of the questions while achieving the research objectives. Moreover, researcher will give consideration to judge the hypotheses on the basis of selection and rejection.

To get the answer of the study, researcher will focus towards 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 to analyse the research topic on the basis of the various point of views of different authors. Furthermore, 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 education sector and has supported to analyse the issues of AUD fluctuation on this sector. This study focuses towards the business, economic and social issues related to the strong Australian dollar while focusing towards the impact of continuous appreciation in the AUD value against the USD value. Moreover, it has supported to emphasize towards the impact of fluctuations in the Australian dollar impact towards the education business while focusing towards 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 about the facilities and pricing relates to students and parents to consume educational services in strong currency economy and is there sufficient demand of these services and the factors that lead to perception of students and parents to switch cost in education sector. Overall this study will remain highly assistive to show the clear picture of the effect of fluctuations in the AUD on the education business.

Research Background

In the current scenario, it is identified that Australian dollar (AUD) is showing increased trend against United States dollar (USD)(Bishop, et al., 2013). This fluctuation has directly affected the economic system of the country.Australia has the resource rich economy which has supported the country to show the increase value of AUD in the global market. It is identified that currency shows fluctuation on the basis of rise and fall in the commodities prices and the current upwards movement of AUD is reflecting the growing trend of economic, social and business environment in the Australian markets (Kortt, Pervan and Hogan, 2016). This study supports to offer the understanding regarding the impact of fluctuations in the Australian dollar in the business, especially in the context of 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 as a risk currency.However it is identified that the economic growth of Australia is highly dependent on export commoditiessuch as iron-ore and copper. These export commodities remain supportive for 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 high level by 80.28 US cents. Although this hike has made the Australian economy stronger but simultaneously it has created the situation of risk for the weak economy. So, in this context, this study will remain quite assistive to show the 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 towards economic and business issues in Australia. For this purpose, this study highlights the research on educational sector. In this research, researcher will also recommend the ways to conduct the study while focusing towards 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, researcher will give consideration towards collecting the data from the relevant data sources(Baskerville and Wood-Harper, 2016). Moreover, researcher will focus towards eliminating the situation of any kind of issues related to copyright and patents. Furthermore, there will be huge focus taken place from the side of researcher in the context of plagiarism issue. Additionally, this study will be designed while focusing towards referencing the data which are collected from the previous study to give adequate respect to the authors whose past studies are included by theresearcher in this study. Moreover, there will be consideration givenwhile collecting the information which will remain supportive to increase the reliability of the study(Flick, 2011). Moreover, researcher will give consideration towards achieving the research objectives at greater extent while collecting the data from the data sources which are authentic and can offer the effective understanding regarding the research topic.

Literary Review

This section of the research is based on theoretical concept and has supported to offer the understanding regarding the research objectives. This section of the research is based on critical analysis of the research topic. It supports to understand the research on the basis of various past researches. This section focuses to achieve the research objectives at 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 frequently fluctuation of the AUD value. The main issue which occur for the domestic business who perform their operations overseas have a major impact in regards to suppliers, clients. However if currency of the nation is fluctuated then business entity faced the problem in making deals with the international suppliers or clients. Such limitation of business directly affects the economy in a badly manner. This is because, due to fluctuation in currency, global market stops their dealing with the particular economy. Thus, this makes the economy failure. Similarly due to rise and fall of currency rate of the Australia, the local business of Australia get affected as global market is never interested in making investment into the fluctuation currency. Then it directs affects the Australia imports and exports which influences their economy. In case of clients, Australia business could face various issues to make proper dealing with their international clients. It could the paying foreign salaries, timely supply of product or services to clients. The cause of arises such practices due to 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 effects. In case of 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 the Australia and its economic condition gets poor.

In the findings of Davis et al., (2016), it is identified that there is also society issue get occur with the fluctuation in the currency. Likewise, if the Australia currency value is gets depreciated then in that case society face problem related to high price of product which directly affects the purchasing power of Australia local people. Thus, it can be stated fluctuation in the currency does not contribute benefit to the country economy so in such 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

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 the improved trend in the 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 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 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 is 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 which 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, 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 the Australia. The positive impact is reflecting in a way like low interest rate environment, rise in commodity prices etc. however, interest rate is the major factor which attracts and influences the global investors as with the low interest rate Australia economy could appeal large investors as compare to US. So this is major advantage that provides positive impact to the Australia 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 response from the larger audiences through giving them high employment opportunity, impart high investment chances to the investors. Thus, these are the facilities would be provide by the Australia with the currency value appreciation. In support to this Saunders & Deeming, (2011) stated that appreciating value of AUD against USD is also provide benefit to the Australia economy as every individual is interested to make an investment on the high valued currency. So this practice enhances the demand of the AUD among the global public which raise the Australia exports price. It proves to be effective for the Australia in terms to achieve strong economy. At the same time, there impact of the Australian dollar will benefit buyers buying/shopping from overseas, travelling to countries with different exchange system like in US dollars and other weaker currencies and gain to importers getting goods at cheaper price.

In a contrary of this Fidrmuc, (2010) argued that appreciation in the AUD value against USD is contributing negative to the Australia market as with the decline in the value of USD dollar, consumer more prefer to buy the USD dollar as it has low price comparatively to AUD. It is that fact that in future USD will again raise due to USA make more investment in the steel and ore segment which will increase the USD value in future. So, in regards to this, public are buying more of the USD currency comparatively to AUD currency. Moreover Reitz et al., (2011), AUD has an less market competitiveness in 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 domestic market. This indicates that the AUD will have a less currency value in future so in that case in-spite of having high valued currency. But still AUD have a less buyers and investors in regards to USD. Such exercise has a negative impact on Australian consumers or manufactures.

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

Aims/Objectives of the Research

Thisresearchaims toevaluate the impact of the fluctuations in the Australian dollar over the business, especially in the context of education sector. This study will support to explore the challenges and opportunities of the recent stated of 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 valueagainst the USD value
  • To evaluate the impact of the fluctuations in the Australian dollar on the education business

This study will focus towards achieving the research objectiveswhile focusing towards the critical analysis which will support to discuss 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, researcher will discuss about the methods which will support to collect the data and to develop the research outcomes in an effective manner.

Research Approach

There are basically three research approach, i.e. quantitative, qualitative and mixedresearch approach(Brymanand Bell, 2015). In this study, researcher will utilizequantitative 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 in a glance and will support to conclude the study in the right direction. It will also support to represent the study in an effective manner.Moreover, quantitative method is more structured as compare to qualitative method so it will support to 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 researcher has utilized secondary data collection method as it will support to analyse the study on the basis of facts and figures and will enable to conclude the study in a right direction. It will also support to increase 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 method, i.e. quantitative and qualitative data analysis method (Davies, et al., 2003). In this study, researcher will utilize 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 towards only 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 towards quantitative approach and has not focused towards qualitative approach. However utilization of qualitative approach can be remain supportive to analyze the study on the subjective perspective. So, in this context, there is an opportunity for the future researchers.

References

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Bishop, J., Kent, C., Plumb, M. and Rayner, V. (2013) The resources boom and the Australian economy: a sectoral analysis. RBA Bulletin, pp. 39-50.

Bryman, A. and Bell, E. (2015) Business research methods.Oxford University Press, USA.

Carson, D. (2011) Political economy, demography and development in Australia’s Northern Territory. The Canadian Geographer/Le Géographe canadien, 55(2), pp. 226-242.

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).

Davies, G., Chun, R., Vinhas da Silva, Rui and Roper, S. (2003). Corporate Reputation and Competitiveness, London: Routledge.

Davis, K., McCarthy, M. and Bridges, J. (2016) The Labour Market during and after the Terms of Trade Boom. RBA Bulletin, pp. 1-10.

Fall, A. M., & Roberts, G. (2012) High school dropouts: Interactions between social context, self-perceptions, school engagement, and student dropout. Journal of adolescence, 35(4), pp. 787-798.

Fidrmuc, J. (2010) Time-varying exchange rate basket in China from 2005 to 2009. Comparative Economic Studies, 52(4), pp. 515-529.

Flick, U. (2011) Introducing research methodology: A beginner’s guide to doing a research project. London: Sage.

Gallifa, J., & Batallé, P. (2010) Student perceptions of service quality in a multi-campus higher education system in Spain. Quality Assurance in Education, 18(2), pp. 156-170.

Hajkowicz, S. A., Heyenga, S. and Moffat, K. (2011) The relationship between mining and socio-economic well being in Australia’s regions. Resources Policy, 36(1), pp. 30-38.

Kortt, M. A., Pervan, S. J. and Hogan, O. (2016) The rise and fall of the Australian DBA. Education+ Training, 58(4), pp. 390-408.

Kotey, B., & Sorensen, A. (2014) Barriers to small business innovation in rural Australia. Australasian Journal of Regional Studies, 20(3), pp. 405.

Monadjemi, M. and Lodewijks, J. (2017) Global Economy and the Australian Dollar.Expert Journal of Economics, 5(2), pp. 47-52.

Nagle, T. T., Hogan, J., & Zale, J. (2016) The Strategy and Tactics of Pricing: New International Edition. USA: Routledge.

Paradiso, A., Kumar, S., & Rao, B. B. (2013) The growth effects of education in Australia. Applied Economics, 45(27), pp. 3843-3852.

Reitz, S., Ruelke, J. C., & Taylor, M. P. (2011) On the nonlinear influence of Reserve Bank of Australia interventions on exchange rates. Economic Record, 87(278), pp. 465-479.

Saunders, P., & Deeming, C. (2011) The impact of the crisis on Australian social security policy in historical perspective. Social Policy & Administration, 45(4), pp. 371-388.

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