Research in common parlance refers to a search for knowledge. It can also be defined as research as a scientific and systematic search for pertinent information on a specific topic. In fact, research is an art of scientific investigation. It is, thus, an original contribution to the existing stock of knowledge making for its advancement. It is the pursuit of truth with the help of study, observation, comparison and experiment. In short, the search for knowledge through objective and systematic method of finding solution to a problem is research.
1.2. Objectives of Research: The purpose of research is to discover answers to questions through the application of scientific procedures. The main aim of research is to find out the truth which is hidden and which has not been discovered as yet. Though each research study has its own specific purpose, we may think of research objectives as falling into a number of following broad groupings: To gain familiarity with a phenomenon or to achieve new insights into it. To portray accurately the characteristics of a particular individual, situation or a group. To determine the frequency with which something occurs or with which it is associated with something else. To test a hypothesis of a causal relationship between variables.
1.3. Significance of Research: Research inculcates scientific and inductive thinking and it promotes the development of logical habits of thinking and organization. The role of research in several fields of applied economics, whether related to business or to the economy as a whole, has greatly increased in modern times. The increasingly complex nature of business and government has focused IndSearch PGDBM 1 2
attention on the use of research in solving operational problems. Research, as an aid to economic policy, has gained added importance, both for government and business. Research is equally important for social scientists in studying social relationships and in seeking answers to various social problems. It provides the intellectual satisfaction of knowing a few things just for the sake of knowledge and also has practical utility for the social scientist to know for the sake of being able to do something better or in a more efficient manner. Research in social sciences is concerned both with knowledge for its own sake and with knowledge for what it can contribute to practical concerns.
1.4. Types of research: Descriptive vs. Analytical: Descriptive research includes surveys and fact-finding enquiries of different kinds. The major purpose of descriptive research is description of the state of affairs as it exists at present. The main characteristic of this method is that the researcher has no control over the variables; he can only report what has happened or what is happening. The methods of research utilized in descriptive research are survey methods of all kinds, including comparative and correlational methods. In analytical research, on the other hand, the researcher has to use facts or information already available, and analyze these to make a critical evaluation of the material. Applied vs. Fundamental: Research can either be applied (or action) research or fundamental (or basic or pure) research. Applied research aims at finding a solution for an immediate problem facing a society or an industrial/business organization. Gathering knowledge for knowledges sake is termed pure or basic research. IndSearch PGDBM 1 3
Fundamental research is mainly concerned with generalizations and with the formulation of a theory. Research concerning some natural phenomenon or relating to pure mathematics are examples of fundamental research. Quantitative vs. Qualitative: Quantitative research is based on the measurement of quantity or amount. It is applicable to phenomena that can be expressed in terms of quantity. Qualitative research, on the other hand, is concerned with qualitative phenomenon, i.e., phenomena relating to or involving quality or kind. Conceptual vs. Empirical: Conceptual research is that related to some abstract idea(s) or theory. It is generally used by philosophers and thinkers to develop new concepts or to reinterpret existing ones. On the other hand, empirical research relies on experience or observation alone, often without due regard for system and theory. It is data-based research, coming up with conclusions which are capable of being verified by observation or experiment.
1.5. Research Methodologies: Research methodology is a systematic way to solve a problem. It is a science of studying how research is to be carried out. Essentially, the procedures by which researchers go about their work of describing, explaining and predicting phenomena are called research methodology. Following are few of the research methodologies: Historical Research: It is the systematic and objective location, evaluation and synthesis of evidence in order to establish facts and draw conclusion about the past. IndSearch PGDBM 1 4
Comparative Research: It is used to compare the experiences of people of different societies either between times in the past or in parallel times in the present Descriptive Research: It attempts to examine the situation in order to examine what is normal and what can be predicted to happen again in the same situation. It relies on observation as a means of collecting data. Experimental Research: In this type, the researcher try to isolate and control every relevant condition which determines the events investigated, so as to observe the effects when conditions are manipulated. 1.6. Research Process:
Figure 1.6: Research Process
Define problem Review the literature Formulate hypotheses Design research Collect data Analyze data Interpret and Report IndSearch PGDBM 1 5
The figure above show how the research process takes place. It consists of closely related activities which may overlap continuously rather than following a prescribed sequence. However, the following order concerning various steps provides a useful procedural guideline regarding the research process: Formulating the research problem: There are two types of research problems, viz., those which relate to states of nature and those which relate to relationships between variables initially the problem may be stated in a broad general way and then the ambiguities, if any, relating to the problem be resolved. The formulation of a general topic into a specific research problem, thus, constitutes the first step in a scientific enquiry. Extensive literature survey: Once the problem is formulated, a brief summary of it should be written down. At this juncture the researcher should undertake extensive literature survey connected with the problem. Developing the hypothesis: After extensive literature survey, researcher should state in clear terms the working hypothesis or hypotheses. Working hypothesis is tentative assumption made in order to draw out and test its logical or empirical consequences. As such the manner in which research hypotheses are developed is particularly important since they provide the focal point for research. Preparing the research design: The research problem having been formulated in clear cut terms, the researcher will be required to prepare a research design, i.e., to state the conceptual structure within which research would be conducted. The function of research design is to provide for the collection of relevant evidence with minimal expenditure of effort, time and money. IndSearch PGDBM 1 6
Determining sample design: All the items under consideration in any field of inquiry constitute a universe or population. A sample design is a definite plan determined before any data are actually collected for obtaining a sample from a given population. Collecting the data: In dealing with any real life problem it is often found that data at hand are inadequate, and hence, it becomes necessary to collect data that are appropriate. Primary data can be collected either through experiment or through survey. Execution of the project: Execution of the project is a very important step in the research process. If the execution of the project proceeds on correct lines, the data to be collected would be adequate and dependable. The researcher should see that the project is executed in a systematic manner and in time. If the survey is to be conducted by means of structured questionnaires, data can be readily machine-processed. In such a situation, questions as well as the possible answers may be coded. If the data are to be collected through interviewers, arrangements should be made for proper selection and training of the interviewers. Analysis of data: The analysis of data requires a number of closely related operations such as establishment of categories, the application of these categories to raw data through coding, tabulation and then drawing statistical inferences. The unwieldy data should necessarily be condensed into a few manageable groups and tables for further analysis. Thus, researcher should classify the raw data into some purposeful and usable categories.
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Hypothesis testing: After analyzing the data as stated above, it is possible to test the hypotheses formulated earlier. Do the facts support the hypotheses or they happen to be contrary? This is the usual question which should be answered while testing hypotheses. Various tests, such as Chi square test, t-test, F-test, have been developed by statisticians for the purpose. The hypotheses may be tested through the use of one or more of such tests, depending upon the nature and object of research inquiry. Hypothesis-testing will result in either accepting the hypothesis or in rejecting it. Generalizations and interpretation: If a hypothesis is tested and upheld several times, it may be possible to arrive at generalization, i.e., to build a theory. As a matter of fact, the real value of research lies in its ability to arrive at certain generalizations. If the researcher had no hypothesis to start with, he might seek to explain his findings on the basis of some theory. It is known as interpretation. The process of interpretation may quite often trigger off new questions which in turn may lead to further researches. Preparation of the report or presentation of the results: Finally a proper report is to be prepared which will contain all the work done, stated in a systematic way. IndSearch PGDBM 1 8
2.1. Title of the project: Effect of rise in the cost of Tungsten Carbide on local Cutting Tools Manufacturers. 2.2. Rationale of the project: All manufacturing industries need precision cutting tools for manufacturing various components. These cutting tools are supplied by multinational companies like SandCor, Kemetal as well local small scale manufacturers like X.J. Tools, CarBd Tools. The basic raw material for making cutting tools is Tungsten Carbide. This Tungsten Carbide, as a raw material is supplied by companies like SandCor, Kemetal and Cemetals The major factor affecting the tool cost is the cost of Tungsten Carbide. Over a period of years these suppliers have increased the price of this raw material and it is now nearly at par with finished products of these manufacturers. This is forcing the local manufacturers to increase the cost of their products, which has adverse effects on their business. Thus, the aim of this project is to analyze the effect of this steady price rise on the Local Manufacturers. 2.3. Objective of study: To understand the effect of increasing cost of raw material on the business of local cutting tools manufacturers. 2.4. Methodology: Type of research: Descriptive Data collection: o Primary Data: Interviews of entrepreneurs in cutting tools business. o Secondary Data: Price lists of carbide rods for the past 3 years from the suppliers.
Data analysis: IndSearch PGDBM 1 9
o Line charts o Bar graphs
2.5. Findings: Effect of rising raw material costs on the profits of Local Cutting tools manufacturers.
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Tools are the heart of any manufacturing industry. Maximum operations in an industry depend on tools. Cutting tools find applications in not just small scale industries but also large scale industries. Earlier the raw materials used for the manufacturing of cutting tools were High Speed Steels (HSS). HSS have high hardness and good abrasion resistance and thus they were widely used. Manufactures using HSS as a raw material used conventional machines for manufacturing. However, with the introduction of CNCs and BNCs this trend started shifting slowly. These machines were able to achieve high production rate with improved quality. As machines changed, the raw material of tools had to be changed to cope up with the manufacturing rate. This was the commencement of Carbide tooling. Many Manufacturers flourished as the demand for tools started increasing. They were able to produce precision tools as the technology improved. With further advancement in technology, Special Purpose Machines (SPMs) started replacing CNCs. This leads to still higher productivity of tools with very high quality. A new raw material, Solid Carbide, was introduced for this purpose. Now, the suppliers of raw material started playing an important role as good quality of raw material is needed to be at par with the needed quality. Local manufacturers started purchasing this raw material from big giants like SandCor, Cemetal and Kemetal. Thus, the cost of the raw material started playing a huge role in the tooling cost. X.J. Tools is one such local manufacturer of precision carbide cutting tools. They started their business in 1968 and since then have seen all the shifting trends in this industry. They supply precision cutting tools to a number of companies, not just domestic but also multi nationals, most of them in automobile sector. Hence this company was selected as representative of local manufacturer of cutting tools. Their policy is of continual investment in state - of - art manufacturing facilities leading to increased quality of the end products. They have a number of highly precise CNC Tool & Cutter, CNC Optical Profile Grinder, Spark Electron Discharge Machine for IndSearch PGDBM 1 11
manufacturing of custom tools. The manufacturing processes are carefully controlled by highly accurate measuring instruments. Quality control is done by an inspection camera which magnifies tool's profile by 300X. With this measuring technology, tools can be measured with accuracy of 0.005mm without removing them from machine. Their products are: o Reamers o Core Drills o End Mill & Ball Nose End o Hole Mills o Side & Face Cutters o Special Tools o Circular Form Tools o Spot Face Cutters o Cylinder Head & Cylinder Block Tools o Profile Cutters o Trepanning Tools o Solid Carbide Drills o Brazed Carbide Drills o Brazed Carbide Tipped End Mills
These tools need solid carbide rods as a raw material which is supplied to the factory by companies like SandCor, Cemetal and Kemetal. Hence this topic was selected to see the effect rising process of raw material is having on this company.
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Research methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. In it we study the various steps that are generally adopted by a researcher in studying his research problem along with the logic behind them. 4.1. Scope: Universe: The entire MIDC area is considered as the universe. Respondents: Suppliers of carbide rods as raw material for X.J Tools.
4.2. Sampling technique: Non probability sampling was selected. Non-probability sampling is that sampling procedure which does not afford any basis for estimating the probability that each item in the population has of being included in the sample. In this type of sampling, items for the sample are selected deliberately by the researcher. In other words, under non-probability sampling the organizers of the inquiry purposively choose the particular units of the universe for constituting a sample on the basis that the small mass that they so select out of a huge one will be typical or representative of the whole. 4.3. Sampling size: Three main suppliers, SandCor, Cemetal and Kemetal, were selected and their respective data were collected for analysis. 4.4. Type of Research: The Research type used is Descriptive. Descriptive research includes surveys and fact- finding enquiries of different kinds. The major purpose of descriptive research is description of the state of affairs as it exists at present. In social science and business research the term Ex post facto research is used quite frequently for descriptive research IndSearch PGDBM 1 14
studies. The main characteristic of this method is that the researcher has no control over the variables; he can only report what has happened or what is happening. 4.5. Method: Survey method which is the technique used for carrying out the investigation processes with the help of direct observation or by the collection of the data by conducting interviews etc is used. For this, interviews of the suppliers of raw materials were taken and all the required information was gathered from them. 4.6. Tools: A semi structured questionnaire was used to conduct the survey. Quantitative data relating to the carbide rod prices of 3 years was collected from the suppliers. 4.7. Statistical tool: The collected data was analyzed with the help of graphs prepared in MS excel.
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From the suppliers of raw material i.e. from SandCor, Cemetal and Kemetal, price lists of carbide solid rods for the past three years were obtained. Based on this data graphs are prepared which are used for secondary data analysis.
5.1.SandCor Asia: The price lists from year 2009 were collected from SandCor. Based on the data obtained two graphs were prepared. One graph, shown in figure 4.1 shows the increasing prices of the raw material from Jan 2009 to September 2013. The other graph, shown in figure 4.2 gives the comparison of price rise for same rod diameter.
Figure 5.6: Price rise comparison for same diameter rods
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As primary data, interview of local cutting tool manufacturers was conducted. Following is the overview of the interview conducted with Partner of M/s X.J. Tools, Mr. Jacob: X.J. Tools has been in the cutting tools business since 1968, and is well versed with the trends of the market. Tungsten carbide is the heart of all cuttings tools manufactured nowadays as these tools can be used at high parameters to achieve the cycle times required by the customer. This has shifted the focus of the pricing in favor of cost of raw material. The major three players in the raw material market are SandCor Asia, Kemetal and Cemetal. They manufacture and supply carbide rods which are basic blanks required for manufacturing the various types of cutting tools. These companies also have their own range of cutting tools which they manufacture themselves. Local manufacturers also produce similar tools and are popular due to their cost effectiveness and quick response to the customers ever changing demands. This has helped in creating a competitive market with healthy competition to provide the best support and innovation to the customer. New players in the cutting tools business are constantly emerging at a very high pace due to the huge market potential. Due to this the raw material manufacturers are now trying to get a bigger share of the market by manufacturing their tools instead of selling only raw material. Also, the devaluation of the Indian rupee against the U.S. Dollar has very high impact on the import costs of the raw material. Raw material for manufacturing Tungsten Carbide is mainly available in China, and this is affecting pricing due to the inelastic demand. Thus, the combined effect of these factors has resulted in steady increase in the prices and is very significant in todays market scenario. Automobile industry is currently facing one of the worst recession period and the sales have hit rock bottom. This in effect has led to manufacturers implementing very strict cost reduction programs. Manufacturers of cutting tools are forced to sell the products at very low rates as any price increase would face the risk of losing business completely. IndSearch PGDBM 1 24
This crunch is having adverse effects on the local manufacturers as they have to purchase raw material at higher rates and sell the finished products at cheaper rates.
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As seen in chapter 5, the prices for raw materials have increased a great deal. This has affected the final tool cost. Earlier the cost of tool for MNCs was four times that of the raw material and 2.5 times for domestic industries. However, this gap is reducing due to increase in the prices of raw materials. The following graph shows the comparison of prices of raw material and finished products that are tools.
Figure 7.1:
Hence it can be concluded that the hypothesis stands true, i.e. the price rise is adversely affecting the manufacturers of cutting tools. 0 5000 10000 15000 20000 25000 30000 35000 10.2 12.2 P r i c e
Rod Diameter Chart Title cost of Raw maetrial Price in Sept 2013 IndSearch PGDBM 1 26
BIBLIOGRAPHY [1] C R Kothari, Research Methodology: Methods and Techniques, New Age publication. [2] Uma Sekaran, Research Methods for Business, John Wiley & Sons, Inc. [3] R J Clarke, Research Models and Methdologies, HDR Seminar Series.