The Influence of Oil Price Fluctuations for Russias Economy - Research Proposal Example

The Influence of Oil Price Fluctuations for Russia’s Economy Table of Contents Research Design 4 Aim of the research 4 Research questions 4 Objectives of the research 4 Research philosophy 4 Positivism 4 Interpretivism 5 Realism 5 Pragmatism 5 Research philosophy adopted 5 Research approaches 5 Inductive approach 5 Deductive approach 6 Research approach adopted 6 Limitation of the research approach adopted 6 Research strategies 6 Applied research strategy 6 Case study 6 Research strategy adopted 7 Techniques and procedures 7 Primary research method 7 Secondary research method 7 Adoption of secondary research method 7 Reference List 9 Research Design Aim of the research The aim of the research proposal is to focus on the influence of the fluctuations in the oil prices for Russia’s economy. Research questions The rationale behind this research proposal is to explore: What are the reasons behind fluctuating crude oil prices in Russia? What is the influence of the crude oil price instabilities for Russia? How to reduce and manage the risk of oil price instabilities? Objectives of the research To answer the question of how the fluctuations in the crude oil prices are having an impact on the economy of Russia, following are the objectives of the research proposal: To focus on the reasons which are responsible for the instabilities in the crude oil prices in Russia To focus on the fact that how the price fluctuation is affecting the Russia’s economy To investigate the way to manage the risk of oil price volatility Research philosophy Research philosophy is described as an expansion of research knowledge, research background and its characteristics. It consists of several factors for example, mental model of individual, variety of viewpoints towards reality, different perceptions, and one’s way of observing things. The elements of research philosophy are positivism, interpretivism, realism and pragmatism (Carson et al, 2001). Positivism According to this concept, researchers collect general data and information from large sample group instead of just focusing on the research details. The own beliefs of researcher is not taken into consideration to influence the study. This approach is chiefly associated with the experiments and observations to gather numerical data (Mikkelsen, 2005). Interpretivism As per this approach, the researchers give more significance to their values and beliefs to provide sufficient justification for the research problem. It helps to understand the exact business situations. Researchers use small sample size to collect information (Mikkelsen, 2005). Realism This research approach takes into consideration the beliefs and reality that already exist/present in the surroundings or environment. Under this concept, the two major approaches are critical and direct realism. Critical individualism means that individuals present their understandings for an exact situation, whereas, in direct realism, individuals present their understandings about what they see, feels or hear. Under this approach, individuals just try to demonstrate their values and beliefs (Salazar, Crosby and DiClemente, 2015). Pragmatism This approach considers the real effects or practical consequences to be essential components of both truth and meaning. It states that the technical method is best suited for the research purpose (Salazar, Crosby and DiClemente, 2015). Research philosophy adopted The research philosophy which will be adopted for this research proposal is the realism approach because this study involves collecting data through secondary research method only and it will focus on the beliefs and reality that already exist. It will help to know the actual reasons for the variations in the prices of oil in Russia. Research approaches Inductive approach Inductive approach is an observation-based approach which includes gathering data and then developing the theory or hypothesis as an outcome of data analysis (Saric, 2012). Deductive approach Under the deductive approach, existing theory is used for designing the research strategy in order to check the hypothesis and the feasibility of result. It is a theory-led approach (Swanson and Holton, 2005). Research approach adopted Deductive approach is adopted for the research study because this research proposal is entirely based on the data collected by means of secondary research. The main reason behind the adoption of deductive approach is that, initially this paper addressed a broad issue and then main focus is paid on addressing the particular feature of the research topic which has been discovered (Saunders, Lewis and Thornhil, 2004). Limitation of the research approach adopted One of the major drawbacks of the deductive approach is that it does not involve the primary data. Given the reality that no survey or interview was carried out; there is no means to confirm the credibility of the information that is acquired from the empirical researches (Curwin and Slater, 2007). Research strategies There are various types of research strategies, but among all two of them i.e. case study and applied research strategy will be discussed for the purpose of the research proposal. Applied research strategy It is a scientific investigation approach which is carried out to answer definite questions and to solve problems which are practice-related. Under this strategy, the researcher uses and access already applied theories, techniques, knowledge, concepts and methods for specific purpose (Page and Meyer, 2011). Case study Case study is a form of descriptive research strategy which is used for gaining rich knowledge of the research context. It involves analysis of particular existing phenomenon within the context of real life by using different support sources. It does not focuses on the reason and effect relationship, rather it lays emphasis on exploring as well as describing the topic which need to be discussed (Page and Meyer, 2011). Research strategy adopted For this research paper, applied research and case study strategy is adopted as it involves the investigation of the existing work of the researchers on the particular topic. Already applied theories and concepts of the researchers are used to show the impact of the instabilities in the crude oil prices in Russia as well as the reasons for the fluctuations will also be taken into consideration with the help of these research strategies. Techniques and procedures Primary research method Primary research is conducted by taking the sample size of the respondents. In this method, face-to-face and telephonic interviews are carried out based on the questionnaires prepared by the researcher. The main drawbacks are that it normally costs more as well as takes more time to complete the process (Sandelowski, 2000). This research paper does not include the primary research technique because of the unfeasibility of conducting surveys with the Russian residents. Secondary research method Secondary research method includes collecting information from the third-party sources for example company websites, research reports, magazine articles, journals and books. The key advantages of carrying out secondary research are that it is cheap in comparison to the primary research techniques and also gives immediate result by involving less time in research process (Ghauri and Gronhaug, 2010). Adoption of secondary research method Secondary research technique has been adopted to show the impact of fluctuations of crude oil on the economy of Russia. The reason for the variation in the crude oil prices is also taken into consideration and the focus is equally provided on how to reduce and manage the risk of oil price instabilities. Influence of the crude oil price instabilities for Russia: Among the various threats facing the economy of Russia, cheap oil is the main of all. The prices of crude oil has fallen up to 23% last year, thereby knocking a gaping hole especially in the state budget, which represent 45% of revenues or earnings from the oil taxes (Bloomberg, 2014). It will badly affect the reserves if the rate of oil prices will remain at the present level. The draft budget for Russia for the year 2015 is estimated at $100-a-barrel oil; however, the crude oil is trading at $88, which is the lowest since 2010. The deviation in the prices of oil is leading to the quick decline in the Russian currency. As Russia heavily depends on gas and oil, which account for over two-third of their exports, the lower gas and oil prices can simply lean its economy into the recession. Growth will probably remain positive or encouraging only with the oil prices over $92 a barrel (Bloomberg, 2014). The shrink in the prices of oil will lead the Russian economy into great trouble. The fluctuation in the prices of oil meant that it will be really harder for the companies to raise their cash either by means of issuing new/fresh shares or by debt financing (The Guardian, 2014). The reason for the fluctuations in the crude oil prices in Russia: It has been speculated that one of the main reasons for the decline in the price of crude oil is that the United States in agreement with the Saudi Arabia, decided to let the oil price to fall by rejecting to allow cuts in the production to penalize Russia for their support of Syria. Other reason is that Saudi Arabia desires keeping their share of market rather than hack production and the cheap rate of oil would allow curbing the future drilling together with oil production in the North America. However, Russia is arguing that the reduction in the prices of crude oil is the outcome of the foreign machinations. Other key reason is that the US is supplying the oil in more quantity, while the demand for it is consistent and it results in the fall of crude oil prices (Oecd, 2009). How to reduce and manage the risk of oil price instabilities: In order to manage the risk of oil price volatility, oil market should feature inevitable price swings as well as managing volatility will also necessitate greater market lucidity and cooperating and engaging with the leading consumer of the oil market and the producer countries. Policymakers should pay more attention on the two dimensions i.e. helping consumers to cope up with the outcomes and blunting volatility. Oil subsidies should be reduced that inflate demand of emerging market (Levi and Rubenstein, 2012). Reference List Bloomberg, 2014. Will cheap oil choke the Russian Economy? [online] Available at: [Accessed 7 May 2015] Carson, D., Gilmore, A., Perry, C. and Gronhaug, K., 2001. Qualitative Marketing Research. London: SAGE Publication. Curwin, J. and Slater, R., 2007. Quantitative methods for business decisions. Connecticut: Cengage Learning. Ghauri, P. and Gronhaug, K., 2010. Research methods in business studies. New Jersey: Financial Times Prentice Hall. Levi, M.A. and Rubenstein, D.M., 2012. How to handle oil price volatility. [online] Available at: < http://www.cfr.org/oil/handle-oil-price-volatility/p27667> [Accessed 7 May 2015]. Mikkelsen, B., 2005. Methods for development work and research: A new guide for practitioners. London: SAGE Publication. Oecd., 2009. OECD Economic Surveys: Russian Federation 2009. France: OECD Publishing. Page, C. and Meyer, D., 2011. Applied research design for business and management. New Delhi: Tata McGraw Hill. Salazar, L.F., Crosby, R.A. and DiClemente, R.J., 2015. Research methods in health promotion. New Jersey: John Wiley & Sons. Sandelowski, M., 2000. Focus on research methods-whatever happened to qualitative description? Research in nursing and health, 23(4), pp.334-340. Saric, S., 2012. Competitive advantages through clusters: An empirical study with evidence from China. Heidelberg: Springer Science & Business Media. Saunders, M., Lewis, P., Fisher, C.M. and Thornhil, A., 2004. Research methods for business students with researching and writing a dissertation for business students. New Delhi: Pearson Education. Swanson, R.A. and Holton, E.F., 2005. Research in organisations: Foundations and methods in inquiry. California: Berrett-Koehler Publishers, Inc. The Guardian, 2014. Collapse of oil prices leads world economy into trouble. [online] Available at: [Accessed 7 May 2015]. Read More