Research Proposal Topic: An Investigation of Capital Structure in the Financial Management of the UK Food Retail Sector

Abstract

This research proposal investigates the capital structure in the financial management of the UK food retail sector. The purpose of this research is to examine how firms in the UK food retail sector use the capital structure as a tool for financial management and how it affects the performance of these firms. The research will focus on the capital structure of publicly listed companies in the UK food retail sector and explore the relationship between capital structure and performance. The research will use available data sources, such as financial statements and industry reports, to analyze the capital structure of the UK food retail sector. The research will also use quantitative and qualitative methods to analyze the data collected. The research results will identify the optimal capital structure for UK food retailers and provide insight into how firms in the UK food retail sector can use the capital structure as an effective financial management tool.

The research will also provide recommendations on how firms in the UK food retail sector can use the capital structure as an effective tool for financial management. The research results will provide insight into the optimal capital structure for UK food retailers and provide a better understanding of how capital structure affects the performance of these firms.

Keywords: Capital structure, financial management, UK food retail sector, Performance, Recommendations.

CHAPTER 1: BACKGROUND AND INTRODUCTION

1.1 Introduction

The retail food industry in the UK has been subject to significant changes over the last decade due to new technology, new market competitors, and the expansion of e-commerce (Ali & Anwar, 2021). A combination of factors has brought about these changes. It has increased competition and decreased margins, making it more difficult for enterprises working in this field to retain good conditions (Ali & Anwar, 2021). Suppose companies in the food retail sector of the UK want to continue to be profitable and successful in their operations. In that case, they need to have a robust financial management strategy in place. Businesses that are active in the food retail sector of the United Kingdom are obliged to give careful thought to all elements of financial management. However, capital structure is among the most crucial of these factors (Ali & Anwar, 2021).

A company’s capital structure is the debt and equity mix used to finance its day-to-day operations. The term “capital structure” comes from the Latin word “capital,” which means ” The way a company raises money for its operations has a significant impact on the profitability of the business (Romano, 2001). The task of selecting the most suitable financial structure for a business in order to achieve the most amount of success is a difficult one for the organization. We aim to investigate the part that capital structure plays in the financial management of the retail food business in the UK by using this research proposal as a guide. The purpose of this research is to investigate how companies that are active in the food retail sector in the United Kingdom use the capital structure as a tool for financial management, as well as how this factor impacts the performance of these companies. Additionally, the study will look into the various ways this factor can affect the performance of these companies.

The capital structures of publicly listed companies operating in the food retail sector in the United Kingdom will be the focus of the examination, and a relationship between performance and capital structure will be looked into as part of the study (Lwesya & Mbukwa, 2023). The research will make use of a wide array of primary and secondary data sources, such as financial statements and publications from the relevant sector, in order to carry out an analysis of the capital structure of the retail food company in the UK (Khan, 2022). In order to analyze the data that was gathered for the research, qualitative methods will be used. The findings of the study will be put to use to determine which capital structure is best suited for food retailers in the United Kingdom and to shed light on how businesses operating in the food retail sector in the United Kingdom can make effective use of the capital structure as a tool for efficient financial management (Romano, 2001). The study was conducted to determine which capital structure is best suited for food retailers in the United Kingdom and to shed light on how businesses operating in the food retail sector in the United Kingdom can make effective use of In addition, based on the results of the research, recommendations will be shown in which companies that are active in the food retail sector in the United Kingdom should make effective ve use of the capital structure as a tool for financial management. In addition to providing a greater understanding of how the capital structure affects their overall performance, it is envisaged that the results of this research will provide insight into the capital structure most suited for food retailers in the UK.

1.2 Background

Retail food retail in the UK is expected to generate roughly 185 billion pounds in sales in 2019, making it a significant contributor to the economy of the nation (British Retail Consortium, 2020). Despite the fierce competition, several significant firms, like Tesco, Sainsbury’s, and Morrisons, have established themselves as market leaders in their respective industries. In recent years, the industry has seen a significant transformation due to several factors, including advances in technology, the introduction of new market competitors, and the meteoric rise in the popularity of online shopping (Keeble, 2021). Because of this, it is now much more challenging for businesses to succeed in the industry since the level of competition has grown and the profit margins have shrunk.

For firms in the food retail sector of the UK to maintain their level of success and profitability, they need to have a well-thought-out plan for managing their finances. As part of their holistic approach to financial management, businesses operating in the food retail sector of the United Kingdom may profit by taking a well-thought-out strategy to their capital structure (Keeble, 2021). One of the most significant aspects of a successful business is its capital structure, the debt ratio to the equity used to fund business operations. It can be challenging for firms to establish what form of financial structure would suit their unique circumstances and circumstances in general (Ali & Anwar, 2021).

Several studies can be found in the published research on the connection between capital structure and results. According to the available research, companies with high debt levels have a higher risk profile but also provide superior returns (Khan, 2022). While there is often a link between a company’s capital structure and its success, this is only sometimes the case. The best capital structure for every particular company will differ depending on the conditions of that company (Keeble, 2021).

This study proposal explores the importance of capital structure in the financial management of the retail food industry in the United Kingdom. This study aims to shed light on the function that capital structure plays as a tool for financial management and how it impacts the performance of businesses in the UK food retail industry. Specifically, this research will focus on how capital structure influences the success of enterprises in the UK food retail sector. The capital structure and performance of publicly traded firms in the retail food industry in the UK will be the primary focus of this research project (Khan, 2022). The capital structure of the retail food industry in the UK will be analyzed using various primary and secondary sources, including but not limited to financial statements and trade periodicals. Qualitative approaches will be used to analyze the study’s findings (Khan, 2022). The research findings will educate grocery stores in the United Kingdom on the ideal capital structure for their businesses. Also, the findings will shed light on how businesses operating in this industry may improve their financial management by utilizing various strategies. The study’s findings will also contain some suggestions as to how companies operating in the food retail sector of the UK might make more effective use of their capital structures. Because of this study, we need to have a more distinct understanding of how the capital structure of UK food retailers influences their level of business performance, as well as the kind of capital structure that would be most advantageous for those businesses (Keeble, 2021).

1.3 Research Objectives and Research Questions:

The research objectives of this project are to:

1. Examine the capital structure in the UK food retail sector.
2. Explore the relationship between capital structure and performance in the UK food retail sector.
3. Identify the optimal capital structure for UK food retailers.
4. Provide recommendations on how firms in the UK food retail sector can use the capital structure as an effective tool for financial management.

1.3.1 Research questions

The research questions that will be addressed in this project are:

1. What is the current capital structure of firms in the UK food retail sector?
2. How does capital structure affect the performance of firms in the UK food retail sector?
3. What is the optimal capital structure for firms in the UK food retail sector?
4. What recommendations can be made on how firms in the UK food retail sector can use the capital structure as an effective tool for financial management?

1.4 Justification of the research

The retail food industry in the UK significantly contributes to the UK economy and has intense competition. That is why businesses in the industry need a solid plan for managing their money. Firms in the UK food retail industry must identify the best capital structure to maximize performance, which is an integral part of financial management.

This proposal for study sets out to look at the role of capital structure in the fiscal management of the UK food retail industry. This study focuses on capital structure as a tool for financial management and how it influences the performance of businesses in the UK food retail industry. The findings are helpful for both academics and professionals in the UK food retail industry. Academic academics will learn more about the relationship between capital structure and firm performance in the UK food retail sector, and practitioners will gain insight into the optimum capital structure for UK food retailers.

1.5 Value of the research

This study’s findings will shed light on the capital structure of the retail food industry in the UK and the connection between structure and performance in this industry. In addition, ideas for improving the use of capital structure in the financial management of retail food businesses in the United Kingdom will be provided. Companies operating in the UK food retail industry can benefit from this study since it will help them choose the best financial structure for their business. In addition, policymakers will have a better idea of how to encourage the success of businesses in the UK food retail industry with this knowledge of the best capital structure for the sector, according to the study.

1.6 Research Gap

Capital structure and performance in the grocery retailing industry in the United Kingdom have been the subject of previous studies. However, more is needed to know about how businesses in the UK’s food retail industry use capital structure to manage their finances. This study will analyze the capital structure of companies in the UK food retail industry and how it might be used for efficient financial management (DeAngelo, 2021).

This study will examine the connection between capital structure and performance for publicly traded firms in the UK food retail industry. The UK food retail sector’s capital structure will be analyzed using primary and secondary data sources, such as financial statements and industry publications. Both quantitative and qualitative techniques will be used to analyze the data gathered for the study. The study’s findings will determine the best possible capital structure for grocery stores in the United Kingdom and shed light on how businesses in this sector may better manage their finances using various strategies. The study will also suggest ways companies in the UK’s food retail industry may improve their use of the capital structure as a tool for financial management. The study’s findings help us better understand the impact of capital structure on the performance of UK food retailers and provide light on the ideal capital structure for these businesses.

Chapter 2: Literature Review

2.1 Introduction

Much research has been conducted in the academic community on the connection between capital structure and performance. Past studies have shown that businesses with larger debt ratios also tend to have better returns; however, these businesses also tend to have higher levels of risk (Keeble, 2021). However, it is essential to remember that the correlation between performance and capital structure does not necessarily exist linearly. Also, the optimum capital structure for a company may be contingent on the particulars of that company’s operations (Keeble, 2021). This literature review will discuss the existing literature on the relationship between capital structure and performance. It will explore how businesses in the UK food retail sector can use the capital structure as an effective tool for financial management. The review will also discuss the existing literature on the relationship between capital structure and performance.

2.2 Capital structure and performance

Past studies have shown a correlation between the kind of capital a firm possesses and the amount of success it has in its industry (Ali & Anwar, 2021). Businesses with excellent debt ratios often have higher degrees of risk but typically have better returns on their investments. However, it is essential to keep in mind that the correlation between a company’s performance and the structure of its capital is not always a linear one and that the form of capital that is the most appropriate for a particular company may vary depending on the characteristics of that company’s operating environment. It is something that needs to be kept in mind at all times (Cortez & Susanto, 2012). On the other hand, the impact of capital structure on performance may be lessened by other factors. These factors include the caliber of management, the company’s size, and the sector’s characteristics (Cortez & Susanto, 2012).

Research has been carried out in the UK retail food business setting to study how an organization’s capital structure influences its overall performance. The research was carried out in this context (Creswell, 2014). According to the findings of earlier studies, the majority of businesses that are active in the food retail sector of the United Kingdom have chosen a conservative capital structure, with a more significant percentage of equity than debt in their respective capital structures. This choice was made because of the potential risks associated with the food retail sector (Dagilienė & Pütter, 2022). it is undoubtedly the consequence of the very competitive nature of the industry, as well as the volatile nature of the market overall and the challenges involved in acquiring access to loan funding. In addition, past research concluded that companies operating in the food retail sector of the United Kingdom that opted for a riskier capital structure (higher debt ratios) tended to outperform their rivals (Mostaghel, 2022). it was the case regardless of the industry. It has been shown that this is the case in the United Kingdom (Dagilienė & Pütter, 2022).

CHAPTER 3: RESEARCH DESIGN AND METHODOLOGY

3.1 Introduction

Within the scope of this research project, this section will provide an overview of the research design and the methodology that will be utilized. In order to analyze the capital structure and performance of businesses operating in the food retail sector of the UK, the study will use the core data sources that will consist of financial records and reports from the industry. In contrast, the secondary data sources will consist of academic studies that have been published. The gathered data will be analyzed using qualitative approaches as part of the study (Creswell, 2014). To be more specific, the quantitative approaches will consist of correlation and regression analyses, while the qualitative methods will consist of interviews and focus group discussions.

The study will be organized and methodical by adhering to the research design and methodology specified in this section. In addition to ensuring that the study is accurate and dependable, the research design and technique will also minimize the possibility of introducing bias into the findings. In addition, the research design and methodology will guarantee that the findings of the study may be applied to other businesses operating in the food retail sector in the United Kingdom.

3.2 Unit of Analysis

Companies in the UK food retail industry that are traded on a public stock exchange will serve as the unit of analysis for this study. It is crucial to zero in on publicly traded corporations since they are more likely to have complete financial records accessible. The study’s concentration on publicly listed companies ensures the research’s applicability to other businesses in the UK food retail industry (Mostaghel, 2022).

The study will use financial statements from publicly traded firms in the UK food retail industry as its data source. The financial statements will reveal the companies’ capital structures and performance. Quantitative and qualitative techniques will be used to examine the data, including statistical tests like correlation and regression and in-depth individual and group interviews (Keeble, 2021).

The study’s unit of analysis is suitable for the study’s issue, as it will guarantee that the data is thorough and generalizable to other businesses in the UK food retail industry (Mostaghel, 2022). The study will be more methodical and thorough, with less room for error, thanks to the unit of analysis used.

3.3 Data Collection Methods

In order to gather information for this study, interviews will be conducted. Because of their efficiency and cheap overhead, surveys are often employed to gather information from a large population. Companies involved in UK food retailing listed on public markets will be interviewed with questions on their financial structure and business performance. If we want a high response rate from our survey, we will make it as painless as possible to fill out.

Interviews will be available online, and completed forms will be collected digitally. The interviews will guarantee that the data is collected methodically and rigorously, lessening the likelihood of skewed findings.

3.4 Data Analysis Methods

The data for this study will be analyzed using qualitative approaches. Qualitative research approaches are ideal for investigating the elements influencing enterprises’ capital structure and performance in the UK food retail industry. In-depth interviews and focus groups are only two examples of the qualitative methodologies employed in this study (Cho, 2019).

Interviews are a typical kind of qualitative data collection due to the depth of information they may provide. During the interviews, questions on the capital structure and performance of the businesses will be asked of executives and managers at publicly traded companies in the UK food retail sector. The interviews will be semi-structured so that we learn more about the underlying issues that influence the businesses’ capital structure and performance.

Moreover, focus groups are often employed to obtain qualitative data since they investigate a subject from several angles. Questions relating to the capital structure and performance of the businesses will be discussed in the focus groups with executives and managers from publicly listed companies in the UK food retail industry (Yang, 2022).

The use of qualitative methodologies for data analysis is suitable for this study because it will investigate the underlying determinants that influence companies’ capital structure and performance in the UK food retail industry. In addition to reducing the possibility of bias in the findings, the qualitative approaches guarantee that the study is carried out methodically and thoroughly.

3.5 Sampling Method

The companies included in this study will be chosen using a non-probability sampling strategy. As it is impossible to identify the population of enterprises in the UK food retail industry, non-probability sampling is acceptable for this research topic. This study will use publicly traded enterprises in the UK food retail industry as its sample frame since these businesses are more likely to have complete financial information (Cho, 2019).

This study’s sample size will be established after carefully considering the study’s data needs. While not all publicly traded firms may have comprehensive financial data accessible, the readily available information will also dictate the sample size. Thirty to fifty businesses will serve as the sample for this study (Cho, 2019).

Due to the impossibility of identifying the population of enterprises in the UK food retail sector, a non-probability sampling approach is suited for this research study. By matching the sample size to the study’s data needs, findings will be more reliable and less prone to bias if a non-probability sampling technique is used (Khan, 2022).

3.6 Ethical considerations

This study will follow the guidelines in the Code of Ethics and Conduct of the British Psychological Society (BPS, 2018). The principles of respect for the person, nonmaleficence, and justice will guide the conduct of this research. When conducting research, it is essential to treat participants with dignity and respect by protecting their right to anonymity and privacy. The principle of beneficence states that no one involved in the study should be harmed and that everyone should benefit from it. The research can only be fair if it is performed in a manner that treats all participants fairly and equally (Romano, 2001).

This research has two major ethical concerns: participant anonymity and confidentiality. Individuals’ names and the research data collected will remain anonymous and secure. After being properly educated on the study’s aims and potential risks, every participant will consent.

We comply with accepted ethical norms and treat all research volunteers with excellent care, respect, and fairness. If these rules are followed, the research may be conducted ethically, and participants will be protected to the greatest extent possible (Yang, 2022).

Conclusion

This research proposal describes a study that will analyze capital structure concerning the fiscal management of the UK food retail business. This research endeavors to shed light on the role that capital structure plays as a tool for financial management and how it affects the success of firms in the UK food retail sector. Capital structure and performance will be studied, focusing on publicly listed companies in the UK food retail business. Financial statements and trade journals, among other primary and secondary sources, will be used to examine the capital structure of the UK food retail sector. The study’s results will be analyzed using qualitative methods. The study’s results will be used to advise grocery shops in the United Kingdom on their optimal capital structure and provide light on how firms in this sector may better manage their finances using a variety of tactics. The research will also include recommendations for how businesses in the UK’s food retail sector can better use capital structure. As a result of this research, we should have a clearer picture of how capital structure affects the success of UK food retailers and what kind of capital structure would be most beneficial for them.

References

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BPS (2018). Code of Ethics and Conduct. Retrieved from https://www.bps.org.uk/sites/default/files/documents/code_of_ethics_and_conduct.pdf

Creswell, J.W. (2014). Research design: Qualitative, quantitative, and mixed methods approach (4th ed.). Sage.

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Appendix

RESEARCH TIMELINE

This research project is expected to take approximately six months to complete. The following timeline outlines the critical stages of the research project:

1. Literature review (1 month): The first step in the research project will be to conduct a literature review. It will involve researching the existing literature on the relationship between capital structure and performance.
2. Data collection (2 months): The next step in the research project will be to collect the data needed to analyze firms’ capital structure and performance in the UK food retail sector. The data will include both primary and secondary sources.
3. Data analysis (2 months): Once the data has been collected, the next step will be to analyze the data. This will involve quantitative and qualitative methods to analyze the data collected.
4. Writing of the report (1 month): The final step in the research project will be to write the report. This will involve writing up the results of the data analysis and providing recommendations on how firms in the UK food retail sector can use the capital structure as an effective tool for financial management.