Operational Definition of Variables Essay (Critical Writing)

Variables are measurable attributes that assume different values among the subjects under consideration. The variables used in this study fell in the broad category of dependent variable and independent variable. The variables that have been considered independent are those that the researcher doctored in order to determine its effect on another variable. The variables that were considered to be dependent are those that the researcher measured, predicted or monitored and were generally expected to be affected by the researcher’s manipulation of the independent variable (Lind et al., 2008). Some variables were qualitative in nature (non-numeric, that is, they are attributes) while others were quantitative (numeric) and were either discrete or continuous. The study had seven variables namely:

1. Outsourcing
2. Off-shoring
3. Operating cost
4. Customer satisfaction
5. Customer loyalty
6. Market share
7. Profitability

An operational description of each of these variables is as described below.

• Outsourcing: This is whereby the employees within an organization could comfortably perform a given job but in its place the management decides to contract a third party to perform the job on its behalf either off-site or on-site. This helps the organization to cut down on operating costs while at the same time achieving optimal customer service. Outsourcing was identified on a nominal scale by asking the respondents “Do you outsource any of your operations from another provider?” The responses were given labels as follows; 0 = No and 1 = Yes.
• Off-shoring: This is another form of outsourcing whereby the organization relocates its business processes to another country. This could involve moving service centres, product manufacturing or other operations to a foreign country. This enables the company to take full advantage of the lower operating costs in the overseas countries. In some cases the company could decide to move some parts of its operations to countries with enabling economic conditions.Off-shoring was identified on a nominal scale by asking the respondents “Do you shift any of your operations to a foreign country?” The responses were coded and given labels as follows; 0 = No and 1 = Yes.
• Operating costs: These are the expenses incurred by a business venture on a daily basis during its operations such as administration, sales and marketing expenses. It does not include depreciation expenses, interest expense or income taxes. The data sources used were obtained from the income statements of the different companies.Operating costs were identified on an interval scale by the determination of the total operating cost of the specific company. The level of measurement of the data obtained was interval. No company can have zero operating cost.
• Customer satisfaction: This is the degree to which the client is content with the service provision of the company. A contented body of clientele will usually make a repeat purchase of the products of the company thus increasing the market share and profitability of the company. Client satisfaction results into consumer loyalty, increased market share and profitability.Customer satisfaction was identified on an ordinal scale by asking the respondents “How satisfied are you with the products of the company?” Their responses were then used on a five-point likert scale as follows; poorly satisfied = 1 and very satisfied = 5 (Francis, 2006). This variable involved the ordinal level of measurement as the responses were ranked in an order based on their level of satisfaction.
• Customer loyalty: This relates to the customers remaining loyal to the products manufactured by a company. Customers who remain loyal to the company show that they are satisfied with the products manufactured by the company and will rarely switch to other products of competing businesses.Customer loyalty was identified on a nominal scale by asking the respondents “Would you switch to a product produced by another company?” The responses were then coded and given labels as follows; 0 = No and 1 = Yes.
• Market share: This relates to the proportion of the total sales volume of a certain service or product in a given economy that can be attributed to a specific company. The data sources on market share were obtained from public archival data on the market trend of the products.Market share was identified on an interval scale by considering the volume of sales made by a company in relation to that made in the economy as a whole. The level of measurement relating to market share was interval since the market share can hardly be zero.
• Profitability: This indicates the ability of a company to yield a financial gain or profit. It is commonly measured by “price to earnings ratio” which is “market price per share” or “earnings per share”

To assess the profitability, the researcher used the profitability ratios from different companies that could purely be attributed to the business outsourcing and off-shoring of Information Technology (IT). The data sources were obtained from the survey information collected from various companies. The figures were interval level of measurement as it is not possible to have zero profitability (Blumann, 2008).

References

Blumaan, A. (2008). Elementary Statistics: A Step by Step Approach. New York: McGraw-Hill Publishers.

Francis, A. (2006). Business Mathematics and Statistics. U.S.A: Thompson Learning.

Lind, D. et al. (2008). Statistical Techniques in Business and Economics. New Delhi: Tata McGraw-Hill.