ESTIMATING THE RELATIONSHIP BETWEEN FINNISH SPENDING BEHAVIOUR AND INCOME IN COMPARISON TO NIGERIA

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ABSTRACT

The need for business firms to expand business networks beyond the sores of its country en-tails taking strategic business decisions which could make or mar the business ideas or put the survival of the business in jeopardy if not properly planned. Hence, it is paramount to have in-depth knowledge of the economy that the firm intends to invest into. This is an empirical research work, designed to act as a planning tool for investors who intend investing into both Finnish and Nigerian market as it bring to fore major areas where residence of both countries spend their income earnings by estimating the relationship between the income and expendi-tures.

The essence of establishing the relationship is to know the various sources of expenditure of residence of Finland, which of these expense lines gulp more of their income, with a slight increase in income which expenditure line(s) are they likely to spend it on, are there rooms for the new entrants into the market where residence of Finland spend large portion of their income and so on. This thesis will also present this fact in comparison with other countries like Nigeria. The essence of the comparison is to understand what is obtainable in other coun-tries and what opportunities, if any; that maybe taken advantage of.

In order to meet up with this task; the thesis employed the use of empirical research tech-nique to obtain relevant information through the designing of a research questionnaire which were distributed among the residence of both countries. This is to give an idea into areas of the economy where income earned is being channeled to or expended on. The choice of resi-dence of both countries is based on the fact that, all classes of residence has got an income level to spend per week irrespective of the amount. Hence, it will be a wise idea for an en-trepreneur to produce goods or services that will meet the needs of this people.

In order to ensure the success of the questionnaire distribution, efforts were concentrated on residences within the capital area of Helsinki including Helsinki, Espoo, Kauniainen and Van-taa. In Nigeria, the major and business areas of Lagos, Port Harcourt and Abuja are considered as a result of time and other resource constraints at the disposal of the researcher. More so, in order to ensure quick and prompt response, the questions will be simple and concise.

From the collected data, it is was deduced that the residence of both countries spend their income largely on basic amenities such as housing, feeding and clothing with residence of Fin-land having the tendencies to even spend more on leisure such as travelling, clubbing and so on if current earnings are increased.The research also revealed that there are different pat-tern of expenditures in both countries. The level of expenditure is tailored along with the purchasing power and also the taste of the residence. Hence, expenditure depends largely on earnings capacity.

Although the quality of life and standard of living differs considerably in both economy; bear-ing in mind that the cost of living also differs. Be that as it may, the population parameters of both countries suggest that consumer products and durable goods are likely goods that will thrive in Nigeria market.


TABLE OF CONTENTS

1 Introduction
            1.1 Background of the study
            1.2 Purpose of the Thesis
            1.3 The Research Idea
            1.4 Limitation of the thesis
            1.5 Framework of the thesis

2 Theoretical background
            2.1 Economic System
            2.2 Forms of Economic System
                        2.2.1 Capitalist System of Economy
                                    2.2.2 Socialist System of Economy
                                    2.2.3 Mixed System of Economy
            2.3 General Overview of the Finnish economy
                        2.3.1 Brief Historical Background
                        2.3.2 Finnish population structure
            2.4 General Overview of Nigerian economy
                        2.4.1 Historical Background
                        2.4.2 Nigerian population structure
            2.5 Regression Analysis                                             
            2.6 Types of Linear Regression Curves
                        2.6.1 Simple Linear Regression (SLR) Curve
                        2.6.2 Multiple Linear Regression (MLR) Curve
            2.7 Relevant Terms
                        2.7.1 Gross Domestic Product
                                    2.7.2 Circular Flows of Income
                                    2.7.3 National Income
                                    2.7.4 Disposable income
                                    2.7.5 Taxation

3 Research Methodology
            3.1 Introduction
            3.2 Research Question
            3.3 Estimation Technique
            3.4 Methods of data collection
            3.5 Research Design and Data collection methods used for this thesis

4 Data presentation, analysis and result of the empirical study
            4.1 Introduction
            4.2       Data Presentation and Analysis
                        4.2.1 Response rate
            4.3 Result of the empirical study

5 Conclusions and Discussion
            5.1 Theoretical linkages
            5.2 Observations
            5.3 Conclusions
References


1       Introduction

This is the chapter that introduced the research idea of the thesis and gives an overview of the thesis process. The background information and limitation of the study also form part of the contents of this chapter.

1.1     Background of the study

In recent years, firms and business organizations are becoming to understand the importance of maintaining local business participation while also ensuring global presence in other parts of the world (Metso Annual Report 2012). Doing business beyond borders could possess some challenges which if not carefully examined; may ruin the chances of success immediately af-ter investment. Some of these challenges include but not limited to problems of breaking into a new market, understanding the taste and preference of the intending consumers, product designing and packaging, marketing and advertisement strategies and so on. Expanding busi-ness networks beyond the sores of a country entails taking strategic business decision which could make or mar the business ideas or put the survival of the business in jeopardy if not properly planned. Unhealthy competition on the home front is one of the factors forcing busi-ness firms abroad. Firms in their quest to search for virgin market and invest in other areas move to other parts of the world where people are in dire need of the services being ren-dered or goods being produced not closing its eyes to the realities of risk inherent in pursuing such task (Burns, A.C. and Bush, R.F. 2009).


Consequently, it is of importance making all necessary findings about the proposed economy which a business firm intends to invest and expand business output. The discovery of new market opportunities is made possible via marketing research. Some of the important infor-mation that may be obtained via marketing research includes but not limited to; what are the needs of the consumers that are yet to be met, what are quality levels that are being ex-pected, what price are the customer’s willing to pay in exchange for the value being ren-dered and so on (Burns, A.C. and Bush, R.F. 2009). In view of this, a careful business feasibil-ity studies is necessary in order to critically evaluate the strengths, weaknesses, opportunities and threats that are eminent in the chosen line of business in the intended economy. Legal and regulatory issues, political and economic factors are some of the factors to be considered when analysing the possibility of doing business abroad. A careful analysis of the economy will reveal the areas to investment opportunities, the legal and regulatory requirement, the inci-dent costs and profit possibilities.

This is an empirical research work that is designed to act as a planning tool for investors who intend investing into both Finnish and Nigerian market. The importance of customer’s satis-faction cannot be viewed with levity by any profit-making organization that intends to still remain in business and ensure optimum profitability (Tracy B. 2008) especially when going abroad. This thesis will delve into establishing the relationship existing between Finnish spending behaviour and their income as compared to Nigeria using multiple regression analyt-ical tools. The essence of establishing the relationship is to know the various sources of ex-penditure of residence of Finland, which of these expense lines gulp more of their income, with a slight increase in income which expenditure line are they likely to spend it on, are there rooms for the new entrant into the market where residence of Finland spend large por-tion of their income and so on. This thesis will also present this fact in comparison with other countries like Nigeria. The essence of the comparison is to understand what is obtainable in other countries and what opportunities, if any; that maybe taken advantage of.

1.2     Purpose of the Thesis

The main idea behind this research work is to investigate the present consumption and spend-ing pattern of the residence of Finland and comparing the performance with other country like Nigeria. The thesis will estimate the existing relationship between the level of income and consumption in both economies. It will also delve into analysing the various expenditure lines of residence of Finland and also that of Nigeria.

This thesis will further employ the use of empirical research technique in order to obtain rel-evant information through the designing of a research questionnaire. The research question-naire will be distributed among the residence of both countries. This is to give an idea into areas of the economy where income earned is being channeled to or expended on. The choice of residence of both countries is based on the fact that, all classes of residence has got an income level to spend per week irrespective of the amount. Hence, it will be a wise idea for an entrepreneur to produce goods or services that will meet the needs of this people.


1.3     The Research Idea


The research idea is borne out reasoning to understand the relationship existing between the income and expenditure of residence of Finland. This desire further spur the need to reason that a critical examination of the expenditure line of an economy; may give an in depth idea about which expense line gulp more of the residence’s income which invariably may be a via-ble business avenue area for an investor to channel his investment. Furthermore, in quest to know what is obtainable in other economy give birth to the comparison between the Finnish parameters and that of Nigeria.

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