Challenges of Cloud ERP System in Retail Sector at Saudi Arabia

This research study analyzes the challenges faced by the retail sector in Saudi Arabia in implementing cloud ERP systems and the impact on customization. It aims to provide a better understanding of the situations and challenges faced by retail businesses in using cloud-based ERP systems.

Running head: RESEARCH SKILLS AND CONSULTANCY PLANNING
Analysis on the customization challenges associated with Cloud ERP System in
Retail Sector at Saudi Arabia
[Name of the Student]
[Name of the University]
[Author note]

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Table of Contents
1. Introduction:..............................................................................................................3
1.1. Background:.......................................................................................................3
1.2. Aim of this study:...............................................................................................5
1.3. Research Significance........................................................................................5
1.4. Research Questions:...........................................................................................6
1.5. Research Objectives and Framework:................................................................6
2. Literature Review:.....................................................................................................6
2.1. Challenges faced by Cloud ERP system by the retail Sector of Saudi Arabia:..7
2.2. SAP ERP Software:............................................................................................9
2.3. Needs related to customization of the Cloud ERP system:..............................11
2.4. Critical success factors:....................................................................................13
3. Research methodology:...........................................................................................15
3.1. Research philosophy:.......................................................................................15
3.2. Research Approach:.........................................................................................15
3.3. Data collection method:....................................................................................16
3.4. Research design:...............................................................................................17
3.5. Time and cost Frame:.......................................................................................17
3.6. Ethical considerations:.....................................................................................18
References:........................................................................................................................20

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1. Introduction:
1.1. Background:
ERP or the Enterprise Resource Planning is considered to be one of the most effective
system which is associated with assisting the retail sectors in running of the business along with
allowing the power of having control over the overall business process by means of adaptation of
an organized way. It has been reported that most of the organization fails in executing the ERP
system because of lack of proper administration support and also due to proper selection of the
ERP vendors (AlBar and Hoque 2017). So it can be stated that the cloud based ERP system is
one of the recent technology which has been developed by the ERP vendors for the purpose of
monitoring the various organizational activities in various geographically distributed locations.
Besides the marketers existing within the retail sector is also associated with facing a lot of
challenges while using the traditional ERP system. Major issues and the challenges that are faced
by the ERP system includes the security issues, issues related to customization, issues because of
the provider lock-in, problems related to flexibility and the data ownership.
Amongst the various issues, the issues related to the customization is mainly faced by the
Cloud ERP systems. The reason behind this is that each of the enterprise is unique and the
company generally requires new software packages which is to be used for supporting the
various business process. The situation when the issues mainly arise is when the expectations of
the customers from the Cloud ERP system is related to fact that the Cloud ERP system is
working as per the needs of the customers and is also associated with providing a similar level of
customization upon the on-premise ERP solutions (Akhter 2017). This is considered to be a valid
concern which is related to the system and is associated with stating the fact that the Cloud based

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ERP system is providing less flexibility along with less customization than the traditional ERP
systems, In case when the ERP system is not associated with bringing any significant value then
it is expected that the end users should move towards the adaptation of the new processes so as to
run the business.
Two type of approaches are generally used by the ERP systems while they are being
implemented like the big bang along with the phased approach. In case of the big bang approach
the company is associated with saving time as well as money. However this this is the particular
approach which is likely to face huge challenges in the retail sector. The end users are generally
not capable of keeping the change with the new system. The lack in the data storage is associated
with the creation of a negative impact upon the development of resistance towards the system.
Followed by this is the phased approach which is associated with rolling out the business
functions at a time (Abunar and Zerban 2016). This particular approach is associated with
spending a time upon the data conversion and on the duration along with being associated with
phasing the legacy system which an organization is having. Due to the outdated architecture of
legacy of most of the enterprises it is associated with providing a structure to the retail sectors
which along with being inflexible is also rigid. Besides this the lack of flexibility is also
associated with preventing the usage of the legacy software with the current products which are
obtainable from the market and this in turn would be associated with adding of value to the
retailing business operations.
The literature review conducted upon the ERP is seen to be very rich and along with this
most of the literature is focused upon the on-premises ERP. The research conducted upon the
cloud ERP is very limited and besides the benefits provided by the cloud technology and the
cloud ERP is seen to be very frequent and is emphasized by the cloud providers. The major

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challenges which are associated with the New ERP deployment methods has been exposed fully
and discussed with respect to the retail sector based in Saudi Arabia (Bahssas, AlBar and Hoque
2015). This respective country is having a growing preference related to modern retail formats
like the hypermarkets, super markets and many more. It is essential to makes sure that the super
markets are meeting all the standards that are set up by the retail sector of the western countries.
1.2. Aim of this study:
The main aim of this research study includes providing of a brief understanding of the
challenges related to customization which are generally faced by the retail sector because of the
Cloud ERP system implementation. Besides this the study is also aimed at analyzing the key
reasons for not implementing the ERP system. This study is going to assist the researchers in
having a better understanding of the various situations related to the usage of the cloud based
ERP within the retail business sector. One of the major aim also includes meeting the objectives
of the research study along with briefly reviewing the research conducted upon the challenges
faced by the ERP.
1.3. Research Significance
The research is mainly associated with discussing about the challenges that are faced by
the cloud based ERP systems that are being used in the retail sector. However it is observed that
the aspects of each retail sector is different from the other and for this reason the challenges are
also seen to be varying in accordance to the retail sector. Some of the challenges mainly includes
the security related issues, issues related to customization, lock-in of the providers, flexibility,
and data ownership. This issues are in turn associated with having a huge impact upon the
selection of the appropriate type of cloud ERP system which are required by the various retail

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enterprises. Because of the impact upon the business there also exists a huge impact upon the
businesses which are conducted by means of the ERP system.
1.4. Research Questions:
 What are the major challenges faced during the customization of the Cloud Based ERP
systems?
 What are major critical success factors which are considered during the implementation of
the successful ERP system in the retail sector of Saudi Arabia?
 What are major impacts of the challenges upon the retail sector because of the selection of
the software ERP packages?
1.5. Research Objectives and Framework:
 To examine the various impact of the customization related challenges during the cloud ERP
system implementation upon the retail sector.
 To examine the Impact of the challenges upon the process of selecting the ERP packages on
the retail business
 To identify the process of implementation of the Cloud retail ERP system along with
identifying the key components for the retail marketers.
2. Literature Review:
This literature review section is associated with discussing about the major challenges
which are to be considered at the time of planning for the implementation of the ERP system in
the retail sector. This particular research study is supported by a case study of a large retail sector
of Saudi Arabia. The retail sector of Saudi Arabia is having an annual budget of around 300
million dollars and it also consists of employees who are seen to be working at different level of

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management (Alhammadi, Stanier and Eardley 2015). Needs related to the new technology has
increased at a drastic rate in Saudi Arabia and along with this the competitiveness existing
against the other retail organizations of the country has led to moving towards the usage of the
technology along with providing various online services so as to become a driver of more
investment in the field of Information Technology. This literature review section would be
consisting of the description of the major challenges which are faced by the retail sector of Saudi
Arabia.
2.1. Challenges faced by Cloud ERP system by the retail Sector of Saudi
Arabia:
In the year of 2003 the United Electronics Company of Saudi Arabia established eXtra
with an aim of providing its customers with electronic and home appliances. This particular
organization had been associated with the implementation of the ERP system with an aim of
connecting along with managing the different branches of the organization. This sector had been
associated with the adaptation of the new system and replaced the old existing system that was
used by them. According to Fakeeh, Qayyum and Albarakati (2014), this ERP system which is to
be used by the retail sector would be providing an information system solution which would be
associated with quick integration of the business operations. Followed by this other authors have
also analyzed this case study and have been associated with the identification of the major
challenges which the traditional spreadsheet based approach was facing while managing the
various customer support queries which was associated with becoming more and more
problematic. Besides this it was also seen that this is responsible for lack in providing of timely
response to the customers along with failing in meeting the SLAs and the incomplete case
visibility (HAJI SALUM and Rozan 2017). Besides this it is also seen that the sales person is

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having a less understanding of the issues faced by a customer at an individual or at the
company’s level.
Additionally the implementation of the ERP system is also associated with facing a lot of
challenges which mainly includes the online data unavailability, lack of manufacturing module
in the planning of the entire trade, need of combining the data offline, the different range of
products which are unmanageable and many more. The low level of awareness related to the
usage of the cloud based ERP system is considered to be one of the major challenge that is faced
by the vendor’s will providing the services (Parven and Maimani 2014). The retail sector of
Saudi Arabia is also associated with facing loss due to several crimes like the theft, and frauds
which acts as the incomplete problem that is faced by the retailers. The National Retail Security
Survey have been associated with stating the fact that the employee theft accounts for almost
45% of the losses along with the shoplifting which accounts for almost 35%. There also exists
managerial error and vendor frauds which is almost around accounts for 12% losses. Day by day
the number of retailers who are becoming victims of the prearranged crime is increasing where it
is seen the crime rings are getting their merchandise along with the gift cards which they sell
online. Some of the major losses is associated with including the cards, books, food items and
many more (Eid and Abbas 2017). The threats related to credit card fraud or theft or impact upon
the data of the customers is one of the major growing concern.
This particular literature review would be associated with discussing about two of the
approaches which are used by the retailer sector for the purpose of implementing the cloud ERP
system and this includes the Phase approach and the big band. Big band approach is generally
associated with putting forward the major challenges that are faced by an organization which
initially turns out to be putting forward the fact that the end users are not able keep up with the

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changes taking place in the new system (Shaikh, Rafiq and Iyer 2014). Besides this the lack of
data storage is associated with having a negative impact upon the development of resistance
towards the system. Followed by this is the phased approach which is associated with helping in
rolling out of the business function. A lot of time is spent by this approach upon the conversion
of the data as well as upon the duration and is associated with phasing the legacy system which
an organization is having.
There exists challenges which are faced by the organization United Electronics situated in
Saudi Arabia and this challenges are mainly related to the outdated architecture. Kraljic et al.
(2014) have argued on the fact that most of the existing legacy enterprise applications existing
within the retail sector is consisting of an outdated architecture which is seen to be very much
rigid. The rigidity in turn is associated with posing a major challenge to the business efficiency.
From this the organization was capable of finding out the fact that the legacy system which they
are having is very much costly to maintain. With passage of time the cost related to maintenance
kept on increasing and besides this the new system was not associated allowing the integration of
the new appliances. So the combination of the system is associated with making the systems to
face failure or crash. Besides the lack of scope and the enterprise wide approach towards the
problem solving process was also noted (Fadelelmoula 2018). The biggest challenge which
exists in the eXtra retail sectors included the limited scope related to customization. Besides this
the ERP software packages were also having a limited scope related to customization. This type
of customization existing within the ERP package is associated with involving a lot of changes in
the structure or the ERP software which is not to be allowed under the license agreement. This in
turn is associated with making the ERP system very much difficult to be used within the retail
sector.

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2.2. SAP ERP Software:
eXtra is associated with the usage of the software like the SAP so as to conduct the
enterprise resource planning along with managing the customer relationship and the management
of supply chain. SAP is associated with providing a retail ERP system like the SAP Retail
Merchandising System for the retail sectors existing in Saudi Arabia. However the usage of the
system is associated with facing a lack in getting the system which is compatible with this
system. Additionally the products of the company is suffering from the incompatibility issues
along with the similar products existing within the market. The product demand is highly
dependent upon the requirements related to hardware resources (James 2014). The issues related
to customization is generally overcome by making use of the Cloud ERP system so as to meet
the needs whenever they arise. This in turn is associated with providing the system with the best
business practice. This type of standardization is having its own benefits and is associated with
increasing the number of potential customers.
Due to the uniqueness of each enterprise the requirements of the software is associated with
supporting the business processes. Syamala Buragadda (2014), have been associated with
supporting this claims related to the customization of the business processes by the company
while trying to achieve the best performance. Any type of attempts made for rolling back from
this type of process would be resulting in loss of the competitive advantage. Zubair and Taha
Zamani (2014), also argued on the fact that the cloud us capable of impairing the ability that an
organization is having for different innovations. Enterprises are associated with tailoring of the
ERP systems due to the uniqueness related to the needs of innovation that the new products are
having. SAP solution is associated with helping the retailers in simplification of the business

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along with understanding the customer needs. The suppliers are also having efficient supply
chain networks so as to make sure the flexible supply chain is obtained at an optimum cost.
During the implementation of the cloud based ERP system the time as well as the
personal requirements are to be considered and it has been seen that eXtra have been associated
with hiring of the consultants so as to help them in the implementation of the systems. The
consultant has been expecting to bring the specialized skills and is aware of the company’s
requirement related to the accomplishment of the time consuming and the costly tasks needed for
the implementation of the system (Salleh et al. 2018). With the expectation that the external
consultant is going the ease the tasks related to implementation, a prior research has been
conducted which is associated with depicting the fact that the conflict of opinion with the
consultant is one of the major challenge that is faced by the organization. Besides this a research
on the case study is associated with indicating the fact that the ERP system is not associated with
providing of any kind of expected customers satisfaction during the implementing system like
the CRM or the Data warehousing.
Implementation of the ERP is considered to be one of the major complex task because of
the different functional roles that the different organizations are having. According to records it
has been seen that most of the cloud based ERP system projects are over budgeted and is
dependent upon different type of requirements and the operations of the business. Besides this
less consideration of the customer issues at an individual or the company level is also noticed in
many cases (Weng and Hung 2014). Certain challenges related to the unavailability of the online
data or due to lack of production components so as to formulate the plans for production, the
needs related to the combining of the data offline and products which are controllable are also
faced. Issues related to the customization of the Cloud ERP system is associated with putting

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forward of certain needs. The cloud based ERP is associated with providing the businesses with
the best business practices along with many other challenges which are faced by the company.
2.3. Needs related to customization of the Cloud ERP system:
According to the opinion of Elmonem, Nasr and Geith (2016), the cloud based ERP is
slowly but is associated with penetrating the enterprises and is associated with taking a part of
the enterprise software market. Besides this Peng and Gala (2014), were associated with arguing
on the fact that the customization is associated with acting as one of the most contentious topic in
the ERP software. Below is the table which is associated with showing the ERP customization
rate for some of the service providers which are well known. The demands related to the
products is generally dependent upon the requirements of the hardware resources. The issues
related to the customization of the cloud ERP system is associated with meeting the specific
needs which arises.
ERP providers Heavy Moderate Vanilla
SAP 38.9 42.60 22.00
Oracle 34.60 42.90 26.90
Microsoft Dynamics 32.90 41.10 26.90
Tier II ERP 24.80 49.20 28.90
The table provided above is associated with depicting the fact that the customization of cloud
ERP system is one of the important feature. The increased software complexity initially results in
an increased complexity of the customization. In one side the customization is associated with
increasing the complexity whereas on the other side it is associated with putting forward of the
risks during the time of implementation. This in turn is associated with becoming a much bigger

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problem whenever the solution that is provided is mismatching the requirements of the company
or when the inappropriate ERP products are purchased (Seethamraju 2015). The issues related to
the customization of the Cloud ERP system is associated with meeting the specific needs which
arises. The usage of the retail cloud based system is associated with providing information
related to the purchasing, merchandizing of the inventory, supply chain, physical assets and the
details of the business as well as the customers. This in turn is associated with helping in the
building of relationships with the customers along with providing them with a superior and
innovative service.
2.4. Critical success factors:
Sustaining of a success path in the process of ERP implementation has been studied many
times and this has helped in recognition of a set of crucial success factors for the performance
that an ERP is having. The critical success factors is associated with including the support of the
top management along with the competence from the consultant, vendor and user support,
capability of the IT and the project management leadership. Study by Venkatraman and Fahd
(2016), has been stating the fact that the consultant planning action along with the internal audit
is considered for the purpose of forecasting the success of the implementation of the ERP.
Whereas the study by Elmonem, Nasr and Geith (2016), have been associated with providing an
opinion related to the challenges which are faced by the retail sector because of the ERP system
implementation which would be within the list known as the critical success factor. The factors
of the higher level is associated with including the support from the top management and the
project competence. The factors of the lower level is associated with including the usage of the
consultants. From this it can be stated that the eXtra is associated with the usage of the
consultants so as to implement the ERP system in the retailing business. At the last stage there is

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a requirement of managing the vendor sourcing decision in a careful way in accordance to the
researcher’s recommendations. During the initiation stage it is better to delegate the
responsibility at the later stages which is followed by the forwarding of the delegation of
responsibilities to the vendors. The implementation stage of the eXtra retail sector mainly
consists of the different communication factors, package selection, and management of channels
and providing of training to the users within the development stage.
Authors Shaikh, Rafiq and Iyer (2014), have been associated with arguing on the fact that
the improper training to the users along with lack of support from the external sources might be
leading to failure of the ERP implementation at a much higher rate. The user involvement acts as
one of the key essential factors responsible for achieving success of the ERP system and the
major reason behind this is that it helps in reducing the resistance related to transformation from
the perspective of a user. Some of the other challenges which is initially responsible for failure of
the implementation process includes the education of the employees and the support from eth
vendors. Zubair and Taha Zamani (2014), have been associated with providing their opinion
related to the set of challenges which are faced during the cloud ERP implementation like the
failure in accepting the changes, failure in fitting, actors and the plan. Fit is generally associated
with indicating the failure in the research objectives and minimization of the level of
performance of the organization. Because of the fact that the actors are associated with causing a
failure in educating the employees for using the new technology. Lastly it can be stated that
failure in development of the plans is associated with leading to over budgeting.
For the purpose of placing the cloud ERP system at the right place there generally exists a
need of new procedures, managerial along with the technical support and employee training.
Besides this it has also been identified that the changeover in the entire ERP system is a slow

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process. Due to the limited scope of customization of the ERP software packages the
customization within the ERP package is associated with involving the changes in the ERP
software structure which is not to be allowed under the license agreement. Besides this the
research upon the case study is associated indicating the fact that the ERP system is not
associated with providing the customer expectation that is expected during the implementation of
the system like the CRM and data warehousing (Syamala Buragadda 2014). Also because of the
lack in flexibility in the system is associated with preventing the ERP software which is to be
used within the current products that are obtainable within the market and this in turn would be
associated with addition of some muscle to the operations of the retailing business.
3. Research methodology:
3.1. Research philosophy:
Research philosophy can be categorized into three different types and this is associated
with including the interpretivism, realism and the positivism. The concept of the positivism
research philosophy has been used in this research. One of the major reason lying behind the
usage of this research philosophy is that it helps in understanding the reality of the research
work. The research study has been taken into consideration for the purpose of conducting the
scientific analysis upon the data which has been collected so as create a proper framework
(Silverman 2016). For this reason there is a need of understanding the research philosophy so as
to understand and for conducting of the research study upon the topic which has been selected.
3.2. Research Approach:
In accordance to the research methodology the approach towards conducting the research
can be categorized into two different types which mainly includes the inductive and the

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deductive approach. For the purpose of conducting this research the deductive method has been
used. The deductive approach is manly associated with the implication of the former theories
which has been established along with the collection of data which is associated with helping in
filling up of the gap so as to complete the entire research study (Taylor, Bogdan and DeVault
2015). For this research the inductive research approach has be avoided and the reason behind
this is that in some cases these particular research approach is associated with reflecting the real
scientific research framework which has taken place.
3.3. Data collection method:
The data collection method can be categorized into two different types which mainly
includes the primary and the secondary method of data collection. Collection of the primary data
is generally done by means of the surveys and questionnaires. Data source of the secondary
source mainly includes blogs, journals and newspaper articles. The procedure of data collection
can also be categorized into two different types which includes the quantitative and the
qualitative data collection method. In this research both the type of data collection procedure has
been used and has gone through different views depending upon the concept of cloud ERP
system used in the retail sector. So it can be stated that the mixed data collection procedure has
been used for the purpose of analyzing the data so as to meet the aim of the research (Flick
2015). The qualitative data collection method is associated with the collection of the data by
means of interviews. Interviews is considered to be one of the best research tool which is
associated with helping in having a direct interaction with the participants. The feedbacks which
are received fro he participants is associated with helping in getting over the thoughts which a
researcher is having. This particular research would be involving the interviews of the retail
chain executives as well as the interviews of the management of various organizations and it is

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very essential to identify the challenges which are to be faced while the users are being
interviewed.
The Quantitative data collection method would be involving the collection of data by
means of surveys. The survey is conducted over the population by usage of the questionnaires
based upon the research topic which acts as a great tool for evaluation of the value of the new
introduction, the questions is mainly put in front of the management authority and to the end
users which mainly includes the retail management executive (Ledford and Gast 2018). The
usage of the questionnaire would be helping in obtaining accurate statistical outcome and
depending upon this outcome of the sample size the population would be considered. The sample
size which has been taken for this research is 10. Once the sample size id selected the data
analysis method is conducted for the purpose of carrying the research forward so as to meet the
objectives and aim of the study. This would be helping in analyzing of the data for the entire
research study.
3.4. Research design:
One of the most significant factor of the research methodology includes a well structures
sequential approach for helping eth researchers in conducting the entire research successfully.
The research design is basically considered to be blueprint of the entire research work which is
associated with discussing the entire research plan in detail by means of analyzing the entire
data. There exists three type of research design and it is associated with including the descriptive
research design, explanatory research design and the exploratory research design (Bauer 2014).
This particular research study would be associated with choosing the explanatory design for the
purpose of assisting and understanding the impact of the increased knowledge amongst the
individuals. Besides this the researcher would also become capable of understanding the nature

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of the problem faced by the research along with the purpose by usage of the experience and the
knowledge of the researchers. The usage of this particular research design would be helping the
researchers in the identification of the research gaps along with the limitations which are caused
due to particular resources (Kumar 2019). Once the research limitations are identified
successfully the researcher would become capable of taking certain possible steps for the
purpose of improving the research method so as to complete the entire project by meeting the
mentioned research objectives.
3.5. Time and cost Frame:
Task Name Duration Start Finish
Schedule for Research Proposal 37 days Thu 4/4/19 Fri 5/24/19
Research Planning 13 days Thu 4/4/19 Mon
4/22/19
Choosing a topic for research 2 days Thu 4/4/19 Fri 4/5/19
Background Study of the Research 2 days Mon 4/8/19 Tue 4/9/19
Development of the Research Question 2 days Wed
4/10/19 Thu 4/11/19
Designing the Conceptual Framework 2 days Fri 4/12/19 Mon
4/15/19
Development of the Research Question 2 days Tue 4/16/19 Wed
4/17/19
Research Proposal Submission 3 days Thu 4/18/19 Mon
4/22/19
Review of the Literature and Collection of the Data 12 days Tue 4/23/19 Wed 5/8/19
Reviewing the available literature 2 days Tue 4/23/19 Wed
4/24/19
Selecting target population for collecting the data 2 days Thu 4/25/19 Fri 4/26/19
Collecting the Data of the Research Study 3 days Mon
4/29/19 Wed 5/1/19
Analyzing the gathered data 4 days Thu 5/2/19 Tue 5/7/19
Submission of the Draft Research paper 1 day Wed 5/8/19 Wed 5/8/19
Submission of the Final Project Paper 12 days Thu 5/9/19 Fri 5/24/19
Critical Analysis of the findings 5 days Thu 5/9/19 Wed
5/15/19
Concluding the Findings of the Study 2 days Thu 5/16/19 Fri 5/17/19
Recommendations 3 days Mon
5/20/19
Wed
5/22/19

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Submitting the Final Project Report 2 days Thu 5/23/19 Fri 5/24/19
3.6. Ethical considerations:
The entire research would be associated with following all the research guidelines. The
entire research work is completed within the time assigned and along with this it is also made
sure that the data which is to be collected for the purpose of conducting the research is accurate
as per the knowledge of the researcher. Besides this it is also to be made sure that the data which
is being collected is not disclosed to any of the third party. All the rules have been followed for
conducting the survey and no such questions have been asked which are likely to hurt the
emotions of the users. In addition to this all the research questions have been chosen in
accordance to the research topic. Entire research work has been conducted honestly and has been
associated with providing accurate outcomes and findings in accordance to the analysis of the
data which have been collected.

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