The Effect of Environmental Factors on the Performance of Small and Medium Scale Business in Nigeria
CHAPTER ONE
OBJECTIVES OF THE STUDY
The purpose of the study is to assess the extent to which environmental factor affects the performance of small business enterprises, evaluate it, determine its success and failure and discuss its likely effects on organizational survival and growth. The other objectives this research seeks to achieve are:
- To determine the extent to which environmental factors affect organizational growth and survival of small scale business.
- To determine the relationship existing between small scale business and its operating environments.
- To determine the challenges facing small scale businesses within Oshilimi North Local Government Area
- To examine how small scale business manage these environmental factors.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
Business organization exists and operates within an environment where there is complex interplay in terms of activities as well as networks of relationship between and among human resources, material resources and other systems. In the views of Aborade (2005) all business decisions are found to be contingent upon a good analysis of the environment which is often the bane of all the constraints as this environment creates the opportunities, threats and problems for the business organization. Evolving from this is the belief that business organization is an integral part of its environment on the ground that they are mutually interdependent and exclusive where the environment plays the role of providing the resources and opportunities to organization for its existence, and the business organization in turn, offers its goods and services to the people living in the environment for survival and enlightenment (Ajala 2005). This is also in line with the views of Adi (2006) that the most important sole influence on organizational policy and strategy at any point in its development is the environment, both within and outside the organization. Akanji (2003) was of the opinion that the more complex, turbulent and dynamic an environment becomes, the greater the impact on human attitudes, business, organizational structure, market and process as well as facilities, therefore there is need for all organizations to direct their attention to the environment when formulating their strategic management policies in order to facilitate their survival, growth and profit motives.
Komppula (2004) identify some constrained by two major factors: internal factor such as entrepreneur competencies, commitment, resource, strategic choice and external factor like competitors, culture, technology, infrastructure and government policy. Understanding determinant factors of SMEs performance is considered an important area of focus in Enterprises (Rosli, 2011). Driver et al (2001) suggested that the link of SMEs performance and economic growth remains complex, and that entrepreneurial ability remains a necessary component of a country’s capability to support economic development. The performance and growth of small and medium enterprises (SMEs) is a major driver and indices for the level of industrialization, modernization, urbanization, gainful and meaningful employment for all those who are able and willing to work, per capital income, equitable distribution of income, and the welfare and quality of life enjoyed by the citizenry Aremu and Adeyemi {2011), because SMEs contribute to employment growth at a higher rate than larger firms Farouk and Saleh {2011). Odekunle (2001) says that investment in human capital has significant end on the impact of entrepreneurial ventures and technological innovation.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
This chapter deals with the method used in collecting data required in carrying out this research work it explains the procedures that were followed and the instrument used in collecting data.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
INTRODUCTION
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analyzing the data obtained.
CHAPTER FIVE
SUMMARY CONCLUSION AND RECOMMENDATION
INTRODUCTION
It is pertinent to note that this research was aimed at assessing the impact of environmental factors militating against the performance of small and medium scale business in Nigeria, thus the topic “the effect of environmental factors on the performance of small and medium scale business in Nigeria”.
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges associated with performance of small and medium scale business in Nigeria.
SUMMARY
From the findings of this study it is observed that majority of the small and medium scale business still suffer from all the external business environment challenges such as Competition, Inflationary trend, Technological changes, Government policy, Infrastructural facilities accessibility, Changing consumer behaviour and Income. Only few claim to have control on government policy and consumer behaviour as a source of opportunity for the business while others still find it difficult to cope with them due to their dynamic nature. The majority of the respondents consider inflationary trend, competition and Infrastructural facilities accessibility as the most important external problems to the growth of their businesses.
Equally, marketing related problems, financial related problem, business strategies and product quality are still being considered as important weak points in business to the respondents while a sizeable number see business size, qualified employees, locations of business and personal relation with customer as a great source of strength to their business operation.
Infrastructural facilities accessibility and government policy are barriers to business growth and survival, the other variables that can be controllable by managers are making a positive effects on their business continuity.
CONCLUSION
Small scale businesses are indispensable catalyst and important contributor to the economic growth in every nation due to their vast irreplaceable prospect in the economy.
Small businesses serve as laboratory for the development and innovation of new ideas and offerings before market commercialization in order to prevent the production of goods and services that does not meet consumer expectation.
On the basis of the research findings, the existing environmental factors in the manufacturing sector were identified together with their respective significance impact or effect in the wake of survival and growth of the business organisations in the manufacturing sector of Lagos metropolis. Factors such as electricity, competition, technology, infrastructural facilities, capital, government policies, organisational policies, financial credits, fraudulent practices were found to show a direct significance in their relationship effect while inflation, raw materials and government politics were found to indicate indirect significance in their relationship effect. It is however crystal clear that all these factors identified were found to be challenges to the survival and growth of business organisations in the manufacturing organisations and where adequate attentions are not paid to these factors, it would definitely impede the survival of the business organisations thus making the growth impossible and where it is possible to be at snail pace.
RECOMMENDATIONS
The following recommendations were suggested by the researcher based on the findings of this study;
- That the government of the day should endeavour to create an enabling environment that would be truly conducive for business organisations to thrive without engaging in any act of fraudulent practices.
- That the present arrangement (policy) of centralizing electricity which has made the federal government to enjoy monopoly should be jettisoned in order to make way for devolution and alternative to power generation aside the use of generator which has made operation cost to keep increasing since there is total collapse in the present arrangement.
- That management of these manufacturing organisations should constantly scan the environment in order to understand the major trends of events and make proactive decisions that would neither jeopardize nor mortgaged the future of the organisations.
That financial institutions should be strengthened in order to make loan available to these business organisations in the manufacturing sector so as to position these business organisations in such a way that availability of funds would not endanger the smooth operations of these organisations.
Reference
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- Adi, A.B.C. (2006). The Moral Economy and the Possibility of Accumulation in Africa How the IFIs can Help West Africa Review Vol. 3 (2), pp 34-49.