THE EFFECT OF OWNERSHIP CONCENTRATION ON CORPORATE PERFORMANCE: A CASE STUDY OF
COCA – COLA (NIGERIAN BOTTLING COMPANY PLC.
The study is a perception survey effect of concentration on corporate performance in Coca Cola Nigeria Bottling Company Plc. It defines ownership concentration in corporate performance as a process that facilitate influence among individuals when are otherwise key to company success. It assures that ownership concentration involvement enhance efficiency in corporate performing. The research question addressed the extent of the relationship ownership concentration in corporate performance in Coca Cola Nigerian Bottling Company Plc, which is the place of the study. While the duration of study is between April and January 2016. A descriptive research design was used in executing the study using 200 randomly selected respondents from a population of 6,141 employees for questionnaire administration. However, 160 questionnaires were returned. In addition, there were face to face interviews and collection of secondary data about the company being studied. The aspect of the study is the use of cross – sectional survey research designed in generating the required primary data. Data collected were analyzed using descriptive and inferential statistics result from the data analysis indicated that significant relationship exist between ownership concentration and corporate performance. The research therefore concludes that significant relationship exist between ownership concentration and corporate performance in Coca Cola Nigerian Bottling Company Plc. Also we recommended among others: encouragement of work teams, improvement of reward system, improvement of reward system, encouragement of promote share holding, improvement in internal communication chemicals, creating a healthy operating environment and training and re-tray of employees.
Keywords: Ownership Concentration, corporate performance corporate governance, Coca Cola Nigeria Bottling Company Plc Ownership, Profitably Employees
TABLE OF CONTENT
Table of Content
1.1 Background of the study- - - - - - - -
1.2 Statement of the problem- - - - - - - -
1.3 Objectives of the study- - - - - - - - -
1.4 Research Questions- - - - - - - - -
1.5 Research Hypotheses- - - - - - - - -
1.6 Significance of the study- - - - - - - -
1.7 Scope and Limitation of the study- - - - - - -
1.8 Research Methodology - - - - - - - -
1.9 Definition of Terms- - - - - - - - -
1.10 Organization of the study- - - - - - - -
REVIEW OF RELATED LITERATURE
2.1 Review of Related Literature- - - - - - - -
2.2 Theoretical Background- - - - - - - -
2.3 History of Coca Cola Nigeria Bottling Company Plc- - - -
2.3.1 Company Overview- - - - - - - - -
2.3.2 Current Ownership Structure of - - - - - - -
Coca Cola Nigeria Bottling Company Plc- - - - - -
2.3.3 Annual Production of NBC Plc- - - - - - - -
2.3.4 Challenges Facing Beverages Industries in Nigeria- - - -
METHODOLOGY OF THE STUDY
3.1 Introduction (Background)- - - - - - - -
3.2 Research Design- - - - - - - - - -
3.3 Population of the study- - - - - - - -
3.4 Sampling Technique - - - - - - - - -
3.5 Instrument for data collection- - - - - - - -
3.6 Validity of the instrument- - - - - - - -
3.7 Method of Data Analysis - - - - - - - -
DATA ANALYSIS AND PRESENTATION OF RESULT.
4.1 Distribution of responses - - - - - - - -
4.1.1 Range of service experience of the respondents- - - -
4.1.2 The means responses on the relationship
between ownership concentration and corporate
performance in Coca Cola Nigerian Bottling Company Plc - - -
4.1.3 The Goodness – of – fit chi-square- - - - - - -
4.1.4 The means of responses on the relationship
between ownership concentration and
enhance official in corporate performance in
Coca Cola Nigerian Bottling Company Plc. - - - - -
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Summary and Findings - - - - - - -
5.2 Conclusion - - - - - - - - - -
5.3 Recommendation- - - - - - - - - -
Bibliography- - - - - - - - - -
Appendix 1- - - - - - - - - -
Appendix 2- - - - - - - - - -
Appendix 3- - - - - - - - - -
1.1 Background of the Study
Ownership concentration is one side of the concept ownership structure. The concept of ownership structure can be defined along two dimensions: (i) ownership concentration, (ii) ownership mix. The former refers to the share of the largest owner and is influenced by absolute risk and monitoring costs, while the latter is related to the identity of the major shareholders such as ownership concentration, foreign ownership domestic ownership, etc (Nguyen et al, 2015). According to classens and Djankov cited in Nguyen etal (2015), the overall concentration of ownership as well as particular types of investors (ownership concentration and ownership mix) are responsible for the changes in profitability and labour productivity. The research of sun and Tong (2003) showed that state ownership having negative impacts on firms performance in China; While foreign ownership does not show uniformly strong, positive impacts on firms performance, can be beneficial in many ways such as improving commitment productivity, morale and harnessing internal resources and teamwork.
Apparently, as ownership concentration is believed to influence performance. Banz (1981) had found that ownership and size have an effect on firm performance. May make big effects on business incentives, merges and acquisition, competition and oversight of agency. The exist as a substantial fact on whether and how the effect of ownership concentration on corporate performance. This as informed the subject as an important and ongoing debate in the corporate environment. Uwalomiva and Olamide (2012) have studied the relationship between ownership concentration with the performance of the 31 companies operating in Nigeria financial sector in the period 2006 – 2010. By using regression models with dependent variable is the rate of return on total assets, the independent variables are the rate of ownership of shareholders (members of board of Directors), the rate of ownership of foreign shareholders has shown that (1) the company has shareholders as members of the Board of Directors will better; (2) the foreign shareholders would also bring positive results in the company’s operations, due to the company management more efficient, and to the skills and new techniques.
Furthermore, Clerk and Wojcik (2005) had argued that high ownership concentration indicate a more closed corporate governance regime, with less information available to outside investors and a high potential for insider trading, companies with more closed corporate governance tend to exhibit more votatile stock market prices. In brief high ownership concentration tends to inhibit corporate stock market returns. Continuing the study, clerk and Wojic, (2005) examined the financial valuation of a German model. The relationship of ownership concentration and firm performance ownership concentration and market performance were studied would encourage a long-term competitive and investment strategy. They show that financial markets discount ownership concentration and there is a significant negative relationship between ownership concentration and the average daily rate of return.
In addition, common evidence showed in developed countries like the U.S. and U.K, nations like central and Eastern Europe or in developing countries (Gedajlovic and Shapiro 1998). One reason might be the fact that many developing economics are characterized by considerable family ownership listed corporations (Claessens et al 2000). And also emerging markets have different characteristic such as different political, economic and institutional conditions, which limit the application of developed markets empirical models.
In developing countries, micco et al (2004) identified a strong relationship between ownership that state – owned banks tens to have lower profitability than their private counterparts, and foreign – owned banks tend to be characterized by higher profitability. Kwuri (2013) studies the effects of ownership concentration on Banks profitability in Kenya. The result showed that ownership concentration is negatively correlated with bank profitability. The Foreign ownership and the domestic ownership are also positive correlated with bank profitability.
Ownership concentration has been widely studied and found to have effect on corporate performance. However, the effect on corporate performance could showed a negative effect, as while as positive effect. significantly ownership concentration types also play an imperative role in this, such as institutional individual, government and foreign ownership. They suggest to us the nature of ownership structure, shareholding as important in determine the ownership concentration on its performance. The particular attention in manufacturing emanates from the conviction that the sector is a potential instrument of modernization, a creator of jobs and a generator of positive spill – over effects (Tybout 2000), It against this background that we carried out a research on the effect of ownership concentration on corporate performance using Coca- Cola Plc as a case study.
1.2 Statement Of The Problem
Due to the current rate of business failure there is an unsurge of interest to no why some company succeed and why some fails. As the critical life wire of a company, how can ownership concentration properly value? Also, what effect does ownership concentration play in enhancing corporate performance and managerial efficiency of a corporate organization? many business organization due to lack of proper ownership concentration control has suffered great losses. some companies have gone under due to the negative impact on either corporate performance under – performance.
The aim of ownership concentration is to ensure significant monitoring cost and minimize risk, whilst at the same time maintaining profitability and labour productivity. Clearly, there are some problems in having either too little ownership concentration or high ownership concentration. Basically, there are effect of ownership concentration on corporate performance. these are competitive and investment strategy, profitability, return on assets, return on equity, productivity, profitability and managerial efficiency.
This research work intend to examine the effect of ownership concentration on corporate performance levels. This work however, intends highlight the probable solution to problems arising from negative impact of ownership concentration.
Hence, for corporate performance to excel in improved productivity, increase commitment of the work force, profitability and managerial efficiency, there is need for ownership, concentration to ensure relationship that favour changes in profitability and labour productivity. There is also a need for a relationship to exist between ownership structure, ownership concentration efficiency of a corporate performance.
Theoretically, ownership concentration over company is assumed to increase commitment of on the part of management control, this leading to improved productivity. Secondly there is popular belief that ownership concentration has a way of assuring industrial harmony by creating positive correlation with profitability, thereby leading to sustainable performance and by incentive that rob on industrial relationship between ownership structure, size of the board of directors, managerial shareholding and employees. It is against this backdrop that we carry out an empirical study on the theoretical proportion of the effect of ownership concentration on corporate performance, using Coca-Cola Plc as a case study. This work is to find out the extent of convergenence or Divergence between theory and practice in Coca – Cola Plc.
1.3 Objective of the Study
The General Objectives of the study is to determine the effect of ownership concentration has on corporate performance with a view to suggesting some measure of improving corporate performance, profitability and managerial efficiency.
To meet it general objective, the study will focus on the specific objectives:
i. To inquire the effect of ownership concentration in Coca – Cola Bottling Company Plc.
ii. To find out the level of ownership concentration in Coca – Cola Nigeria Bottling Company Plc.
iii. To ascertain the impact of owner concentration on Coca – Cola performance and managerial efficiency.
iv. To suggest better ways of achieving ownership concentration. Thus achieving good performance for owner’s shareholders, management and employees.
v. To determine the problems associated with ownership concentration at Coca – Cola Nigeria Bottling Company Plc.
1.4 Research Questions
1. Does ownership concentration affect corporate performance?
2. Does ownership concentration affect management decision making?
3. How consistent do ownership concentration affect corporate performance?
4. What are the problem associated with ownership concentration in Coca – Cola Nigerian Bottling Company Plc.
5. Ownership concentration motivate increase corporate performance.
1.5 Research Hypotheses
In order to ensure the objectives of the research and also provide answers to the research problems, the following research hypotheses are formulated:
Ho: There is no significant relationship between ownership concentration and corporate performance in Coca-Cola NBC Plc.
Hi: There is significant relationship between ownership concentration and corporate performance in Coca-Cola NBC Plc.
Ho: There is no significant relationship between ownership concentration and enhance efficiency in corporate performance in Coca-Cola NBC Plc.
Hi: There is significant relationship between ownership concentration and enhance efficiency in corporate performance in Coca-Cola NBC Plc.
1.6 Significance of The Study
The study is an attempt to explore the effect of ownership concentration on corporate performance. However it is partly a new subject for researches in Nigeria. Looking towards all scholarly studies completed in Nigeria, it is observed that there is insignificance research work done on this subject meter and this has created a wide gap, which needs to be filled up by the present and the future human resources management scholars.
Furthermore, this research will show the significance of ownership concentration and their effect on manage efficiency, profitability and organizational productions. This will help the management of coca-cola plc, the government, manufacturing and merchandizing company, individuals, researchers and other interested persons who may wish to carry out a researcher on ownership concentration.
1.7 Scope And Limitation Of The Study
The study is limited to coca-cola plc, the available secondary date and other sources such as internet, libraries, journal, newspaper and primary date collected by means of structured questionnaires.
The researches of this mequitude is not without some limitation. The speed and cost of getting materials/ date have limited effect on the study, to this end, the bottleneck associated with getting materials from coca-cola plc actually slowed drummed date guarding and analysis.
The above limitation does not however in anyway nullify the validity and reliability of the reclusion that have been researched in this research, it only makes room for unavoidable errors.
1.8 Definition of Terms: Ownership: The people who have some thing to themselves. That is being the founder or creator of a business entity or business enterprise, even a building.
Ownership Structure: This entail owner ship concentration and ownership mix in the form of shareholders, identify of major owners, mountoricy cost risk and corporate governance.
Corporate Performance: The act sign which an organization systematically does it business excellently. This also entails an effective result.
Corporate Governance: The putting a machine that ensure effective direction and controlled of business.
Management: This is made up of top and middle level management. Top management includes shareholders, board of directors and managing director, while middle management includes heeds of department, manager deputy and assistant.
Profitability: The platform that ensure a gain from doing selling or doing business. That is making a lot of financial monetary gain in non- monetary gain but impact full.
Institution: This entail a large organization such as a corporate entity engage in commercial ventures.
Commitment: The state of quality of being dedicated to a cause or activity.
Productivity: This means a measure of the affiance of production, that is of production’s capability to create income, which is measured by the formula reel output value virus reel input value
Section Making: This is cognitive process result in the selection of a belief or course of action among several alternative possibility.
1.9 Organization of The Study
The research will be organization into five chapters made up as follows:
Chapter One: This chapter will be made up of the introduction, statement of problem, objective, scope, significance, definition of terms and the organization of the study.
Chapter Two: Then cover the reviews of related interties, that is what has alertly been written and said about ownership concentration and its relevance to corporate performance.
Chapter Three: This chapter deals with the researcher methodology, that includes researches design, sources of date, method of date analysis, questionnaire design and administration e.g.
Chapter Four: This chapter put formed discussion on date presentation and analysis.
Chapter Five: This is the final chapter and it comprises of the summery, conclusion and recommendation and areas for further researcher.