ENVIRONMENTAL FACTORS AND PERFORMANCE OF SMALL SCALE BUSINESS IN NIGERIA (A CASE STUDY OF ABUJA MUNICIPAL AREA COUNCIL (AMAC) FEDERAL CAPITAL TERRITORY (FCT).
In this digital age, information is the popular currency while knowledge is the preferred coin essential in getting the best deal. Nowhere is more real than today business environment which affect the success or otherwise of any business venture. Several authors have attributed failure of businesses particularly small and medium scale enterprises to various factors ranging from training of the entrepreneur to exposure and experience while some analysts opined that business environment could impact on small and medium scale enterprises. Hence, using the chi-square statistical analytical technique to analyze primary data obtained through a structured questionnaire administered to Eighty entrepreneurs, managers and staff of various scale business and civil servants in Abuja Municipal Area Council (AMAC) Federal Capital Territory (FCT), However, a total number of fifty (50) questionnaires were duly completed and returned. This study seeks to ascertain the nature of the relationship between business environment and the survival of small and medium scale businesses in Nigeria. The obtained result revealed that the model of chi-square was able to predict the distribution of 62% of the observed values of the dependent variables as factors such socio-cultural factors, fiscal incentives and government fiscal policies serve as barriers to business growth and survival. Hence, it is recommended that small business operators must developed and adopt scientific and rational business management strategies that will aid and increase their understanding of both their business and its environment in order to facilitate planning and predictions on the most significant factors that affects business survival.
TABLE OF CONTENTS
Title page - - - - - - - - - - -
Declaration - - - - - - - - - - -
Approval- - - - - - - - - - - -
Dedication - - - - - - - - - - -
Acknowledgement - - - - - - - - - -
Abstract - - - - - - - - - - -
Table of contents - - - - - - - - - -
List of Tables - - - - - - - - - - -
CHAPTER ONE: INTRODUCTION
1.1 Introduction - - - - - - - - - -
1.2 Background of the study - - - - - - - -
1.3 Statement of the problem - - - - - - - -
1.4 Objective of the study - - - - - - - - -
1.5 Research Question - - - - - - - - -
1.6 Statement of the Hypothesis - - - - - - - -
1.7 Significance of the study - - - - - - - -
1.8 Justification of the study - - - - - - - -
1.9 Scope of the study - - - - - - - - -
1.10 Definition of Terms - - - - - - - - -
CHAPTER TWO: LITERATURE REVIEW
2.0 Introduction - - - - - - - - - -
2.1 The concept of an organization - - - - - - -
2.1.1 Mission, Objectives and Goals - - - - - - -
2.1.2 Organizational Performance - - - - - - - -
2.2 Theoretical Framework - - - - - - - -
2.3 Literature on the Subject Matter - - - - - - -
2.3.1 Concept of small and medium Scale Business - - - - -
2.3.2 Small and Medium Scale Business and Entrepreneurship - - - -
2.4 Small Scale Businesses and the Nigerian Business Environment - - -
2.4.1 Classification Based on the Rate of Change - - - - - -
2.4.2 Effects of Environment on Small Scale Business - - - - -
2.4.3 Types of Environment Faced by Business Organization - - - -
2.5 The Concepts, Social Responsibility and Nigerian Business - - - -
2.5.1 Should small Scale Businesses be Socially Responsible? - - - -
2.5.2 To whom should Small Scale Business be Socially Responsible? - - -
2.6 The Role of Public Policies on Businesses - - - - - -
2.6.1 Impact of Public Policies in Businesses - - - - - -
2.7 Roles of Small Scale Businesses in
Wealth Creation and Economic Development - - - - -
2.8 Problems Militating Against Growth of Small Scale Business in Nigeria - -
2.8.1 Possible Solutions to These Problems - - - - - -
2.8.2 Providing Fiscal Incentives for small Scale Business in Nigeria - - -
2.9 Importance of Small and Medium Scale Enterprises - - - - -
2.10 Successful Business Strategies for Small Scale Business - - - -
CHAPTER THREE: RESEARCH METHODOLOGY
3.0 Area of study - - - - - - - - - -
3.1 Research Design - - - - - - - - -
3.2 Sources of Data - - - - - - - - -
3.3 Study Population and Determination of Sample Size - - - - -
3.4 Research Instruments - - - - - - - - -
3.5 Procedure Instruments - - - - - - - -
3.6 Techniques of Data Analysis - - - - - - - -
3.7 Limitation of the Studies - - - - - - - -
CHAPTER FOUR: DATA ANALYSIS, FINDINGS AND DISCUSSION
4.0 Data Analysis, Findings and Discussion - - - - - -
4.1 Findings of the Study - - - - - - - - -
4.2 Discussion of the findings - - - - - - - -
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.0 Summary of Findings - - - - - - - - -
5.1 Conclusions - - - - - - - - - -
5.2 Recommendations - - - - - - - - -
5.3 Proposal for Further Studies - - - - - - - -
Bibliography - - - - - - - - -
Appendix 1: Letter of Introduction - - - - - - -
Appendix II: Questionnaire - - - - - - - -
LIST OF TABLES
Table 4.1 Showing Distribution of Administered Questionnaire
Table 4.2 Analysis of Respondents’ Bio-Data
Table 4.3 Analysis Based on Marital Status
Table 4.4 Analysis Based on Age
Table 4.5 Analysis Based on Academic Qualification
Table 4.6 Analysis Based on Job/Position
Table 4.7 Your organization pays considerable attention to the external environment it operates in order to enhance its performance for survival and growth.
Table 4.8 For small scale businesses to improve their productivity, they must effectively manage their environment.
Table 4.9 Small business being socially responsible will improve its performance.
Table 4.10 In highly competitive business environment, small scale business will still achieve pre-determined objectives without adapting to environmental factors.
Table 4.11 Government Fiscal Policies do not have significant effect on the performance of small scale businesses .
Table 4.12 Organization that must improve in performance must keep abreast with technology development.
Table 4.13 The present economic system in Nigeria is helpful for the growth and development of small scale industries in Nigeria.
Table 4.14 The present socio-cultural environment conducive, for enhanced productivity of small scale industries in Nigeria.
Table 4.15 Small scale businesses are the key to economic development of Abuja Municipal Area Council (AMAC) Federal Capital Territory (FCT).
Table 4.16 In ability of small scale businesses to access a credit facility from Banks impinges negatively on the productivity and growth.
Table 4.17 Conflicts in business environment usually take a negative toll on the performance of small scale businesses.
Table 4.18 Abuja Municipal Area Council (AMAC) Federal Capital Territory (FCT) is a fast developing business environment with all the potentials for small scale industries to thrive.
Table 4.19 The business environment has all necessary infrastructures needed for high productivity of small scale businesses.
Table 4.20 Small Scale Business have significantly contributed to wealth creation in Abuja Municipal Area Council (AMAC) Federal Capital Territory (FCT) Business Environment.
The present bay business environment is marked by different dynamic features such as global competition, information technology, quality service revolution and corporate social responsibility which are compelling managers to rethink and reshapes their approach to their various operation responsibilities. Due to this paradigm shift, new firms are emerging that are more responsive to both their internal and external environments (Luthans, 1995). The internal factors exist within the operational base of an organization and directly affect and different aspect of business. These internal factors include firms Mission, resistance to change, poor quality staff, lapses in internal control, bad resources? Financial management, operational weakness, high staff turnover and overleveraging while the external factors include government regulation, economic recession, political turn oil, low cost competitors, change in customer behaviour, environmental/ health issues, technological changes, natural disasters, change in input supply, changes in macro-economic variables and terrorist attacks. Hence, it is important for business to keep a pace with the various changes in the environment in order to survive in the long run. Similarly, every business settings often bring in new way of thinking about the business environment and new ways of acting (Belohlav, 1996). Hence, copping with these multitude of challenges require a firm that can easily adapt to change. This makes the small and medium scale enterprises (SMEs) the driving force in economic growth and job creation I both developed and developing countries due to their ability to experiment new approach at minimum cost and create a standardized product/ service that can meet the needs of a large target market (Sunter , 2000). However, more than half of newly established business survive beyond five years. Hence, the identification of those factors which empirically lead to entrepreneurial success/failure would assist in equipping small business owners with the necessary managerial skills of survive in today’s competitive environment as well as exploit several strategies that will improve their operational efficiencies.
1.2 BACKGROUND OF THE STUDY
There is controversy that small and medium scale business in any country where they operate play important role in the economic growth and development of that country or nation and it improves the quality of life individuals (Ohanemu, 2006).
Business organizations anywhere in the world operate within environment which according to Adidu & Olanye (2006) is an aggregate of all conditions, events, circumstances and influences that surround and effect the business organization.
In management, the term “Environment” does necessarily mean physical surrounding but, it is used as a total forces, factors and influences that surround and affect business organizations as a separate entity as well as other business organizations. This means that business must interact with those forces that influence its decisions, directions, actions, size, health, profitability and performance of the organization as a whole.
Ukaegbu (2004) stated that the contemporary environment is becoming dynamic and competitive and since business organizations do not operate in vacuum, they affect and are affected by environment conditions. Therefore, business organizations irrespective of their objectives must take into consideration, these environmental opportunities and constraints. Businesses affect the environment by providing the required goods and services thereby contributing to the development of the business by presenting opportunities and threats. One thing to be emphasized at this point is that, the extent to which managers could identify, evaluate and react to the environmental forces will have considerable impact or organizational performances.
Kuye, (2004), emphasized that the need to study business environment is very important considering the fact that business organizations do not operate in vacuum and an effective management in complex and dynamic society requires the assessment of strengths and weaknesses of the organization and the opportunities and threats provided by the challenges of the external environment , hence for survival and growth, organizations must cope and adopt to these challenges posed by the ever changing environment (internal & external) in which managers operate means that managers must not only be aware of what constitutes the elements of their business environment but also should be able to respond to the forces of the environment which inevitably impinges on the operations of the business organization.
Ukaegbu (2006) further stated that the relationship between a business organization and its host environment can be examined from three strategic ways;
Firstly, the organization can be viewed as importing various kinds of inputs (resources)s such as human resources, capital, managerial and technical inputs. These inputs are then transformed to provoke output which takes the form of goods and services. A second approach is the study of the relationship between the organization and the society. It focuses on the demands and legitimate rights of different claimants such as employees, consumers, suppliers, stakeholders, government and the community. A third opportunities and constraints. Thus no single approach is sufficient for all times and in all circumstances. They are complementary. The elements external to the organization affect its performance as well as those elements within the organizations.
1.3 STATEMENT OF THE PROBLEM
The effects of environment on organizational performance vary from one situation to another. The environment suitable for the growth of a particular business may be hostile to the survival of another business. The problems that necessitated this research are as flows:
· Assess impact of environment factors that has the performance of small scale enterprises in Abuja Municipal Area Council (AMAC) federal capital territory (FCT).
· The ability to identify, evaluate and react to the challenges that are critical to organizational performance.
Therefore, this study to investigate the of business environment on organizational performance of small scale business in Abuja Municipal Area Council (AMAC) federal capital territory (FCT).
1.4 OBJECTIVES OF THE STUDY
The purpose of the study is to assess the 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:
i. To determine the extent to which environmental factors affect organizational growth and survival of small scale business.
ii. To determine the relationship existing between small scale business and its operating environment.
iii. To determine the challenges facing small scale business within Abuja Municipal Area Council (AMAC) federal capital territory (FCT).
iv. To examine how small scale business manage these environment factors.
1.5 RESEARCH QUESTIONS
In order to arrive at a precise answer to the effect of environmental factors on the performance of small scale business, the following research question shall be tested;
i. To what extent do environmental factors affect growth and survival of small scale businesses?
ii. Is there a relationship existing between small scale business and its operating environment?
iii. What are challenges facing small business within Abuja Municipal Area Council (AMAC) federal capital territory (FCT)?
iv. How do small scale business manage these environmental factors?
v. What are the available incentives provided by government to support small scale businesses?
1.6 STATEMENT OF THE HYPOTHSIS
The following formulated hypothesis would be tested in order to help provide answers to the research questions;
1. Ho: there is no significant relationship between external environment factors and performance of small scale business.
H1: there is significant relationship between external environment factors and performance of small scale business
2. Ho: there is no significant relationship between increased productivity of small business and socio-cultural within the business environment where it operates .
H1: there is significant relationship between increased productivity of small business and socio-cultural factors within the business environment where it operates.
3. H0: there is no significant relationship between the fiscal incentives provided by the government, and enhanced performance of small business.
H1: there is significant relationship between the fiscal incentives provided by the government, and enhanced performance of small business.
1.7 SIGNIFICANCE OF THE STUDY
This study will be highly useful after its completion of both current and future entrepreneurs, business organizations and the government. This research study on the effects of environment factors on performance of small scale business in Abuja Municipal Area Council (AMAC)federal capital territory (FCT) would have considerable benefits on the small scale business operating within this business operating within the business environment in that it would;
· Help these business become sensitive to the uncontrollable external environmental factors impinging on the performance of their business and how they can effectively manage these factors and top the opportunities for enhanced productivity and profitability.
· To an entrepreneur: the knowledge obtained from this study will enable them to know how critical environmental factors are and how to effectively manage these factors for the survival and growth of small scale business.
· To organizations and the society: the study will equally be useful to organization and the society at large in the sense that knowledge about technological advancement generation through small scale business source of credit facilities to establish small business will be acquired.
· To the government: this research will also be useful to the government in the formulation of policies towards small scale enterprises development in Nigeria. It will also help the government to indentify the importance of small scale enterprises in the achievement to economic growth and development in Nigeria.
1.8 JUSTIFICATION OF THE STUDY
The reason why the research is being conducted is to assess the impact of environmental factors that has the performance of small scale enterprises in Abuja Municipal Area Council (AMAC) federal territory (FCT) and the ability to indentify, evaluate and react to the challenges that are critical to organizational performance.
The overall objective of the study is to assess the extent to which environmental factor affects the performance of small business enterprises, evaluate it determine it success and failure and discuss its likely effects on organizational survival and growth.
The significant of the study is to help business become sensitive to the uncontrollable external environmental factors impinging on the performance of their business and how they can effectively manage these factors and top the opportunities for enhanced productivity and profitability .
The chi-square statistical analytical technique was used to analyze the primary data obtained from structured questionnaire to eighty entrepreneurs, manager and staff of various scale business and civil servants in Abuja Municipal Area Council (AMAC) federal capital territory (FCT).
1.9 SCOPE OF THE STUDY
This study covers environmental factors and its effects on the performance of small scale business in Abuja Municipal Area Council (AMAC) federal capital territory (FCT). The study basically focused on the challenges of these business managing the dynamic nature of their business environment in achieving organizational performance.
1.10 DEFINITION OF TERMS
ENVIRONMENT: environment is the aggregate of surrounding things, conditions or influences.
ENVIRONMENTAL FACRORS: environmental factors are known characteristics in an environment that impact the survival, operations and growth of an organization. This identifiable element exists as a physical, cultural, demographic, economic, political, regulatory or technological characteristic.
SMALL SCALE BUSINESS: small scale business that employs a small number of workers and does not have a high volume of sales. Such enterprises are generally privately owned and operated sole proprietorships, corporations or partnerships.
ENTREPRENEUR: entrepreneur is a person who organizes and manages any enterprise especially a business, usually with considerable initiative and risk.
SOCIO-CULTURAL FACTORS: socio-cultural factors are customs, lifestyles and values that characterize a society. Some example are religion, attitudes, economic status, class, language, polities and law. These factors can affect quality of life and business.
FISCAL INCENTIVES: fiscal incentives are incentives granted to enterprises to facilitate local and foreign of the local value added.
GOVERNMENT FISCAL POLICY: a government fiscal policy is the government spending policies that influence macroeconomic conditions. Through fiscal policy, regulators attempt to improve unemployment rates, control inflation, and stabilize the economy and business cycle.
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