ENVIRONMENTAL
FACTORS AND PERFORMANCE OF SMALL SCALE BUSINESS IN NIGERIA (A CASE STUDY OF
ABUJA MUNICIPAL AREA COUNCIL (AMAC) FEDERAL CAPITAL TERRITORY (FCT).
ABSTRACT
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.
CHAPTER ONE
INTRODUCTION
1.1
INTRODUCTION
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.
REFERENCES
Adidu & Olannye (2006) Basic Small
Business Entrepreneurship: A Modern Approach, Royal Place Publishers, Agbor, Delta
State
Asika Nnamdi (2004) Research Methodology:
A Process Approach. Mukugamu Enterprises Lagos.
Edett, I.A (2001) Small And Medium Scale
Enterprises Development In Nigeria Ageless Friendless Press.
Elikwu Michael (2008) Research Project
Made Easy: A Simplified Approach To Write And Defend A God Research Report, Cin-Eight
Publishers, Lagos.
Ohanemu. C. (2004) The Complete
Entrepreneur: Managing The Small Scale Industry. Rockfied Publishers, Lagos.
FOR
THE REMAINING CHAPTERS OF THIS PROJECT PLS CALL; ADEFOLARIN OLAMILEKAN;
08134232272 OR 08073814436
