EFFECT OF ENVIRONMENTAL FACTORS ON THE BUSINESS PERFORMANCE OF IMPERIAL BAKERY

EFFECT OF ENVIRONMENTAL FACTORS ON THE BUSINESS PERFORMANCE OF IMPERIAL BAKERY

CHAPTER ONE

INTRODUCTION

1. Background to the Study

Business organization cannot operate successfully in isolation without dependence on supportive institutions, variables and factors (Oginni, 2010). This means that business organisation 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 organisation. 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).

The environment in which business organizations operate is a complex, multi-focus dynamic and has a far reaching effect on such organization. The environment tends, shape the outlook, and goal of the organization by placing constraints on them. These constraints in the environment of organizations goal could be in the form of competition, this sets a limit on the goals specify by the organization. For instance, trade union asking for increase in salary, will affect the shareholder dividend. Unethical behaviour also affects profit. All these settings provide multiple contexts that influence how the organization operates and how and what it produces (Oghojafor, 1998).

According to Pearce and Robinson (2003) business environments can be grouped into three interrelated categories: the operating environments, the industrial environments and the remote environments. Operating environments, also called the competitive or task environments, are those factors in a competitive situation that affect the success of a company in acquiring the needed resources and/or in marketing its products and services profitably. According to Pearce and Robinson (2003), some of these factors include: the competitive position of the company, the reputation of the company in the eyes of suppliers/sellers and creditors. Kotler and Armstrong (2013) identified the remote environments as the main macro-environments that include natural and technological environments, social environments, economic and cultural environments, and political, law and security environments.

The concept of business performance can only be understood if the variables that constitute environmental factors are well recognized. These variables include customers, competitors, suppliers, distributors, substitutes, government, the economic, demographic, social and cultural factors. Others are innovations and technological steadfastness (Nnamani & Ajagu, 2014). These factors could be internal to the organization or external. Therefore, examining the environment of business is essential for the survival, growth and performance of any business especially the Small and Medium Scale Enterprises (SMEs). It is against this background that this study was conducted to determine the effects of environmental factors on the business performance of imperial bakery, Abuja.

1. Statement of the Problem

The Nigerian business environment has witnessed a lot changes from the period of the oil boom in the 1960s and the early 1970s. Austerity measures in the early 1980s and the structured adjustment programme in the late 1980s from the company act of 1960s allied matter decree in the 1990s, undoubtedly brought in the eighty’s the opportunities to be exploited by some firms or the problems that inhibit the survival of so many business firm. The need for studying business environment became important considering the fact that business organization do not operate in vacuum and effective management in complex and dynamic society such as Nigeria, requires the assessment of strengths and weaknesses of the organization and the opportunities and threats posed and the challenges of the external environment. Other issues such as retarded growth rate, high rate of unemployment, low industrial output, coupled with poor demand in terms of services and tangible products, energy crisis put alots of pressure on the survival of business organization. The relationship between industrial representatives and government institutions and representatives keep nose-diving virtually on all matters, criminal activities increasing at alarming and uncontrollable rate, exercising excessive control through excess of rules and regulations with stringent conditions, tax policies without adequate provision of infrastructural facilities to ameliorate business operations. In the face of all these challenges, how effectively can a business organisation respond to its basic operational functions of survival, growth and profit maximisation, hence the need to examine the effect of environmental factors on the business performance of Imperal bakery Abuja.

1. Objectives of the Study

The general objective of this study is to examine the effect of environmental factors on the business performance of Imperial Bakery, Abuja. The specific objectives of the study include:

1. To examine the effect of social cultural factors on the performance of  Imperial Bakery Abuja.
2. To examine the effect of technological factors on the performance of Imperial Bakery Abuja.
3. To assess the effect of political factors on the performance of Imperial Bakery Abuja.
   1. Research questions
4. How does the social cultural factors affect performance of Imperial Bakery Abuja?
5. To what extent does technological factors affect the performance of Imperial Bakery Abuja?
6. How does political factors affect the performance of Imperial Bakery Abuja?

1. Statement of hypothesis

H₀₁: There are no significant effect of cultural factors on the performance of Imperial Bakery.

H₀₂: There is no significant effect of technological factors on the performance of Imperial Bakery Abuja.

H₀₃: Political factors does not have any significant effect on the performance of Imperial Bakery Abuja.

1. Scope and Limitations of the Study

The scope this study will be limited to the examination of the effect of environmental factors on the business performance with particular reference to Imperial Bakery Abuja.

The limitations faced by the researcher in the course of this study include the following:

1. Finance: Lack of adequate funds tends to diminish the vital information that is supposed to obtain, which will thoroughly enhance the findings of this research work.
2. Data: The shortage of comprehensive information is another constraint faced during the research, since most of the employees and customers of the establishment especially the owner and management staff of imperial bakery were very reluctant to share relevant information with the researcher.
3. Time Factor: Insufficient time to undertake the research was also identified as the constraint of the research work and the task of combining lectures and writing of assignments and presentations of term papers in the lecture hall was very cumbersome. Since most of the time, have to forfeit some lectures in other to meet up with my research work.

1. Significance of the study

The research work provided insight into the dynamism of business environment through which major and minor constraints in the environment were identified, the role of environmental factors in ensuring as well as heralding survival and growth of business organisations in relation to danger posed by these environmental factors were identified. The work has equally placed environmental factors in the fore front of business survival and growth thus enlightening that the success of any business organisation is contingent on understanding the environmental factors.

The findings of this study contribute to the knowledge on the effect of environmental factors on the business performance in Nigeria. The study adds value to the existing literature and establishes the gaps for future research on the same or similar topic by suggesting areas that need further studies to be conducted. This helps policy maker to come out with possible alternative policy intervention on creating conducive business environment to improve the performance of micro, small and medium enterprises in Nigeria.

1. Historical Background of the Case Study

Imperial Bakery was established in August 1999 with its head office in Cape town street Wuse zone 4 Abuja. Since its inception, Imperial Bakeries has since grown to become a synonym for fresh quality bread in the capital city. Made with passion and utmost care, Imperial loaves are rich in nutrients that leave one satisfied and smiling.

The management of Imperial Bakery believes that customer satisfaction begins with total employee commitment; its workforce made up of a team of young, dedicated professionals supported by well-trained and skilled personnel. Imperial Bakeries have taken the time in the past two decades to perfect their recipes and ensure that they produce nothing but the best in honour of what is perhaps the earliest processed food known to man and arguably the most consumed food in Nigeria and around the world.

Imperial Bakeries has since been certified by the Standards Organization of Nigeria (SON) and the National Agency for Food and Drug Administration and Control (NAFDAC). They were among the first bakery in Nigeria to received SON’s seal of approval and have move on to win the hearts of many Nigerians with our delicious products.

PRODUCTS

Imperial Bakery products are baked using specially selected ingredients to give one delicious and affordable product every time. Their skilled bakers pay attention to every detail when crafting each of the products like fine art. The following are the products of Imperial Bakery:

1.  Family Loaf: They are highly nutritious and crafted to not only appeal to ones senses but also because of its size will leave one and the entire family delightfully satisfied. This loaf is ideal for sandwiches and toasts.
2. Imperial Classic Loaf: It is fluffy, yummy, light, and has a free-rising shape to it. One look at this classic loaf makes one want to take a big bite.
3. Imperial Mini Loaf: This is a smaller size of family loaf. This  mini loaf for solo consumers and budget customers.
4. Cinnamon Roll: This bread is made with raisins and enhanced with rich cinnamon extract that is baked to perfection and glazed with caramel. Its large segmented size ensures that everybody gets a piece.
5. Imperial Fruit Bread: The fruit bread is similar to the cinnamon roll except that it is filled with more raisins to give it an extra unique fruity taste.
6. Imperial Wheat Bread: It is 100% made with whole wheat and without any white flour. This is to ensure that one get exactly what one is asking for; which is a healthy yet tasty alternative.
7. Imperial Cake: This English type of cake is delicately flavoured so that it is not too sweet and not too plain either. Its rich delicious taste makes for a perfect family snack.
8. Imperial Cup Cakes: This small but yummy product is the perfect desert.
9. Imperial Burger Buns, Large & Mini: The burger buns are ideal for making sandwiches and burgers of all sorts. Alternatively, they could be served as bread roll appetizers, and could be served with tea or soups.
10. Chin-chin: This is a product we are especially proud of because it has its roots in West Africa. It’s so good it was named twice. The Chin-Chins are made with the finest ingredients, which are mixed, flattened and deep-fried to perfection. Because of its bite-size feature, it is ideal for any occasion from parties and luncheons to weddings and picnics.
11. French stick (Baguette): The baguettes are also ideal for making sandwiches. Hard on the outside, soft on the inside and adequately salted to perfection.
12. Meat pie: The size and taste of the meat pies makes it a perfect snack for all occasions. Stuffed with carrots, potatoes, onions, lots of beef, our meat pies are tasty and highly nutritious.
13. Doughnut: Our doughnuts are deep-fried using cholesterol free vegetable oil whilst maintaining its rich taste. This item is perfect for birthdays, picnics, luncheons, and weddings. Our doughnuts come in different varieties so you have options.

1. Definition of Key Terms

Business environment: Business environment is the sum total of all external and internal factors that influence a business. These are force that affect the operation of business organization (Nnamani & Ajagu, 2014)

Business Performance: Business performance is defined as the operational ability to satisfy the desires of the company’s major shareholders” (Smith & Reece, 1999), and it must be assessed to measure an organisations’ accomplishment.

Customers: A customer is an individual or business that purchases the goods or services produced by a business (Investopedia, 2019). These are the people or organization in the environment who buy goods and services from the organization. 

Economic Environment: The economic environment of an organization is a set of economic indicator which influences the cost of all input and the ability of customer to buy goods and services (Nnamani & Ajagu, 2014).

External forces: These are forces that are not controlled by the business organization. It refers to those forces that are outside the control of the company. They are externally inclined and therefore the management has no control over them (Oginni, 2010).

Internal forces: these are the forces that are controlled by the business organization. It refers to those forces that are within the reach of the company. These forces are internally inclined because they take place within the company and the management has control over them (Oginni, 2010).

EFFECT OF INTERNAL ENVIRONMENTAL FACTORS ON THE PERFORMANCE OF SMALL SCALE BUSINESS ENTERPRISES IN NASARAWA STATE

EFFECT OF INTERNAL ENVIRONMENTAL FACTORS ON THE PERFORMANCE OF SMALL SCALE BUSINESS ENTERPRISES IN NASARAWA STATE

ABSTRACT

This study examines effects of internal environmental factors on the performance of small scale business enterprises in Nasarawa state. Specifically the study seek to assess the effect of capital on small scale business enterprises performance in Nasarawa state, examine the effect of entrepreneurial skills  on the performance of small scale business enterprises and examine the effects of marketing strategy on the performance of Small Scale Business Enterprises in Nasarawa state. The population of the study consists of 1753 registered SME’s in Nasarawa but the study sampled only 95 of them randomly selected using Yamane (1967) formular. The research design adopted for this study is survey design and experimental research. The research analyzed the respondent’s opinion using tables while hypothesis was tested using regression analysis (OLS).  The findings of this study shows that internal environment factors have significant effects on the performance of small scale business enterprises in Nasarawa state. Specifically, the study shows that capital, entrepreneurial skills and marketing strategy have significant effect on small scale business enterprises performance in Nasarawa state. Finally the study recommends that the federal government should come up with economic policy and regulatory framework that will make capitals available for owners of small scale business enterprises or entrepreneur to enhance their performance and also entrepreneurs should ensure they acquire all the necessary skills and marketing strategies that will promote their performance.

Keywords: Internal environment, small scale business, enterprises, capital, entrepreneurial skills, marketing strategy

CHAPTER ONE

INTRODUCTION

1. Background to the study

The role of small and medium scale enterprises in the most developing nations cannot be overemphasized. Worldwide, Small scale business enterprises are regarded as the engine for growth, job creation and human development, particularly in developing countries. Available studies have over the years confirmed that Small scale business enterprise provides a strong foundation for economies around the world providing about 60% of employment and constitute about 95% of enterprises around the globe (Keynes, Kolstad & Wiig, 2017). A report released by the World Bank Group on registered formal SMEs is that they contribute up to 45% of employment and 33% to GDP in developing economies.

Small and medium scale enterprises comprise of business that employed little capital for establishment and operate small scale business with the objective of making profit. Small and medium scale enterprises have continued to increase and survive because they require few capitals for establishment, less labour, low technological knowledge and little managerial capacity for establishment (Essien, 2014). Also, small and medium scale enterprises are seen as major tool for reducing unemployment and poverty through the generation of employment, contribution to rapid economic growth and export earnings, industrialization and utilization of local resources.

A business internal environment plays the most significant part in charting out the direction and the unique qualities that define it from others (Aldrich, 2015). This micro environment comprises of factors which a firm can effectively use in adapting to the ever-changing external environment. Unlike the external, the internal environment factors are largely within control of the management of a business enterprise. Such factors as tangible business resources, its workers, its management, competencies, production, marketing and strategic choices are so strong conventional contributors to the effective and efficient operation of any business (Kibera, 2016).

Each of the internal factors whether tangible or not are significant to the success of the business, based on how each firm employs and maintains them (Nzomo, 2015). A business plant, machinery, equipment or tools for instance should be those that are cost effective in terms of their acquisition, installation, maintenance, repair and replacement. This would make an entrepreneur to retain some funds for other operational plans. These facilities are equally important for the quality and quantity of product output, market size and niche, companies / firm image and general public approval of the company’s product. All these translate into sales, profit and size of a business which effectively define the business success or failure (Karingiti, 2019).

SMEs performance is the ability of a firm to provide value to its stakeholders such as owners, customers, society and government. Aminu and Shariff (2015) defined firm performance as the procedures of quantifying business actions in terms of accomplishing its objectives. According to Abdulmalik, Moahammed and Salem (2014) financial performance such as profit maximization, maximizing profit on assets and maximizing shareholders’ benefits are the core of the firm’s effectiveness. Operational performance measures such as growth in sales and growth in market share provide a broad definition of performance as they focus on the factors that ultimately lead to financial performance.

The performance of small and medium scale enterprises can be significantly influenced by both internal and external environment factors. The success and failure of an organization is solely not determined by the firm’s specific characteristics but also, prevailing factors in the environment in which the firm operates. Small and medium scale enterprises operate in a complex and multi-facet environment which shape organizational objectives and could have a wide effect on the performance of the organization (Eruemegbe, 2015).

1. Statement of the Problem

Small Scale Business Enterprises are the engine of growth and development of most developed and developing nations in the world, but unfortunately the state of economic growth of Nigeria appears to be very low despite the large concentration of businesses in the country. The poor performance of small scale business enterprises in Nigeria and its low contribution to the development of the country is due to some economic and environmental factors such as high unemployment rate, low income level, high inflation, low interest rates, high tax rates, fluctuation exchange rate, poor consumer confidence levels, recessions size of the available market, low demand for the company’s products or services, competition, etc. Small and medium enterprises (SMEs) in Nigeria have not performed creditably well and hence have not played the expected vital and vibrant role in the economic growth and development of Nigeria, (Basil, 2005). Year in year out, government at federal, state and local level make an effort in support of entrepreneurship development, but still the contributions of SSBs to economic development is low. It is worrisome that despite the incentives, favorable policies, regulations and preferential support by government aimed at improving SSBs, the sub-sector have performed below expectation in Nigeria (Abiodun, 2011). Inspite of the large volume of studies on Small Scale Business Enterprises in developing countries, there is a death of literature on studies relating to internal environmental factors on the performance of small scale business enterprises.

1. Objectives of the Study

The main aim of this study is to evaluate the effects of internal environmental factors on the performance of small scale business enterprises in Nasarawa state. Thus, the specific objectives of this study are to:

1. Assess the effect of capital on the performance small scale business enterprises performance in Nasarawa state.
2. Examine the effect of entrepreneurial skills on the performance of small scale business enterprises in Nasarawa State.
3. Examine the effects of marketing strategy on the performance of Small Scale Business Enterprises in Nasarawa state.

1. Research Questions

The study was designed to seek answers to the following research questions:

1. What are the effects of capital on small scale business enterprises performance in Nasarawa state?
2. What are the effects of entrepreneurial skills on the performance of small scale business enterprises?
3. What are the effects of marketing strategy on the performance of Small Scale Business Enterprises in Nasarawa state?

1. Statement of Hypothesis

In order to achieve the stated objectives of the study, the following formulated hypotheses are proposed for testing:

H₀₁: Capital has no significant effect on the performance small scale business enterprises in Nasarawa state.

H₀₂: There is no significant relationship between entrepreneurial skills and performance of small and medium scale business enterprises.

H₀₃: Marketing strategy has no effect on the performance of Small Scale Business Enterprises in Nasarawa State

1. Scope and Limitations of the Study

This study assesses the effects of internal environmental factors on the performance of small scale business enterprises in Nasarawa state. The emphasis is to identify the influence of factors such as capital, entrepreneurial skills and marketing strategy on the performance of small scale business enterprises.

The major limitations of this project are the difficulty in obtaining data as is usually the case with most project.

The lack of data is further compounded by the fact that the researcher has a very tight schedule programme.

For instance, time is too short for the research considering the time within which to submit the project and combined with academic work load could not enable the researcher to carry out wide research on the general environmental impact on small scale business. Finance is another hitch encountered during the course of study.

1. Significance of the Study

Given the importance of small scale business enterprises to the nation’s economic growth, and also the role they plays in reducing poverty and unemployment, the result of this study would be of great importance to government, researchers and major stakeholders such as investors, staffs, managers, business consultants, financial analyst and consumers. It’s expected to contribute to small scale business enterprises sub-sector development process in developing countries and even developed countries that share similar environmental factors influencing business performance.

In a globalized economy, there is increase recognition that identifying the factors hindering small scale business enterprises performance in a developing country may be meaningful in terms of assistance developed countries provide to developing countries in the area of small scale business enterprises development. Thus, the result of this study is expected to help both Nongovernmental organizations (NGOs) and international agencies that assist in the area of Small Scale Businesses and entrepreneurship development.

The study would draw the management and policy maker’s attention to the urgent need for specific management practice to enhance the effectiveness and sustainability of small scale business enterprises in Nasarawa town and states at large. The study can also assist local entrepreneurs in formulating strategies that will guide against poor business performance.

1. Definition of Key Terms

Small Scale Business: Is defined as some of all activities which involve distribution of goods and services to making of profit in the business.

Some of the terms used in this study include political economic factor and cultural factor.

Internal Environment:  The internal business environment comprises of factors within the company which impact the success and approach of operations.

Capital: Capital is the money or wealth needed to produce goods and services. In the most basic terms, it is money. All businesses must have capital in order to purchase assets and maintain their operations. Business capital comes in two main forms: debt and equity.

Entrepreneurial Skills: Entrepreneurship is ‘an individual’s ability to turn ideas into action. It includes creativity, innovation and risk-taking, as well as the ability to plan and manage projects in order to achieve objectives.

Marketing Strategies: A marketing strategy refers to a business’s overall game plan for reaching prospective consumers and turning them into customers of the products or services the business provides. A marketing strategy contains the company’s value proposition, key brand messaging, data on target customer demographics, and other high-level elements.Performance:  A Performance is an act of staging or presenting a play, concert, or other form of entertainment. It is also defined as the action or process of carrying out or accomplishing an action, task, or function