EFFECTS OF GLOBALIZATION ON THE DEVELOPMENT OF DOMESTIC MANUFACTURING INDUSTRIES IN NIGERIA
(A STUDY OF DANGOTE FLOUR MILL PLC)
This study examines the effects of globalization on domestic manufacturing industries in Nigeria usingDangoteFlour Mill Plcas case study; Itadopted a survey research design to elicit data. 65 employees of Dangote Flour Mill Plc were selected using scientific sampling technique. Questionnaire was used as the instrument for data collection and the collected data were statistically analysed using the simple percentage, and chi- square non parametric technique of hypothesis testing. The analysis was carriedout using statistical Package of Social - Sciences (SPSS) as a tool. All the hypotheses tested were rejected. The finding revealed that globalization has impact on the performance of domestic manufacturing industries in Nigeria and also the development .of domestic manufacturing industry has effect on prices on goods and services. Finally, the studysubmittedthat globalization positively affect the performance of domestic manufacturing industries. Therefore, the domestic manufacturing industries in Nigeria should embrace the benefit that comes with globalization.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.1 Background of the study
1.2 Statement of the problem
1.3 Objective of the study
1.4 Research Questions
1.5 Research Hypotheses
1.6 Significance of the study
1.7 Scope of the study
1.8 Definition of terms
1.9 Historical Background of the study
CHAPTER TWO: LITERATURE REVIEW
2.2 Conceptual framework
2.3 The impact of globalization on the manufacturing sector in Nigeria
2.4 Forces of globalization
2.5 Challenges for Nigeria
2.6 Theoretical framework
2.7 Summary of the chapter
CHAPTER THREE: METHODOLOGY
3.2 Research design
3.3 Population ofthe study
3.4 Sample and sampling technology
3.5 Data collection method
3.6 Data collection instrument and its administration
3.7 Validity and reliability of the instrument
3.8 Techniques of data analysis
3.9 Limitations of the study
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.2 Data presentation and analysis according to research question
4.3 Data presentation and analysis according to research question
4.4 Discussion of Findings
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.4 Suggestion for further studies
1.1 BACKGROUND TO THE STUDY
Globalization could simply be described as the integration of national economies through trade investment and financial interaction. The concept of globalization began to thrive shortly after the end of Second World War when the allies led by the united State decided to support a world wide opentrading and investment system. The collapse of the Soviet Union,the fall of the Berlin wall and anti-climatic end of the cold war aided the emergence of the ascendancy of the globalization trend. This resulted in the hurried marketizationand democratization of the former soviet states of Eastern Europe and selective absorption into mainstream western Alliance system of the hitherto to communist States. Beyond this however, globalization aided by supersonic transformation in information technology integrated the world through pushof free market economy as well as liberal democracy. (Olaleye, 2002).
Globalization has increased the volume of trade by the developing nations in general and that of Nigeria in particular. The continuous growth in. imports and exports is seen as evidence that countries are becoming independent on global markets.
Globalization has also brought about revelation, in technology. In fact one of the propelling agents is technology. There have been developments of new and improved method of doing traditional things otherwise called technological progress. The Banking sector more than any other sector is the hardest hit (Olajide, 2002).
1.2 STATEMENT OF THE PROBLEM
There is wide spread of trade around the globe thereby increasing the level of competition in the manufacturing industry globally. The domestic manufacturing industry in Nigeria is faced with the problem of competing with the developed countries who through globalization continue to improve and advance on daily basis in innovationand in information technology. The technological environments are moving at supersonic speed, Computers, Telephones, Televisions and wireless forms of communication now are merging into telecommunication both to create multimedia products and allow individuals in the developed world to communicate with others, hereby improving manpower skills, improving in method of production, efficiency and effectiveness of business organization. Globalization has helped these developed countries to achieve quality, quantity, price, durability, manpower skill, and etc. If the domestic manufacturing industries fails to heed the lessons of globalization it will be gradually whipped into line by the forces unleashed by globalization.
Therefore, it is upon this premise that a study of this nature is necessary in order to identify the effect of all afore mentioned factors on the development of domestic manufacturing industries in order for them to be able to compete globally.
1.3 OBJECTIVES OF THE STUDY
The main objective of this study is to examine the effect of globalization on the development of domestic manufacturingindustry with Dangote Flour Mills PLC as a focus. This, in order to achieve the above objectives, the following specific objectives will be our guide.
1. To examine whether the development of domestic manufacturing industries have effect on prices of goods and services?
2. To examine whether increase in the level of competition with globalization have effect on prices of goods and service?
3. To examine whether organization output' in, domestic manufacturing industry affect price?
4. To examine whether quality plays a role in the acceptability of goods and services of domestic manufacturing companies globally?
1.4 RESEARCH QUESTIONS
In order to achieve the objectives of this study, the following are the research questions:
1. Does the development of domestic manufacturing industries have effect on prices of goods and services?
2. Does increase in the level of competition with globalization have effect on prices of goods and service?
3. To what extent does organization output in domestic manufacturing industry affect price?
4. To what extent does quality plays in the acceptability of goods and services of the domestic manufacturing companies globally?
1.5 RESEARCH HYPOTHESES
To provide, answers to the research-questions the following hypotheses will be tested.
1. Globalization has impact on the performance of domestic manufacturing industries in Nigeria.
2. The development of domestic manufacturing industries has effect on prices of goods andservices.
1.6 SIGNIFICANCE OF THE STUDY
A study of this kind is expected to make theoretical and practical contributions to manufacturing companies in Nigeria. Thus, Nigeria is the most populous black nation in the world and the effect of globalization on the country could be generalized for other countries in the sub-Sahara Africa, so the effect of globalization process on Nigeria has a determinant effect on other countries in Africa.
Also, it is hoped that this stud' will provide manufacturing companies an incite on how organizations, can cope in the ever-changing, turbulent business environment in developing countries and how organization activities can be organized in order to cope effectively with opportunities and trend in the business environment.
Also, how to overcome industrial or economic recession changes in social variables increase competition and technological advancement. In addition, it is hoped that this study will help the policy makers to see need to invest more in technology in a nation like Nigeria that encourages small and medium enterprises scale (SMEs).
This study is also expected to prove to scholars and imminent researchers, that it is possible to manufacture quality product in a developing nation like Nigeria with Globalization.
Furthermore, for Business administration student who aspires to become Managers manufacturing industries, itis expected that this study win expose them on how products can be advertised and distributed in the global village without stress and with less cost, thanks to globalization
1.7 SCOPE AND LIMITATIONS OF THE STUDY
The basic premise on which this study is based is the effect of globalization on the development of domestic manufacturing industries in Nigeria with DangoteFlour Mills Plc as a case study. The study covers representative numbers of the generality of the workers in the organization. No special consolidation is given to sex, age and Nationality in collecting data from the respondents.
The first set-back encountered in the course of carrying out this research is the time limitation. The Nigeria academic environment has been largely infected by irregularities and uncertainties and as such abnormal academic calendar.
Another key limitation was that of finance. Since I do not have a computer system. of my own I haveto pay to get the research work typed out. Furthermore the fear of insincere response on the part of the respondents even when a questionnaire is administered on them.
1.8 DEFINITION OF BASIC TERMS
Globalization: Globalization could simply be described as the integration of national economies through trade investment and financial interaction
Manufacturing Industries: A manufacturingindustry is an industry where goods are produced and they prepare what is known as manufacturing account. A manufacturing account is basically a list of cost relating to the production of goods (i.e. factory relation expenses).
Development: Is a process of improving the economy of a country by increasing the amount ofbusiness activities.
Technology Development: It is a process of using advanced scientific mechanism in an industry to improve it productivity.
Manpower: All the people who are available to do a particular job or to work in a particular place.
Management: Is the art and science of getting done through other people using both human and non-human resources.
Performance: The degree of efficiency and effectiveness with which organizational objectives are achieved. Thus efficiency and effectiveness are the determinants of performance in the study.
Strategy: The unified comprehensive plan that the enterprise develops to achieve its objective.
Enterprises: This is any commercial undertake that is either publicly owned orcontrolled. The word is used interchangeably with organization in this study.
Company: Is an association of a number of person carrying on business for the purpose of a monetary gain, although there are other companies that are deliberately non-profit making.
Business Environment: This is the sum total of the physical and potentially relevant to the organization goals setting and goal attainment which are taken directly into consideration by members of the organization when making business decision and plans.
1.9 HISTORICAL BACKGROUND OF THE CASE STUDY:
Dangote Flour Mills Plc commenced operations in 1999, as a division of Dangote industries limited. One of Nigeria's largest and fastest growing conglomerates. Following the strategic decision of DIL unbundled its various operation, Dangote flour Mills Plc was incorporated in January, 2006. The restructuring was completed in January, 2006 when the federal High court sanctioned a scheme of arrangement where in all the assets, liabilities and undertakings of the erstwhile Flour division of OIL were transferred to Dangote Flour Mills Plc. From an initial installed capacity of 500 MT per day at its Apapa mill, Dangote flour has expanded rapidly by opening in quick successions, Three other flour mills in Kano (2000), Calabar (2001) and installed capacity of 5000 MT per day but three of them were subsequently expanded resulting in a total installed capacity 5000MT per day distributed as follows:
Apapa - 1000 MT per day
Kano - 1500 MT per day
Calabar - 1000 Mt per day
Ilorin - 500 MT per day
These expansions were in response to a growing national demand for the flour and flour based products in addition to the company's drive for increased market share. Thus from a modest beginning, the company has grown to become one of the industry leaders within a six year period.
The company has 2 wholly owned subsidiaries, namely
i. Dangote Agro sacks limited
ii. Dangote paste Limited
In line with DIL's business philosophy of establishing a document presence in any sector it operate in these subsidiaries occupy leadership position in their respective industries.
The company is in the business of flour milling, processing and marketing of branded flour its product portfolio comprises of the following:
i. Bread flour
ii. Pasta semolina and
iii. Wheat offal's (bran's)
FLOUR MILLING TECHNOLOGY AND PROCESS
In order to transform wheat into high quality flour the deployment of state of art plant and equipment as well as technical expertise is critical DFM's mills across the country equipped with the latest flour milling technology available in the world. All mills were purchased installed and commissioned by world renewed milling equipment supplies. The butter Group of Switzerland (Buhler)
DANGOTE FLOUR·MILLS GROUP OVERVIEW
Despite the fierce competition, DFMremains a significant player in the flour milling and associated products industry.
Dangote Flour Mills Plc was incorporated in, 2003 with its registered office at 8 Rycroft Road, off Liverpool Road, Apapa, Lagos.
Dangote flour mills PLC entered into management and technical services agreement dated 2nd January, 2006 with Dil. The Agreement is for an initial period of 5 years subject to termination by either party in accordance with the terms of the agreement.