CAUSES OF FAILURE OF SMAL-SCALE INDUSTRIES IN NIGERIA
( A CASE STUDY OF ENUGU STATE )
TABLE OF CONTENTS
1.1 BACKGROUND OF STUDY
1.2 STATEMENT OF PROBLEM
1.3 SCOPE OF THE STUDY
1.4 AIMS AND PROBLEM
1.5 LIMITAITONS OF STUDY
1.6 DEFINITION OF THE TERM
2.0 LITERATURE REVIEW
3.0 SUMMARY OF FINDINGS
Whenever a business fails, we tend to point at different type
of internal reasons like failure of major products, a bad investment decision, structural rigidity or management incompetence or the root cause, business failure could also result from external factor like competition, change in government regulations, scarcity of raw materials etc. Whatever may be the reasons, it is relevant for manager to get to know them with a view to optimizing then for their company advantage.
Apart from the general know reasons, some factors are peculiar to some organizations and entrepreneurs; some of these are most times environment-driven. The ability of organization to prevent such failure depend on whether management align and see the factors in the context of their business strategy, hence there could be full optimization of their respective risks. Such factors among others include the following:
Failure to change and adopt due to past success. It is a wrong action for anyone to describe his organization or business as failure – proof no matter what the level of the past achievement was. Most of the business that collapse in the recent times are dose we have described as excellent in the past. They have failed not because they lack the strength to sustain success but due to their insentivity to changes around them and therefore get trapped by their past success.
Let us take a walk around some industries estate in Nigeria especially in Enugu, Kano, Aba, Lagos and Ibadan, one would find several of these organization that have won different performance awards in the past but are no longer doing well today. This is an unfortunate consequence of their rigidity and management styles.
Whenever an organization losses touch with it’s environment, it becomes less sensitive to competitive demand, thereby operating in an imagined environment. Enron and double A of united state are good example of such organization. For instance, when we are yound, we heard of the financial myth and strength of organization i.e. Dommo, AG Leventis, UTC, UAC, CFAD, Odutola Industry, Adebowale Industry etc. But today, not many of these organization can compete favorably with international counterparts, their positive past performance seems to be a major stumbling block in their process of strategic re-orientation.
It is not worthy to mention that most successful business set up today may collapse in future going by their style and management attitude to strategic failure.
To understand why their success today may bread failure tomorrow, because they may need to look at how the organization are using their success. It is suppose to be a learning experience for future growth, but they have programmed their organizational successful strategies to attract no further success.
During successful business period, some orgnaisaiton create some expensive culture, norms and belief that may turn the organizations resistant to future change the culture also reduces their flexibility to respond to competitive change.
1.1 BACKGROUND OF STUDY
It is good to imagine than experience, it was said that one of the greatest concern in the present time, for both management practioners and entrepreneurs is the rate at which businesses collapse.
Additionally, it was stressed that most business owners that find themselves in one financial problem or the other, today have been noted to have no adequate knowledge of risks facing their businesses.
It was also emphasized that no matter how brilliant an entrepreneur may be, once the internal reporting system of the business fail to report an inherent risk that can impair the business, such a business may possibly suffer some kinds of failure in future.
WHY SHOULD ENTERPRENEURS KNOW ABOUT IT?
This is because many enterprises have failed. It is dangerous for any entrepreneur or management to ignore why they have failed. Just as we learn about our failure and mistakes inbusiness, it is a good management strategy to learn from those business that have failed. This is why a manager of business should learn about corporate and failure
This research work is to highlight the problems that are being faced by small-scale industries in Nigeria, which eventually lead to their massive failure. The research work comprises three main chapters. In chapter one, the researcher in the introduction examine problems identifiable, aims and objectives, limitation of study and finally, definition of the term.
In chapter two, attention of readers where drawn to note the writer, scholars and so many experienced industrialists in the field of this study (causes of failure of small-scale industries in Nigeria.
Finally, in chapter 3, it summarized and concluded on the research and recommendations made.
1.2 STATEMENT OF THE PROBLEM
My research work reveled that the continuous failure of
small-scale industries negates the struggle by the government to revamption of the economy. The effects of this on the economy are – food scarcity unemployment, increase in social ills, adverse balance of payment position experience by the country reduction in per capital income etc. These problems if not adequately checked may result to a total collapse of the economy.
In almost every country, small-scale industry constitutes a greater part of all industries establishment. It has a strategic role to play in the economic development of industrially less advance economies like ours and remains important in the economics of the more highly industrialized nation. Depending too much on the importation of foreign ready-made technology that too often also depend on the importation of raw-materials and expatriate personnel of their operation is never to the best interest of this great nation.
However, small-scale industries in Enugu State are finding it very difficult to grow because of the operation problems confronting deficiency, market etc. are some of the major independents to the progress and survival of this class of industry. They are the major problems for most small-scale industries and one that are best attacked by collective effort.
For the survival of any business, what is produced must be sold and at a reasonable price. Marketing is a managerial function and a very important tool in the operation of a business. The place and role of marketing in any organization is indispensable and cannot be over-emphasized. It embraces the activities we engaged in order to satisfy economy needs and wants.
Nevertheless, good marketing has not always been easy to attain in many of our small-scale industrial organization because there are certain internal and external factors that always militates against marketing activities. Internal factors may include production quality design, promotion, complexity and inefficiencies of the existing distribution channels. But in the case of external force we have limited market, inadequate market, structure, changing consumers life style etc. Some of these problem should be systematically studied so that they could be solved once and for all.
But whatever is the case, the question to be answered in this
study is what problems of small-scale industries in Enugu State encounter, what factors influence them and what should be done so as to alleviate these problem. If these problems should be properly looked into they can provide or presents opportunities to small-scale industries in the state in particular and the country in general.
1.3 SCOPE OF THE STUDY
In highlighting the scope of the study, certain factors are to
be considered, that hinder the research to be fully successful.
These are as follows: -
1. lack of adequate financing
2. no bargaining strength
3. serious marketing problems
One cannot fully conduct the resararch for the study as time is
one of the limitations in the scope of study.
LACK OF ADEQUATE FINANCING:
It is one of the limitations in the scope of study whereby a
student is not financially bomfant and may not be able to conduct the research and collect enough reasons.
This also can be considered as one of the factors in the scope of study. As distant is a barrier of a successful research work.
As Enugu is the only state that could be visited during theis research methodology, there are also some areas it covers.
The problems of the study, objectives and aims of the study, limitations of the study, and so much more.
1.4 AIMS AND OBJECTIVES
This study was carried out basically to probe into the causes
of failure of small-scale industries in Nigeria, with particular reference to Enugu State.
The study also aimed at enlightening the very many Nigerians who engage in small-scale industries and those who intend to go into these industries they might step to take for the economic survival of their enterprise.
I wished to make small-scale industrialist in the state who lack marketing knowledge realize the problems facing them and offer some prescriptions for putting the ailing patient back on it’s feet.
1.5 DEFINITION OF THE TERM
For the purpose of this research work, the definitions of terms
used with the UN standard industrial classification of economic activities.
“Any organization that engaged in the manufacturing of product” by W.C fisher P.S.
The transformation of material into new product”. The transformation may be effected by machines or by manual labour in factory or in the home.
C. NUMBER EMPLOYED:
These are employee who are in the pay roll of the establishments, whether they are part-time casual, or ful time workers.
D. INDUSTRIAL CLASSIFICATION:
The code assigned to the various manufacturing activities covered in this work are based on the revised international standard. Industrial classification of all economic activities (ISIC).
E. SMALL –SCALE INDUSTRY:
Any manufacturing processing and servicing industry with a capacity investment of up to N15,000 in machinery and equipment.
Is communication that inform as potential customers of the existence of products and persuade them these products have want satisfying capitalities.
G. WORKING CAPITAL
This is the amount of liquid (cash) find that a business needs to pay it’s way in the short-term e.g. Payment of wages and due creditors.
H. FINANCIAL CLINIC:
A department that is responsible for providing useful information to our small-scale investors of financial matter.
To give an industry character or character of industrialism i.e devotion to labour or industrial pursuits. That system or condition of society in which industrial labour is the chief and most characteristic failure.
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