Full Project – Critical analysis of causes of business failure on milling organizations in Nigeria

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CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Businesses are not just established for the more fact that they must exist. They are set-up to accomplish some predetermined objectives and to make profit. The successful attainment of the set objectives of a business is therefore the essence objectives of a business establishment. Beumback (1983:32) Wrote “every business function, every business institution, every person engaged in performing these functions in or for a business institution is seeking t satisfy human wants and needs are satisfied effectively, economically and therefore profitably these are successful and remain in existence.

For a business organization to achieve its objectives, all the functional parts must be in perfect working order, that is, the whole sub-systems that make up the system, must be very effective and efficient. Anything short of this, may lead to poor performance and total business failure.

Uzoma (1991:29) defined failure as the inability of a particular business to continue to function. He had earlier explained that businesses are normally established to continue as a growing concern, concept where they have particularly been established to take advantage of a sudden business opportunity, which is not long-term. To support the continuity concept, Katz and Kalm (1966) noted that to survive, open system must acquire negative entropy. As we know, business operates in an open system; therefore, it must acquire the negative entropy to remain alive. The negative entropy law as noted, stated that, a system survives and maintains itself by importing more energy from its environment than it expends and that it will continue to survive as long as it continues that importation and storage of these energies. Entropy literally means the tendency of heat and other forms of energy in universe to spread out evenly and gradually disappear. If a system affects the entropy on the negative, it continues to exist. Knootz and O’Donnell offereda comprehensive application of negative entropy ‘system approach to management. The instance above, are employed to support the fact that business not formed to die, but to continue as growing concern to keep their owners, employees and the society moving.

In the past, cases of business failures in Nigeria were minimal or non-existence. Businesses were set up and they stood, made profits, achieved their defective and even expanded. But the story now is different as confirmed by this extract from Newswatch October 5, 1987, Nigeria has been known both good times and bad times when it was pining away in poverty.

Narrowing down on the milling organizations in Nigeria where study is focused. Some of the milling organizations in Nigeria are battling with failures such as flour mill industry which is located at Apapa Lagos. General cotton mill which was established in 1970 and locate at onitsha in Anambra state.

A perplexing situation had naturally been built in the Nigeria business sector, as they are now characterized with failure: set objectives are no longer met, profit are not made there is a decline in the quantity and quality of goods and services, employees are constantly being sacked and most disturbing is the fact that they are fast going out of business. This situation as reported aboved is confirmed by this extract from TELL Aril 20, 1998. “The Senario in the #26.12 billion is being lost to continue export, while over 2 million is jobs are threatened in an industry where Nigeria held sway as a prime exporter just a few decades ago”. The report further stated that already some of major oil palm companies in the eastern part of the country have packed up.

One fascinating thing is that, at the time when businesses were having in boom, the technological level in the country was not as sophisticated and advanced as it is now, for example, almost every business organization now makes use of the computer given the present technological level and advancement in human resources, in terms of education skill and general knowledge, one would naturally assume that any business undertaken would succeed, but the reverse is the case. This situation has posed a problem and challenge to businesses continued existence and the national economy.

The issue of business failure in Nigeria calls for serious concern, as it is capable of crippling the economy the economy the earlier something is done to determine the factors occasioning these failures the better for economy. If at one time businesses were set up and they stood, broke even, achieved their objective and then made profits, what is now responsible for this twist of event?

What is now responsible for the dismal performance in this sector even in the face of improved technology? The factors that inhibit the success of business on milling or organization in Nigeria are what this research is set to find out.

1.2 STATEMENT OF THE PROBLEM

The purpose of every business as stated earlier is to achieve some defined objectives and to make profit. This is noted by fubara (1985,4) “Business exists because profit is made and when profit disappears business can no longer go on”.

Business purposes of Nigeria are hardly realized, private and governmental owned businesses are only shadows of themselves, they are crumbling and crewing – the quality and quantity of their products are daily depreciating even workers appointment are increasingly being terminated – thus throwing people into the unemployment market and thereby compounding the already complex situation in the country.

Work equipment and machinery are now going obsolete cannot be repaired or replaced as to enhance productivity: wastes are on the rise; production costs are also on the increase, thus making product price rise. All these affect the economy negatively.

The epidemic in the sector must be left unchecked as the likely consequences can be devastating to the economy, since the backbone of the economy is business.

Businesses are not set up to fail, but why are they failing? What factors are responsible for these mass business failures? What is really causing this unwanted objective? What are the causes of these disagreements that should not allow business organization make progress. This research is designed to find out why business falls in Nigeria.

1.3 PURPOSE OF STUDY

The purpose of the research is to examine the factors that are responsible for mass business failures on milling organizations in Nigeria and to proffer solution to them.

1.4 RESEARCH QUESTION

To address the issue of business failure in Nigeria, the research questions are posed.

To what extent do management styles account for business failure?
To what extent does management function lead to business success?
To what extent do environment factors contribute to business failure?
To extent does business funding result in failure?

SIGNIFICANT OF THE STUDY

The basic question here is why it is considered useful to embark upon this study? What articulated contributions can the result of this study make in eradicating business failures in Nigeria?

It is hoped that the result of this study will help in pointing out the causes of business failure and provide ways of getting rid of these failures.

This study will also help the business men in knowing the ways that lead to success in business and also following those ways.

This study will provide solutions to the factors occasioning mass business failure in Nigeria and also to provide a guide to forestall future occurrences.

1.6 LIMITATION OF THE STUDY / SCOPE

The researcher encountered certain limitation in course of the study which include.

Time: This research was greatly affected by time allowed for its completion. This study is an academic exercise. The research has other academic works to accomplish and so had to share the availability time between the study and his other academic works.
Absence of Enough Data: This is also one of the limitations the researcher encountered in course of carrying this research work, in this research there was no enough data the researcher then kept on further investigation in other to obtain data that will enable the study stand the test of time.
Research Instrument: The oral interview conducted was not well spread and enough questions were not raised to get adequate response from intervieviewees. The questionnaire used for data collection does not contain enough facts and the number administered was not enough too to gather all facts sought.
Financial Constraints: Which drastically affected the extent of research work, inadequate financial support deployed the researcher in taking quick decision on how to facilitate quick study.

1.7 SCOPE OF THE STUDY

This sub-heading deals with the context of the research i.e. what the research is all about or what it is concerned with.

This research work is concerned with the relevant information that will be of help to the milling organization in order to overcome the problems of business failure.

It tries it look into reason behind business failure in the milling organization and how to overcome then. This will create a good and conducive atmosphere for management.

1.8 DEFINITION OF TERMS

Business: It has to do with you the act of buying and selling, commerce, trade3 and distribution of goods and services.

Failure: Lack of success to business or the inability for a particular business to continue to function.

Milling: Put through or machine for grinding

Organization: This is the act of organizing.

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Full Project – Critical analysis of causes of business failure on milling organizations in Nigeria

Full Project – Critical analysis of causes of business failure on milling organizations in Nigeria

Full Project – Critical analysis of causes of business failure on milling organizations in Nigeria

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