CHAPTER ONE
INTRODUCTION
1.0.
Background of the study
One of the main issues that concern
most of the policy makers at the helm of affairs is how to improve the economy
through the support of small and medium scale enterprises in order to sustain
their economic development. Therefore, a major concern to policy makers in
different countries is to identify appropriate strategy to support and develop
small and medium scale enterprises (SMEs). In order to tackle global challenges
impeding sustainable development, world leaders came up with the Millennium
Development Goals (MDGs) in 2000, were expected to be met by 2015. The first of
these MDGs is “to eradicate extreme poverty and hunger”. Consequent upon this,
it became very pertinent for the nations of the world to create strong
socio-economic structure that would serve the interests of majority of their
citizenry, especially the poor. Since then, different countries have been
working to raise the living standard of their citizens in order to achieve this
goal, among other Millennium Development Goals (Etuk, Etuk, & Baghebo,
2014). The importance of small and medium scale enterprises in a developing
economy like Nigeria can be enormous because Nigeria’s economy is dominated by
small and medium scale enterprises in agricultural, construction,
manufacturing, commerce and industry, services, trading, etc. Small and Medium
Scale Enterprises (SMEs) play a significant role in both developed and
developing economies. Statistics as shown that SMEs contribute over 55% of
gross domestic product (GDP) and over 65% of total employment in developed
economies and it also play a significant role by contributing 60% of GDP and
over 70% of total employment in developing economies (Small and Medium Scale
Enterprises Development Agency of Nigeria, 2012). Small and Medium Scale
Enterprises are very vulnerable, and their failure rate is very high; so high
that no nation can afford to ignore it. The Business Statistics Office (UK)
observed that “60 per cent [of small business] fails in the first three years
of existence. In the United States, the picture is much the same with “eighty
percent of all start-ups succumb within their first five years”. Nigerian
Economic Summit Group (2002) also emphasis that about 70 per cent of Small
Enterprises in Nigeria failed within the first five years of operation. With
this being the case, greater efforts are urgently needed to reduce the fatality
rate of Small and Medium Scale Enterprises. Ultimately, a more robust SMEs
sector will help to build a nation’s wealth, without it having to woo
investments of sophisticated technology. Although, every nation including
Nigeria has instituted assistance programs to aid its own SMEs, the
entrepreneurs’ efforts count most in determining the performance of this
industry. It is the careful selection and correct application of appropriate
technique that determine entrepreneurial success. A business
organization is an individual or group of people that collaborate to achieve
certain commercial goals. Some business organizations are formed to earn income
for owners. Other business organizations, called nonprofits, are formed for
public purposes. These businesses often raise money and utilize other resources
to provide or support public programs. Organization is a broader term, as it
includes businesses and other groups of people not organized for commercial
purposes. Clubs and sports teams are examples of non-business organizations.
Organizations have a specific structure and hierarchy. People and systems
create a culture within the organization and guide its operation. Different
organizations have different policies, work flows and objectives.
Management is universal in the modern
world. Every organization requires the making of decision, the coordination of
activities, deciding in advance when, why how and who does what, setting of
standards, measuring performance against standard and reviewing the standards.
Numerous managerial activities have their own particular approach to specific types
of problems which fall under headings such as production and operation
management human resources management, management of health delivery system and
others.
According to Nwachukwu (2007)
management is the act of getting things done through and with others. Another
definition by Launer (1999) he refers to management as the corner stone of
organization effectiveness and is concerned with arrangements for the carrying
out of organizational processes and the execution of work. Kountz (2006)
management is an operational process initially best dissected by analyzing the
management functions. The five essential managerial functions are planning,
organizing, staffing, directing, leading and controlling. These tasks of
management are interrelated and actually dove tail into each other. Planning
sets the stage by helping the organization to determine where it wants to go
(objectives) and how to get there (strategies and tactics). These objectives
and strategies determine the type of organizational structure most suitable for
the organization.
Organization structures are designed to
fit the strategies which are meant to achieve the objective and both strategies
and objectives are the outcome of planning. There is no human endeavor that
does not require proper management for it to function efficiently. For every
type of organization either government establishment or private enterprise,
there is need for qualified managers to handle its activities. Management and
organizations are seen as the product of their historical and social times and
place and to understand the evolution of management theory in terms of how
people wrestled with matters of relationship at a particular time in history.
The lesson here is to learn from the trials and tribulation of those who have preceded
us in steering the fortunes of formed organization. It is now obvious to
everyone that, of the factors that are necessary for economic take off, none is
to be stressed more often than management characteristically, the developing
countries are known for their low technological progress and extremely low
labor productivity. A realistic approach to the development of these countries
call for qualified high-level manpower especially at the management level. In
present day organizations it is the manager that determines the appropriate
technology required and the best way to efficiently and effectively utilize all
types of resources, be it physical or human. The Nigeria scene portrays the
situation very adequately. Despite her abundant natural resources and rich
environment, the economy of Nigeria has not quite taken off most organization
do not operate smoothly and efficiently. The management cadre which is a sine
qua non for economic development is lacking. The government in many instances
has assumed the function of entrepreneur and taken over the management
functions, instances abound to convince everyone that the government has not
fared well as a good manager, and has even performed worse than private
entrepreneurs. The need for management is essential to the development of
organizations, be it small scale or large scale industries, therefore, whenever
people work together, there is generally a need for the coordination of efforts
in order to attain expected result in reasonable time, and with minimum amount
of money, discomfort or energy. A manager is expected to be vast in knowledge
and to possess special talents or abilities quite different from non-managers.
1.1. Statement
of the problem
No organization, no matter its size can
survive without an effective managerial function and good organization,
therefore, there is need for sound and qualified man and women to operate in
every organization especially small scale enterprises; and also there should be
capable hands to manage the financial affairs in order to ensure a sound system
of operation in the enterprise.
It is important to note that, effective
operation is not exclusive concern of only one person or department within an
organization, it must involve every staff who should have the interest of the organization
at heart in order for it to achieve it set goal and objectives.
This study felt that business
organization and managerial efficiency, a key pillar for business survival, may
be adapted and applied to ensure sustainable development of SMEs, on a more
consistent basis. Business organization and managerial efficiency literature
focused primarily on large businesses. The reaction of SMEs is naturally one of
being intimidated; and therefore, they prefer to operate in the usual manner
and mindset. Where there is no change, different results cannot be expected.
Anthony Robbins, the most famous
Neuronlinguistic Programming specialist, once remarked: “To keep on doing the
same thing and expect a different result is a form of insanity”. For reasons
stated above, a research on business organization and managerial efficiency for
SMEs is very essential. Therefore, SMEs should not be discouraged to adopt business
organization and managerial efficiency if they have not done so. It can start
off with its own style, and incorporate business organization and managerial
efficiency gradually. The study therefore seeks to assess the impact of
business organization and managerial efficiency on small scale enterprises in
Nigeria.
1.2. Objectives
of the study
This project intends to assess the
impact of efficient management function in the survival of small-scale
industrial towards the achievement of the overall goals and objectives of the
organization.
Specifically, this project has the
following objective:
- To
find out the relationship between management business organization and
managerial efficiency on small scale enterprises. - To
examine some strategies for business organization and managerial
efficiency set out by small scale enterprises. - To
find the role of business organization and managerial efficiency on small
scale enterprises.
1.3. Research
questions
In order to achieve the stated
objectives for the study the following research questions will be asked:
- What
relationship exists between business organization and management efficiency
of small scale enterprises? - How
does business organization and managerial efficiency impact small scale
enterprises?
3. What role does business organization
and managerial efficiency play on the growth of small scale enterprises?
1.4. Research
hypotheses
- :
There is no significant relationship between business organization and
managerial efficiency on small scale enterprises. - :
There is significant relationship between business organization and
managerial efficiency on small scale enterprises. - :
Business organization and managerial efficiency has no impact on small
scale enterprises.
Hi: Business
organization and managerial efficiency has no impact on small scale
enterprises.
1.5. Significance
of the study
The essence of this project cannot be
over emphasized because it will help Small Medium Scale Entities understand how
effective management is the yardstick and bedrock of every organization,
thereby, enhances the achievement of organizational objectives. Furthermore, it
will guide and give a sense of direction to the entire organization in the area
of channeling resources and enhancing productivity and also giving status to
the organization.
1.6. Scope
of the study
This research work is on business
organization and managerial efficiency on small scale enterprises of eatery
centers (tantalizer) in Rivers state, using tantalizer as a case study. The
study could not cover other eatery centers due to representative nature of
tantalizer and proximity to the researcher.
1.7. Limitations
of the study
The study was carried out to
investigate the impact of business organization and managerial efficiency on
small scale enterprises. The study is limited to eatery centres (tantalizer) in
Rivers state, in Port Harcourt Local Government Area to be precise
1.8. Definition of terms
Business: This
is a person’s regular occupation, profession, or trade.
Organization: This
is an organized group of people with a particular purpose, such as a business
or government department.
Management: This
is the process of dealing with or controlling things or people.
Efficiency: This
is the state or quality of being efficient.
Small Scale Enterprise: This
is a 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.
Business Organization: This
is an individual or group of people that collaborate to achieve certain
commercial goals. Some business organizations are formed to earn
income for owners. Other business organizations, called nonprofits, are
formed for public purposes.
Managerial Efficiency: This
is the process of dealing with or controlling things or people in such a way as
to achieve efficiency.
Rivers State: This
is a state in southern Nigeria in the eastern part of the Niger
Delta.