BUSINESS STRATEGY AND PERFROMANCE OF SELECTED CONSUMER GOODS FIRMS IN ENUGU STATE, NIGERIA.

ABSTRACT  

The study examined the impact of business strategy on organizational productivity of selected consumer goods companies in Enugu State. Business strategy is a combination of all decisions and actions taken by an organization to achieve set objectives and gain competitive advantage.

The research employs the descriptive survey research design with the use of questionnaire. This entails the use of frequency distribution and percentages to determine the various objectives of the study and to answer the research questions posed by the study. Also, the hypotheses of the study were analyzed using the Ordinary Least Squares (OLS) regression analysis. All these analyses were performed using Statistical Package for Social Sciences (SPSS 22.0) and statistical significance will be accepted at 5% level of significance.

The study revealed that: Corporate strategy has significant influence on productivity of selected organizations in Enugu State (β= 0.161; p<0.05). Organizational strategy has significant influence on effectiveness of selected organizations in Enugu State (β= 0.297; p<0.05). Motivational strategy has significant influence on engagement of selected organizations in Enugu State (β= 0.181; p<0.05). Managerial strategy has significant influence on efficiency of selected organizations in Enugu State (β= 0.145; p<0.05).

The study concluded that business strategy has significant impact on organizational performance of consumer goods companies in Enugu State with respect to efficiency, effectiveness, engagement and productivity. The study further recommends that: For every organization to succeed whether big or small, it must valid and strong plan which will serve as a form of compass for the business. When formulating strategies, management of organizations are advised to take necessary steps accordingly and very religiously. Management of organizations especially small and medium-sized ones should take all the necessary steps to embark on strategy formulation and implementation because the quality and strength of firms’ competitive advantage relates to how effective the internal resources of the firms are utilized. Organizations should continuously analyze their strengths, weakness, opportunities and threats for an enduring adaption to the dynamic environment characterized by political instability, government interference, corruption, sharp practices.

 

 

CHAPTER ONE

INTRODUCTION

1.1        Background to the study

The concept of organizational performance is increasingly gaining momentum into a business organization context in that it explains the level and quality of organizations in terms of product and service delivery in an organization. Organizational performance is a strategic approach to the management of business administration as a quest for efficiency and effectiveness of organizations in terms of the production of goods and services, all over the world especially in developed countries like France, Italy, Belgium, Canada and in the United Kingdom, the strategic plan to every business in those country is a measure of organization performance because business strategies  as conceptualized is an approach that has become a statutory measure to delivering quality services in a dynamic and diverse environment One reason for this is that research relating to both large, medium, small and micro sized firms constantly emphasized a positive relationship between business strategies and organizational performance, because it is often detailed that best business strategies produce outstanding organizational performance (Aremu & Lawal, 2012).

 

In Africa, it has become an evolving phenomenon, as each nation develops its own pattern of business strategy and model and pattern. Performance management in the public service has become almost ubiquitous over the past three decades and has been a central concern of elected officials, public administrators and citizens for decades. Managing performance has been one of the key drivers in the reform of the public sector in recent years and one of the central planks of the reinventing government movement. No wonder, McCourt and Minogue argued that the past two decades have seen a process of almost continuous reform in managing public services through importation of market-type managerial practices into the public sector. The reforms have all aimed at improving the quality of performance in public services, creating new forms of relationship between public and private sector organizations, and new types of regulation and accountability. Conversely, these public management reforms have, in a variety of ways, been transferred to the state systems of developing and transitional economies. Thus, there has been a significant increase in the use of performance management systems in the public sector. The overall aim of performance management is to establish a high performance culture in which individuals and team take responsibility for the continuous improvement of business processes and for their own skills and contributions within a framework provided by effective leadership. So the objective of performance management is to develop the capacity of organizations so that the performance of every individual can be improved. In fact, the purpose of the outcome performance system is not limited to measuring outcomes and outputs. It serves as a mechanism to guide the direction of policy implementation and to ensure that we are doing what matters most.

Business is understood as the organized efforts of enterprise to supply consumers with goods and services for a profit (Zayol, Agaregh & Eneji, 2017). Businesses vary in size, as measured by the number of organizations or by volume of sales but all businesses share the same purpose which is to earn profits (Owolabi & Makinde, 2012). Strategies in business is to aid excellent performance in business organizations. This is of great importance to all kinds of establishment in the world and in all business environment. One reason for this is that research relating to both large, medium, small and micro sized firms constantly emphasized a positive relationship between business strategies and organizational performance, because it is often detailed that best business strategies produce outstanding organizational performance (Aremu & Lawal, 2012).

Strategy is a subject that has exercised the minds of political, military and business leaders for centuries (Kapellas & Siougle, 2017). As business organizations continue to find proper avenues of achieving competitive edge, they also endeavour to achieve competence in every valuable area of their businesses to boost business operations which mostly improve business performance (Adebiyi, 2017).

Long et al. (2012) defined Strategy as large scale action plans for interacting with the environment in order to achieve long-term goals. Pushpakumari and Wijewickrama (2008) posit that Strategy is a pattern of actions and resource allocations designed to achieve the goals of the organization. Long et al. (2012) views Strategy as the determination of long-term goals and objectives, the adoption of courses of action and associated allocation of resources required to achieve goals. Strategy is the direction and scope of a firm over the long-term which gain the advantage in changing the environment through its configuration of resources and competences with the aim of fulfilling stakeholder's expectations. Armstrong and Barron (2002) refers to Strategy as a set of decision-making behavior in an organization for the purpose of achieving a predetermined objective. Thompson et al. (2004) see Strategy as a game plan which management of an organization adopts to stake out market position, attract competent organizations and please customers, compete successfully, conduct operations and achieve organizational goals.  Strategy can therefore be viewed as a means by which a particular goal of an individual or organization is attained. Business strategy has become important tool globally for any organization to remain in competitive market environment and was stronger. In addition, Pushpakumari and Wijewickrama (2008) reported the same outcomes that link organizational strategies, management operations and organizational performance.

Business strategy starts with market research, in which needs and attitudes and competitors’ products are assessed and continues through into advertising, promotion, distribution and where applicable, customer servicing, packaging, sales and distribution.  The acceptance of such practices based on the application of quality control ideology and instruments by management will result to a progressive enhancement in business performance (Herzberg, 1984; Henekom, 1987; Prajogo & Sohal, 2003). The fact that the world around us is constantly changing requires that change must be studied by every business organization and the various ways in which it presents itself to successfully handle and be able to move ahead of it (Crittenden & Crittenden, 2008). The levity of handling business operations in the past will no longer be applicable to the future. The events of globalisation and the development of new areas of economic and consumer activities will lead organizations to seize different opportunities globally and still be able to meet local requirements. Dezember et al. (2005), believed that management must create a future where strategic management is seen by an organization as a going concern and for constant progress in the activities of the organization and its significance in the marketplace. This leads to product innovation, service innovation, new processes, and new business opportunities (Ajagbe et al., 2011; Ajagbe & Ismail, 2014).

Business strategy aims to know and understand the business as well as the customers, to identify their needs and create design strategic variables that meet the needs of the customers (Ibojo, 2015). Having identified a customer who is willing and able to buy, making the product or service available is not all that is needed for effective performance but also a clear understanding of the environmental intervening variables of business is a must if a workable integrative marketing web is to be institutionalized. Business strategy also gives room for the process of creating, delivering and communicating superior customer’s value to the target market. It is therefore critical that no organization can succeed effectively without the application of strategies to the marketing variables. Thus, business strategy makes marketing a significant and driving force behind business organizational performance for creating sustainable and favorable customer relationship. This study examines business strategy and organization performance of consumer goods in Enugu State.

1.2        Statement of the Problem

Without effective implementation, no business strategy can succeed (Jones & George, 2011). According to Peter mills (2018) many organizations overly rely on structural change to execute strategy. While changing structure has its place, it is only part of the requirement for successful strategy implementation. In the past decade, the issue of organizations performance have attracted the attention of scholars in behavior of organization in an organization and have ignited a lot of discussions and arguments. Organizational performance have an objective to achieve and this is only realizable through the coordinated efforts of organizations. Cole and Kelly (2011) most mangers know more about developing strategy than they know about executing it because making strategy work, executing or implementing throughout the organization is even more difficult than the other stages of managing a strategy .  The structure of an organization which is the framework within which the goals of business strategy are carried out very fundamental to the realization of better organization performance.

Many researchers have studied the success factors and failure factors of consumer goods firms to gain competitiveness. Some researchers suggest that the key determinant of firms to gain competiveness is the ability of a firm to develop unique products, and their flexibility in adopting new and strategies (Williams & Hare, 2012).  Due to increased competition and accelerated product development cycles, business strategy and the management of technology is becoming crucial to the success of an organization. Research found the most important driver of corporate value for both durable and nondurable companies to be business.

 Management of an organization has an obligation to not only encourage new product development, but also to develop a system to ensure that technology is being used most effectively with the consumer in mind. Most products are seen as old as they were without some forms of development for consumers’ attraction. Apart from the above, evidence hold it that research on business and organizations performance in Nigeria has not received much attraction. This is a motivation for this study, to look into the importance of business to organizations in Nigeria. However, this study seeks to examine the effect of business strategy on organizations’ performance consumer goods firms in Enugu State, Nigeria.

1.3        Objectives of the Study

The general objective of this study is to examine the effect of business strategy and organizational performance of consumer goods firms in Enugu State, Nigeria. The specific objectives are;

  1. examine the effect of corporate strategy on organizational productivity of consumer goods firms in Enugu State, Nigeria.
  2. establish the impact of organizational strategy on organizational effectiveness of consumer goods firms in Enugu State, Nigeria.
  3. determine the extent to which motivational strategy affects organizational engagement of consumer goods firms in Enugu State, Nigeria.
  4. examine the effect of managerial strategy on organizational efficiency of consumer goods firms in Enugu State, Nigeria.

1.4        Research Questions

Flowing from the above objectives, the main research question will be; what effect does strategy implementation have on performance of consumer goods firms? This will be further broken down into the following research questions.

  1. how significantly is the effect of corporate strategy on organizational productivity the effect of managerial strategy on organizations efficiency of consumer goods firms in Enugu State, Nigeria?
  2. what is the impact of organizational strategy on organizational effectiveness the effect of managerial strategy on organizations efficiency of consumer goods firms in Enugu State, Nigeria?
  3. to what extent does motivational strategy affects organizational engagement the effect of managerial strategy on organizations efficiency of consumer goods firms in Enugu State, Nigeria?
  4. what is the effect of managerial strategy on organizational efficiency of consumer goods firms in Enugu State, Nigeria?

1.5        Hypothesis of the study

H01: cooperate strategy has no significant influence on organizational productivity in consumer goods firms in Enugu State, Nigeria.

 

H02: Organizational strategy has no significant influence on organizational effectiveness in consumer goods firms in Enugu State, Nigeria.

 

H03: Motivational strategy has no significant influence on organizational engagement in consumer goods firms in Enugu State, Nigeria.

 

H04: Managerial strategy has no significant influence on organizational efficiency in consumer goods firms in Enugu State, Nigeria.

1.6        Operationalization of Research Variables

Y = Organizational Performance

X = Business strategy 

Y = f(X)

Y = (y1,y2,y3, y4)

X = (x1,x2,x3, x4)

y1 = f(x1)

y2 = f(x2)

y3 = f(x3)

y4 = f(x4)

Equation to be investigated by the study

y1 = α + β 1x1  + µi -------------(i)

y2 = α + β 1x3  + µi ------------(ii)

y3 = α + β 1x3  + µi -----------(iii)

y4 = α + β 1x4  + µi -----------(iv)

Where; α is the constant of the equation, β is the co-efficient of X the independent variable and µ is the error or stochastic term in the equation.

y1 = Organizational Productivity (OP), y2 = Organizational Effectiveness (OE), y3 = Organizational Engagement (OE), y4 = Organizational Efficiency (OE).

x1 = Cooperate Strategy (CS), x2 = Organizational Strategy (OS), x3 = Motivational Strategy (MS), x4 = Managerial Strategy (MS).

1.7        Scope of the Study

This study focuses on business strategy and organizational performance of consumer goods firms in Enugu State, Nigeria. Three consuming goods companies will be focused on in Enugu State, Nigeria. These companies are Aqua Rapha Investment, 9th, Mile Corner Enugu Reserrection Power Nigeria, 9th Mile, Ngwo, Udi, Enugu, Nigeria. Dalex Paints (Dalex Chemical Industries) Nig. Ltd. 11 Obeludu Crescent, Trans- Ekulu, Enugu State Nigeria, and Juhel Nigeria Limited 35 Nkwubor Road, Emene Enugu State Nigeria. The study focuses on these selected companies because of recent researches and studies have shown that these are the most effective and efficient consuming goods companies in Enugu State axis having high profit margins in recent years. The target population of the study would be organizations from the selected companies. The population of organizations in all the three companies in Enugu State is 736; Aqua Rapha Investment Nigeria – 291; Dalex Paints (Dalex Chemical Industries) Nig. Ltd. – 198 and Juhel Nigeria Limited  – 247 as at October, 2019. The sample size for the study will be 259 which was arrived at using the formula developed by Chonbach Alpha in 1977. The research method adopted by the study is descriptive survey research method. Also, the study will adopt simple random sampling method in sampling the respondents and questionnaires would be used in obtaining the data for the study. The data would be analyzed using descriptive statistics (frequency distribution, mean and standard deviation) and simple linear regression analysis. The research is set to be executed from September 2019 to April 2020.

1.8        Significance of the Study

This study will be beneficial in a number of ways. The study will be of immense benefit to different business firms by improving their organization performance through a pattern of actions, a set of decision-making behavior and resource allocations designed to achieve the goals of the organization. The study will also help business and organization to widen their knowledge on how to integrate organization performance and how it will lead to increased level of provision of consumer goods. The study would favorably ensure a good structure of business strategy which is one of the vital issue in promoting competitive market and within which these goals and objectives are carried out is very fundamental to the realization of these goals. Through this study, business strategy would become known and understood in such a way that businesses in Nigeria as well as the customers would get to identify their needs and create design strategic variables that would meet these needs. The study will make organizations to appreciate the importance of business strategy on the production of consumer goods. This study would gives note on business strategy on how it plays a vital role on the organization performance and how it shows that the impact of business strategy to consumer goods is no longer in doubt because they occupy a significant place in the business firm or organization, however, this study will help in the optimal deployment of businesses.

1.9        Definition of Operational Terms

Business Strategy: A business strategy is defined as the combination of all the decisions taken and actions performed by the business to accomplish the business goals and to secure a competitive position in the market. (Aashish Pahwa 2019)

Organization Performance: Performance is the achievement and attainment of state goals. The act of carrying out a duty or accomplishing something such as a task or action (Adebiyi, 2017).

Corporate strategy: Corporate strategy is a companywide plan to choose and develop particular markets in which to compete while improving the various divisions or units of the business. (Vicki A. Benge, 2017)

Organizational engagement: organizational engagement is the passion and commitment of the willingness to devote oneself and expand one’s discretionary effort to contribute towards achieving the goals and objectives of the organization as a whole. (Chandhok & Bhavet, 2014).

Motivational strategies: are tactics, techniques, or approaches to encourage learners or students to participate in the teaching and learning process. (karen Rasmussen 2008).

1.10      HISTORICAL BACKGROUND OF CASE STUDIES

Aqua Rapha Investment Nigeria Limited

Aqua Rapha Investment Nigeria Limited was incorporated on 7th November 2003 (RC 498461) as a private limited liability company. AQUA RAPHA was coined from two words. AQUA is a Latin word for water while RAPHA is a Hebrew word for healing hence AQUA RAPHA implies Healing Water a product which has its foundation in God the Holy Spirit. The main objective of the company is the provision of quality drinking water and other beverages at affordable prices for the populace. Similarly the need to provide employment for the teeming unemployed youths in our society as well as provide assistance to the less privileged also informed the decision to establish Aqua Rapha. Thus the company in pursuit of her objectives set up a plant for the packaging of table water with 3 sachet water filling machines in February 2005. This has grown to 70 sachet water filling machines in 2009 with the help of effective and efficient management. The company expanded into the production of yoghurt, manufacturing of Plastics and Poly bags, through the recycling of water cellophane bags into pelletized raw materials. The Plant has annual installed capacity of 25,000,000 (twenty five million) bags of sachet water, 500000 (five hundred thousand) crates of bottled water, 560,000 (five hundred and sixty thousand crates of Yoghurt and 292 (two hundred and ninety two) tonnes of Poly Bags. The Plant commenced production in 2005. The products recorded an instant success and attained production and sales of over 80% of installed capacity. Attesting to the excellent potentials of the company.

Dalex chemical industries

Dalex chemical industries, producers of Dalex paints is a paint manufacturing industry and sales of raw materials for paint production and other products. It was established in the year 1997 to provide Nigeria buildings with it best of paint standards which can withstand the country's hash weather conditions. Since inception it has maintained this standard of quality. 
We produce various kinds of paints for buildings which include textured coating, Emulsion, Oil/Gloss, Silk, screeding paints etc. We also provides standard quality paints for road tracks and kerbs.

Juhel Nigeria Limited

Juhel Nigeria Limited is an indigenous pharmaceutical manufacturing company, founded in 1987 as the first pharmaceutical manufacturing company in old Anambra state, Nigeria. We manufacture a wide range of pharmaceutical products, from oral to intravenous medicines. With a total of over 100 Pharmaceutical products, we manufacture one of the largest range of pharmaceutical products in the country, all of which are NAFDAC and ISO certified, meeting high standards at affordable prices.

The pharmaceutical manufacturing division of the company operates in two locations. The Oral Medicine Manufacturing Plant in Emene, Enugu State and the Parenteral Medicine Manufacturing Plant in Awka, Anambra State. The Enugu location contains our Tablet and Syrup Manufacturing Plants, our separate Antibiotic Capsule Manufacturing Plant, Our Bottled Water and Beverage Manufacturing Plants and our dedicated Plastic Bottle Manufacturing Plant. Our Anambra State location contains our large state-of-the-art Parenteral Drug Manufacturing Factory in which we manufacture our Intravenous Medicines, Sterile Water For Injections, Ear Drops and Eye Drops.

With these under our belt, we are not only one of the largest Pharmaceutical Drug manufacturing companies in Nigeria, we also remain the largest manufacturer of high-quality blow-fill-seal aseptically manufactured intrvenous medicines in West Africa. Our presence in Nigeria and other countries throughout West-Africa has been maintained as a result of our product quality and reliability in ensuring these reach the customer as they want, at prices they can afford. At Juhel Nigeria Limited, your satisfaction is our business.