CAUSE OF FAILURE OF SMALL-SCALE INDUSTRIES IN NIGERIA
TABLE OF CONTENTS
1.1 PROBLEMS IDENTIFICATION
1.2 AIMS AND OBJECTIVE
1.3 SIGNIFICANCE OF THE STUDY
1.5 LIMITATION OF STUDY
1.6 DEFINITION OF THE STUDY
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 product, a bad investment decision, structural rigidity or management incompetence as the root cause, business failure could also result from external factor
Like competition, change in government regulations, scarcity of raw material 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, 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 young, 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 organization 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 PROBLEMS IDENTIFICATION
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.
1.2 AIMS AND OBJECTIVE
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-sclae 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.
1.3 SIGNIFICANCE OF THE STUDY
So many small-scale industries fail, that is, there is high
motility rate among small-scale industries. On of the reason adduced for the massive failure is poor record keeping. These industries either do not keep records at all or keep only a few records. An area worst hot is the area of accounting, most small scale industries do not keep accounting records. As a result, there industries do not have accounting data to aid in management decision. Such vital accounting information includes: -
The amount of capital invested in the business at any point in time. Most small-scale industries cannot say the amount of capital tied down in their business.
The amount of profit earned during a trading period. This is why most of them fail. They invested capital Andover the years they will not know that they have been operating at a great losses or earning grossly inadequate profits with the result that their drawing are mainly withdrawal of capital.
My proposal regarding the causes of failure of small-scale
industries in Enugu State, is that finance is the major contributor top the failure. Finance is the hub around which all the economic activities revolves.
If the fund is not adequately provide for the investement tyre will be punctured and may result to the total collapse of the business.
1.5 DEFINITION OF THE STUDY
For the purpose of this research work, the definitions of terms
used with the UN standard industrial classification of economic activities.
“Any organisation 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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