AN ASSESSMENT OF BUSINESS ENVIRONMENT AND ITS IMPACT ON ORGANIZATIONAL GROWTH
This section deals with the background of the research study, the announcement of the problem, the exploration of objectives, the research questions, significance of the research study, the scope of the research study, overview of methodology, limitation of the research study and the organization of the research study.
1.2 Background of theStudy
There are no distinct accepted meaning for Small and Medium Sized Enterprises. SMEs which stand for Small and Medium Sized Enterprises are owned, managed and established by entrepreneurs, according to Abor and Quartey (2010). Entrepreneur is a French word. In French language it means „entreprendre‟, meaning „to undertake‟. Some duties of the entrepreneur are managing, directing, controlling, assuming risks of business and organizing (Kuratko&Hodgetts
,1995). The terms „entrepreneurs‟ and „entrepreneurship‟ are popular terms used in today‟s modern parlance. Entrepreneurship is the process the entrepreneur goes through to undertake all the business risks to come out with invention which is of value to the society and receiving rewards for his invention, (Hisrich and Peters, 2002 cited in Stokes and Wilson, 2010). The European Commission initiated definitions for SMEs. The definitions of SMEs by European Commission brought about a category of small businesses which was named „Micro Enterprises‟.
There are so many definitions for SMEs defined by government agencies in Nigeria. Nigeria Statistical Service described SMEs with more than 10 employees as Medium and Large Sized
Enterprise and SMEs with less than 10 employees as Small Scale Enterprises. Once more, NBSSI portrayed firms as Micro and Small Enterprises as ventures utilizing 29 individuals or few workers. As per NBSSI, (2016) a firm is a Micro Enterprise when that firm employs between 1-5 representatives and have a fixed asset not exceeding 10,000 USD excluding land and building. NBSSI further categories SMEs as enterprises employing between 6-29 people with a fixed asset not more than 100,000 USD, excluding land andcapital.
Challenges such as government policies, economic factors, financing, social amenities and among other are challenges faced by SMEs in Nigeria. Globally, challenges such as experience, the age of the entrepreneur, business environment forces and lack of adequate capital are challenges faced by SMEs, (Rose et al.,2006).
In spite of the above challenges faced by SMEs, governmental organizations, for example, National Board for Small Scale Industries (NBSSI), the Intermediate Technology Transfer Unit (ITTU), have interceded to discover answers for the issues confronting SMEs proprietors in Nigeria and Abuja Metropolis. Therefore, the research under investigation tries to find out the impact of external business environment forces or factors affecting the growth of Small Scale Pharmaceutical Industry in Abuja Metropolis.
1.3 Problem Statement
From the statistics of Ministry of Trade and Industry (MoTI), (2016), SMEs in Nigeria comprised of 160,000 enrolled risk organizations and more than 350,000 sole proprietorship. SMEs are major contributors to the economic growth, employment and taxes. This is on the grounds that SMEs contribute 40% to Nigeria’s Gross Domestic Product (GDP).Despite these enormous contributions of SMEs challenges such as low production capacity, unavailability of suitabletechnology, unfavorable external business environment forces, inadequate capital, technical know-how and others are confronted by SMEs.
Environment can provide means of survival for organizations, the same environment can pose threats on organizations. Threats such as new regulatory requirements, hostile shifts in market demands, revolutionary technologies and competitors make the business environment very fatal, (Johnson, Scholes &Whittington, 2008). That is the reason this study is undertaking to find out the effect of external business environment on execution of SMEs in the pharmaceutical industry
There are real investment endeavors made by local pharmaceutical industry in Nigeria and Abuja Metropolis. In spite of these investments, local pharmaceutical industry cannot function in full capacity because of high cost of utilities, unfavorable in-licensing conditions, high direct and indirect taxes, high allowances paid to pharmacists andothers.
In Nigeria, research studies on SMEs exist in literature. Abor&Biekpe in their research in 2006, 2007 on SMEs finance and SMEs corporate governance did not look at the impact of external business environment factors on SMEs. In addition, Dizisi Smile, (2008) wrote article on
„‟entrepreneurialactivitiesonindigenousAfricanWoman:acaseofNigeria‟‟andhedidnotlook at external business environment factors on SMEs. Be that as it may, (Johnson et al., (2008) built up a conceptual framework given clarification on the connections between macro-business environment elements, industry strengths, contenders and business sector drives that influence the execution associations. This study adjusted the framework to research the effect of external business environment elements on execution of Small Scale pharmaceutical industry working inside Abuja Metropolis.
1.4 Objectives of the Study
The main goal of this study is to assess the impact of external business environmental factors on organizational growth. The specific objectives are as follows:
- To examine the impact of macro-external business environment factors on the growth of SMEs in the pharmaceutical industry in Abuja Metropolis.
- To determine the impact of industry forces on growth of SMEs in the pharmaceutical industry in Abuja Metropolis.
- To evaluate the impact of competitors and market business environment factors on the growth of SMEs in the pharmaceutical industry in Abuja Metropolis.
1.5 Research Questions
To find out the effect of external business environment elements on the execution of SMEs in the pharmaceutical industries in Abuja Metropolis, the following exploration inquiries will be investigated:
- What is the impact of macro-business environment factors on growth of SMEs in the pharmaceutical industry in Abuja Metropolis?
- What is the impact of industry forces business environment on growth of SMEs in the pharmaceutical industry in Abuja Metropolis?
- What is the impact of competitors and market business environment forces on the growth SMEs in the pharmaceutical industry in Abuja Metropolis?
1.6 Significance of the Study
The study plainly analysis external business environment forces in which SMEs operates. Correct analysis of external business environment factors will help SMEs to identify key drivers in macro-business environment, industry forces, competitors and market forces and use them to have competitive advantage. This study will serve as great exploration reference material for researchers and understudies. This will contribute immensely to knowledge in society which will boost academic excellence.
Once more, the study will make feasible for business people in the pharmaceutical industry to distinguish external business environment variables which are liable to highly affect the execution of SMEs in the pharmaceutical industry.
In addition, study will likewise empower Pharmaceutical Council of Nigeria to survey the effect of their controls cum the external business environment variables on the execution of SMEs in the pharmaceutical business.
1.7 Scope of the Study
The study deals with the effect of external business environment forces on organizational growth. The study focuses on the pharmaceutical industry. The scope covers registered pharmaceutical firms which are into whole sale, whole sale & retail, retail pharmaceutical industry in the Abuja Metropolis.
1.8 Overview of Methodology
Quantitative research methodology was used by the researcher for the study. Information were gathered from essential sources through administration of questionnaire to proprietors, official administrators, supervisors and workers of chosen pharmaceutical industries in theAbuja
Metropolis. The information gathered were dissected with the utilization of Statistical Package for Social Sciences (SPSS). Reliability test was run with a Cronbach alpha above 0.7. Pearson‟s Correlation Matrix was used to check the strength and direction of associations between variables.
1.9 Limitation of the Study
The challenges and difficulties associated with this study include, limited financial resources, time constraints, risk of commuting from one pharmaceutical industry to another, challenge face by retrieving of questionnaires administered, difficulty encountered in terms of appropriate sample to use, data collection techniques challenges, unwillingness of prospective respondents to answer the questionnaires and unpreparedness of top-level business executives to be granted interviews.
1.10 Organization of the Study
This research study is comprised of five parts. The Chapter One takes a gander at the presentation, foundation to the study, issue articulation, research goals, research questions, significance of the study, extent of the study, overview of methodology, limitations of the study and organization of the study. Chapter Two reviewed theoretical and empirical literature on macro-business environment factors, industry forces and competitors and market business environment factors. Part Three clarifies the research methodology that was followed in gathering information for the study. Quantitative research methodology was utilized for this study. The Fourth Chapter presents the analysis of the data, presentation and discussion of data collected. Finally, Chapter Five exhibited rundown of findings, conclusions and proposals for analysts and further studies.
AN ASSESSMENT OF BUSINESS ENVIRONMENT AND ITS IMPACT ON ORGANIZATIONAL GROWTH