ABSTRACT
This study, the
effect of organizational challenges facing owners of medium enterprises in a
recessive business environment in Enugu metropolis. The effect of
organizational challenges were carefully examine and the aim of the study is to
assess the organizational challenges facing owners of the medium scale
enterprises in a recessive business environment. The survey research design was
adopted and a sample size of 270 (two hundred and seventy) was gotten using Yamene
1964 formula out of the population of 828 (eight hundred and twenty eight)
employees in Enugu metropolis. In determining the number of questionnaire
administered to the respondents, stratified random sampling and the kumar
proportionate were adopted. The data for the study was gathered with a four
point likert scale questionnaire. The study revealed that power supply, skills,
raw materials and low capital base constitute a major challenge facing owners
of medium scale owners of medium scale enterprises in Enugu metropolis. The study
concludes that medium scale enterprises can excel in productivity, financially
and otherwise if all these challenges enumerated are taken care of. The study
recommends that planned efforts should be made ahead of time to facilitate
successful and timely implementation of a sound and uninterrupted power supply
which can be done through an understanding synergy between owners of medium
scale enterprises and government of the federal Republic of Nigeria.
CHAPTER ONE
INTRODUCTION
1.1 Background of
the Study
It has been a contemporary issue in the recent studies on
the challenges usually faced by the owners of medium scale enterprises mainly
during the time of economic recession. It is obvious that the contributions of
the medium scale enterprises towards the growth of the Nigeria economy cannot
by any sight of imagination be over emphasize. Medium scale enterprises are
usually regarded as the engine of the economic growth and equitable development
in a developing economy.
Medium scale enterprises (MSE) have been recognized as
indispensable components of natural development in both developed and
developing economies. This subsector of the economy is globally acknowledged to
contribute substantially in enhancing employment creation or generation,
poverty alleviation, equitable distribution of resources, income
redistribution, technical and technological innovation, entrepreneurial skills
development, more uniform industrial and economic region? Moreover, they have
been touted strategic in ensuring food security and encouraging rapid
industrialization andreversal of rural-urban migration.
Consequently, both the federal, state
governments and local governments recently have stepped up efforts to promote
the development of medium scale enterprises through increased incentive scheme,
including enhanced budgetary allocations for technical assistance programmes.
New lending schemes and credit institutions such as the National Economic
Reconstruction found (NERFUND), World Bank-assisted medium-scale enterprises
loan scheme (MES), Nigeria Export and Import Bank (NEXIM) and the Community
Bank have also emerged at both the national and local levels to boost the flow
of development finance of small and medium scale enterprises which have so far
depended largely on personal funds and credit from informal sources for both
their investments and working capital.
1.2 Statement of
the Problems
Notwithstanding the immeasurable contribution of the
medium scale enterprises towards the economic growth in Nigeria, there are
numerous organizational challenges facing this active sector over the years
without solution. It is tradition in Nigeria that most medium scale enterprises
in Nigeria die within their first five years of existence.The growth and
development ofmedium scale enterprises in Nigeria have been slow and in
somecases even stunted, due to a number of problems and challenges
confrontingthis important sector of the economy. Some of the problems
highlightedinclude: deplorableinfrastructural facilities funding and financing
challenges; inadequatemanagerial and entrepreneurial skills; corruption and
lack of transparencyarising from government regulations and regulators; poor
power supply, low capital base, inadequate market research, lack of succession
plan; inexperience, lack of proper book keeping; inability to separate business
and family or personal finances, lack of business strategies, inability to
distinguish between revenue and profit, inability to procure the right plant
and machinery, inability to engage or employ the right caliber of staff and
cut-throat competition among others.
Beckman (2002) contends that most of the problems of MEs
are external to it. Among them are those related to capital shortage, taxation
and regulations, product liability patent and franchising abuses. The internal
problems of MEs in Nigeria include: inadequate working capital, stiff
competition from larger companies, difficulties in sourcing raw materials, low
capacity utilization, lack of management strategies, poor educational
background of operators, and huge financial problems while the external
problems include: policy inconsistencies and so many others. This study then
aims at looking at ways these impediments could be rectified to enable business
in Nigeria, especially Enugu metropolis, flourish.
1.3 Objectives
of the Study
As a central objective, this study
seeks to assess the organizational challenges facing owners of the medium scale
enterprises in a recessive business environment. The specific objectives are
to:
1. To determine if power supply is a
major challenge facing owners of medium scale enterprises in Enugu metropolis.
2. To examine the effect of low capital
base on the performance of medium scale enterprises.
3. To determine whether business skills
constitute a major challenge in the performance of medium scale enterprises.
4. To ascertain the effect of raw
materials on the organizational performance.
1.4 Research
Questions
From the aforementioned research objectives, the following
research questions were formulated
1. What is the extent of power supply
availability on the performance of small and medium scale enterprises in Enugu
Metropolis?
2. How does capital base constitute a
major challenge to owners of small and medium scale enterprises?
3. What skills are needed by owners of
small and medium scale enterprises for success in Enugu metropolis?
4. Does raw material constitute as a
major challenge facing owners of medium scale enterprises in Enugu metropolis?
1.5 Research
Hypotheses
Based on the above research questions, the following
hypothesis were formulated
1. Ho: power
supply does not constitute a major challenge facing owners of medium scale
enterprises in Enugu metropolis.
2. Ho: Low
capital base does not constitute a major challenge facing owners of medium
scale enterprises in Enugu metropolis.
3. Ho: Business
skill does not constitute a major challenge facing owners of medium scale
enterprises in Enugu metropolis.
4. Ho: Raw
material does not constitute a major challenge facing owners of medium scale
enterprises in Enugu metropolis.
1.6 Significance of
the Study
This study is significant in that it attempts to pinpoint
some of challenges facing owners of medium scale enterprise in Enugu
metropolis. It has both theoretical and practical significance. Theoretically,
the finding of the study will be useful to both students and scholars who wish
to advance their knowledge on the challenges facing owners of medium scale
business enterprises in Enugu and Nigeria at large. On the other hand, the
findings will be of practical significance to the management of Innonson
Technical and Industrial Company Limited, and other medium scale business
organizations, employees and the government, as it will help them improve their
inability to manage those challenges facing them in the organization.
Significantly, the
findings are expected to make the sole proprietor to see the need to improve
staff strength through employment and development of skilled manpower. This
will help them to plan adequately and suggest the need to organize seminars to
the general public on the danger of the aforementioned challenges, Adding to the above, it will specifically
create an awareness on how the challenges facing the owners of the medium scale
enterprises can be managed.
1.7 Scope
of the Study
The research work covered the challenges facing the owners
of medium scale business enterprises in Enugu Metropolis with special concern
to Innonson Technical and Industrial company Limited. Nevertheless, it focused
generally on enumerating the challenges and tested ways of averting/managing
it.
1.8 Limitations
of the Study
The study was limited by the fact
that it relied solely on one enterprise and some of the personnel did not
volunteer the necessary information. Finally, time available for me was limited
when compared to other activities I need to engage myself in the school.
Definition of Terms
1. Medium Enterprise: Company with total cost including
working capitalbut excluding cost of land is above hundred million naira (100,000,000)and
a staff strength of between seventy-one (71) and two hundred (200)full time
workers and with an annual turnover of more than twentymillion naira
(20,000,000).
2. Small scale Enterprise: An enterprise whose total cost
including workingcapital but excluding cost of land is between ten million
naira(10,000,000) and one hundred million naira (100,000,000) and
workforcebetween eleven (11) and seventy (70) full time staff and a turnover of
notmore than ten million naira (10,000,000) in a year.
3. Large Enterprise: Any enterprise whose total cost
including workingcapital but excluding cost of land is above three hundred
million naira(300,000,000) and a labour force of over two hundred (200)
workforceand an annual turnover of more than twenty million naira (20,000,000).
4. Micro Enterprise: A firm, whose total cost including working
capital butexcluding cost of land is not more than ten million naira
(10,000,000)and/or with a labour size of not more than thirty (30) full time
workersand/or a turnover of less than two million naira (2,000,000).
5. Economic Growth: This means the enhancement of profit
generated bythe designed economic resources of a nation or individual.
6. Investor: This is a person who commits fund
into business undertakenwith a view of financial return.
7. Business Firm: This means a business organization in
which anindividual or group of individuals organizes and operates to have
profit inreturn.
8. Financial Institution: This is a financial system of any country’sset
of institutional and other arrangements put in place for the transferof savings
from those who generate them to those who ultimately usethem for investment or
consumption.
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