EFFECT OF EXTERNAL ENVIRONMENTAL FACTORS ON SMALL SCALE BUSINESS MANAGEMENT

EFFECT OF EXTERNAL ENVIRONMENTAL FACTORS ON SMALL SCALE BUSINESS MANAGEMENT

ABSTRACT

The purpose of this research work is aimed at viewing the effect of external environmental factors on small scale business management. The study is design to provide a comprehensive information on the effect of external environmental factors on small scale business especially how it affect the growth of the businesses in Nasarawa town. Primary and secondary data methodology was used to obtain the required information through questionnaire, interview and source document. The research findings reveals that ignorance of investors on the effect of environmental factors before investing on the business may cause business failure. The researcher therefore recommends that small scale business owners should appreciate that external environmental factor could lead to business failure or success. They should aim at achieving a way of following the changing factors in order to avoid the bad effect it could cause.

CHAPTER ONE: INTRODUCTION

1.0     INTRODUCTION

Small scale business is as old as men, because as we all know, businesses has been going on since the history of man. So, in this research work, we are going to take a good look at effects of external environmental factor on small scale business management in Nigeria.

Small scale businesses in Nigeria became more pronounced during the coming of the Europeans into Nigeria in the name of spreading the gospel on the abolition of slave trade.

The Federal Government Industrial Policy of 1989 defined a small business as “any business that its total investment is between N10,000.00 and N2 million naira  exclusive of cost  of land but including working capital.

Some of the external environmental factor which affects small scale business in Nasarawa state and Nigeria at large includes: physical environment factors, economic, social technological, cultural, demographical etc.

Therefore, this project work is aimed at scanning those external environmental factors properly in other to become successful in undertaking small business in Nigeria and to manage it property.

1.1     BACKGROUND OF THE STUDY

The external environmental force and nuisance experienced by small scale business are more than what meet the eyes for instance, between 1984 and 1985, the government of Buhari took street kiosk and traders by surprise when their businesses were swept away without compensation. Again between 1990 and 1992, religions riots culminated into burning and looting of businesses of native of Bauchi, Kaduna and Kano. However, the story is the same in Lagos where businesses under overhead bridges in Oshodi bus stop and other locations  in Lagos fell into the hands of the federal government while  businesses with telecommunications service throughout the country were closed down without prior notices to the business owners at the time when  means of telecommunication were out of the common  man’s labour market and deprived the poor masses of communication.

Moreover,  what is more worrisome is the persistent of religions  crisis that has continued  to spill like wild fire with resultant  effects  of consuming  small scale business owners and their businesses thought looting and burning.  An instance an be cited  at the recent ethnic  and religious  crisis between  1991 and 2001 which  took  place in Kano,  Kaduna, Jos, Benue, Kogi and Nasarawa state. As we all know, the aim of small scale business management which is to create job opportunities and elimination of poverty in the economy. The external environmental factors that affects the business can be categorized via (PEST). Political Economical, Social and Technological. Since one factor can affect another factor, there is an interrelationship among them. All businesses are influenced by changes in one of the environmental factors. Some of the important changes that affect managerial decision making of small scale business are zoomed critically in this work.

1.2     STATEMENT OF THE PROBLEM

As the topic implies the effect of external environmental factors on small scale businesses. Government policies has been one of the major problem facing small scale business as well as poor implementation of its policies. The political instability in the country as a result of tribal sentiments is directed to small scale business. There are other factors like economic, social and technological factors.

1.3     THE SCOPE OF THE STUDY

This research work is restricted only on those external environmental factors that affects small scale business in Mongoes ventures Nasarawa state. It refuses to touch the internal aspects of environmental factors the emphasis is to identify the effects of these environmental factors or forces and provide possible solution to handle them.   

1.4     OBJECTIVE OF THE STUDY

The general aim of this project is to examine the effects of external environmental factors on the organization performance especially small scale business operation like Mongoes ventures Nasarawa.

Some of the specific objectives are as follows:

(a)        To  identify  the business environmental factors  and how they affects the performance  of  business

(b)       To determines ways or methods of managing external environmental factors by small business

(c)        To identify and define factors to make room for stability, profitability, harmony, peace and comfort of small scale business.

1.5     SIGNIFICANCE OF THE STUDY

It is important to note that   this project work is aimed at identifying the values of starting a business career without facing much problems that may come from external actors.

This project work can contribute significantly in the following:

(a)        It will be of great important to government in their role  of  developing small business by identifying and applying  environmental tools analysis

(b)       Potential entrepreneurs and small business owners would appreciate the  role of environment  in business

(c)        Researchers  and students will find this project  worthy while

1.6     RESEARCH QUESTION

Some of the research questions were effort shall be made to find answers to this study include the following:     

(a)           Does the external environmental factor have great impact on the growth of small scale business in Nigeria?

(b)           Does the external factors affects  the organizational productivity

(c)            Does  the organization manage those external environmental factors so as to achieve the organization aims and objective

1.7     RESEARCH HYPOTHESIS

Hypothesis which has been defined by various authorities to be a tentations statement, assumption of conjectural statement which can be true or not and cannot be generally accepted until when proven.

Hypothesis can be classified into two hypotheses 

a)     Null  or negative hypothesis (Ho)    

b)    Alternative or positive  hypothesis (Hi)

The following hypothesis will be tested in this research   work.

Ho:    The external environmental factor have no impact on the growth of small scale business in Nigeria

Hi:     The external environmental factors have a great impact on the growth of small scale businesses in Nigeria

1.8     LIMITATION OF THE STUDY

The major limitation of this project is the difficulty in obtaining data as a usually the case with most project work.  The lack of data is further compounded by the fact that the researcher has a very tight scheduled programme.  For instance, time is too short for the research considering the time within which to submit the project combined with tight academic work load could not enable me to carryout wide research on the general environmental impact on small scale business.

Finance is another hitch  encountered  during the  course of study, in adequate availability of research materials and some vital information  which  they called “Top Secret” in many  case  study  Mongoes Ventures   not given out which could  have been of great  important to the success  of this work.

1.9     DEFINITION OF TERM

The definition of term used this project stated below:

§  Business:Business is  any  legitimate  activity or activities  embarked upon by an individual or group of individual  or group of individuals  for the production of goods and distribution of services  for the satisfaction of need as and wants of the people for the purpose of making  profit. (Ben A.  Ogedengbe, 2007) 

§  Small Scale Business: It is any business that has a total investment of between N10, 000 to N2million exclusive the cost of land but including   working capital   or it can be seen as any business that independently owned and managed, started with little capital and operated with few employees to produce goods and services to the people at a profit. By (Ben A.  Ogedengbe, 2007)

§  Profit: It is the rewards of an entrepreneur for investing his money and time. It is also seen as the additional surplus that a business gets after deducting the entire cost incurred in the business.  By (Ben A.  Ogedengbe, 2007)

§  Culture: It is the total collection of people beliefs, customs, knowledge, art, moral and other attributes that are accumulated by individuals of a particular society.  By   (Balkin 2002:98)

§  Product: it is any tangible or intangible thing that is capable of satisfying peoples want and needs. Includes goods and services.  (Ben A.  Ogedengbe, 2007)

§  Technology: It means  modern  method applied to materials  in production of goods and series it is the practical application  of  research  and  discovery which results in a  bright  standard of living and increase productivity. By (Onuoha 1999)