THE IMPACT OF INFORMATION TECHNOLOGY ON BUSINESS OPERATION

THE IMPACT OF INFORMATION TECHNOLOGY ON BUSINESS OPERATION

(A CASE STUDY OF MR. BIGGS LOKOJA BRANCH)

CHAPTER ONE

 1.0 INTRODUCTION:

Most of this problem would soon be over on the installation of and the commissioning of our new Information Technology said a company director during an informal discussion with the company stakeholder.

The above is the general believe of Information Technology system to solve problems. However, this needs a closer review in order to ensure that set objectives are attained with reasonable cost. Effectiveness and efficiency have to be balance. It is of no use trying to kill a mosquito with a sledge hammer. The impact of information technology on business is a wide field and has amiable organization across the world to work in an efficient manner.

1.1 BACKGROUND TO THE STUDY

Corporate entities especially profit oriented business organization all over the world are now improving their efficiency and customer’s relationship by investing a new information technologies. Nigeria business community cannot afford to remain imperious to this development most especially if one takes a look at the trend of events in technology development as the whole world becoming a global village with the aid of new information technologies. Business transactions can now take place easily without necessary going through difficult activities of travelling to places to obtain information.

This can be done through the help of internet for a firm to obtain information needed from the websites of another organization using a computer network.

The importance of information technology cannot be over emphasized if one takes look at the advantages an organization who can afford these technologies stands to gain.

1.2 STATEMENT OF THE PROBLEM

Undoubtedly there is a notable change in the face of business organization in Nigeria; there are also notable new trends in the business organization activities which have impacted positively on the turnaround services rendered by the business organization. These changes are that some of the performance indicators of transactions efficiency have response time, turnaround time, and delivery time. All bordering on timeless conclusion of transactionsat the end of the research work, the following problems are likely to be solved.

There is growing problem for management to acquire or purchase current information technology due to high cost of hardware, software, and peripherals. There are general public power failures generating plant breakdown, constant breakdown of information technical know-how and loss of files in a situation where proper information technology system guidelines are not adhere to. Problems that arises due to high cost training, these prevents employees to have proper orientation as regards to careful handling of information technology.

1.3 SIGNIFICANCE OF THE STUDY

This research work will make an immense contributions to the body of knowledge by been use as a source of reference materials for further investigation, an insight into the meaning and cause of system down time and it’s effects on customers delivery the induction and staff training.

1.4 OBJECTIVES OF THE STUDY

The research THE IMPACT OF FOREIGN EXCHANGE POLICIES ON THE OPERATION OF MANUFACTURING INDUSTRIES

(A CASE STUDY OF ROYAL FOAM PRODUCTS (NIG) LTD.)

CHAPTER ONE

1.0 BACKGROUND TO THE PROBLEM

The need for foreign exchange policy and management arises only within the framework of countries engaged in international trade in contrast to a closed economy, whose scope does not transcend its intra country trade transactions. This need is under scored by the economic theory of comparative advantage, theory of comparative cost as well as international resource endowment differentials and imbalance. The interdependence of countries in terms of trade has grown so much that perhaps no country can lay absolute claim on self – sufficiency in its resources requirements or lay absolute claim on perfectly balanced supply of resources. By extension, since resources are limited and scarce, the need for policy formulation and management of resources becomes inevitable.

Foreign currency, otherwise known as foreign exchange, is one of the scare resources particularly in developing countries. Unless the policy framework and management of this scarce resource is properly articulated in terms of its revenue generation and expenditure (inflow and outflow), a country runs the risk of balance of trade or balance of payment problems. Moreover, in order for a country to optimize the advantages of international trade, it becomes imperative for that country to institute appropriate foreign exchange policy and management. One major aspect of the Federal Government in Nigeria budget statement every year is the monetary policy under which the foreign exchange market policies, procedures, strategies or guidelines are articulated. The polices which are subjugated to change every year are formulated and implemented by the Federal Government through the ministry of finance and Central Bank of Nigeria (CBN) regulating, monitoring and disbursing the flow of its scarce foreign exchange earnings to the various sectors of the economy both private and public sectors.

However, sometimes some of the guidelines contained in the foreign exchange market policies are formulated without taking into consideration their future effects on the produce sectors of the economy, or are not properly managed/implemented to achieve a desired goal. At times they are changed before they achieve results. This and other irregularities from financial institutions are responsible for the poor performance of the manufacturing industry in Nigeria and the economy as a whole vis-à-vis slowing down economic activities in the country.

If there is one index today that speaks volumes of various in Nigeria economy, it is the Autonomous foreign exchange market policy introduced in 1995/1996 like a bubbling economy a few years back (under the foreign market policies). Trade in foreign exchange was perhaps the most lucrative profit centre of financial institutions. Then even a junior officer in the foreign exchange department of a bank could be picked out of a group of his peers. Reason is that he is in an area where things are happening, all at the expenses of the few genuine manufacturers who are starved of their required foreign exchange allocation to feel irrelevant sectors.

Today foreign exchange business like the Nigerian economy has ebbed to an all time how one. It is so bad that some banks bow treat the business like a contagious disease, which must be touched. Yet it is bad and becoming worse very fast too due to the recent policies packed in the new method of selling and buying of foreign exchange under Autonomous foreign exchange market (AFEM) in 1995 and 1996 budget. Generally foreign exchange in any country is fundamental and important to its economy.

Foreign exchange is the exchange of goods and services across one country and another, this has actually attracted the investors in one country to order for the raw materials or goods which they are not having from another country that is having it in abundance. In this case there is no amount of interaction of one country to another that will not call for government policy, such as Tarife, Taxation and Vat etc.

In the course of this, capitals need to be taking into consideration as currency barrier may not allow easy flow of trade within countries, therefore the Central Bank should hasten through the world Bank the easy flow of international monetary transfer.

The epileptic/eratic nature of power supply has been a great hindrance to the effective performance of the industry i.e the Nigeria power is not regular compare to other countries as a result preventing foreign investors, Nigeria should as a matter of urgency emulate other countries that have regular supply of power to be able to meet up with the demand of foreign exchange policy.

1.1 STATEMENT OF THE PROBLEM

The application of foreign currency operation of Manufacturing Industry differs from one organization to another in approach and dimension, and also in sourcing application and uses. Funds are raised for definite uses, where this is not true it would be useless. But whatever these varying needs and uses are they are for the manufacturing and procurement of raw materials from countries other than their host countries. But there are however, some constraints in the obtaining of these foreign currencies.

–             It could be difficult to get in the government market

–             It is difficult and costly to obtain through the open/public market

–             Where it is even available, there are risks involved in their safekeeping from the point of purchase.

–              Transfer of such currencies are also not always easy.

–             Time constraint is another factor that could militate against the easy procurement of the currencies.

–             Rate of exchange is very high and most often the currencies are short in supply.
All these constitute fundamental problem which this research, seek to address.

1.2 PURPOSE OF THE STUDY

The aim of this research is to particularly evaluate and appraise the management and acquisition of foreign exchange for the manufacturing companies and such other operators and users of foreign currencies others are:

·        To find out the need for application and used of foreign currency in the operation of Royal Foam Nigeria Limited.

·         To examine the application of foreign exchange in the production of goods and services by the firm.

·        To see the effect in respect of cost, price, quality and benefit of foreign currency in manufacturing concerns.

·        To find and proffer possible and reasonable solutions on the best approach to the management and impact of foreign exchange on the operation of manufacturing firms especially Royal foam Nigeria Limited.

1.3 RESEARCH QUESTIONS

1.     These are the questions which I derive from the hypothesis
1. Can the business entity operation alone?
2. Is foreign exchange have any impact on the manufacturing industries?
3. Can manufacturing industries finance the raw materials?
4. Can manufacturing Industries effectively market their product alone?
5. Can foreign exchange policies have advantages on manufacturing industries?
6. Is the manufacturing Industries depend on imported raw materials and machinery?
7. Can unfavourable tariff measures result to decline in capacity utilization?
8. Can price be an indicator for goods and services in foreign exchange.

HYPOTHESIS

Hypothesis is a tentative proposition suggested as a solution to a problem or as explanation of some phenomenon.
The hypothesis for this study are set in consideration of the problem raised and drawn base on the research topic.
The research has the following drawn hypothesis to the appropriate standard.
HI: All the business entity can be operated.
HO: Not all the business entity can be operated by the foreign exchange.
HI: The business entity can finance their raw materials
HO: The business entity can not finance their raw materials.
HI: Manufacturing industries can not effectively market their products.
HI: All manufacturing industries can render door to door distribution of
their goods.
HO: All manufacturing industries can not render door to door distribution of their goods.
HI: Foreign exchange have impact on the manufacturing industries
HO: Foreign exchange have impact on the manufacturing industries

1.3 SIGNIFICANCE OF THE STUDY

This study is important and very useful in many ways even to Nigeria small scale business enterprises on the procurement of its raw materials for manufacturing. The management of the capital of any business buts across the local currencies, but touches on all that makes production of goods and services possible, hence the knowledge of foreign exchange problem in this research should be of help to students of business administration and management, the public and as well as manufacturing concerns. Bankers, decision makers, planning researchers, fellow students as well as policy makers in government will find this work useful for the improvement of its economic policy thrust.

1.4 SCOPE OF THE STUDY

The scope of this work covers the impact of foreign exchange on the manufacturing industry. The case study is taken from Royal foam limited. The study touches on a very wide area and issues in the capital management and the impact of dearth foreign exchange on the manufacturing firms. The need for such area of coverage becomes imperative because of the complexity of the topic and the vast need for foreign currency by manufacturing firms with diverse areas of operation and manufacturing. Major areas of the filed were covered such as areas concern on the need for foreign exchange, types of currencies in use by firms operating in Nigeria, and the characteristic of foreign exchange operation to manufacturing firms.

At the end of this research work. It is expected that organizations would be able to see the need for the use of foreign currency and the effect of exchange rate in our system. It is expected that researchers could be very much acquainted with how organization manage their working capital in relation to raw materials purchase in the foreign countries of the globe. It is also assumed that by the end of this project, possible and reasonable solution would have been proffered to sourcing and management of foreign exchange in respect to different countries that Royal Foam trade with,. in the use of their raw materials for the manufacturing of goods and services in the firm.

1.5 LIMITATION OF THE STUDY

The scope of this is limited to Royal Foam Nigeria Limited. All data pertaining to this study would be sought from this organization, but the findings emanating therefore would be largely applicable to all organizations where capital are sought for and managed for the survival of the company. The use of the period 1984 -1989 in chapter two is considered to ensure the authenticity of the secondary sources of data available. The study emphasized more on the effect of foreign exchange and recommendation to the manufacturing firms.

The hypothesis testing, therefore, is based on primary data collected as depicted by tabular presentation in chapter four.

1.6 DEFINITION OF TERMS

FOREIGN EXCHANGE: This is a system of exchanging the goods and services between two or more countries.

MANUFACTURING INDUSTRIES: This is a process whereby raw-materials are converted into finishing goods.

ADMINISTRATION: This is the totality of planning, organizing, coordinating, motivating controlling and operating work.

ACCOUNTABILITY: This is the obligation to carry out responsibility and exercise the authority in terms of performance standards established.

ACQUISITION: This means the procurement of any thing, stock, element, potential and ownership.

APPRAISAL: This means to evaluate, to see or find out the state of something to analyze.

STAFF: This refers to those organizations components that exist primarily for the purpose of providing advice and service to other units.

ASSISTANT: It means helpmate, render service that another person would have rendered, do service in place of another.

ORGANIZATION: This is a structure that enables living things to work effectively together. This is true to all forms of living organizations.

MANAGEMENT: It means first identifying the work that must be done to attain objectives, and doing them well.

DECENTRALIZATION: This refers to the consistent and systematic delegation of authority to the levels where action takes place.

DATA: This means facts of basic importance for any organization.

OUTPUT: It means the returns made by an organization as a result of its performance and evaluation.

INPUT: Whatever comes in as a mark of progress to the organization is input.

STORAGE: The element which hold stocks together for safekeeping.

WAREHOUSE: Means a place where goods are stored and kept for future use or safekeeping.

CONTROL: Measure of standard involved to avoid waste.
SYSTEM: This is a set of concerned elements or parts, which enable functioning of events.

EXCHANGE: The rate at which goods or currency is transferred to another.

INDUSTRY: It is a collection of firms that produce similar products or service.

STOCK: Goods or equity valued in cash or goods form.

IDR: Import Duty Report

IFEM: Inter Bank Foreign Exchange Market

AFEM: Autonomous Foreign Exchange Market

CBN: Central Bank of Nigeria

MAN: Manufacturers Association of Nigeria

SAP: Structural Adjustment Programme

NEPC: Nigeria Export Promotion Council

EPZ: Export Processing Zone

work on the impact of information technology to seek among other things:

• To determine the particular area of business operation in which information technology can be of help to the business organization.
• To show if information technology provides management with a necessary tools to facilitate decision making process to the selections of alternatives.
• To find out the problems of these technologies business organizations.
• To recommend appropriately the necessary cause of action for the organizations concerned.

1.5 RESEARCH HYPOTHESIS

Hypothesis is a tentative answer to a research problem, it is also a declarative statement of prediction meant to help in the clarification of research question.

Alternative Hypothesis (Hi)

Null Hypothesis: We normally make assertion about two event e.g. we very often say that twins resemble themselves that is, there is no different between them.

Alternative Hypothesis: is a Hypothesis which specifies any of them of the following Hypothesis here by formulated.

HO: There is no significant relationship between efficiency and profitability of a business organization.

HI: There is significant relationship between efficiency and profitability of a business organization.

HO: Application of information technology (II) in business leads to effective attainment of objectives.

1.6 SCOPE OF THE STUDY

This research work intends to cover such area as;

• Highlight of the benefit of information technologies to the business organization.
• To find out the problem of financing and maintenance of these technologies.
• To determine the particular area of business operation in which information technologies can be of help to the business organization.

1.7  LIMITATION AND CONSTRAINTS OF THE STUDY

For the successful completion of every research work, the constraint that hinder the progress of the research work cannot be emphasized. The limitations faced by researcher in the cause of investigation are, in this study, the problem obtaining relevant information needed has limit the study to certain extent this is because the official of the organization believe that some of the information request for, is so secret that they cannot be released.

Secondly the researcher was faced with the problem of finance needed to visit the business organization. Thirdly, the task of organizing the various the articles and literature bring out what we have today is a great problem. More so, inadequate time was one of the most problems faced. However, the manager of Mr. Biggs who was to give relevant information is such a busy officer.

Finally the problem of moving from the research destination to visit the business organization is also a great constraint.

1.8 DEFINATION OF KEY TERMS

The researcher will not be grasped adequately if some of the key words are not define to suite the usage in the write up. Telecommunication: is the standard telephone system which is commonly used for connecting computers over long distance.

System: this is the putting together of different part to make up a whole to achieve a common goal.

Efficiency:The power or ability to produce the desire or satisfactory result.

Computer: This can be define as a powerful electronics device which has the capability of accepting data as input, processing the data by accepting some arithmetical and logical operation and it store the result of the processed data.

Data: Is the representation of facts, observation or occurrence which can take different forms as number, codes, words etc.

Information: Is the data that has been processed in a way that its meaningful and beneficial to the users or recipient.

Hardware: Refers to the physical components that make up a computing Centre or installation.

Internet: A group of computer located all over the world connected to each other through telephone, line, and satellite communication. The world wide website (www) is the multimedia part of the internet.

Software: These are computers related program that you can feel with the physical sense e.g. anti-virus program, web browser etc.