Impact Of Business Environment On Organization’s Performance In Peacock Paint Nigeria Limited

Impact Of Business Environment On Organization’s Performance In Peacock Paint Nigeria Limited
Impact Of Business Environment On Organization’s Performance In Peacock Paint Nigeria Limited

CHAPTER ONE

INTRODUCTION

1.1       Background of the Study

No business organization can operate successfully in isolation without dependence on supportive institutions, variables and factors (Oginni, 2010) i.e business organisation exists and operates within an environment where there is complex interplay in terms of activities as well as networks of relationship between and among human resources, material resources and other systems. In the views of Aborade (2005) all business decisions are found to be contingent upon a good analysis of the environment which is often the bane of all the constraints as this environment creates the opportunities, threats and problems for the business organisation.

Evolving from this is the belief that business organization is an integral part of its environment on the ground that they are mutually interdependent and exclusive where the environment plays the role of providing the resources and opportunities to organization for its existence, and the business organization in turn, offers its goods and services to the people living in the environment for survival and enlightenment (Ajala 2005). This is also in line with the views of Adi (2006) that the most important sole influence on organizational policy and strategy at any point in its development is the environment, both within and outside the organization.

Akanji (2003) was of the opinion that the more complex, turbulent and dynamic an environment becomes, the greater the impact on human attitudes, business, organizational structure, market and process as well as facilities, therefore there is need for all organizations to direct their attention to the environment when formulating their strategic management policies in order to facilitate their survival, growth and profit motives.

(Oghojafor, 1998) In management, the word “Environment” does not necessarily mean physical surroundings, but is used to describe all those influences that bear upon the individual organizations. Business environment is used to mean anything, which surrounds the business organization. It affects the decisions, strategies, process and performance of the business. The environment is consisting of factors which are beyond the control of the business (STEP) social, technological, economical, legal and political. It provides opportunities or poses threats to the organization.

Since business makes demand on the society and the society makes demands on the business, managers in any organization must interact with and respond to environmental factors internal or external to their organizations. The sum of these interrelationships within the business and between the business and the society is what is the management regarded as business environment.

Taking a look at the business environment is, therefore, like considering the cost of a building before embarking on it lest after starting one finds that the cost is too much and the building is not completed. People pass by such building and mock the owner for starting something he could not complete. It is also like a country going to war with another country and making a good assessment of its war capabilities against those of the enemy whether there is chance of winning the war (Luke 14: 28-31). Even before starting the business, a painstaking, time consuming and mind- involving business plan utilizes variables in the environment to determine the prospects of the business and assure investors of the safety of their moneys in the venture. Environmental factors such as income, employment, cost of capital, inflation, exchange rates, technology, legal provisions, industry demand and nature of competition need to be captured in the business plan (Hisrich, Peters, and Shepherd, 2008).

All the environmental variables could be broken into four groups of Economic, Technological, Politico-legal and Socio-cultural, with each group having myriads of individual variables (Porter, 1980). The focus of this paper is on the economic variables which comprise of Gross Domestic Product (GDP), Interest rates, Government expenditure, Inflation rate, unemployment, exchange rate, and foreign direct investment (FDI).

Organizations survival and success depend on the appropriate adoptions to a complex and over changing environment. It is pertinent for top management of organization to identify opportunities and threats in the external environment. Internal environment, it should focus on strengths and weakness, potential and existing ones. It should respond swiftly, in order to know where it can have competitive advantage over its rivals. Therefore, any organization should look or search its environment continuously, Oghojafor (1998). Hence, a research into the impact of business environment is drawn to assess the influence of economic, technological, ethical behaviors and political environment on organization’s performance. 

Impact Of Business Environment On Organization’s Performance In Peacock Paint Nigeria Limited

1.2       Statement of Problem

The Nigerian business environment has witnessed a lot changes from the period of the oil boom in the 1960s and the early 1970s. Austerity measures in the early 1980s and the structured adjustment programme in the late 1980s from the company act of 1960s allied matter decree in the 1990s, undoubtedly brought in the eighty’s the opportunities to be exploited by some firms or the problems that inhibit the survival of so many business firm.

Hence, for organizations to achieve their goals, they must do that within allowable resources of the environment. The economy provides the needed market situation and funding for businesses, when the economic factors in the environment does not support business performance, the firm may not be able to produce profitably. Peace is a sine-quanon for productivity, the political environment especially in developing economies like Nigeria may be exposed to violence and frequent change of government, and this may lead to change in both economic and public policies. This makes it difficult for business organization to accurately forecast and plan their operations. This therefore calls for reexamination of the effects of environmental factors on the growth of Business Enterprise.

The need for studying business environment however became important considering the fact that business organization do not operate in vacuum and effective management in complex and dynamic society such as Nigeria, requires the assessment of strengths and weaknesses of the organization and the opportunities and threats posed and the challenges of the internal environment by the challenges of the external environment (SWOT analysis). For survival and growth, organization must adapt to these changes. There is there is therefore need to research into the impact of business environment on organization’s performance.

1.3       Objective of the Study

The general purpose of this study is to assess the impact of business environment on organization’s performance in Peacock Paint Nigeria Limited, Etinan-Akwa Ibom State. Specifically, the study sought to:

  1. Determine the influence economic environment on organization’s performance.
  2. Determine the influence of technological environment on organization’s performance.
  3. Determine the influence cultural environment on organization’s performance.
  4. Determine the influence political environment on organization’s performance.

1.4        Research Questions

The following research questions are raised to aid the study.

  1. To what extent does Economic environment influence the performance of business organization?
  2. To what extent does technological environment influence the performance of business organization?
  3. To what extent does cultural environment influence the performance of business organization?
  4. To what extent does political environment influence the performance of business organization?

1.5       Research of Hypotheses

This  research  is  undertaken  on  the  basis  of  the  following hypothesis.

  1. There is no significant influence of economic environment on organization’s performance.
  2. There is no significant influence of technological environment on organization’s performance.
  3. There is no significant influence of cultural environment on organization’s performance.
  4. There is no significant influence of political environment on organization’s performance.

Impact Of Business Environment On Organization’s Performance In Peacock Paint Nigeria Limited

1.6       Scope of the Study

The study covers all the small and medium scale enterprise in Akwa Ibom State. However, due to time and financial constraint, the researcher limited the study only to Peacock Paint Nigeria Limited, Etinan-Akwa Ibom State.

Therefore this study seeks to empirically investigate on the impacts of economic, technological, cultural and political environmental organization’s performance using chi-square method of analysis on primary data obtained from the company.

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Peter Hezekiah Lawson (Sir Pee). The CEO of onlineproject.com.ng. A reputable researcher, Web Developer, ICT Instructor and a publisher of many research works in Education.