PURCHASING PROBLEMS OF SMALL SCALE INDUSTRY IN NIGERIA
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Abstract
The researcher set out with the following objectives.
To find if quality of products is a problem to Encristo pharmaceutical industry.
To find out the inadequate capital of the company and how if affects the purchasing activities of Encristo pharmaceutical industry, amongst others.
Four hypotheses were formulated. A review of related literature was also reviewed to expose the researcher to what has been previously done to ensure a sound basis for the research.
A structural questionnaire were develop and administered by the researcher to staff and management, and customers/ccnsumers of Encristo pharmaceutical industry products until the government and management of small scale industries wakes up to the challenges facing them, small scale industries cannot survive and flourish in sufficient numbers to complete the industry of the futu6re.
The following recommendations were made:
The Enchristo pharmaceutical industry should improve on their products performance by making use of research work.
The government should wake-up to their responsibilities by providing all the necessary requirement for the survival of small scale industries in an ever dynamic purchasing environment.
The research strongly believes that if these recommendation strongly believes that if these recommendations are carried out the Encristo pharmaceutical industrial will serve their customers better and at a profit.
Table Of Content
Approval Page
Dedication
Acknowledgement
Abstract
Table of ContentCHAPTER ONE
1.0 INTRODUCTION
1.1 Background of Study
1.2 Statement of the Problem
1.3 Objectives of the study
1.4 Scope of the study
1.5 Significant of the study
1.6 Definition of terms
CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 Overview of purchasing
2.2 Product
2.3 Price
2.4 Place
2.5 Promotion
2.6 Overview of small scale industries
2.7 Important consideration in Establishing small scale industries
2.8 Government and small scale industries
2.9 Purchasing problems associated With small scale industries in Nigeria
2.10 Problems created by small firms themselves
2.11 Prospects of purchasing in Small scale Industries in Nigeria
2.12 Prospects of purchasing in Encristo industry
CHAPTER THREE
3.0 RESEARCH METHODOLOGY
3.1 Sources of data
3.2 Population of study
3.3 Determination of sample size
3.4 Research instruments used
CHAPTER FOUR
4.0 PRESENTATION AND ANALYSIS OF DATA
4.1 Introduction
4.2 Presentation of data
4.3 Analysis of data
4.4 Interpretation of results(s)
CHAPTER FIVE
5.0 SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Introduction
5.2 Summary
5.3 Conclusion
5.4 Recommendation
Bibliography
Questionnaire
Chapter One
This work was on the purchasing problems of small scale indigenous pharmaceutical manufacturing company in Nigeria (a case study of Encristo Pharmaceutical industry Nigeria limited Enugu).
The researcher set out which the following objectives:
To find out if quality of products is a problem of Encristo Encristo Pharmaceutical industry.
To find out the inadequate capital of the company and how it affects the purchasing activities of Encristo Encristo Pharmaceutical industry, among others.
That the purchasing problems of Encristo Pharmaceutical industry a s a small scale include lack of finance, supply of enough quantity if raw materials, labored managed problems purchasing /promotional problems, until the government and management of small scale industries including Encristo Pharmaceutical industry wake up to the challenges facing tem , small scale industries cannot survive and flourish in sufficient numbers to complete the industry of the future.1.2 BACKGROUND OF THE STUDY
With the term of economic event brought about by the structural adjustment programme, (SAP) of 1985 – 1993, Nigerians were challenged to adopt their own technology and establish indigenous business otherwise known as entrepreneurship
Nigerian government introduced the indigenization decree in the 1970s banning the whole ownership of certain categories of business by foreigners (Ebue, 2001:16). The essence of mapping out this objectives was to improved the technology/technical skills making provision for business management, training, development of women\’s skills in food processing, the energy saving and lobbies for training opportunities relevant for small scale industries.
The comprehensive definition of small scale industries/business was given by (Ani 1999:4) detail as owned, managed by one or two persons, influenced by the family I decision making, has no undifferentiated organizational structure, market share is small and employs less than fifty (50) persons.
The small scale industries in Nigeria are faced with a lot of problems such as lack of initial capital to start up the business, low standard of production which brings about great lost in business and the incapacitation level of local machines and indigene technology which have into gone far to challenge the modern technology. This implies tat Nigerian small scale industries have to struggle for survival in the midst of sophisticated and highly equipped foreign competitors who have so influenced the Nigeria consumers to look down on made in Nigeria goods or products.
The Encristo Nigeria Limited manufacturer of liquid preparations is owned by Chief I.O. Mereguim. The company Encristo Nigeria Limited manufacturers was established in the year 1994, the nature of the company is fully a sole proprietorship. The industry was being managed by the family which Chief Meregim is the chairman and the Chief executive. He started his business life right before the Nigerian civil war and ever since then he had an immense growth in import and export business.
Construction, estate trading and pharmaceutical business. His wife was being of a great help to him by sharing her experience as an entrepreneurial and manufacturing business inclination. This has contributed largely to the growth of the company.
The company which in due time started immediately after inception started full operation on 1st June, 1994 with a foundations staff numbering 19, he also in proper was registered by the National Agency for Food and Drug Administration Control (NAFDAC), Pharmaceutical council of Nigeria, manufacturers association of Nigeria (MAN) and Pharmacist manufacturing group (PMG).
The company\’s activities are being directed from its operative heading quarters located at No. 8, 2nd Avenue Independence layout, Enugu and it is also from h8ere tat other sections of Encristo industries since inception has invested heavily on the manufacturing of the liquid drugs, otherwise liquid preparations. The products to the credit of the company\’s brand name are including:
Cristolyn (cough syrup) Criston (blood tonic) Encristo (multivitamin) Cristumal (paracetamol) and cristoquine (Chloroquine).
These products are bottled in both bornc, 100ml and 200ml amber bottle and 2 liters plastic containers (hospital packs) and above.
The company\’s giant step has being a contribution t the much desired improvement in the care delivery in Nigeria and to supplement the high demand and –consequent importation of drugs which has been on the rise and treat to the national foreign reserve. Moreover, imported drugs have been –on the high price side heavily concentrated with unrefined chemicals of dangerous after use reactions and affect.
As time goes on the number of the employees or staff has increased to 35 including managerial supervisor\’s assistant manager and operators.
1.3 STATEMENT OF THE PROBLEM
This research is very vital in the sense that the government is interested in seeing that made in Nigeria products are for self reliance through establishment of viable small scale industries.
The problems of Encristo Pharmaceutical industry which call for critical evaluation ate as follows:
1. Encristo Pharmaceutical industry has restraints in promoting their goods and services. This is as a result of their poor purchasing orientation and low capital base.
2. They also have the problems of producing products that are rarely competent because product facilities are not always available.
3. They have not well located because of site cost.
4. The Encristo entrepreneur and his purchasing officials, lack of managerial know how initiate policy, cost, control and purchasing strategies.
5. most of the goods produced by Encristo industry in Nigeria have not adequate and appreciable market acceptance due to the negative attitude of Nigerians towards the made in Nigeria goods.
6. Encristo Pharmaceutical industry as a small scale industry lacks finance, supply of enough quantity, of raw materials, labored managed problems purchasing/promotional problems.
These are some of the problems of the Encristo indigenous small scale industry in Nigeria and it is the interest of the research to critically examine these problems and find solutions to them.
1.4 OBJECTIVES 0OF THE STUDY
The intention of this research is to focus on the overall trend of purchasing problems and the performance of small scale industries in Nigeria.
However, the objectives of the study are a s follows:
1. To find out if quality of products is a problem to Encristo pharmaceuticals.
2. To find out the effectiveness and adequate of the company\’s promotional strategies.
3. to find out the inadequate capital of the company and how it affects the purchasing activities of the company.
4. To evaluate the purchasing efforts and performance of the Encristo pharmaceutical industry.
5. To know how the low standard of the production hinders the continuity of Encristo pharmaceutical industry.
6. To draw recommendations that will assist findings effectively check their purchasing problems as well as help government formulate policies tat will enhance the performance of small scale industries.
1.5 THE SCOPE OF THE STUDY
The scope covers only the Encristo pharmaceuticals in Enugu metropolis, and it is on purchasing problems ad prospects of small scale indigenous companies in Nigeria.
1.6 SIGNIFICANCE OF THE STUDY
The research study on purchasing problems of small scale indigenous pharmaceuticals manufacturing [companies in Nigeria is a very relevant one to the researcher and the company based on the primary and purpose of this research which the purpose was to obtain the valuable and objectives.
Information on the purchasing problems militating against industries and provide solution to them. This will also be useful and necessary to entrepreneurs especially small scale industries and encourage investors to design their strategies because production starts and ends with purchasing.
1.7 DEFINITION OF TERMS
ENTREPRENEUR: According to Collins et al in NwachuKwu (1990:5), an entrepreneur is defined as a risk taken. He is a man who braves uncertainty. He is a person who strikes out on his own through native, dertoion to duty and singleness of purpose somehow creates a business and industrial activities where non-exited before.
SMALL SCALE BUSINESS: According to Ude (1999:2) small scale business is independently owned and operated for profit and is not dominated in its arrears of operation.
STRATEGY: According to Adirika (2000) strategies is a game plan of any firm depicting its objectives, were it is and where it want to be and being able to maintain tat state or position which has long term implications.
PURCHASING: According to Odike (2001:155) market is defined as a place where the buyers and the sellers come into contact for the purpose of exchanging goods and services.
PRODUCTION: This is a process of producing or creating new goods or products.
PRODUCT: According to Markins (1997) a product is anything that can be offered to the market for attention acquisition use or consumption which includes physical, place, organizations and items.
It is also a bundle of tangible varying that offers some levels of satisfaction.
For instance, in managing a product variables embraces planning and developing the right goods or services to be marketed by the company.
Chapter Five
This chapter presents the summary of the main findings in the research for easier and concise understanding, it goes further to proffer recommendations, and draw conclusion tat will brie fly mirror the details of the research.5.1 SUMMARY OF FINDINGS
Sequel to our research analysis, presentation and tested hypothesis, we can now draw the following observation and findings. The research realized that inefficient distribution system have been a problems to the purchasing performance of Encristo pharmaceutical indigenous manufacturing industry.
The company of case study distributes its products with motor vans but the study received that limited number of vans had roads and high costs of spare pats have been a major problem militating against the efficiency of this system.
Findings also showed that some other small scale industries still use bicycles and motorcycles to distribute their products wh0ile some others do not even any automated means and consequently depend on manual distributions.
Furthermore, the data analyzed that many small scale industries do not advertise their products. The hypothesis tested in hypothesis 11 of this study clearly showed that financial and lack of strong capital base have limited performance of this dispensable purchasing tool. Not only that, researcher also turned out that other customers and potential consumers and improve product purchasing are full employed for obvious reasons.
The study also revealed further that the quality of the products of small scale industries (Encristo Pharmaceutical industry) affects their purchasing performance negatively. The researcher clearly reveals that management and staff, consumers and customers simply affirmed that the quality of the Encristo pharmaceutical products are too poor. This is due to lack of standard processing equipment most of which are imported inadequate raw materials also affects quality adversely.
These materials mostly are not locally sourced hence it generally transcend to lack of strong capital base to pay trained professionals or even train their manpower expertise will improve the quality of products.
She once more showed the products of Encristo Pharmaceutical industry victims of low or poor public acceptance and patronage as further revealed in tables. But from the presented economic policy development, there is hope for a better change this is due to the new economic reliabilities coupled with charion call on all Nigerian is to embrace contacts made goods given effective patronage, the quality of the products of the Encristos industry will increase immensely supervision by individual standards.
The research further revealed that the prices of the products of Encristo pharmaceutical industries are costs compared with similar product that imported despite their cost of import tariff and transportation. From one interview with the staff and management, it was found that this abnormal cost which has been a competitive strategy by marketers of foreign products is as a result of the inability to adopt bulk purchase of raw materials and lack of facilities for mass production to cut production cost.
The major customers of Encristo pharmaceutical industry are local traders, individuals and household users. There is little patronage of this company by government agencies. Customers from markets situated abroad are situated within Nigeria. There researcher showed that having a sound purchasing department is a pre-requisite to all small scale industries for profitability not having its constitutes, a great purchasing problems. When the department is in place, it overseas all the purchasing activities.
Purchasing department will ensure the planning and implementation of all purchasing strategies, establish purchasing budgets and find a way of financing them. The department will also be in charge of customer\’s need and recommending,, identifying qualities of products that will satisfy these needs. With these, most of these problems will be controlled.
5.2 RECOMMENDATIONS
The first step towards the solution of any problem is to identify that problem examine the alternative and then proffer solutions to the identified problems.
Some years ago, when the Nigerian economy experienced a boom, purchasing activities were largely neglected, the indigenous small scale manufacturing industries were not encouraged either. But the development of the early eighties coupled with the emergence of austerity measure policies, saw a sharp turn around in the market trend as global economic recession spread purchasing department become a \”sine quo non\” and the training and employment of qualified purchasing managers with good knowledge of purchasing becomes inevitable. We are in the era of sellers \”beware\”. This invariably amounts to effective and efficient performance through period purchasing research.
Based on the findings of this research and this brief promise, the following recommendations are made:
1. That Encristo pharmaceuticals industry should promote their products through sales promotion, trade fairs shows and exhibitions and advertisement, participating in these promotional activities are good alternatives.
2. on the other hadn it is very difficult for small scale industries to meet up the requirement of the customers. There will be a break in the supply of the product as a result of small capacity associated with small scale manufacturing industry
3. if Encristo pharmaceutical industry will survive, the effective distribution system should be adopted.
4. packaging is a purchasing factor especially in the drug package of products has to be attractive to motivate the customers to purchase the product.
5. the core content of the product most be of a good quality. Therefore the management should embark on manufacturing of good quality products. Packaging is a purchasing factor especially in the drug package of products has to be attractive to motivate the customers to purchase the product.
6. The core content of the product most be of a good quality. Therefore the management should embark on manufacturing of good quality products.
5.3 CONCLUSION
Purchasing is the source and the feeder of every organization. It is apparently obvious tat any organization that neglects purchasing seeks for a natural death.
The inability of the small scale industries to carryout effective and efficient promotion and distribution has been a great purchasing problem to indigenous manufacturing industries. Negative attitude of most Nigerians to locally made goods and cost control.
Techniques contributes to problems significantly, through but can still be easily solved if others factors are harmonized. When this is done, it has been observed that the company (Enchristo pharmaceutical industry a subsidiary of Encristo industries Nigeria limited will be better positioned to harvest the fruits of their present purchasing strategies in line with the increasing and ever dynamic Nigerian business environment.
