AN EVALUATION OF THE BUSINESS ENVIRONMENT AND ITS EFFECT ON ORGANIZATIONAL GROWTH
1.1 CONTEXT OF THE STUDY
The contemporary business environment is characterized by various dynamic elements, such as global competition, information technology, the quality service revolution, and corporate social responsibility, which are compelling managers to reconsider and reshape their approach to their various operation responsibilities. As a result of this paradigm change, new companies are developing that are more sensitive to their internal and external contexts (Luthans, 2005). The internal elements exist within an organization’s operating base and directly influence the various business aspects. These internal factors include firms’ mission, resistance to change, poor quality staff, lapses in internal control, poor resource/financial management, operational weaknesses, high staff turnover, and over-leverage, whereas external factors include government regulation, economic recession, political turmoil, low-cost competitors, changes in customer behavior, environmental/health issues, technological advancements, natural disasters, shifts in inputs, and changes in macroeconomic conditions. In order to survive in the long run, it is essential for a firm to keep up with the many changes in the environment.
Essentially, a business environment should contribute significantly to a company’s ability to survive. Corporate settings have the power to either promote or inhibit business growth. This is due to the fact that, at certain periods, the policies and forces imposed by these environmental factors might assist a business flourish, while at other times they can lead a business to cease operations. Essentially, it might be a government regulation, the rate of interest on capital, the nature of market competition, or the amount of technological sophistication relative to that of the company’s operations.
The Nigerian business climate differs from typical business environments in unusual ways. In general, the Nigerian corporate climate necessitates a different type of study. This is because the environment has the power to either encourage or discourage economic growth.
According to Adebayo et al. (2005), the business environment can be broadly categorized into internal and external environments, with the former comprising variables or factors under the control and manipulation of the firm to achieve set objectives and the latter comprising factors beyond the control and manipulation of the firm. Consequently, a business must design a plan to help it deal with the numerous environmental factors (Oluremi and Gbenga, 2011). Similarly, the nature of the business environment is considered to be dynamic, stable, or unstable, which often aids a company in selecting the most suitable strategy (Ibidun and Ogundele, 2013). Adeoye (2012) observed that for businesses to adapt to a dynamic and fast changing business environment, they must design and implement strategies that preserve their operations and produce the desired outcomes. In a similar vein, Ogundele (2005) stated that a company’s assessment of the nature of its business environment is dependent on its size and industry. Business survival is the capacity of a company to remain in operation despite adversity, i.e. the managerial process of guiding a company’s activities on a regular basis as a continuing concern that serves the needs of all stakeholders (Akindele et al., 2012). According to Dun & Bradstreet (2009), business failures occur when a company declares bankruptcy or ceases operations, resulting in losses and a failure to meet its numerous financial obligations to creditors. In order to thrive, businesses constantly monitor the many actions that define their continued existence. According to Adeoye (2012), the current forms of complications faced by businesses include leadership styles, changes, uncertainty, conflict, culture, technology, structure, a competitive market, profitability, and workplace motivation. Therefore, businesses must design a strategic plan and tactical method that is relevant and adaptable to the current business climate in order to maximize resource usage and achieve their objectives.
Burns (2001) opined that small-scale businesses cannot be characterized as merely scaled-down versions of large companies, as they exhibit a number of fundamental differences that can be explained by the absence of economies of scale and scope, which is caused, among other things, by a smaller supply of factors of production. According to Ciano (2011), there are four defining elements for any company transformation program. This includes the time between reviews of milestones; the project team’s performance integrity, which is the ability to complete the initiative on time based on members’ skills and traits relative to the project’s requirements; the commitment to change displayed by top management and employees affected by the change; and the effort above and beyond the normal work that the change initiative requires of employees. According to Alexander (2000), the dynamic and fast changing business environment in which the majority of firms operate has a considerable impact on organizational survival and performance. This means that the external environment is complicated and continually changing, with competition being its defining trait. Recognizing the presence of intense competition often necessitates gathering more information about customers for the purpose of evaluation and to use such information to their advantage, thereby enabling competition to drive business organizations to seek out their customers in order to better understand how to meet their needs and desires, which in turn improves organizational performance (Azhar, 2008).
Relevance between theory and practice has led professionals and academics to initiate research on general business management and, in particular, strategic management. Various strategic management models have been suggested by numerous researchers. The five basic frameworks of the strategic management model proposed by Wright, Kroll, and Parnell (1996) are as follows: (1) opportunities and external threats, which include macro environment and industry; (2) the internal environment, which includes the company’s resources, mission, and goals; (3) formula strategies, which include koporasi level, business unit level, and functional level; and (4) implementation of the strategy, which includes organizational structure, leadership, and implementation. The design of a strategy that is segmented into corporate, business unit, and functional levels requires a fundamental understanding of this model’s major components. Moreover, Wheelen and Hunger (2010) highlight the strategy formation directly in the development of a more operational level, including the mission, objectives, strategies, and policies. Regarding the plan implementation described in the degree program, budget, and procedures. In a pragmatic approach, Wheelen and Hunger’s strategic management appears easier to comprehend and implement, yet leadership, organization, and culture appear to be less emphasized in the model they provide.
1.2 DESCRIPTION OF THE PROBLEM
It was once suggested that Nigeria’s economic climate was hostile for corporate activities. This may be true to some extent, but the reality is that the country’s current economic condition offers some promise for the conduct of business. Even while the importation of some capital goods is placed in the hands of specific individuals, the average businessperson still has a say in the matter. The Nigerian business climate is influenced by economic growth, interest rates, exchange rates, and inflation rate, among other economic factors. These elements have significant effects on the operations and decisions of enterprises. For instance, interest rates impact a company’s cost of capital and, consequently, its capacity for growth and expansion. Exchange rates influence the expenses of exporting commodities, as well as the supply and cost of imported items, in an economy. In addition, economic policies have a substantial impact on the conduct of activities in the Nigerian corporate environment. Occasionally, tax or trade policy can influence the conduct of business. For instance, Aliko Dangote is the sole individual responsible for the importation of certain items in Nigeria. This impacts other businessmen and reduces the conduciveness of the Nigerian business environment for entrepreneurs.
1.3 OBJECTIVE OF THE RESEARCH
This study’s primary objective is to evaluate the effect of business environment on organizational growth. Specifically, the study aims to:
1. Determine the characteristics that influence organization growth
2. Determine the obstacles to organizational growth in Nigeria.
Determine the effect of the business environment on the development of organizations in Nigeria.
4. Propose remedies for the obstacles to organization expansion in Nigeria.
1.4 RESEARCH QUESTIONS
In order to arrive at a valid result, the following research questions were established to direct the investigation.
What are the factors that determine the growth of an organization?
AN EVALUATION OF THE BUSINESS ENVIRONMENT AND ITS EFFECT ON ORGANIZATIONAL GROWTH