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Chapter one

1.1 Historical Background of Nestle Nigeria Plc

Nestle Nigeria Plc is part of the Nestle Group, the world’s largest food manufacturer, and is well-known for its high-quality goods.

Nestle Nigeria plc began modest trading in 1961 and has since grown into a major manufacturing and marketing corporation. It is a public corporation that has been listed on the Nigerian stock exchange since 1978, with around 20,500 shareholders.

Nestle Nigeria Plc of Switzerland owns around 43% of the company’s equity. Nestle Nigeria plc’s production plant is located in the Agbara Industrial Estate in Ogun State.

The major items were designed in accordance with contemporary manufacturing procedures, ensuring efficient production of the following:

v Nestle Golden Morning Infant Cereals.

v Instant family cereals, Nestle Milo – beverage drink.

v Chocomilo includes chocolate candies, Maggi cubes, Maggi chicken, Maggi crayfish, and Maggi super onion seasonings.

Nestle Nigeria plc obtains the majority of its agricultural raw materials locally from contract farmers and out growers under a partnering agreement that allows them to benefit from the company’s agricultural services department’s technical advice and assistance while also ensuring a continuous supply of raw materials that meet the company’s high quality standards.

The company employs a backward integration strategy by pursuing its sustainable agricultural initiative (SAI), in which she engages in collaborative research with the University of Agriculture,

Abeokuta (UAAB) on the popularisation of soya beans, resulting in the development of a selection of soya bean varieties with improved seed colour, seed size, and yield.

The company’s objective is to satisfy the requirements of the consumers with high quality food products with long shelf life adapted to the taste and food habits of the consumers, and as a result, she has continuously invested in Nigeria by building and commissioning in 1991 at Agbara,

Ogun State, a fully integrated plant producing concentrated sorghum malt extract from locally malted sorghum, and in June 1995, Nestle Nigeria plc commissioned another plant at Agbara that

The expenditures constitute a successful and considerable attempt to replace imported raw ingredients in the manufacturing of Milo food drink and Maggi seasonings.

Because the corporation recognises its social duty, it is committed to incorporating environmental policies, plans, and practices into all aspects of its operations. She strives to reduce her environmental impact by using packaging and production processes that are widely recognised as having a low environmental impact.

With a history in nutrition, a diverse product portfolio, strong brands, research and development expertise, skilled and motivated employees, and efficient management, the company is well-positioned to contribute to Nigeria’s progress, prosperity, economic development, and industrial growth.

Through the use of a vertical integration strategy, the company seeks to achieve a clear competitive advantage over competing products by ensuring that their products are available wherever, whenever, and however the consumers want.

Continuous attention is also given to developing the professional leadership skills of employees at all levels so that they can directly contribute to growth and improved performance.

To boost industrial growth, the organisation has implemented a long-term sustainability business practice. Over 75% of their raw materials are sourced locally by themselves through the use of employed farmers and suppliers, and they also support an ever-increasing standard of living through job creation, increased income,

infrastructure improvements, and a growing concern for the interests of the community here in Nigeria through the application of Nestle Environmental Management (NEM) and compliance with applicable environmental legislation.

1.2 Statement of Research Problems.

In the twenty-first century, the globe is a global market (Diacon, 2003), characterised by competition, in which a firm must compete with other firms all over the world.

Backward integration approach has assisted in identifying the tasks that must be completed, providing ideas that have been redefined by experience, and achieving a competitive edge for the organisation.

Backward integration strategy is defined as the process by which a company takes ownership or gains control of its supply chain. It serves to simplify the organisation in order to provide better cost controls and eliminate the middleman, since efficiency and lower production costs allow the firm to become more competitive in the market.

Although backward integration technique increases organisational performance, there are still debates over whether it is more suited to manufacturing enterprises than to service companies. As a result, statements can be made about the following:

v Managing employee performance as an essential component of the job.

v Quality metrics that were not customer-focused.

v The effect of reduced output caused by slowing global demand.

v Insufficient availability of skilled labour.

1.3 Object of the Study

The objectives of this research study include the following:

v To introduce the manufacturing industry to the value of a backward integration strategy as a management policy that documents individual and organisational expectations and provides a meaningful process for employees to be rewarded for significant contributions to the organisation while also providing a mechanism to improve individual/organizational performance as needed.

v To ensure that industries, particularly manufacturing industries, understand the value of the Backward Integration strategy and how it can help the organisation maximise its net profit by strategizing very simple strategies for both product lines and production processes, as well as making difficult decisions to cut costs quickly and cheaply to avoid repeated morale-sapping cuts.

v To ensure that manufacturers are alerted to chances for expansion as valuations fall and owners seek rapid exits. Research and marketing may also be critical in enabling excellent positioning to capitalise on the upcoming upturn.

v To give suggestions and recommendations on the impact of the backward integration strategy on organisational performance, as well as relevant recommendations for future research in the area of its specialisation.

1.4 Statement of Research Questions

What impact does backward integration have on organisational performance in manufacturing industries?

v How do manufacturers use integration strategies to meet the needs of a rising market?

v What is the relationship between backward integration strategy and organisational performance in terms of growth and profitability?

v Is the backward integration strategy focused on customer satisfaction?

1.5 Statement of Research Hypotheses.

H0: The Backward Integration Strategy does

not have a significant impact on organisational performance.

H1: The backward integration method has considerable

Have an impact on the performance of the organisation.

H0: Backward integration strategy corresponds to the organization’s growth and expansion.

H1: Backward integration approach is not synonymous with organisational growth and expansion.

H0: Backward Integration Strategy Increases an

Organisational profitability.

H1: Backward integration strategy does not increase.

The profitability of an organisation.

1.6 Significance of the Study

A study of this nature is intended to produce both theoretical and practical contributions to the industrial industry. This study provides a foundation for a more in-depth examination of the formulations and implementation of the backward integration technique currently in use.

The study is likely to help department of interior rating officials improve management performance that is linked with and supports organisational goals.

The study benefits manufacturing, services, and professional businesses that are always looking for competitive tactics, as well as individuals, because it improves organisational performance.


This study aims to investigate the relationship between backward integration approach and organisational performance.

However, it will only apply to manufacturing enterprises in Ogun state (Nestle Nigeria Plc). The reason for confining this analysis to manufacturing enterprises is that their activities have a significant impact on the overall economy.

As a result, the analysis will be limited to the manufacturing sector and its sole ownership structure in Nigeria.

1.8 Operational Definition of Terms

Several terms are predicted to be used often in this investigation. Several of these are briefly described below:

v INTEGRATION STRATEGY: This is the acceptance of a strategy or course of action that is critical to the organization’s overall success.

v COMPETITIVE ADVANTAGE: This is the ability to outperform others in a competitive situation.

v GROWTH: This is the growth of the organisation in one or more dimensions without any structural modifications, as well as its development as an innovative process that leads to the structural alteration of the social system.

v ORGANISATION: This is a collection of people who collaborate to attain a certain goal that cannot be accomplished by an individual working alone.

v. PERFORMANCE: The act of carrying out or completing an action or function.

v DEVELOPMENT: The number of modifications in the manufacturing process that will begin slowly but gradually rise over time.

v IMPLEMENTATION: The process of turning a plan into action.

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