BACKGROUND OF STUDY
There is controversy that small and medium scale
business in any country where they operate play important role in the
economic growth and development of that country or nation and it
improves the quality of life of individuals (Ohanemu, 2006).
Business organizations anywhere in the world operates within
environments which according to Adidu & Olanye (2006) is an
aggregate of all conditions, events, circumstances and influences that
surround and effect the business organization.
In management, the term “Environment” does not necessarily mean
physical surroundings but, it is used as a total forces, factors and
influences that surround and affect business organizations as a
separate entity as well as other business organizations. This means that
business organizations must interact with those forces that influence
its decisions, directions, actions, size, health, profitability and
performance of the organization as a whole.
Ukaegbu (2004) stated that the contemporary environment is
becoming dynamic and competitive and since business organizations do
not operate in vacuum, they affect and are affected by environment
conditions. Therefore, business organizations irrespective of their
objectives must take into consideration, these environmental
opportunities and constraints. Businesses affect the environment by
providing the required goods and services thereby contributing to the
development of the business by presenting opportunities and threats.
One thing to be emphasized at this point is that, the extent to which
managers could identify, evaluate and react to the environmental forces
will have considerable impact on organizational performances.
Kuye, (2004), emphasized that the need to study business
environments is very important considering the fact that business
organizations do not operate in vacuum and an effective management in
complex and dynamic society requires the assessment of strengths and
weaknesses of the organization and the opportunities and threats
provided by the challenges of the external environment, hence for
survival and growth, organizations must cope and adopt to these
challenges posed by the ever changing environment (internal &
external) in which managers operate means that mangers must not only be
aware of what constitutes the elements of their business environment
but also should be able to respond to the forces of the environment
which inevitably impinges on the operations of the business
Ukaegbu (2006) further stated that the relationship between a
business organization and its host environment can be examined from
three strategic ways;
Firstly, the organization can be viewed as importing various kinds
of inputs (resources), such as human resources, capital, managerial
and technical inputs. These inputs are then transformed to provoke
output which takes the form of goods and services. A second approach is
the study of the relationship between the organization and the society.
It focuses on the demands and legitimate rights of different claimants
such as employees, consumers, suppliers, stakeholders, government and
the community. A third approach is to view the organization as
operating in an external environment of opportunities and constraints.
Thus no single approach is sufficient for all times and in all
circumstances. They are complementary. The elements external to the
organization affects its performance as well as those elements within
1.2 STATEMENT OF THE PROBLEM
The effects of environment on
organizational performance vary from one situation to another. The
environment suitable for the growth of a particular business may be
hostile to the survival of another business. The problems that
necessitated this research are as follows:
- Assess impact of environmental factors that has the
performance of small scale enterprises in Oshimili North Local
- The ability to identify, evaluate and react to the challenges are critical to organizational performance.
Therefore, this study seeks to investigate the
impact of business environment on organizational performance of small
scale business in Oshimili North Local Government Area.
1.3 OBJECTIVES OF THE STUDY
The purpose of the study is to assess the extent to which
environmental factor affects the performance of small business
enterprises, evaluate it, determine its success and failure and discuss
its likely effects on organizational survival and growth. The other
objectives this research seeks to achieve are:
- To determine the extent to which environmental factors affect organizational growth and survival of small scale business.
- To determine the relationship existing between small scale business and its operating environments.
- To determine the challenges facing small scale businesses within Oshilimi North Local Government Area.
- To examine how small scale business manage these environmental factors.
1.4 RESEARCH QUESTIONS
In order to arrive at a precise answer to the effect of
environmental factors on the performance of small scale businesses, the
following research questions shall be tested;
i To what extent do environmental factors affect growth and survival of small scale businesses.
ii. Is there a relationship existing between small scale business and its operating environment.
iii. What are the challenges facing small businesses within Oshimili South Local Government Areas.
iv. How do small scale businesses manage these environmental factors?
- What are the available incentives provided by the government to support small scale businesses?
1.5 RESEARCH HYPOTHESIS
The following formulated hypothesis would be tested in order to help provide answers to the research questions;
- H0: There is no significant relationship between external environment factors and performance of small scale business.
H1: There is significant relationship between external environment factors and performance of small scale business.
- H0: There is no significant relationship between increased
productivity of small business and socio-cultural factors within the
business environment where it operates.
H1: There is significant relationship between
increased productivity of small business and socio-cultural factors
within the business environment where it operates.
- H0: There is no significant relationship between the fiscal
incentives provided by the government, and enhanced performance of
H1: There is significant relationship between the
fiscal incentives provided by the government, and enhanced performance
of small business.
1.6 SIGNIFICANCE OF THE STUDY
This study will be highly useful after its
completion for both current and future entrepreneurs, business
organizations and the government. This research study on the effects of
environment factors on performance of small scale business in Oshimili
North Local Government Area would have considerable benefits on the
small scale business operating within this business environment in that
- Help these businesses become sensitive to the uncontrollable
external environmental factors impinging on the performance of their
businesses and how they can effectively manage these factors and top
the opportunities for enhanced productivity and profitability.
- To an entrepreneur: The knowledge obtained
from this study will enable them to know how critical environmental
factors are and how to effectively manage these factors for the
survival and growth of small scale businesses.
- To organizations and the society: The study
will equally be useful to organization and the society at large in the
sense that knowledge about technological advancement generation
through small scale business source of credit facilities to establish
small business will be acquired.
- To the Government: This research will
also be useful to the government in the formulation of policies towards
small scale enterprises development in Nigeria. It will also help the
government to identify the importance of small scale enterprises in the
achievement of economic growth and development in Nigeria.
1.7 SCOPE OF THE STUDY
This study covers environmental factors and its effects on the
performance of small scale businesses in Oshimili North Local
Government Area. The study basically focused on the challenges of these
businesses managing the dynamic nature of their business environment in
achieving organizational performance.
1.8 LIMITATIONS OF THE STUDY
However, there were some constraints that impinged on the research, these are;
- Financial constraint: The cost of
sourcing information and administering questions was quite on the high
side, which included visiting various small businesses in the various
towns that made up the local government.
- The limited time frame given to achieve the research was also a constraint to the study.