THE IMPACT OF STRATEGIC PLANNING TO THE DEVELOPMENT OF SMALL SCALE AS A MEANS OF REDUCING UNEMPLOYMENT

CHAPTER ONE

INTRODUCTION

Background Of Study: Nigeria is bedeviled by a myriad of problems which, despite her oil wealth, inhibit her development and even threaten her continued existence as a sovereign state. Nigeria’s socio-political and economic circumstances give the significant indication that many of her problems stem from an origin of artificial colonial construct which lumped together a variety of separate peoples. Fragmentation of the nation is seen as a distinct possibility unless its citizens can be induced to accept a new sense of Nigerian identity, involving a commitment to the survival of the present state as a cohesive entity. This would necessitate a number of radical changes, not only in the political and economic structure of the country but also in the psychology of the people.

\Nigerians have lived through series of administrations underdifferent governments, and the question still arises, ‘is Nigeria a nation at all?’ A critical look at what the government calls reform reveals a personally instituted concept of governance, filling the seats of power with those they believe to be their kin, rather than have professionals in the positions of merit, and a breed of people typified by their integrity of heart, ingrained in the training and qualifications they have received in the course of service to the nation. The increasing number of those who are not gainfully employed or adequately educated in the country, remain preys as political tools of violence as it has been seen in the history of violence occurring in the country over a period of time. The country has depended much on oil as its major source of revenue for years, however, the current administration also fails to recognize that the future of the country may very well depend on the economy of its people(the youths), which is possibly the only untapped, ill harnessed, most lucrative resource of the country. If it remains this way in the next ten years, putting into consideration the effect of increased poverty, lack of employment, poor educational system, it is unpredictable what the result will be. The table below shows the statistical data of the rate of unemployment and the population rate from 2006 to 2011 in Nigeria. It is the result of a survey carried out by the National Bureau of Statistics and shows that persons aged 0-14 years constituted 39.6%, those aged between 15-64 (the economically active population), constituted 56.3%, while those aged 65 years and above constituted 4.2%. Analysis of employment data for the past 5 years show that the rate of new entrants into the labour market has not been uniform in the past five years.

The rate was on the increase from 2007 to 2009 but declined significantly from 2009 to 2010. The rate increased again from 2010 to 2011. Within the five year period, there has been an average of about 1.8 million new entrants into the active labour market per year.

Governments, or local leaders, who are generally not held accountable for how much money is spent, and how education systems are managed. Sufficiency attitude – What is provided for the poor is not good enough

Inadequate pro-poor infrastructure or support systems this makes it difficult to implement successful poverty eradication interventions

A lack of systematic tracking of pro-poor interventions –  in this way, it is extremely difficult to know if the activities and programmes implemented have had any impact at all. Nigeria cannot combat the ills of the society just by raising its budget; there should be a strategic systematic approach to education that would bridge the gap between its service delivery and its effectiveness in the country.

 

1.2 Statement Of The Problem

Akingbolu (2014), Okezie, Odii, and Njoku (2013) has documented that 70% of SMEs fail in their first three years of operations in Nigeria because of their economy of scale. This is coupled with the dynamic nature of the environment, greater competitive firms and the need for continuous innovation. Product customization and growing use of ICT, forces firms to face challenges of improving their competitiveness. These difficulties are greater for the highly competitive environment for small scale businesses which negatively affect their Return on Investment (ROI). The inability of top management of SMEs to properly analyze the market is one of the leading causes of reduction in Return on investment (ROI) for SMEs (Aaker, Kumar & Day, 2008). This is as a result of their  inability to formulate and implement appropriate competitive strategies for diversification, to fulfill their role of being an industry low cost provider, developing expertise and creating a niche for their companies that will allows for SME Development.

1.3  Purpose Of The Study

The general aim of this study is to critically evaluate the impact of strategic planning to the development of small scale as a means for reducing unemployment. Specifically, the study is set;

1. To appraise if there are SMEs business strategies that differentiate them from competition.

2. To explore the SMEs competitive priorities that outperform competitors.

3. To ascertain ways in which SMEs contribute to the reduction of unemployment in Nigeria.

4.  To see if the current strategic planning of SMEs has reduced unemployment

 

1.4 Research Questions

The following questions will guide this study.

1.  Do SMEs business strategies differentiate them from competitors?

2.  Do SMEs have competitive priorities that outperform competitors?

3.  How do SMEs contribute to the reduction of unemployment in Nigeria?

4.  Has the current strategic planning of SMEs reduced unemployment?

5. Do SMEs undertake market analysis to determine the need of customers?

1.5 Statement Of Hypothesis

This study will test the validity of the following hypotheses;

H01: Small-scale business owners do not have significant business strategies to differentiate themselves from competition. 

H02: Small-scale business owners do not have significant competitive priorities to outperform competitors.

H03: Small-scale business owners do not significantly undertake market analysis to determine the need of customers.

1.6  Significance Of The Study

The general understanding of this study would serve as a useful guide to management, practitioners, executive, corporate managers most especially in SMEs to understand how entrepreneurial strategies in their business policies, leadership styles, recruitment and selection, innovation and pricing aid or enable, the relationship and the extent of its effect on the attainment of development by the SMEs. The study would also enable the SMEs to proactively respond to changes within the environment more effectively as well as enable them implement better business strategy for their operation and development. This study would enable stakeholders in SMEs to understand that employing all these strategies together would enable them achieve organizational growth and development.

Understanding from this study would enable the government to create better policies and regulation with regards to the research variables in a way to enable development and growth within the country’s economy and sector as well. Findings from this study will enable the society to be more informed and provide more knowledge with regards to entrepreneurial strategies as it relates to SMEs development. It would also provide more knowledge concerning entrepreneurial strategies and reveal what makes it to be entirely different from one SME firm to another. Lastly, it is also hoped that these findings would contribute to the body of knowledge and stimulate more researcher’s interest in this field of study.

1.7 Scope Of The Study

This study investigated strategies planning and SME development in reducing unemployment in Ogun State. The state was chosen because of its position as second to the least state in south west Nigeria in terms of SMEs development (National MSME survey report, 2013).

1.8  Definition Of Terms

SME: Small and medium scale enterprise.

Strategic Planning: Strategic planning is a process in which organizational leaders determine their vision for the future as well as identify their goals and objectives for the organization.

Unemployment: Unemployment, according to the OECD, is persons above a specified age not being in paid employment or self-employment but currently available for work during the reference period.