Effects Of Backward Integration Strategy On Organizational Performance In Manufacturing Industry

Effects Of Backward Integration Strategy On Organizational Performance In Manufacturing Industry

Abstract

The study concentrated on the effect of backward integration strategy on association performance. Nestle Nigeria Plc was used as case study. Fifty clones of questionnaires were administered using convenience slice ways for the purpose of data collection and interviews were conducted to authenticate the information deduced. The data attained was analysed using frequence distribution and ki- forecourt. The findings revealed that Backward Integration increases association profitability. This is to say that Backward Integration strategy streamline the association to give better cost control by barring the mediator and lower cost of product for the establishment to came more competitive in the request place. It was recommend among others that to justify the finances expended on this strategy, the strategy should be well validated and estimated. While it’s proper that exploration and development programme should be amassed upon.

Table Of Content

Runners

Title Runner i

Instrument ii

Fidelity iii

Acknowledgement iv

Abstract vi

Table of content vii

Chapter One

Preface

Literal Background of Nestle Nigeira Plc 1

Statement of exploration problems 4

Objects of the study 5

Statement of Research questions 6

Statements of exploration suppositions 6

Significance of the study 7

Compass and Limitations of the study 7

Functional description of terms 8

Chapter Two

Literature Review

Preface 9

Literal background of strategy 14

Theoretical frame work 15

The classical proposition of strategy 16

The elaboration proposition of strategy 16

The proccessual proposition of strategy 17

Systemic proposition of strategy 18

Backward integration strategy 19

Problems of benefits of backward integration strategy 23

Chapter Three

Exploration styles

Preface 48

Exploration design 48

Characteristics of population of the study 49

Sample size and slice design 49

Re statement of exploration questions 50

Re-statement of exploration suppositions 50

Analytical tools 51

Test of validity and trustability of exploration instrument 52

Chapter Four

Data Analysis And Donation

Preface 53

Frequence table 53

ki-square 67

Chapter Five

Summary Of Findings, Conclusion And Recommendations

Summary of findings 74

Conclusion 75

Recommendations 75

Limitations 76

Bibliography 77

Excursus 81

Chapter One

Literal Background Of Nestle Nigeria Plc

Nestle Nigeria plc is associated with the nestle group, the single largest food company in the world and it’s known worldwide for its top quality products.

Nestle Nigeria plc began simple trading in 1961 and has moment grown into a leading manufacturing and marketing company. It’s a public quoted company listed since 1978 on the Nigeria stock exchange with about 20,500 shareholders sharing.

Nestle Nigeria Plc of Switzerland owns about 43 of the company’s equity. Nestle Nigeria plc manufacturing complex is located at Agbara Industrial Estate in Ogun State.

The main products were designed in line with ultramodern manufacturing styles which insure effective product of the following

v child cereals – nestle golden morn.

v Instant family cereals, nestle milo – libation drink.

v Chocomilo – chocolate sweets, maggi cells, maggi funk, maggi crayfish, maggi super onion spices.

Nestle Nigeria plc obtains utmost of its agrarian raw accoutrements locally from contract growers and out farmers in partnering agreement that enables the benefits from the specialized advice and backing of the company’s agrarian services department and at the same time, guarantee to the company nonstop force of raw accoutrements that meet their high quality norms.

The company pursue the use of backward integration strategy by pursuing its sustainable agrarian action( SAI) where she involve herself with cooperative exploration with the university of husbandry, Abeokuta( UAAB) of popularisation of soya sap which brought into being the a selection of soya sap kinds with bettered seed colour, seed size, and seed yield.

The company’s ideal is to satisfy the conditions of the consumers with high quality food products with long shelf life acclimated to the taste and food habits of the consumers and as a result, she has continuously invested in Nigeria by erecting and commissioning in 1991 at agbara, ogun state a completely integrated factory producing concentrated sludge malt excerpt from locally malted sludge, and in June 1995, Nestle Nigeria plc commissioned another factory at agbara which produces enzymatic hydrolyzed factory protein blend.( EHPPM).

The investments represent successful and significant trouble at replacing imported raw accoutrements in the manufacture of milo food drink and the maggi range seasonings.

The company being conscious of her social responsibility is committed to environmental programs, programmes, and practices into each business as an element of operation in all functions. She always thrives to minimize the impact of her terrain through the application of packaging and manufacturing process that are internationally honored to have a minimal impact on the terrain.

With her literal root in nutrition, wide product portfolio, strong brands, exploration and development capability, professed and motivated professionals, and effective operation, the company is deposited to committed to the progress, substance, profitable development, and artificial growth of Nigeria.

Through the use of perpendicular integration strategy, the company seeks to achieve a clear cut competitive advantage over competitive products by icing that their products are available wherever, whenever, and still the consumers want their nonstop attention is also given to developing the professional leadership chops of staffs at all situations so that they can directly contribute to growth and a advanced position of performance.

To stimulate artificial growth, the company has a policy of long term sustainability business practice. Over 75 of their raw accoutrements are sourced locally by their characters through the use of employed growers and suppliers and also support an ever adding standard of living through employment generation, increased income, structure advancements, and a growing concern for the interest of the community then in Nigeria through the operation of the nestle environmental operation( NEM) and complies with applicable environmental legislation.

Statement Of Research Problems

In this twenty first century, the world is a global request( Diacon, 2003) characterized by competitiveness where a establishment has to contend against another establishment each over the world. Backward integration strategy has helped to identify the effects that need to be done, gives idea, readdressed by experience, as to how they should be done and achieve competitive advantage for the association.

Backward integration strategy is known and accepted as the process by which a establishment takes power or increased control of its force system. It serves to streamline the association to give better cost controls, and to exclude the mediator, because of effectiveness and lowered cost of product as it’s possible for the establishment to come more competitive in the request place.

Although backward integration strategy improves associations performance, but there are still dubieties on the assertions that backward integration strategy is more applicable to manufacturing enterprises as compare to service companies. thus, the assertions can be made to the entourages

v Managing workers ’ performance as an integral part of the work.

v Quality criteria that weren’t concentrated on guests.

v The effect of compression in affair that slackening global demand is generating.

v Lack of vacuity of professed pool.

Ideal Of The Study

The ideal of this exploration study includes the following

v To compose manufacturing assiduity to the utility of Backward integration strategy as designing a operation policy that documents the prospects of individual and organizational which provides a meaningful process by which workers can be awarded for noteworthy benefactions to the association and also give a medium to ameliorate existent/ organizational performance as necessary.

v To insure that diligence, especially the manufacturing bones sees the utility of Backward integration strategy and how it can help in maximizing the net profit of the association which is attainable by strategizing veritably simple strategies for both product lines and product processes as per making delicate opinions to cutting costs snappily and cheaply to avoid repeated morale enervating cuts.

v To make sure that manufacturers are cautions to openings for expansions as valuation drops when possessors look for quick exits. Research and marketing may also be the key, enabling strong positioning to take advantage of the unborn upturn.

v To give suggestions and recommendations on the effect of backward integration strategy on organizational performance and also make applicable recommendations for unborn inquiries on the area of its specialization.

Statement Of Research Questions

v What effect does backward integration has on organizational performance in manufacturing diligence?

v How do manufacturers crucial into the need of the growing request through integration strategy?

v Is backward integration strategy and organizational performance related to growth and profitability?

v Does backward integration strategy focuses on guests ’ satisfaction?

Statement Of Exploration Suppositions

H0 Backward integration strategy does

not have significant effect on association’s performance.

H1 Backward integration strategy have significant

effect association’s performance.

H0 Backward integration strategy is the same as association’s growth and expansion.

H1 Backward integration strategy isn’t the same as association’s growth and expansion.

H0 Backward integration strategy increases an

Organization’s profitability.

H1 Backward integration strategy doesn’t increases

an association’s profitability.

Significance Of Study

A study of this kind is anticipated to make theoretical and practical benefactions to the manufacturing diligence. This study provides a base for near checking of the phrasings and operation of backward integration strategy in use.

The study is likely useful for department of interior standing officers to help with the operation performance that’s aligned with and in support of the organizational pretensions.

Manufacturing diligence, services and professional diligence that are constantly looking for competitive strategies and individualities can profit from the study as it enhances organizational performance.

Compass And Limitation Of Study

This study wants to look at the effect of backward integration strategy and organizational performance.

still, it shall be limited to manufacturing enterprises in ogun state alone( nestle Nigeria plc). The reason for the limiting this study to manufacturing enterprises is because their conduct have tremendous effect on the public frugality.

The study will thus be confined to manufacturing sector and whose power structure is rigorously Nigerian.

Functional Description Of Terms

colorful terms are anticipated to be constantly used in this study. Some of them are compactly defined below

v Integration Strategy This is the acceptance of a plan or a course of action which is of vital pervasive or continuing significance to the association as a whole.

v Competitive Advantage This is the getting ahead of others by outslicking them in the course of contest.

v Growth This is an expansion of the association in one or further confines without changes in its structures and development as an innovative process leading to the structural metamorphosis of the social system.

v Association This is a group of people working together to achieve a special purpose which can not be achieved by an individual working alone.

v Performance The action of carrying out or complete an action or function.

v Development The volume of changes in the process of product which shall be slow at the original, but will latterly increased over a long period of time.

v Perpetration The process of putting a plan into action.