ABSTRACT
The study examined the effect of competitive strategies on the organisational performance of Nigerian Breweries Plc from 2005 to 2020. The specific objectives of the study were to: ascertain the effect of human resource planning (recruitment and training, retirement etc) on the profitability of Nigerian Breweries, find out the effect of logistics (marketing, distribution and administration) on the sales volume of Nigerian Breweries, determine the effect of product development (product and process innovation) on production output of Nigerian Breweries plc, ascertain the effect of plants and machinery maintenance on the production cost of Nigerian Breweries and evaluate the effect of gifts and donations on the goodwill of Nigerian breweries. The study adopted the ex-post-facto research design as the study relied on secondary data from the annual financial statements/ reports of Nigeria Breweries, for the analysis. In all, five (5) research questions and hypotheses were formulated in line with the objectives of the study and were tested 5% significance level using ordinary least square regression analysis with the aid of statistical softwares: Eviews 10.0 and SPSS (version 21.0). Empirical evidences emanating from the results of the study revealed that human resource planning, has a non-significant but positive effect on the profitability of Nigerian Breweries Plc. Logistics has a positive and significant effect on the sales volume of Nigerian Breweries Plc . Products development has a non significant but positive effect on the production output of Nigerian Breweries. The study equally revealed that plants and machinery maintenance has no significant but positive effect on the production cost of Nigerian Breweries Plc. Finally, the study showed that gifts and donation (a proxy for corporate social responsibilities) has a positive and significant effect on the goodwill of Nigerian Breweries Plc.. The study made conclusions based on the findings and therefore recommended that organisations’ especially Nigerian Breweries’ human and materials resources must be put into proactive use at the right time and manner so as to enhance its competitive edge and equally create high quality products at minimal cost. Also, organisations should come up with innovative products development that meet with global trend in order to gain competitive advantage over their competitors.
TABLE OF CONTENTS
Title Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgements v
Table of Contents vi
List of Tables viii
List of Figures ix
Abstract x
CHAPTER
1: INTRODUCTION
1.1Background of the Study 1
1.2 Statement of the Problem 3
1.3 Objectives of the Study 5
1.4 Research Questions 6
1.5 Research
Hypotheses 6
1.6 Significance of the Study 7
1.7 Scope and Limitation of the Study 7
1.7.1 Unit Scope 7
1.7.2. Content Scope: 7
1.7.3 Geographical Scope 8
1.7.4. Limitation of
the Study 8
1.8 Operational Definition of Terms 8
CHAPTER
2: REVIEW OF RELATED LITERATURE
2.1 Conceptual
Review 10
2.1.1
Competition 10
2.1.2 Competitive Advantage 11
2.1.3 Strategy 11
2.2 Theoretical Framework 75
2.3 Empirical Review 78
2.4 Gap
in Literature Review 82
2.5 Summary of Literature
Review 83
CHAPTER
3: RESEARCH METHODOLOGY
3.0 Research Design 85
3.1 Sources of Data 85
3.1.1 Secondary Data 85
3.1.2. Primary Data: 85
3.2. Population of the Study 86
3.3. Sample and Sampling Procedure 86
3.3.1. Sampling Technique: 86
3.3.2 Determination of sample size 86
3.4 Model Specification 86
3.5 Method of Data Analysis 89
3.5.1 Analysing the Specific Objectives 89
CHAPTER 4: DATA PRESENTATION AND ANALYSIS
4.1 Data Presentation 91
4.2 Results and Discussions 93
4.2.1 Descriptive Statistics 93
4.2.3 Unit root test of stationarity 98
4.2.4 Regression Analysis 100
4.2.5 Discussion of Findings 115
CHAPTER
5:SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary 119
5.2 Conclusion 120
5.3 Recommendations 121
REFERENCES
APPENDIX.
LIST OF TABLES
Table page
2.1 classes of assets 4.1
4.1: Data for the variables of the study 92
4.2 Descriptive statistics 94
4.2.2Normality Test of Variables 96
4.3: Tests of normality 96
4.4: Unit Root Test for
explained and explanatory variables 99
4.5: Showing simple regression analysis (OLS) result on
the relationship
between staff cost and
profitability of Nigerian Breweries Plc 100
4.6: Showing
simple regression analysis (OLS) result on the relationship
between marketing distribution and administration and sales revenue of Nigerian
Breweries
Plc 103
4.7: Showing
simple regression analysis (OLS) result on the relationship
between products & process innovation and production output of Nigerian Breweries
Plc 106
4.8: Showing
simple regression analysis (OLS) result on the relationship
between plants and machinery maintenance and production cost of Nigerian
Breweries
Plc 109
4.9 Showing
simple regression analysis (OLS) result on the relationship
between gifts and donations and goodwill of Nigerian Breweries Plc 112
LIST OF FIGURES
Figure Page
4.1:
Normality distribution of the
residuals of the data for the study 97
4.2:Residual plots for profit 102
4.3:
Residual plots for sales volume 105
4.4: Residual plots for production
output 108
4.5: Residual plots for production
cost 111
4.6: Residual
plots for goodwill 114
CHAPTER 1
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Organisations, irrespective of their
designations, are usually spurred to compete for success in their respective
domain and as such, competition arises when they strive for a goal (the best)
irrespective of the fact that they hardly control all resources necessary for
outperforming their rivals (Andrevski 2009). Similarly, the advent of a global
economy has brought tremendous increase in the competition for continuous
existence, relevance and excellence in the industry (Phusavat and Kanchana
2007), as well as explain some business
strategies like: human resources planning, logistics, product
development, plants and machinery
maintenance, gifts and donations among others, for quality assurance and
realisation of elevated performance and
sustainable competitive advantage (Pulaj, Kume, and Cipi 2015) of a beverage
manufacturing company like the Nigerian Breweries PLC.
The
functionality of Nigerian Breweries clearly reflected in the fact that, it is
the leading and largest brewing company in Nigeria, which serves the Nigerian
market, even exports to other parts of West Africa. Thus Nigerian Breweries has
a stake in Nigerian economy as it, in conjunction with Guinness Nigeria PLC,
controls over 80% of total market shares in the Nigerian Stock Market, in addition
to promoting the health and happiness of most Nigerian people in and across
board (Furnivall, 2009). Nigerian Breweries was established for the purpose of
marketing high quality brands of alcoholic and non-alcoholic drinks, to deliver
superior customer satisfaction in an environmentally friendly way. Thus,
competitive advantage could be linked to the diversity of its product
portfolio, as it has been able to attract relatively higher patronage in most
segments of its business, especially in lager beer, stouts and non-alcoholic
drinks.
More so, the adoption of strategic business
initiative and structural changes aimed at deploying and maintaining resources
for capabilities buildings towards competitive advantage (Soosay, Nunes,
Bennett, Sohal, Jabar, and Winroth 2016), cannot be ignored. This is owing to
the idea that being competitive is a sine qua non to topping ones
contemporaries (Schreiner 2019) in terms of level of profitability, sales
volume, production output, production cost and good will, as the core aim is
more to achieving a modest way of remaining afloat in business. Be it as it
may, the management of Nigerian Breweries is poised towards fine-tuning
strategies aimed at enhancing its position as a fully incorporated national
brewery, ready to flourish irrespective of the challenging business dynamics in
the brewing industry. Also, the Nigerian Breweries’ management focuses on the
development, production, marketing and distribution of lager beer, stout, malt
and assorted non-alcoholic mineral and
flavored drinks under the rainbow brand that included; Krola, Tip Top Tonic,
Sundowner Soda Water, Schweppes Bitter Lemon and Gulder Masx (Wikipedia 2021). The brewery more or less
continue to budgeting and expending on the recruitment of employees with
promising potentials, who would be responsive to required trainings, employing
adequate logistics, as regards advanced marketing and distribution of the breweries
products, taking leverage on product
innovations to remain competitive. Nigerian Breweries for instance,
launched a new "45cl Legend Extra Stout," a variety of the popular
Legend Stout (originally in 33cl and 60cl bottle sizes) in 2019 (Afrinvest 2020).
Similarly, evidence indicates that over the years, NB maintained dominance in
the Nigerian market, with posted revenue of 54.3 percent, ahead of about six
(6) Brewery companies in Nigeria (Ugwanyi and Ibe 2012). This further implies
that NB would do well to proposing and implementing some responsibilities as
regards the welfare of its employees as well as gifts and projects of benefit
to the public.It is against this background that this study seeks to examine,
competitive strategies and performance of Nigerian Breweries Plc.
1.2 STATEMENT OF PROBLEM
Competition
in the brewing industry spurs the need for operational excellence towards
profitability, with sufficiency of trained manpower, strife for adequate
distribution of a company’s products to meeting the ever growing demand for
beers, stouts and non-alcoholic drinks in Nigeria, as well as venturing into a
world class company. More so the need to developing products towards increasing
production output as well as the quest to control production cost and goodwill
amongst others, are challenges Nigerian breweries faces and the issue of
dwindling performance trends recorded by the brewery under survey (Nigerian
Breweries), results to non-attainment of its mission and goals, most of the
times (Teryima, Emachukwu and Dewua 2015).
Thus,
service delivery towards improving the profitability of NB was negatively
impacted during the nationwide economic lockdown, as a result of the outbreak
of the novel Coronavirus, known as COVID-19 pandemic. NB however, was faced
with the need to expose her staff to
training, essentially, the brewers in areas aimed at mitigating the effect on
production and distribution also, stemming the spread of the virus (Muogbo,
2013), which was hindering access to raw materials, with obvious implications
on the firm’s revenue base (Ugwanyi and Ibe 2012). Besides the lockdown, there were other
factors that adversely affected the revenue profile of the company, within the
period under review (2005-2020). They included: the cost of daily running of
cold rooms where perishable raw materials are stored; the rising cost of plant
maintenance; the high cost of primary raw materials occasioned by government restrictions and
related COVID-19 protocol; the new wave of insecurity across the country, particularly,
in the Northern Region of Nigeria, where majority of the primary materials are
sourced; constant power outages; Federal government’s 7.5 percent upward review
of Valued Added Tax(VAT); and, most importantly, the weak Nigeria’s foreign
exchange that has affected the importation of other needed production
materials (Ugwanyi and Ibe 2012).
The
company nonetheless, responded with an upward review (although marginally), of
her standard products in order to remain in business. This coupled with economic
hardship on income earners led to a drop in consumption of beverage drinks,
directly telling on the size of sales (Afrinvest 2020). Furthermore, the delays
in diffusing the company’s effort towards embracing modernisation of production process in the face of
increased competition (Taktegiesala 2006) and in the bid to enhancing output,
posed a problem (Ogbo, Japheth and Ukpere 2014). Sequel to this is the issue of
plants and machinery maintenance, considering their impending addition or
reduction to the cost of production. Moreover, the emergence of some breweries
like Son Premier Breweries Plc, Mopa Breweries Ltd, Golden Guinea Brewery etc.
poses competitive threat to NB, as it undergoes pressure to register its
presence by implementing corporate social responsibilities like gifts and
donations in an effort to promoting, its goodwill to outweigh its business rivals in an
effective manner, bearing in mind that implementing business strategies is
usually much more difficult than formulating them (Rajasekar 2014).
Therefore,
the dire need to examining the effect of competitive strategies adopted by NB,
on its performance within the period under review (2005-2020).
1.3 OBJECTIVES OF THE STUDY
The
broad objective of this study is to examine the effect of competitive
strategies on the organisational performance of Nigerian Breweries Plc (2005-
2020), while the specific objectives include to:
i.
ascertain
the effect of human resource planning (recruitment and
training, retirement etc.) on the profitability of Nigerian Breweries.
ii.
find
out the effect of logistics (marketing,
distribution and administration) on the sales volume of Nigeria Breweries.
iii.
determine
the effect of product/ process innovation on production output of
Nigerian breweries.
iv.
verify
the effect of plants and machinery
maintenance on the production cost of Nigerian Breweries.
v.
determine
the effect of gifts and donations on the goodwill of Nigerian breweries.
1.4 RESEARCH QUESTIONS
The
research questions formulated for this study include:
i.
To
what extent does the human resource planning (recruitment, training, retirement
etc.) affect the profitability of Nigerian Breweries?
ii.
How
much effect has logistics (marketing, distribution and administration) on the
volume of sales of Nigerian Breweries?
iii.
What
level of effect has product/ process innovation on the production output of Nigerian Breweries?
iv.
To
what extent does plant and machinery maintenance affect the production cost of
NB?
v.
What
level of effect are gifts and donations on the goodwill of Nigerian Breweries?
1.5 RESEARCH HYPOTHESES
Research hypotheses formulated to aid the
research process are;
i.
Ho1: human resource planning
(recruitment, training, retirement etc) has no significant effect on the
profitability of Nigerian Breweries.
ii.
Ho2: logistics (marketing, distribution and
administration) has no significant effect on the volume of sales of Nigerian
Breweries.
iii.
Ho3: product/process
innovation does not have significant effect on the production output of
Nigerian Breweries.
iv.
Ho4: plants and machinery maintenance has no
significant effect on the production cost of Nigerian Breweries.
v.
Ho5: Gifts and donations do
not have significant effect on the goodwill of Nigerian Breweries.
1.6 SIGNIFICANCE OF THE STUDY
The
importance and usefulness of the study stated, thus:
Firstly,
the research findings are of overriding significance to Nigerian Breweries, as
it would enhance the perceptive of its management team to adopting and
practicalising realistic competitive
strategies by sharpening the organisations human resource as regards training,
development welfare, logistics for adequate distribution of its
products , development of its product for quality assurance etc., that will
promote the brewery’s overall performance as regards; profitability,
sales volume, production output, production cost and goodwill. Furthermore, if
other organisations consider adopting the given strategies enhancing their
performance would be closer to certainty.
Moreover, this research work will serve as a
base for further research to scholars, who may have interest in similar area of
study, and would wish to use it as a reference for their studies.
1.7 SCOPE OF THE STUDY
1.7.1 Unit scope: The study focuses on the Nigerian Breweries
Plc.
1.7.2. Content scope: The study, within the premise of Hosskin’s
resource based theory focused on how competitive strategies like planning of
the organization’s human resource, logistics as regards; marketing,
distribution and administration, product development, plant and machinery
maintenance, gifts and donations adopted by Nigerian Breweries will affect its
performance; profitability, sales volume, production output, production cost
and goodwill from 2005 to 2020. More so, the study is limited to data collected
from the annual report of the company under study.
1.7.3 Geographical scope: The
Company under study is situated in Nigeria, a country in West Africa
which shares land borders with the Republic of Benin at the West, Chad and
Cameroon at the East, Niger at the North and bordered Lake Chad at the
Northeast (wiki 2021).
1.8 LIMITATIONS OF THE STUDY
This
research has limitations peculiar to it, these include: limited previous
research studies on the topic of discourse to enhance the empirical content of
the study.
1.9 OPERATIONAL DEFINITION OF TERMS
For
the purpose of this study, the following terms are defined as used in this
study.
Organisational
performance: Organisational performance here
entails the extent of success of the company as regards their profitability, volume
of sales, production output, production cost and goodwill. Succinctly
organisational performance comprises the actual inputs of an organisation as
measured against its intended outputs.
Strategy:
Simply put, strategy refers to a planned programme of work to follow in other
to maximise the organisation’s performance, indicated as: profitability, sales volume, production
output, production cost and goodwill. It could also be defined as the ability
to initiate, generate and derive a long-term policy that will sustain the
cooperate aspirations of the organisation.
Competitive strategies:
Competitive strategies could be seen as a carefully entrenched and enduring
action plan or policy a company employed to gain competitive advantage over
other rival companies within the same market conditions, for the purpose of
profit maximisation and organisational goals’ sustainability.
Competitive advantage:
Competitive advantage is the edge an organisation has over others in the same
industry, it usually helps a company; under certain market conditions create an
added value to its products or goods in order to attract markets for its goods.
This is usually aimed at making more profits or outperforms others in the same
business, because customers prefer its products or services.
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