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COMPETITIVE STRATEGIES AND ORGANISATIONAL PERFORMANCE OF NIGERIAN BREWERIES PLC

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Product Code: 00009669

No of Pages: 126

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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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