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CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Globalization could simply be described as the
integration of national economies through trade investment and financial
interaction. The concept of globalization began to thrive shortly after the end
of Second World War when the allies led by the united State decided to support
a world wide opentrading and investment system. The collapse of the Soviet Union,the
fall of the Berlin wall and anti-climatic end of the cold war aided the
emergence of the ascendancy of the globalization trend. This resulted in the
hurried marketizationand democratization of the former soviet states of Eastern
Europe and selective absorption into mainstream western Alliance system of the
hitherto to communist States. Beyond this however, globalization aided by
supersonic transformation in information technology integrated the world
through pushof free market economy as well as liberal democracy. (Olaleye,
2002).
Globalization has increased the volume of trade by the
developing nations in general and that of Nigeria in particular. The continuous
growth in. imports and exports is seen as evidence that countries are becoming
independent on global markets.
Globalization has also brought about revelation, in
technology. In fact one of the propelling agents is technology. There have been
developments of new and improved method of doing traditional things otherwise
called technological progress. The Banking sector more than any other sector is
the hardest hit (Olajide, 2002).
1.2 STATEMENT OF THE PROBLEM
There is wide spread of trade around the globe thereby
increasing the level of competition in the manufacturing industry globally. The
domestic manufacturing industry in Nigeria is faced with the problem of
competing with the developed countries who through globalization continue to
improve and advance on daily basis in innovationand in information technology.
The technological environments are moving at supersonic speed, Computers,
Telephones, Televisions and wireless forms of communication now are merging
into telecommunication both to create multimedia products and allow individuals
in the developed world to communicate with others, hereby improving manpower
skills, improving in method of production, efficiency and effectiveness of
business organization. Globalization has helped these developed countries to
achieve quality, quantity, price, durability, manpower skill, and etc. If the
domestic manufacturing industries fails to heed the lessons of globalization it
will be gradually whipped into line by the forces unleashed by globalization.
Therefore, it is upon this premise that a study of this
nature is necessary in order to identify the effect of all afore mentioned
factors on the development of domestic manufacturing industries in order for
them to be able to compete globally.
1.3 OBJECTIVES OF THE STUDY
The main objective of this study is to examine the effect
of globalization on the development of domestic
manufacturingindustry with Dangote Flour Mills PLC as a focus. This, in order
to achieve the above objectives, the following specific objectives will be our
guide.
1. To examine whether the development of
domestic manufacturing industries have effect on prices of goods and services?
2. To examine whether increase in the level
of competition with globalization have effect on prices of goods and service?
3. To examine whether organization output’
in, domestic manufacturing industry affect price?
4. To examine whether quality plays a role
in the acceptability of goods and services of domestic manufacturing companies
globally?
1.4 RESEARCH QUESTIONS
In order to achieve the objectives of this study, the
following are the research questions:
1. Does the development of domestic
manufacturing industries have effect on prices of goods and services?
2. Does increase in the level of competition
with globalization have effect on prices of goods and service?
3. To what extent does organization output
in domestic manufacturing industry affect price?
4. To what extent does quality plays in the
acceptability of goods and services of the domestic manufacturing companies
globally?
1.5 RESEARCH HYPOTHESES
To provide, answers to the research-questions the
following hypotheses will be tested.
1. Globalization has impact on the
performance of domestic manufacturing industries in Nigeria.
2. The development of domestic manufacturing
industries has effect on prices of goods andservices.
1.6 SIGNIFICANCE OF THE STUDY
A study of this kind is expected to make theoretical and
practical contributions to manufacturing companies in Nigeria. Thus, Nigeria is
the most populous black nation in the world and the effect of globalization on
the country could be generalized for other countries in the sub-Sahara Africa,
so the effect of globalization process on Nigeria has a determinant effect on
other countries in Africa.
Also, it is hoped that this stud’ will provide
manufacturing companies an incite on how organizations, can cope in the
ever-changing, turbulent business environment in developing countries and how
organization activities can be organized in order to cope effectively with
opportunities and trend in the business environment.
Also, how to overcome industrial or economic recession
changes in social variables increase competition and technological advancement.
In addition, it is hoped that this study will help the policy makers to see
need to invest more in technology in a nation like Nigeria that encourages
small and medium enterprises scale (SMEs).
This study is also expected to prove to scholars and
imminent researchers, that it is possible to manufacture quality product in a
developing nation like Nigeria with Globalization.
Furthermore, for Business administration student who
aspires to become Managers manufacturing industries, itis expected that this study win expose them on how products can
be advertised and distributed in the global village without stress and with
less cost, thanks to globalization
1.7 SCOPE AND LIMITATIONS OF THE
STUDY
The basic premise on which this study is based is the
effect of globalization on the development of domestic manufacturing industries
in Nigeria with DangoteFlour Mills Plc as a case
study. The study covers representative numbers of the generality of the workers
in the organization. No special consolidation is given to sex, age and
Nationality in collecting data from the respondents.
The first set-back encountered in the course of carrying
out this research is the time limitation. The Nigeria academic environment has
been largely infected by irregularities and uncertainties and as such abnormal
academic calendar.
Another key limitation was that of finance. Since I do
not have a computer system. of my own I haveto pay to get the research work
typed out. Furthermore the fear of insincere response on the part of the
respondents even when a questionnaire is administered on them.
1.8 DEFINITION OF BASIC TERMS
Globalization: Globalization could simply be described as the
integration of national economies through trade investment and financial
interaction
Manufacturing
Industries: A
manufacturingindustry is an industry where goods are produced and they prepare
what is known as manufacturing account. A manufacturing account is basically a
list of cost relating to the production of goods (i.e. factory relation
expenses).
Development: Is a process of improving the economy of a country by
increasing the amount ofbusiness activities.
Technology
Development: It is a process
of using advanced scientific mechanism in an industry to improve it
productivity.
Manpower: All the people who are available to do a particular job
or to work in a particular place.
Management: Is the art and science of getting done through other
people using both human and non-human resources.
Performance: The degree of efficiency and effectiveness with which
organizational objectives are achieved. Thus efficiency and effectiveness are
the determinants of performance in the study.
Strategy: The unified comprehensive plan that the enterprise
develops to achieve its objective.
Enterprises: This is any commercial undertake that is either
publicly owned orcontrolled. The word is
used interchangeably with organization in this study.
Company: Is an association of a number of person carrying on
business for the purpose of a monetary gain, although there are other companies
that are deliberately non-profit making.
Business
Environment: This is the sum
total of the physical and potentially relevant to the organization goals
setting and goal attainment which are taken directly into consideration by
members of the organization when making business decision and plans.
1.9 HISTORICAL BACKGROUND OF THE
CASE STUDY:
Dangote Flour Mills Plc commenced operations in 1999, as
a division of Dangote industries limited. One of Nigeria’s largest and fastest
growing conglomerates. Following the strategic decision of DIL unbundled its
various operation, Dangote flour Mills Plc was incorporated in January, 2006.
The restructuring was completed in January, 2006 when the federal High court
sanctioned a scheme of arrangement where in all the assets, liabilities and undertakings
of the erstwhile Flour division of OIL were transferred to Dangote Flour Mills
Plc. From an initial installed capacity of 500 MT per day at its Apapa mill, Dangote
flour has expanded rapidly by opening in quick successions, Three other flour
mills in Kano (2000), Calabar (2001) and installed capacity of 5000 MT per day
but three of them were subsequently expanded
resulting in a total installed capacity 5000MT per day distributed as follows:
Apapa – 1000 MT per day
Kano – 1500 MT per day
Calabar – 1000 Mt per day
Ilorin – 500
MT per day
These expansions were in response to a growing national
demand for the flour and flour based products in
addition to the company’s drive for increased market share. Thus from a
modest beginning, the company has grown to become one of the industry leaders
within a six year period.
The company has 2 wholly owned subsidiaries, namely
i. Dangote
Agro sacks limited
ii. Dangote
paste Limited
In line with DIL’s business philosophy of establishing a
document presence in any sector it operate in these subsidiaries occupy
leadership position in their respective industries.
BUSINESS:
The company is in the business of flour milling,
processing and marketing of branded flour its product portfolio comprises of
the following:
i. Bread
flour
ii. Pasta
semolina and
iii. Wheat
offal’s (bran’s)
FLOUR MILLING
TECHNOLOGY AND PROCESS
Technology
In order to transform wheat into high quality flour the
deployment of state of art plant and equipment as well as technical expertise is critical DFM’s mills across the country
equipped with the latest flour milling technology available in the world. All
mills were purchased installed and commissioned by world renewed milling
equipment supplies. The butter Group of Switzerland (Buhler)
DANGOTE
FLOUR·MILLS GROUP OVERVIEW
Despite the fierce competition, DFMremains a significant
player in the flour milling and associated products industry.
Dangote Flour Mills Plc was incorporated in, 2003 with
its registered office at 8 Rycroft Road, off Liverpool Road, Apapa, Lagos.
Dangote flour mills PLC entered into management and
technical services agreement dated 2nd January, 2006 with Dil. The
Agreement is for an initial period of 5 years subject to termination by either
party in accordance with the terms of
the agreement.
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