SUSTAINING NIGERIA FIRMS THROUGH STRATEGIC ALLIANCE IN THE BUSINESS ENVIRONMENT.
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ABSTRACT
It is no longer news to say that the world has become a global village. This transformation has been ensured by the immense advancements and breakthroughs achieved in the field of technology the world over. With this have come different phenomenal changes that have affected all spheres of human existence, more particularly the world of business. As a result, many aspects of business have changed and many are in the process of this transformation. Ultimately, these transformations have resulted in businesses operating in an environment that is totally beyond their control. Meaning? The . business entities have to fight for a place in the global market place – whether or not they are prepared to play in this market. This is the situation many Nigerian firms have found themselves in. but more to that, the nigeria firms operating in a ‘third world economy; have found themselves in an environment that has not very much encouraged their business operations. But they have to survive. They have to survive the harsh economic realities of the time; they have to run the business amidst the non-availability of the necessary facilities” and resources with which to support their operations. Thus the research aimed at showing the firms one sure way of amassing the resources they need and strengthening themselves to contain the charging competition. The study was carried out using both primary and secondary data. The primary data was obtained using questionnaires which sought opinions from respondents from some selected firms in Lagos – the commercial hub of the nation, while the secondary data were obtained from textbooks, periodicals and web publications. Study sample was selected using the judgement and convenience non-probabilistic sampling techniques. Data obtained from the questionnaires were further analyzed and the formulated hypotheses were tested using the Chi-Square method. From the information obtained from the study, it was discovered amongst other things that while many businesses outside the polity are already at home with strategic business relationships, The phenomenon has already gained widespread acceptance in more developed countries because of its advantage in helping the aligning firms garner more strength and position themselves to compete better in the market. And this is bearing in mind that the business atmosphere of these economies are not so different from that of Nigeria. Very importantly, it-was noted that strategic^ alliances reshape competition. In view of these and more, it was suggested that both the government and management technocrats in_the__ country should work to encourage alliances amongst Nigerian firms through re¬orientating our entrepreneurs, guiding aligning firms through the process and providing some form: of incentives to encourage aligning firms through the process and providing some form of incentive to encourage alignment such that the firms’ experiences and testimonies will encourage more firms to opt for the strategic alliance option.
CHAPTER ONE
1.1 INTRODUCTION
Events and experiences in the historic governance of the evolving Nigerian nation have invariably left scars in the mental consciousness of the average Nigerian that so affects his disposition to life. His hold on what belongs or appears to belong to him is vice-tight – and is often tainted with a dose of covetousness and a hunger for more. His hold on his business is a case in point.
Naturally, Nigerian entrepreneurs establish their businesses and sit atop it as executive management. Their sweat and struggle to set up the business, a fundamental distrust for the next man, and the desire to satisfy their ego, make it pretty difficult for them to engage the services of a management technocrat to run the business— more so, even now when these technocrats have craftily usurped some organizations. Therefore Nigerian entrepreneurs are unwilling to relinquish control of their firms and rarely welcome ideas / causes that will entail their having so to do. Therefore alliances are not very common practices amongst—-firms in Nigeria. But the scenario is changing and the trend is shifting.
Background of The Study
1.1.1 The Nigerian Entrepreneur
An entrepreneur is one who can assume the risk of pulling resources Together to turn an idea into a profitable business venture that can satisfy human needs. In as much as, ,not many Nigerian businessmen are entrepreneurs in terms of innovativeness,- certain characteristics, amongst others, cannot be taken away
• Egoistic
• Short-term profit orientation
• Resilience
• Profit-maximization orientation
These features describe the average Nigerian businessman, especially his short-term profit orientation. But understandably, circumstances prevalent in his operating environment contribute to this disposition. Certain conditions and facilities necessary for the smooth running of economic activities are unarguably unavailable, thus necessitating businesses taking drastic measures to stay afloat, including measures to ensure that the little facilities and conveniences available are not lost – and such measures include such a hold on the management and control of their organizations. The, typical Nigerian businessman will not give up control and management of his organization to anybody – the most he may do is to allow a relation (say wife, child, brother) to ran the organization – someone he can control from the background.
The reason for this is not far from the afore-listed factors of distrust, fear, the” quest to protect investment, to satisfy their egos. The Nigerian entrepreneur, deep down, does not .believe, that the next person will not want to take advantage of him and mismanage his money (and possibly sink his funds) in the name of his organization . this fear and distruct have contributed in no small measure to the almost non-existent alliances in Nigerian businesses.
For many entrepreneurs, they have not taken time to understand the importance of joining forces with other firms to strengthen themselves and place themselves more strategically to contain the ‘charging’ competition in the market place. Rather, they have hitherto seen themselves as vitally in competition with every other firm especially if they are in the same industry.
This must have been the thought in the writer’s mind when he, Akingbola (2006: 14) asserted about the Nigerian business owners that:
“… they would rather own 100% of nothing, than 10% of a thriving entity “.
For this reason, many firms have continued to go round in circles, unable to rise
beyond their states of just breaking even , when they could have easily become
blue chips by taking advantage of the strengths of their ‘opponents’ by forming alliances with them and expanding their spheres of influence and taking charge of their area.
This is definitely not a healthy state for firms operating in the present global market place where the rules of the game, even in your own local market, is determined not by the local players, but by players from anywhere in the world who have the wherewithal to play whenever they please – a satiation that is beyond the control of local firms. And so Welch (1987) advised:
“Alliances are-a big part of this game (of global competition)… they are critical to win on a global basis. The least attractive way to try to win on a global basis is to think that you can take on the world all by yourself. But in the wake of the recent banking revolution in the country, more eyes are open. There is a better insight into the benefits of synergistic, rather than combatant relationships among firms.
1.2 Statement of Problem
“A significant revolution is taking place in business today. Organizations are increasingly global in perspective, innovative in technology, open in architecture and lean in operations. As companies continue to improve their capabilities, they are discovering that their performance is only as good as the weakest link in the supply chain — usually the link between suppliers and customers. No matter how you optimize, your capability can be hamstrung by your weakest link: a system that is not in your control”. Somers (2005:36)
Most Nigeria firms have operated and are still in operation haying their founders as executive management. Is it wrong? NO! There is no problem with founders running their companies. But where the necessary boost their firms need to rise or grow is not available due to the actions and inactions of the founders in executive management, then there is a problem.
It is the researcher’s belief That a major problem of Nigerian firms is the fact they are operating in a system that is not within their control. Even if it was within their control, the inextricable influx of forces and influences from without the polity, have caught them up in a web that gives them no room-for local manipulations. Developments in technology and science has mandated them to play globally from a local standpoint if they must remain viable, and that is the bane of Nigerian businesses. Nigerian firms are bedeviled by a variety of problems, ranging from problem from the governance of the larger society (i.e. Nigeria itself), for instance, socio political and’ economic laws made, to problems emanating from the human elements within the organization.
Some of the most biting problems faced Nigerian firms are those of the absence of the basic amenities with which to run the organization. Power supply, transportation, high cost of raw materials, communication and security issues have always been the major worries of firms as these have always been known to be unavailable or inadequate. Firms therefore, in providing these for themselves, have had to run exorbitant costs which erodes their available revenue which they would have been able to put into other uses to strengthen their firms.
And because the investment in these amenities is not one-off, firms unarguably operate at a high cost year in year out. Unfortunately, the emerging competitive market the world over does not .recognize the cost of operating in it and the buyers in this market do not recognize the cost of meeting their ever increasing expectations. This leaves the firm that wants to play in this market having to spare nothing at meeting up with the market demands. This is a situation that is beyond the control of the firms as Somers asserted above.
Meeting these demands have become very difficult for Nigeria firms. In the…
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