Business Organization and Managerial Efficiency of Small Scale Enterprise
Chapter One
OBJECTIVE OF THE STUDY
The objectives of the study are;
- To find out the relationship between management business organization and managerial efficiency on small scale enterprises.
- To examine some strategies for business organization and managerial efficiency set out by small scale enterprises
- To find the role of business organization and managerial efficiency on small scale enterprises.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
BUSINESS EFFICIENCY
Business Efficiency is a situation in which an organization maximizes benefit and profit, while minimizing effort and expenditure. For the case of this study, business efficiency is defined in terms of profitability, growth (Cummins 2003). The lack of efficiency affects all businesses whether small or big. Inefficiencies in larger businesses may go unnoticed due to the availability of excess resources. Smaller businesses may not survive or fail to grow due to the inefficiencies regardless of the nature of the business. In the study done in Ethiopia, the key challenges to the long term survival and viability of small businesses and enterprises are lack of basic entrepreneurial and managerial skills, poor efficiency, lack of access to finance required for growth and development, lack of relevance of the vocational curriculum to technical and managerial skills that are required by entrepreneurs in Ethiopia, lack of accurate information related to the risk of lending money to small businesses, and over-regulation of the small businesses sector in Ethiopia (Zeleke, 2009). The key challenges to the long term survival and viability of small businesses and enterprises are lack of basic entrepreneurial and managerial skills, poor efficiency, lack of access to finance required for growth and development, lack of relevance of the vocational curriculum to technical and managerial skills that are required by entrepreneurs, lack of accurate information related to the risk of lending money to small businesses, and overregulation of the small businesses. Lerner and Wulf (2007) have shown that there is a significant association between the managerial efficiency of small firms and long-term survival, prof itability and viability. The acute shortage of finance experienced by small businesses is a result of lack of efficiency in the management of development finance. There is a long-term strategic benefit in financing today’s small enterprises through appropriate support strategy. Efficient managerial and technical skills are critical for the sustained growth and development of small businesses and enterprises in Ethiopia (Decron and Krishnan, 2009). The lack of essentially needed managerial skills is a serious threat to the continued survival and profitability of small businesses in developing economies. Efficiency in managerial and technical skills has enabled small businesses and enterprises to play a major role in the alleviation of poverty and job creation in several emerging market economies (Hauner, 2009). The Grameen Bank of Bangladesh (Dowla, 2005) has provided finance to MSMEs on easy terms since the early 1970s, and this assistance of finance has contributed significantly to the alleviation of poverty and job creation. The success achieved by Grameen Bank is attributed to visionary leadership, innovative thinking and managerial efficiency. (Woldehana et al., 2008).
PROFITABILITY
Profitability ratios are viewed as a way to identify and measure business efficiency of SMEs. According to Jaggi and Considine (1990), profitability is a crucial indicator for determining the financial position of the firm. The firm is considered financially weak when its profitability is sliding or the profitability is weak compared to other firms in the industry. In their study, they also used return on assets as the indicator to reflect profitability. Burns (1985) and Meric et al. (1997) measured profitability by three ratios: return on total assets, return on net assets, and return on equity. According to Burns (1985) return on total assets is the best measure of a firm’s efficient use of assets because it is independent of financing methods. While return on equity is a measure of the profit return to shareholders. Profitability has generally been found to be lower for small enterprises than large in USA studies such as Anderson (1967), Gupta (1969), and the USA Small Business Administration (1984). Only Tamari (1980) and Walker and Petty (1978) found small enterprises to be more profitable than large enterprises. In the UK, only Bates (1971) found small enterprises to be less profitable than large enterprises. Both Bolton (1971) and Wilson (1979) found that small enterprises were more profitable than large. Bolton (1971) also found that growth small enterprises were more profitable than either large enterprises or other small enterprises. In more recent, Davidson and Dutia (1991) also found smaller firms in their study tend to have lower profit margins than large firms. However, small firms did not have lower ROA ratios. Conversely, Osteryoung, Constand and Nast’s (1992) results of studying indicated that two profitability ratios, return on sales and return on net worth, are not different across the large and small firms
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought business organization and managerial efficiency of small scale enterprise
Sources of data collection
Data were collected from two main sources namely:
(i)Primary source and
(ii)Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
Population of the study
Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information business organization and managerial efficiency of small scale enterprise. 200 staff of tantalizer in River state was selected randomly by the researcher as the population of the study.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain business organization and managerial efficiency of small scale enterprise.
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of business organization and managerial efficiency of small scale enterprise
Summary
This study was on business organization and managerial efficiency of small scale enterprise. Three objectives were raised which included: To find out the relationship between management business organization and managerial efficiency on small scale enterprises, o examine some strategies for business organization and managerial efficiency set out by small scale enterprises, to find the role of business organization and managerial efficiency on small scale enterprises. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of tantalizer (eatery) in River state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made cooks, managers, cashiers and junior staff was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
Based on the findings of this study, the following conclusions were drawn: The Theory of Pecking Order (Myers 1984) which states that Management has a preference to choose internal financing before external financing, was proven in this study in the aspects of SMEs using internally generated funds as compared to borrowed funds. The study was able to bridge the gaps that were not covered by the previous studies since none of the studies had looked into business efficiency in SMEs in Nigeria. The study brought up new knowledge on how SMEs apply financial management practices and the weaknesses that were found out in their current operations hindering their efficiency in terms of profitability and business growth.
Recommendation
The SMEs owners should try to maximize and put to use their assets so as to obtain higher returns on assets. This will in the long run lead to increased sales if the assets are put to use. The owners of SMEs should also make sure that they set mission statements so as to keep them focused, they should also put in place key performance indicators and have these reviewed regularly in order to know the progress on whether they are being achieved or not. The owners of SMEs should have sales team in place so as to market the products and services of the business in order to increase sales. The SMEs owners should also make sure that business plans are prepared so as to act as a roadmap on how to take the business to the next level.
REFERENCES
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