Examining the Unique Risks Associated With Operating in a Global Market and Develop Strategies for Risk Mitigation (a Case Study of Multinational Corporation Within Nigeria)
Chapter One
Objective of the study
- To investigate the political landscape in Nigeria and its impact on MNCs.
- To assess economic fluctuations and currency risks within the Nigerian context.
- To investigate the cultural nuances and social expectations relevant to MNCs operating in Nigeria.
CHAPTER TWO
REVIEWED OF RELATED LITERATURE
Risk categorization
The need to manage complex supply chains better and gain competitive advantage has made uncertainty, vulnerability and risk, key areas of focus in business management (Norrman & Lindroth, 2001; Christopher, et al., 2002; Lamming et al., 2001). Preparing risk management plans requires proper identification and understanding of risks and their impact on supply chain performance (Hiles & Barnes, 2001). In this thesis, a categorisation by Christopher and Peck (2004) is used to illustrate sources of supply chain risks. The specific risks and mitigation strategies discussed below have a direct effect on supply chains according to Manuj and Mentzer (2008) and these can affect performance of OFSCs as well.
Process and control risks
These are risk sources within a focal firm and arise out of logistics and production processes as well as managerial actions (Christopher & Peck, 2004). These affect valueadding processes and managerial tasks undertaken by a firm (Manuj & Mentzer, 2008). Christopher and Peck (2004) describe controls as ’’the assumptions, rules, systems and procedures governing how an organisation exerts control over the processes. Controls are the ‘’order quantities, batch sizes, safety stock policies and procedures governing asset and transportation management. Control risks occur due to failure in applying these policies or control measures appropriately.’’ Such risks vary from labour (strikes) or production (equipment failure, unreliable supply) to IT system failures (Ceryno et al., 2013).
Supply and demand risks
These risks comprise all risks emerging because of the actions of supply chain members (Juttner et al., 2002). These occur due to social and industry or market factors (volatility of consumer demand, supply constraints), political events and natural disasters (Chopra & Sodhi, 2004). Juttner, Christopher and Peck (2003) state that these are external to a focal firm but are internal to the inter-firm network through which material, products and information flow. These risks affect supply and demand, and can disrupt flow of information or products between a focal firm and the market (Sadghiani et al., 2015). This relates to processes, control, assets and infrastructure dependencies of firms downstream and those directly connected to the focal firm (Juttner et al., 2002).
Environmental risks
These characterise all the potential risks triggered by socio-political, macroeconomic or natural events (Christopher & Peck, 2004). These are external to the supply chain network and may directly affect a focal firm or firms in the upstream or downstream (Christopher & Peck, 2004). Economic, socio-political or technological incidents can trigger these risks far away from a focal firm’s supply chain (Harland et al., 2003). In this thesis, authors focused on internal, external and environmental related risks to establish how these affect operations of OFSCs.
Risk Assessment
The assessment of risks affecting the supply chains has been a subject of many studies. Fiksel et al., (2015) examined six major vulnerability factors and approaches to control these weaknesses. Nyamah et al., (2014) explored a comprehensive list of general risks affecting an agricultural supply chain, and then ranked these by probability and severity. Vlajic et al., (2012) split risks between external and internal and ranked them by their controllability. Finally, Jaffee et al., (2010) categorized eight types of risks to investigate their transmission of impact at the downstream of a supply chain. In their study, Leat and Revoredo-Giha (2013) provide a framework introducing five risks faced by specific enterprises especially food producers and processors. These included production, price or market, institutional, human and financial risks. A study by Leat and Revoredo-Giha (2013) is closely related to the aims of this research study. The following risks categories are adopted from a review of various studies and these specific risks are identified as having a direct impact on OFSCs. Food safety regulations, consumer concerns and related costs have resulted in more emphasis on risk identification and prevention (Fearne et al., 2001).
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examining the unique risks associated with operating in a global market and develop strategies for risk mitigation (a case study of multinational corporation within Nigeria). multinational corporation in Lagos state form the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain examining the unique risks associated with operating in a global market and develop strategies for risk mitigation (a case study of multinational corporation within Nigeria). 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 Examining the unique risks associated with operating in a global market and develop strategies for risk mitigation
Summary
This study was on examining the unique risks associated with operating in a global market and develop strategies for risk mitigation (a case study of multinational corporation within Nigeria). Three objectives were raised which included: To investigate the political landscape in Nigeria and its impact on MNCs, to assess economic fluctuations and currency risks within the Nigerian context and to investigate the cultural nuances and social expectations relevant to MNCs operating in Nigeria. A total of 77 responses were received and validated from the enrolled participants where all respondents were multinational corporation in Lagos state. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
In conclusion, the study on examining the unique risks associated with operating in a global market, with a focus on a multinational corporation within Nigeria, has provided valuable insights into the complex challenges faced by businesses in the globalized economy. The research highlighted the multifaceted nature of risks, encompassing economic, political, cultural, and operational dimensions.
The findings underscore the necessity for organizations to adopt a proactive approach in identifying, assessing, and mitigating risks. In the context of the Nigerian market, the study illuminated specific challenges such as political instability, regulatory uncertainties, and cultural nuances that can significantly impact multinational corporations. It became evident that a one-size-fits-all risk mitigation strategy is not feasible, and organizations must tailor their approaches based on the unique characteristics of the local environment.
Recommendation of the study
Based on the comprehensive analysis of the unique risks associated with operating in a global market, particularly within the context of a multinational corporation in Nigeria, several recommendations emerge to enhance risk mitigation strategies:
- Conduct thorough and ongoing risk assessments that are specific to the local Nigerian market. Tailor risk identification processes to account for political, economic, cultural, and regulatory factors unique to the region. This will ensure a more nuanced understanding of potential challenges and enable proactive risk mitigation.
- Foster strong relationships with local stakeholders, including government entities, industry associations, and local communities. Collaborative efforts can provide valuable insights, early warning signals, and support during times of crisis. These partnerships can also facilitate smoother navigation of regulatory complexities.
- Develop agile and adaptive risk management plans that can respond to evolving circumstances. Regularly update strategies to reflect changes in the global and local business environment. This flexibility will enable the organization to stay ahead of emerging risks and seize opportunities that may arise.
- Invest in cultural competence training for employees working in the global market, particularly in culturally diverse regions like Nigeria. Understanding local customs, norms, and communication styles can improve relationships with both employees and external stakeholders, minimizing cultural misunderstandings that may pose risks.
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