Effects of globalization on the development of domestic manufacturing industries in nigeria (a study of dangote flour mill plc)

Thesis Overview

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