CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY  

The business environment today has become so dynamic that the decision to structure or restructure an organization has become paramount. When certain manifestation become effectually significant, top management contemplate creating a structure to suit the organization’s demands in order to effectively and efficiently achieved its stated objectives. 

                                                                         The manufacturing and banking firms in the business world

today need organization structures to direct the levels of authority and responsibilities, information channel and equally establish, primary control units to bring about corporate performances, as they move from one stage   to another in terms of growth size, technology, market, product line, merger and acquisition. Tidd (2004:4) state that performance lies in the ability of today’s managers to understand how each of the sub-units such as job, positions, activities and systems develop and the interaction with one another should form an organic whole in any given

organization. Scholars in particular and management practitioners in general are beginning to be worried about the situation and there is the need to investigate into the extent of performance of most of the firms in Nigeria.  

                                                                        Previous researchers on organization structure or design like

Ottih (2004), Allison (1984), Payne (1981) Mintzbery (1979)

Galbraith (197), Cummings and Worley (1992), Duncan (1972) Emery and Trist (1965) Terryberry (1968) Thompson (1967), Burns and stalker (1961), Lawrence and Horsch (1967) Wieck (1969) Woodward (1960), Hicks, Pugh and associates (1969) mills and associates (1980) Aston group (1960) Blam and associates, (1980) Aston groups (1960) and Associates Chandler (1960), Child (1972) and Fubara (1984) but their basic study on  structure were structure support mechanism, environment, technology, size, strategy, power and politics and finally the total contingency paradigm

 Fubara’s (1984) study was based on state owned enterprises in developing countries.  According to him, such firms dominate developing economics and that compels him to inquire into their efficiency and effectiveness. In probing into the strategies decision processed behind the often dismal performance of these firms, Fubara (2004:120) found that decision processed are influenced by power gains from within and outside the firms.  These political powers influences the structure and  this raises questions such as legitimacy of purpose and objectives of the organization, appointments are not made on merit bases hence they influences corporate decision and thirdly, the power games negatively influence the already misconceived corporate shared values Ottin (2004:73). The pertinent question to ask is, do Nigerian firms have nay structural patterns? If yes, how are they effective and efficient and what are the necessary causes of poor performance. 

 According to Ottin (2004:23) “organizational structure is a framework of roles, responsibilities, authority and communications relationship that are carefully designed to achieve the performances of an organizational task and achieve its objectives.” That means that any manager must adhere to the following design components such as technology, structure, measurement system, human resources system and culture and not power game, if high performance is to be achieved in our firms.  Cummings and Worley (1992:126) on the basis of performance these design components are briefly discussed for clarification. 

Technology:  This centres on how organization can convert raw materials into products and services. The core transformation function such as production methods, work flows and equipment 

Structure: the ways an organization should divide its labour or differentiates its parts into horizontal department and groups and vertical into managerial hierarchies 

Measurement System: Simply the methods of gathering assessing and disseminating information on the activities of groups and individuals in the organization such as management control systems and performance appraisal systems. 

Human Resources System: The mechanisms that will enable the selection, training and development of its employees such as reward system.  

Culture: This concerns the basic assumptions, values and norms shared by the organizational members.  These elements will serve to guide the members perceptions, thought and actions. The point emphasized here is that the ability of the management adherence to these components has a positive effect on the organizations performance.

 Other factors that could affect performance are the external and internal forces as well as the style of management approach to structuring the organization. 

 The background profile identifies factors responsible for the performance of our firms through their organizational structures.  Why is it that some firms perform poorly irrespective of their organization structure? Could it be that most managers or management to do follow seriously their structures or could it be that the employees are responsible for poor performance? What structural patterns do Nigerian firms currently operate and can these structures being about or increase corporate performance? It is against this background that he study is undertaken to investigate firms organizational structures in relation to corporate performance, using manufacturing and services firms “banks” as

the object of interest. 

1.2 STATEMENT OF THE PROBLEMS 

The fact that organization’s needs to have structure cannot be over emphasized. It is a vital tool for directing the overall activities and performance of organizational tasks that should enhance corporate performance. 

 This is a problem and calls for investigation. The study suggests management inability to adhere to design components as a factor responsible for performance and carried out an empirical investigation into the relationship between decentralization and production efficiency and organizational democracy, and organizational performance. The aspect of structure investigated were the extent of practice of the structural characteristics  as well as the extent of performance in the areas of performance such as profitability efficiency of work, ability to make good decision etc. 

1.3 OBJECTIVE OF THE STUDY    

This study is designed to do the following:-

(1)        To find out the current structural patterns adopted by firms in Nigeria 

(2)        To investigate the extent of practices of the structural characteristics of the firms 

(3)        To measure their performance in areas, such as

profitability, efficiency of work etc. 

1.4 RESEARCH QUESTION 

The background profile suggested the following questions for investigation to enable us achieve the objective of the study. 

(1)        What structural patterns are adopted by the Nigerian firms?

(2)        What are the characteristics of these structural patterns?

(3)        To what extent are these structures efficient and effective?

1.5   RESEARCH HYPOTHESIS 

The study is designed to verify the following research proposition.

Hypothesis I

H0: There is no relationship between decentralization and        production efficiency 

H1: There is a relationship between decentralization and          production efficiency. 

Hypothesis II

H0: There            is          no        relationship      between           organizational              democracy and organizational performance.    

H1: There is a relationship between organizational  democracy and organizational performance.    

1.6 SIGNIFICANCE OF THE STUDY 

 All business entity is expected to grow in strength and remain in the competitive environment. But these entities performance has been a thing of concern to many. Several attempts and effort have been made to improve the performance of these firms from the government reforms and researchers.  However, there had been no substantial improvement on the performance.  Perhaps, government and company’s effort to improve performance were adopted in the wrong manner.  This calls for the research to identify the actual factors that account for performance

 If the organizational structure is an important tool that should bring about performance in firms, then managers, practitioners and scholar should develop and adopt the right structural patterns that will ensure effective and efficiency to the organization. This research will serves as a references piece to other researchers and scholars. 

1.7  SCOPE OF THE STUDY 

This study was restricted to Nigeria Brewery plc to ascertain whether the organizational structures of these firms can bring about corporate  performance.

1.8 LIMITATION OF THE STUDY 

The greatest limitation encountered in the work was basically time, money, the respondents fear and refusals to freely give out their organogram with the pretext of indulging secret. 

1.9 DEFINITION OF TERMS 

To ensure a better understanding of this research, definition of the following terms as used in the work are given below

Organizational structure: The framework of formal relationship that have been established in an organization through the process of organizing.  It involves the establishment of the rules, regulations, procedures, the employment and utilization of

specialist. 

Complexity: the nature of differentiation of activities or function. It indicates the degree of difficulty in the execution of tasks without expert knowledge. 

Organization Design: the choices about the strategies, structures and processed that would be used to produce efficiency and performances. 

Prevalence of Written Rules and Procedures: the extent to which activities are co-ordinate by plan rather than by feedback ie. The intensity of the use of rules policies and procedures 

Intensity: the extent to which organizational use large number of administrative and staff personnel to achieve any on-going coordination of activities in the organization. 

Structure:  the way an organization divides labour or differentiate its parts horizontally into department and groups and vertically into managerial hierarchies.  

Culture: these are basic assumptions, values and norms shared by the organizational members to make corporate performance tick.

Diagnosis: the process of assessing the functioning of the organization, department and tasks to discover certain sources of problem areas for possible improvement from the structure or design. 

Resource scarcity: the availability to the organization’s essential resources such as raw materials human resources and capital.  Self-contained units: the fundamental different way of organizing popularly  called product or divisional structures in which organizational activities are groups on the basis of product, services, customers or geographic 

Democracy: the level of decision making in the organization. The employer and employee decision making process.    

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