Abstract

This study was carried out to assess the strategies for survival of small-scale business in Kontagora Local Government Area of Niger State. Six research question and three hypotheses were postulated to guide the investigation. Structured questionnaire, dichotomous in nature was the main research instrument. The stratified sampling method was used to select 72 small-scale businesses from 10 business types. Data were analyzed using simple percentage and the three hypotheses were tested using chi-square test of statistics. The study revealed that; there is a significant relationship between market segmentation and the maximization of a firm’s competitive advantage; price adjustment does not significantly influence the profitability of small-scale business, and that reactive strategy is negatively related to the success of small-scale business. The study recommendations should proactively be applied to marketing strategy.

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CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Although specific statistical evidence may not yet be readily available, there is hardly any doubt that business enterprises employing less than fifty full-time employees dominate the Nigerian economy today, not only in terms of their sheer number but also in terms of volume of employment. They dot every nock and cranny of every city; even in the rural areas, they predominate. With every limited growth and employment in the large scale business sector and dwindling employment opportunities in government, the various levels of government in Nigeria have continued to encourage young school levers and the large number of young and not so-young people who have been retrenched in recent time to seek self employment.

The kind of business described above is small-scale business which Osaze (1986) describes, as “(a business) which is owned, managed, controlled by one or two persons, his family influenced in decision making, has an undifferentiated organizational structure, has a relatively small share of the market and employs less than fifty people”. The history of industrial revolution in developed and developing countries have shown that Small-scale businesses are the driving force of industrial development.

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The attentions of national government all over the world have therefore focused on funding and supporting them through the creation of enabling environment.

Expanding an understanding of small-scale business, Adamu (2005) explains that a major characteristic of Small-scale business worldwide is that they are generally managed by their owners either as sole proprietorship or partnership and are also largely local in their area of operation. They depend on internal source of capital and are relatively small size within the industry. The relative importance of the small-scale business differs considerably from one type of business to another. The major areas of business enterprise activities are in manufacturing, distribution of products and rendering of services some of which may involve the use of products.

Baumbacle (1983) shows in his publication on “Basic Small Business Management” that more than one third of all the manufacturing firms at all, and that close to two-thirds employ fewer than twenty workers. On the whole, his study revealed that 95 percent of the non-form business of all kind employs fewer than fifty workers each. The aforementioned characteristics of Small-scale businesses largely constitute the very basis of their problem and the need for effective strategies for their survival.

Today, businesses in Nigeria, as in any other country of the world, are facing faster pace of environmental changes and uncertainty than was

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typically the case even a few years ago. This change and uncertainty has been manifested in a wide variety of ways and has led to a series of environmental pressures and challenges with which managers need to come to terms. Wilson and Gilligan (2003) mention these to include;

Market fragmentation, the increasingly global nature of many market, shorter product life cycle, product proliferation, increased energy and sales force costs and downward price pressure. Others include, greater customer sophistication and increased customer demands, an increased emphasis upon environmental and ‘green’ issue, the stagnation of many market, and the erosion of many of the traditional bases of competitive advantage.

This pressure poses serious challenges to businesses particularly the small-scale ones given their peculiar and fragile nature. To succeed and survive in the market they must formulate and execute marketing strategies that make sense to the environment. Marketing strategy, Armstrong (2004) points out is an essentially iterative process. It is iterative for a number of reasons, the most significant of which is that as the company’s external environment changes, so opportunities and threats emerge and disappear only to re-emerge perhaps in a modified form at a later stage. Because of this, the marketing strategist need to recognize the fundamentals necessary both for an environmental monitoring process that is capable of identifying in advance any possible opportunities and threats, and for a planning

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system and organizational structure that is capable of causing a radical change to reflect the environment so that effects of threats are minimized and that opportunities are sized.

In essence, therefore, the formulation of marketing strategy is concerned with matching the capabilities of the organization with the demands of the environment. In doing this, the strategist is faced with a difficult problem, since what is typically referred to as the environment encapsulates a wide variety of influences. The difficulty lies therefore in coming to terms with this diversity in such a way that it contribute to effective decision making, since it is this that has a direct influence upon business performance. This difficulty in coping with the environment was viewed by (Bliss, 1980) under two headings:

i.                    Understanding the extent to which the environment effects strategy

ii.                 Understanding the ways in which environmental pressures can be related to the capabilities of the organization.

The preceding paragraphs have tried to give full emphasis to the need for objectives and strategy to be realistic, obtainable, and based firmly on corporate capability. In practice, of course, this translates into an almost infinite number of strategies that are open even to small-scale businesses. Porter (1980) has, however, pulled them together and identified three general types of strategy — overall cost leadership, differentiation and focus; that provide a meaningful basis for strategic thinking. In doing

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this, Porter emphasize the need for the strategist to identify a clear and meaningful selling proposition for the organization. In other words, what is the competitive stance of the organization, and what does it stand for in the eyes of its customers?

This study takes a psychological and marketing point of views to look at process characteristics of action and strategies of small scale business owners in Kontagora Local Government Area of Niger State. These strategy characteristics are then related to the firms` success and survival. I, therefore, intend to provide an answer to the question, how strategies are used and how strategy-relevant behavior by the owner/manager is related to success in the small-scale business. In the realm of psychology, the strategies that shall be deliberated and investigated vis-à-vis small scale business in our area of study are reactive strategy, opportunistic strategy, complete planning strategy and critical point strategy, and routine/habit strategy (Bhide,1994).These strategies can be differentiated according to orientation to the goal, situational responsiveness, pro-activeness, and the overlap between planning and action. Under the marketing perspective, pricing strategy and value added strategy shall be focused. It should, however, be noted that pricing and value-added as strategies can be applied differently under the psychological strategies depending on the psychology of the business owner/manager.

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