CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Business is any
commercial or economic activity that tends towards profit. The primary,
objective of business organizations is to make profit, grow and survive in the
environment in which it operates.
The
environment in which business organizations operate is a complex, multi-focus dynamic
and has a far reaching effect on such organization Aguilar and Osaze (2009).
The environment tends, shape the outlook, and goal of the organization by
placing constraints on them. These constraints in the changing environment of
organizations could be in the form of government policies, competition etc. and
this sets a limit on the goals specify by the organization if now well managed Mohamed,
A.S. (2003). For instance, trade union asking for increase in salary, will
affect the shareholder dividend.
In management,
the word “Environment” does not necessarily mean physical surroundings, but is
used to describe all those influences that bear upon the business organizations.
Economic environment is used to mean anything, which surrounds the business
organization. It affects the decisions, strategies, process and performance of
the business. The changing economic environment is consisting of factors which
are beyond the control of the business (STEP) social, technological,
economical, legal and political. It provides opportunities or poses threats to
the organization Oyebanji, J. (2000).
Since business
makes demand on the society and the society makes demands on the business,
managers in any organization must be able to manage changing economic
environment by interacting with and responding to environmental factors be it internal
or external to their organizations Mohamed, A.S. (2003). The sum of these interrelationships within the
business and between the business and the society is what is the management
regarded as business environment and it is dynamic and not static Lawal, A.A.
(2000).
Organizations
survival and success depend on the appropriate adoptions to a complex and ever
changing economic environment in Nigeria. It is pertinent for top management of
organization to identify opportunities and threats in the external environment,
Internal environment, it should focus on strengths and weakness, potential and
existing ones. It should respond swiftly, in order to know where it can have
competitive advantage over its rivals. Therefore, any organization should look
or search (Scanning) its environment continuously Isimoya, S.A. (2010).
The Nigerian changing
business or economic environment has witnessed a lot changes from the period of
2014 and 2016 drastically. The transition of power from PDP to APC, devaluation
of the Naira, flexibility exchange rate policy by the Central Bank of Nigeria,
Treasury Single Account and many more undoubtedly has brought about a lot of
change in the Nigeria economic environment which has caused some firms untimely
death and others the problems that
inhibit their survival Kareem, Y. (2002).
The need for
studying changing economic environment became important considering the fact
that business organization do not operate in vacuum and effective management in
complex and dynamic society such as Nigeria requires the assessment of
strengths and weaknesses of the organization and the opportunities and threats
posed and the challenges of the external environment Adeniji, A.A., &
Osibanjo, A.O., (2012). Thus, for survival and growth, organization
must adapt to these changes in the Nigeria economic environment.
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