CHAPTER ONE

INTRODUCTION

1.1      Background of the study

Small and medium scaled enterprises (SMEs) are no longer exempt from environmental conditions that until recently were often the drivers of strategic decisions in large organizations. They now find themselves subject to the same rapid, novel and discontinuous changes that have become amplified due to the exceptional advancement in technology and globalization. The SMEs managers are now subject to real threat and/or possibility that their firm/industry will be the one that is affected by these environmentaldiscontinuities and as such, are agents of change to the traditional methods in which SMEs formulate and implement their strategic plans in order to prepare for and to deal with the rapidly changing environments that most of them face (Wheelen& Hunger, 1995 and David, 1999). Gibb & Scott (1985) argued that as small business managers adopt a more formal planning process, the breadth of strategic planning can most certainly influence the growth development pathway for the company and provide a framework for enhancing the existing size and capability of the firm. Although many of these studies have not really established a direct relationship between strategic management, organizational development and SMEs; they have rather provided frustrating results in the relationship between strategic planning and performance of small business (Watts &Ormsby, 1990). Prior studies have consistently claimed that SMEs in general do not engage in formal strategic planning (Stoner, 1983; Shrader, 1989; Sexton &Auken, 1985; Robinson et al. 1984; Hidde&Masurel, 2000) and even those SMEs that attempt to plan strategically tend to only do so sporadically and inconsistently (Sexton &Auken, 1985). However, an instance where strategic management is in practice in SMEs, research indicated that it is informal, unstructured, and irregular, supported by insufficient and ineffective information, usually obtained through informal sources, and reactive rather than proactive (Gibb and Scott, 1985; Flavel, 1991). Moreover, when managers of small businesses engage in strategic thinking, such deliberation is seldom formal due to lack of time, cost, expertise, information, training, education and skills of owner-mangers (Robinson and Pearce, 1984; Shrader, et al., 1989). Thus, this study reviewed existing literatures on the relationship between strategic management and SMEs development categorized into developed countries, emerging countries and Nigerian economy. For both developed and developing countries, Small and Medium Enterprises plays a very important role in the nation’s economy. Jeff (2000) posits that small and medium enterprises constitute a high proportion of a nation’s business activities and generate more employment opportunities than the large corporations in recent years. Today, organizations have to deal with environmental dynamism. In order to be successful, organizations must be strategically aware and understand how changes in their competitive environment are unfolding. Small and Medium Enterprises must be able to act quickly in response to opportunities and barriers by way of actively looking for opportunities to exploit their strategic abilities, adopt and seek improvement in every area of their business by building on awareness and understanding of current strategies and successes. Since managers operating in organizations perform a number of activities such as planning organizing, and controlling the work of their subordinates, motivating them, controlling what happens and evaluates results. Decisions by managers have a strategic impact and contribute to strategic change in the organization. Every organization is seen as one of a number of competitors in an enterprise, and to a greater or lesser degree, these competitors will be affected by the decision, competitive strategies and innovation of the others. These independences are crucial, and consequently, strategic decision should always involve some assessment of their impact on others companies and likely reactions. For long time success, organization most competes effectively and performed better than their rivals in a dynamic environment. To accomplish this, they most find suitable ways for creating and adding values for their customers. Strategic management is a very important element of organizational success, therefore the need to know what the business is all about, what it is trying to achieved and which way it wants to achieve that are very important decision that must be carried out. Determining the effectiveness of the contribution of each member is a very good requirement. In the case of Small and Medium scale Enterprises, both internal and external forces can dictate whether the business stay solvent or not. The major problem for many SMEs is that of the management of cash flow. To succeed, a business most have clearly defined objective, and developed strategies for achieving them, i.e. a verygood business plan which shows the purpose of the business and what it intends to accomplish. A good business plan help to give form and substance for an entrepreneurial business set up and vision, providing a mechanism that enable owners, managers and workers to function effectively.

1.2      STATEMENT OF THE PROBLEM

Essence of any business organization is to achieve its desired goals. On the other hand, SMEs are very valuable and their failure rate is very high that no nation can afford to ignore. Jeff (2000) posited that 60% of small business enterprises failed in the first three years of their existence in Kaduna state. With the problem at hand greater efforts are urgently needed to reduce the failure rate of SMEs. s Although, every nation has instituted assistance program to aid its own SMEs, the entrepreneur efforts count most in determining the performance of the industry. After all, assistance program are no more than tools available for the SMEs. It is the careful careful adoption and selection of appropriate strategy that enhance the death or survival of the organization.

1.3      OBJECTIVE OF THE STUDY

The main objective of the study is to ascertain the strategies adopted by small and medium scale industries in Kaduna state. Specific objective includes:

i)             To examine the role of record keeping in strategic management of small scale industries

ii)           To access the impact  of effectively managing small scale industries it's role on the development of Kaduna State

iii)          To access the performance of small scale industries in Kaduna State in relation to entrepreneurial ability

iv)         To examine the effect of record keeping in the performance of small scale industries in Kaduna State

1.4      RESEARCH QUESTION

To aid the completion of the study, the following research questions were formulated by the researcher

i)              Does record keeping play any role in the strategic management of small scale industries?

ii)           Does the effective management of small scale industries affect the development of Kaduna State?

iii)          does  entrepreneurial ability affect the performance of small scale industries in Kaduna State

iv)         Is there any impact of record keeping in the performance of small scale industries in Kaduna State?

1.5      SIGNIFICANCE OF THE STUDY

It is believed that at the completion of the study, the findings will be of great importance to the management of small scale industries in Kaduna state, as the study seek to explore appropriate strategy that will enhanced effective management of small scale industry in Kaduna state. The study will also be of importance to the Kaduna state government, as the findings and recommendations of the study will help them in policy formation, which will aid the survival and growth of small scale industry in the state

The study will also be of great importance to researcher who wants to embark on research on similar topic as the findings will serve as a reference point to them. Finally the study will be of great importance to the academia and the general public as the study will add to the pool of knowledge.

1.6      SCOPE AND LIMITATION OF THE STUDY

The scope of the study covers strategic management of small scale industry in Kaduna state. But in the cause of the study there were some factors which limited the scope of the study

a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study       

b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

c) Organizational privacy: Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities

1.7 DEFINITION OF TERMS

Strategic management               

Strategic management is the formulation and implementation of the major goals and initiatives taken by a company's top management on behalf of owners, based on consideration of resources and an assessment of the internal and external environments in which the organization competes

 Small scale industry

The official definitions of a small scale unit are as followsSmall-Scale Industries These are the industrial undertakings having fixed investment in plant and machinery, whether held on ownership basis or lease basis or hire purchase basis not exceeding

Management

Management is the administration of an organization, whether it be a business, a not-for-profit organization, or government body. Management includes the activities of setting the strategy of an organization and coordinating the efforts of its employees (or of volunteers) to accomplish its objectives through the application of available resources, such as financial, natural, technological, and human resources.

1.8      ORGANIZATION OF THE STUDY

This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research question, significance or the study, research methodology, definition of terms and historical background of the study. Chapter two highlight the theoretical framework on which the study its based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study.

---