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APPRAISAL OF THE PROBLEMS AND PROSPECTS OF PURCHASING IN SMALL SCALE BUSINESS IN NIGERIA

CHAPTER ONE

1.1 INTRODUCTION 

After about a decade and a half of adopting an industrialization strategy based on large-scale industries, mostly of the assembly type, Nigeria has failed to achieve industrial development. The large-scale industries, which were setup, tended to be capital intensive and in appropriate, given the country’s resources endowment. Their capital equipment and technical manpower have continued to be largely imported. As a result, the triple objective of setting up large-scale industries namely: 1. Achievement of high level employment  2. Local sourcing of raw materials. 3. And saving of foreign exchange acquisition materialized. In response to the weakness of large-scale manufacturing government has sought to promote small-scale industries as a strategy for self-reliant industrialization. In Nigeria economy, attention has been drawn to the fact that small-scale enterprises have received very little attention where as it is providing employment for approximately triple the number engaged in large-scale manufacturing as well as playing their role which is crucial importance to our developing economy. This is why it is important to reconsider the problem hindering the growth of his sector. Such problems the researcher has classified into managerial and financial inhibitions as well as some of the government policies, which do not favour small-scale industries.

1.2 STATEMENT OF PROBLEMS 

For the period under review, the country’s economic objective were centered on reducing the level of important and promoting the expansion of domestic production especially in the small-scale manufacturing sector.  However, small-scale industries in Nigeria today are faced with a lot of problems.  These problems go a long way to hamper their prospects and growth in the country and thereby limiting their potential contributions to the development of the economy. Such problems are as follows:  a) Many small-scale industries do not possess a visible feasibility study of their projects. b) There is also the problem of loan misapplication and non-repayment of loans.  c) They keep poor accounting and business records, and d) Because of the low capital outlay involved, experts are not often employed. The researcher will therefore, focus attention on the problems and prospects of parts company limited and what the company should do to alleviate these problems hindering it’s prospects and opportunities available to it.

1.3 HISTORICAL BACKGROUND OF AQUA RAPHA INVESTMENT LTD. 

The Aqua Rapha (God’s Healing Water) was established on 15 December 2004, by it’s sole owner Rev. Father Ejike Mbaka. His ability to generate money out of little or nothing and his interest in business as whole made him engage in small business partnership dealing on the distribution of household goods. The owner made the feasibility study. The report is not too far from what became the reality. The feasibility study was good, only that there were few under and over estimations due to the on-going inflationary trend in the country and reforms in the economic system of the country (NAFDAC). The factory is located at 9th mile opposite. Ama Brewearer Plc in Enugu State. The factory is located in this area because f it’s proximity to the source of the raw materials for the productions. The major raw materials used in the production of sachet/packaged water are sourced locally. The manufacturer employs the services of different professionals in manufacturing of the packaged water. 

These professionals from different field/department work together to ensure the success of desired quantities that will ensure the company’s targets, objectives and goals. The purchasing department plays their roles by getting all the necessary requirements for the production. The factory men will organize the raw materials and use it in production of complete products. After production, they will communicate stores and stores will pack those products and communicate purchasing for sales there by realizing funds what the finance department will keep for the enhancement of the company. 
The programme could have taken of long before now, but the company has a serious financial constraint. The availability and cheapness of the major raw materials also effected the choice of products. 

Aqua Rapha Investment Company produces packaged water. Its product capacity is at minimum of Eight hundred and fifty (850) bags that contains (20) sachets, per day. Given an effective annual working period of 240 days the output is modestly placed at 203, 760 (Two hundred and three thousand, seven hundred and sixty) bags per year. The management of Aqua Rapha Investment Company focus attention on the human side of the enterprises. In other words the behavioural aspect of management is primus. The proprietor of Aqua Rapha Investment Company believes that by rewarding workers adequately they tend to work harder and put in their best to achieve the organization set goals.

1.4 OBJECTIVE OF THE STUDY

The objectives of this study are:

1) To identify and examine the problems militating against the effective operations of small-scale industries via-the case of company in areas of finance, marketing, technical etc. 

2) To identify the prospects available to the case company. 

3) And to suggest ways or solutions of solving these identified problems.

1.5 STATEMENT OF HYPOTHESIS 

Hypothesis I

Ho: Aqua Rapha (God’s Healing Water) does not practice purchasing concept. 

Hi: Aqua Rapha Investment Company practices purchasing concept.

Hypothesis 2:

Ho: Aqua Rapha Investment Company does not carryout purchasing research. 

Hi: Aqua Rapha carryout purchasing research.

Hypothesis 3:

Ho: Consumers are not satisfied with the quality of product produced by Aqua Rapha (God’s Healing Water).

Hi: Consumers are satisfied with the quality of product produced by Aqua Rapha (God’s Healing Water)

1.6 LIMITATION OF STUDY 

Research study in Nigeria is best with a lot of problems, which include mass illiteracy, little supply of reliable secondary data. Prejudice against the researcher themselves. Under secrecy as well as time and financial constraints. Many of these limitations were experienced the course of our study. However, prominent among these limitations were time and financial constraints. As final year student we had too short time at my disposal for the study, as I had to combine it with other academic work. Some problems were therefore encountered in the conduct of the fieldwork and it was not quite easy to arrange for personal interviews with the general manager, proprietor or the production manager of the Aqua Rapha Investment Company. Our insufficient to financial resources was also a major constraints in limiting the scope of field work at Aqua Rapha Investment Company, the National Directorate of Employment as well as the Nigerian Bank of Commerce and Industry Limited (NBCL). Other limitations of the study and the inherent short comings in the research methodology by employed. These limitations not withstanding, it is believed that the findings and conclusions reached would be useful for better management of Aqua Rapha Investment Company as well as some other related small-scale enterprises in Nigeria.

1.7 DEFINITION OF TERMS 

The following terms used in this study should be taken to mean the following:

MARKETING: Purchasing is defined as all-important set of creative human activities aimed at identifying; anticipating and satisfying human needs and wants through exchange as efficiently and as effectively as possible. 

Purchasing is located in the realm of human activities; purchasing needs the degree of intelligence possessed only by human being. Two monkeys cannot market. It is directed at facilitating and consummating exchange, it covers both transaction and exchange relationships. The transaction relationship is a short run affair (transaction is the unit of measurement of exchanged) whereas the exchange relationship is a more durable and continuous relationship. 

PROSPECTS: Prospect may be defined as a person or institution who will benefit from your product or service and who can afford to buy or pay for it. 

STRATEGY: Strategy is a process of planning that involves deciding what the major goals of the entire organization in its pursuit of their goals. 

SMALL BUSINESS: Small business is any industry which is independently owned and operated and not dominate in its area of operation. It is requires at most one man who is not engaged in any other functional work required. 

INDUSTRIALIZATION: Industrialization is the process of building up a country’s capacity to process raw materials and to manufacture goods for consumption or further production. 

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