AWARENESS ON THE INFLUENCE OF MACRO-ENVIRONMENTAL FORCES ON MARKETING ACTIVITIES OF SMALL SCALE BUSINESS OPERATORS IN OYO STATE

ABSTRACT

The  study was  carried  out  to  determine  the  level  of  awareness  of  small  scale  business operators on the macro-environmental forces that influence marketing activities in Oyo state. To achieve the objectives of the study six research questions were developed and answered while three null hypotheses were formulated to guide the  study and tested at 0.05 level of significance.  The  study  adopted  survey  design  that  made  use  of  a  68-item  structured questionnaire  developed from the literature. The  population for the study consisted of 119 small scale business operators in Oyo State. The questionnaire was face validated by three experts;  two  from  Emmanuel  Alayande  College  of  Education,  Oyo  and  one  from  the Department  of  Vocational  Teacher  Education,  University  of  Nigeria,  Nsukka.  Cronbach alpha method was used to determine the reliability of the instrument. The questionnaire was administered  on 119  respondents.  All the copies of the questionnaire  were retrieved  and analyzed using mean and standard deviation while t-test statistic and ANOVA were used to test the  null  hypotheses.  The findings of the study revealed  that the small scale business operators  in  Oyo  State  are  aware  on  the  influence  of  macro-environmental  forces  that influence marketing activities. However, recommendations such as organization of seminars and workshops for the small scale business operators, availability of relevant  information, employment of qualified and well grounded business administrators,  and  familiarity to the relevant business materials like newspapers,  magazine and internet  materials by the small

scale business operators were made based on the findings from the study.

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CHAPTER I

INTRODUCTION

Background of the Study

Business  is  an  organization  or  economic  system  where  goods  and  services  are exchanged for one another or for money. Every business requires some form of investment and enough customers to whom its output can be sold on a consistent basis in order to make a profit. Obi (2002) defined business as an organized  effort to produce  products or supply services demanded by people for the purpose of making profit. Also, Aina and Salako (2007) affirmed that business can be regarded as a system which is better described as a linkage of input flows (energy, materials and information) from a source in uncontrollable environment otherwise called external environment.  In the  same  vein, business  could be viewed as an enterprise that involves buying and selling on the basis of satisfying consumer’s wants and need for profit making purpose.  Business  enterprises are in various forms which include: small scale business, medium and large business enterprises.

Small scale enterprise  is generally stated  as the business which  is  independently owned and operated and not dominant in its field of operation. Osuala, (2000) expressed that the small scale business is any business that is owned, managed,  and controlled  by   sole proprietor, or partners of about two persons, has total assets of less than four million naira, and a relatively small share of the market and do not have more than fifty employees. As it is considered  in this  study,  small  scale  business  is an  enterprise  with  an initial  capital  of N50,000 to N500,000 owned, managed and  controlled, by one or two persons including a workforce  of  between  5  to  20  employees.  Small  scale  business  activities  can  only  be successful when consideration is given to the prevalent forces in the business environment.

Business does not operate in a vacuum but in a complex and changing environment.

The type of environments in which business operates determine to a great extent how sound

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the business should be in carrying out its marketing activities for the organizational goals to be achieved.   According to Ross (2001), marketing is the process used to  determine what products  or  services  may be  of  interest  to  customers,  and  the  strategy to  use  in  sales, communications and business development. Agbonifoh, Ogwo, and Nnolin (2004) indicated that  marketing  consists  of  individual  and  organizational  activities  designed  to  serve  the consumer’s  needs  and    facilitate    exchanges  with  a  view  to  achieving  the  goals  of  the individual or organisation through the satisfaction of the consumer’s needs. Also, it involved efforts made to provide goods and services to the target people at the appropriate time aiming to  maximizing  profits.  Osuala  (1998)  expressed  marketing  as  the  performance  of  those business activities that direct the flow of goods and services from producer to consumers or users.  Osuala  (1998)   further   stated  that  the  marketing  activity  includes:  production, managing, forecasting, conducting research, pricing, transporting, storing, advertising, buying and selling.

Marketing activities are the business strategies adopted in making products available for the satisfaction of consumer. Edna and Eboh (2011) viewed marketing  activity as the totality of all the activities done by the firm before any product exists. Also, it can be viewed as everything  needed  to get a product  off the business  premises and pass it to the final consumer for profitable exchange. William and Ferrel (2007) stated that marketing consists of individual  and organizational  activities  aimed  at facilitating  and expediting  exchanges within a set of dynamic environmental forces.

Environmental forces are the totality of forces and institutions that are external and potentially relevant to the firm. Baker (2004) referred to environmental forces as the ultimate constraint upon the firm’s strategy. Also, Odigbo (2011) expressed that business environment means  forces  that  influence  business  objectives,  functioning,  strategies  and  the  entire performance of organization in an area. However, environmental forces could be termed as

those elements that are beyond the control of the business and which must be reckoned with in their marketing planning activities. These elements could be classified as controllable and uncontrollable forces.

The controllable forces of marketing environment are product, price, promotion and place and they are referred to as micro environmental forces. Whereas, demographic forces, economic conditions, technological change, social/cultural change, legal/political forces and competition constitute the uncontrollable elements of marketing environment which could be regarded  as macro environmental  forces (Osuala, 1998). According to  Ogidefa  in Odigbo (2011) macro environment refers to factors that are largely outside the control and influence of a business and that can potentially have positive and/or negative impact on the business. In view of this, the uncontrollable  forces are those  factors that require proper and adequate monitoring by the business for better and efficient maintenance of the business activities.

Macro  environments  are  demographic,  economic  conditions,  social  and  cultural changes,  technological  changes,  legal and political forces and forces of  competition.  Ade (2000) explained that demography as the country’s population and its geographical dispersion of people  is important  to  the marketer  in selecting  target  market,  location  of plants and warehouses and selection of distributors. This shows that people make market and their tastes and preferences  determine  what to produce at a  particular  point in time. Also, Anyanwu (2000) indicated that economy has tremendous effects on the marketers’ decisions because it determines the buying decisions of the buyers. If the economy is healthy, business activities will be smooth and all aspects of business including marketing will be very active and during the recession business activities are at their lowest and marketing is mostly affected in any society.

Moreso, societal reaction to a new product could be instrumental to its success and at the same time could be fatal. Consequently, the businesses monitor social changes and try to

adapt to change by keeping in touch with the business environment. Kotler and Armstrong (2004) opined that the purchasing power is directed toward certain goods and services and away from others according to people’s tastes and preferences.  Society shapes the beliefs, values, and norms that largely define these tastes and  preferences.  This indicates that for business to thrive well, efforts must be made to critically analyze the current trends in the societal and cultural beliefs of the society in which business enterprises operate.

Changes  in  technology  constitute  a  great  challenge  to  the  survival  of  business marketing  activities.  Ade  (2000)  stated  that  technological  changes  and  innovations  and discoveries affect peoples’ lives and consumption patterns dramatically. As new products are introduced, old ones are withdrawn. It is by virtue of these changes in technology that cause a shift  in the  consumer’s  tastes  and  preferences.  This  implies  that  changes  in technology constitute challenges on the business to have a better control of their activities by shifting their resources towards the technological advancement as to meet up with the modern way of production and distribution of goods and services.

Government in other hand regulates business activities by enacting laws that influence the conduct of business in any economy.  Osuala (1998) stated that in the  civilized  world political action sets the legal boundaries for business and other forms of activity. In addition, another  form  of  forces  that  influence  marketing  activities  of  business  is  the  force  of competition among the business operators. Agbonifoh, Ogwo  and Nnolin (2004) indicated that a marketer’s marketing mix is a reflection of the perceived degree of competition which lead to product modifications and improvement, reduction in prices of goods and increase in promotional outlays. This occurs as a  result  of struggle to gain consumer  acceptance  and favourable market share by individual business enterprise for their products. Therefore, the marketers must be constantly aware of the macro environmental forces that are prevalent in the society in which he is operating for the attainment of business objectives.

Awareness is the state or ability to perceive, to feel, to be conscious of events, objects or  sensory.  According  to  Heath,  (2002)  awareness  is  an  automatic   response  to  our environment.  Moreover,  knowledge  of  macro  environmental  forces  are  essential  to  the business existence because marketing environment is constantly presenting new opportunities and threats upon which business must act for better performance. Business performance can be determined by the level of its awareness on the macro-environmental forces prevalent in a particular area, in this case being small scale business operators in Oyo state.

Among the states in Nigeria, Oyo State is one of the largest states in the country with three senatorial zones which includes Oyo North, Oyo Central, and Oyo South. It is a state where  businesses  of various  forms  are in existence  ranging  from   local  textiles,  poultry farming, manufacture of soap and detergents, manufacture of leather  footwear, pure water firms, dying of cloth, to manufacture  of cosmetics.   In Oyo  state,  business activities  are predominantly major occupation of the people in the state. Both in the rural and urban area of the state, one form of businesses or others are  established by the people of the state. Oyo senatorial zone is regarded as the urban area of Oyo state because it is an area where seat of government is located and small scale  businesses in the area produces majorly goods like cosmetics, footwear, soap and  detergent while Oyo North and Oyo Central are referred to rural area of the state because of non-existence of key governmental parastatals in the area and small scale business found in such areas engaging in dying of cloth, poultry farming and pure water.

In addition, as regards to the year of experience of small scale business operators in the state some of them have been in the business between one to eleven years of operation. Also, some of them are graduates while some are non-graduate. The graduate among them are those who have possessed  HND, Degree and Ph.D. certificate  while  non-graduate  are those who have acquired NCE and OND certificate. Moreso, small scale business operators

irrespective of their area of operation, experience and academic background need to be aware of the changes that constantly occur in the business  environment  because the  success or survival  of business  enterprise  can  be determined  by how knowledgeable  and  cognizant business operators are on marketing environmental forces which are regarded as a pivot upon which profitable marketing activities rotate.

Statement of the Problem

The major responsibility of small scale business operators is to plan, implement and evaluate  their  organizations’  marketing  system  by  anticipating  environmental  changes, remaining flexible and acting progressively for maximal actualization of organizational goals (Osuala, 1998). This implied that the key to organizational survival and growth is the firms’ ability to adapt its strategies to a rapidly changing environment; failure to adapt may lead to goal unattainment  and finally run down business activities.  Moreover, the development of small scale enterprises  is a core government  policy  concern purposely to raise economic growth, providing employment opportunities  and  provision of essential goods and services (Shaw, 2004; Baron & Share, 2005). It is obvious that small scale businesses especially in Oyo State have contributed immensely to the economic growth of the state in the creation of employment as a source of livelihood.

However, despite the above contribution, small scale businesses are performing below expectations  due  to  lack  of  awareness  of  the  small  scale  business  operators  to  adopt marketing skills needed for proper and adequate monitoring of business environmental forces like demography,  economic,  societal and cultural forces,  technological  changes,  legal and political forces and competitive forces, by the small scale business operators for better and effective business activities. People are the market and understanding of the size, structure, and  composition  trends  is of  fundamental  importance  to  the marketing  planner.  Moreso,

every marketing activities are subjected to some of government regulation failure to concur may lead them to violation of government rule. As a result of changes in technology, a new product introduced in to the market by one company can easily become old fashioned and obsolete  on  account  of  improved  versions  brought  into  the  market  by the  competitors. Attitudes,  cultures  and  beliefs  are  very  significant  social-cultural  variables  because  no business can survive if it produces goods that are against the belief of the society it operates. Therefore,  the marketers’  lack of awareness  on the state  of these  forces  has  contributed negatively  to  their  business  prosperity  in  the  state.  Some  of  these  business  enterprises produce below their maximum  capacity due to the low patronage of their product by the consumers. Many of small scale business enterprises have closed down because of the low turnover on the investment which also makes it difficult for them to pay the salary of their workers promptly. In addition, it has lead to the decrease in the standard of living among the people of the state.

In view of this, Ogwo in Ayozie (2001) indicated that small scale business operators lack  the  knowledge  and  skills  of  basic  marketing  which  involves:  marketing  research, environmental  scanning  and  forecasting,  market  segmentation,  marketing  planning  and control. As a result of this, most of these businesses in the state are operating at a cost below the  total  cost  due  to  their  inability  to  take  into  consideration  the  significant  of  macro environmental forces in the business activities.  Hence, there is need to study the level of awareness of small scale operators on macro-environmental forces that influence  marketing activities of small scale business activities in Oyo State.

Purpose of the Study

The major purpose of the study is to determine the level awareness of small scale business operators on the macro environmental forces that influence marketing activities in Oyo State:

Specifically,  the study determined  the  level of awareness  of small scale  business operators on:

1.        The demographic forces that influence marketing activities in Oyo State

2.        The economic forces that influence marketing activities in Oyo State

3.        The societal and cultural forces that influence marketing activities in Oyo State.

4.        The technological forces that influence marketing activities in Oyo State.

5.        The political and legal forces that influence marketing activities in Oyo State

6.        The competitive forces that influence marketing activities in Oyo State.

Significance of the Study

The findings from this study will be of benefit to the lecturers of business education, students   of  business   education   small  scale   business   operators,   general   public,   state government, ministry of commerce and industry and future researchers.

The  study  will  provide  information  to  the  lecturers  of  business  education.  The information provided in the study will help lecturers to upgrade their knowledge based on the different concepts of macro environmental forces provided in the study. It will also serve as a material for preparing a lecture note for their students when taking the cognizance of the result of the study into consideration.

The study will be of immense benefit to the students of business education as  the finding of the study will enable the students to be aware of the effect of technological forces on the marketing activities and will also help the Students to overcome problems that related to technological changes.

For business operators in Oyo state, the findings of the study on economic forces will enable the business operators to update themselves with the current trend in the market and how the scarce resources will be used judiciously. Application of the findings of this study by

the small scale business operators in Oyo State will strengthening their forecasting skills and techniques needed in the economic environment on the basis of effective utilization of scarce resources for profit maximization.

The study will provide information to the general public. The people in the  society will have a great opportunity of purchasing standard products because of the existence of the laws that prevent selling of adulterated goods and this will contribute to their living standard maximally. It will also provide the general public with consciousness of what they consume by  having  complete  knowledge  of  the  product  thereby  preventing  themselves  from  the dubious attitude of some business operators in the state.

The study will provide information to the policy makers in the state.  The findings of the study will guide the government in making result oriented business law by enabling them knowing how political and legal forces influences activities of the small scale business. The business  law  that  will  lead  to  a  good  result  will  be  achieved  by  the  government  by considering  the  plight  of small  scale  business  operators  and  the  current  political  factors prevailing in the society when making law that concerns business operators in the state.

The study will provide information to the ministry of commerce and industry.  The information  given in the study will enable the officers in the ministry to develop  proper monitoring procedures and guidelines for effective business operation in the  state and also, render professional advice in terms of the skills needed by the small scale business operators to perform effectively and fulfill the objectives of which is being formulated.

Future  researcher  will  find  information  from  this study useful.  It will serve  as  a reference material to provide a foundation and pointer from which more research would be carried  out  for  the  purpose  of  innovation  and  discoveries  in  the  world   of  business environment.

Research Questions

The following research questions were formulated to guide the study:

1.         What is the level of awareness of small scale business operators on the demographic forces that influence marketing activities in Oyo state?

2.          What is the level of awareness of small scale business operators on the  economic forces that influence marketing activities in Oyo state?

3.         What is the level of awareness of small scale business operators on the social and cultural forces that influence marketing activities in Oyo state?

4.         What is the level of awareness of small scale business operators on the technological forces that influence marketing activities in Oyo state?

5.         What is the level of awareness of small scale business operators on the political and legal forces that influence marketing activities in Oyo state?

6.         What is the level of awareness of small scale business operators on the competitive forces that influence marketing activities in Oyo state?

Hypotheses

Three null hypotheses were formulated for the study. The hypotheses were tested at

0.05 level of significance.

Ho1:   There is no significant difference between the mean responses of urban and rural small scale business operators on the level of awareness of economic forces that influence marketing activities in Oyo state.

Ho2: There is no significant  difference in the mean responses of the small scale  business operators on the level of awareness of technological forces that  influence marketing activities with respect to their years of experience.

Ho3:   There is no significant difference between the mean responses of graduate and  non- graduate small scale business operators on the awareness of  competitiveness  forces that influence marketing activities in Oyo state.

Delimitations of the Study The study was delimited to the level of awareness of small scale business operators on the macro-environmental  forces  that  influence  marketing  activities.  The study will  cover mainly the influences of demographic forces, economic conditions, social and cultural forces, political and legal forces and competitive forces on the marketing  activities of small scale business enterprises in Oyo State.

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