ABSTRACT
This research work is on causes of business failure and possible solutions with a case study of Faith printing press, Uyo. business failure is when a firm is suffering from either technical insolvency or bankruptcy or when it happens that a firms total revenue do not cover its total cost , this can be avoided by finding solutions to business failure by way of managing recourses in a proper way. It is in view of this that a research work as this was undertaken. The research work contains five chapters, the introduction examines the historical background of the case study and so on and also limitations of the projects were outlined. chapter two was centered on the literature reviews with a view of bringing out what business entails, its operations and impact on the society ,its mode of operations and why and how failure occurs in business enter prices. Population sample and sources of data collocation were the various methods of data collection adopted .such as desk research ,personal interview as well as questionnaires In chapter four presentation and analysis of data was shown in the write up. The data collected were analyzed and presented based on the research questions, which form the views and opinions of the respondents drawn.In the final chapter, summaries and recommendations were made on the subject matter.
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TABLE OF CONTENTSTitle -- - - - - - - - - -- - i
Declaration- - -- - - -- - - - ii
Approval- - - - - - - - - -- - iii
Dedication-- - - - - - - - -- - iv
Acknowledgement- - - - - - - -- - v
Abstract- - - - - - - - - -- - vi
Table of contents- - - - - - - - - vii
CHAPTER ONE - Introduction1.0 Background Of The Study- - - - - - -
11.1 Historical Background Of Faith Printing Press- - - -
91.2 Statement of The Problem- - - - - -
111.3 Statements of Hypothesis- - - - - - -
121.4 Objectives of The Study- - - - - - - 121.5 Significance of The Study- - - - - - -
131.6 Scope and Limitations of The Study- - - - -
131.7 Definitions of Terms- - - - - - - -
15CHAPTER TWO - Literature Review
2.0 Introduction- - - - - - - - - 182.1 Definition of Business- - - - - - - -
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2.2 Types of Businesses- - - - - - - -21
2.3 Basic Management Functions needed for business operations 252.4 Importance of Business to the Society- - - - -
292.5 Modes of Operation In Faith Printing Press- - - -
322.6 Sources of Funds for Faith Printing Press – - - -
342.7. Reasons for Business Failure - - - - - - 35
References - - - - - - - - - 44CHAPTER THREE - Research Methodology3.0 Introduction- - - - - - - - - -
453.1 Research Design- - - - - - - - -
463.2 Population Sample Size of the Study- - - - -
473.3 Sampling Techniques Used- - - - - -
473.4 Instrument Used in Data Collection- - - - - 483.5 Procedures for the Administration of the Instrument- -
483.6 Statistical Techniques Used- - - - - - -
49CHAPTER FOUR Presentation and Analysis of Data4.0 Introduction- - - - - - - - - 50
iii
4.1 Test of Hypothesis- - - - - - - - 624.2 Test of hypothesis observed and expected frequency table
based on table sixteen - - - - - - - 634.3 Conclusion - - - - - - - - - 65
CHAPTER FIVE-SUMMARY OF FINDINGS, CONCLUSIONS & RECOMMENDATIONS5.0 Introduction-- - - - - - - - - 665.1 Summary Of Major Findings - - - - - -
665.2 Conclusions- - - - - - - - - 675.3 Recommendations - - - - - -- -
67Bibliography- - - - - - - - - 69Appendix - - - - - - - - - -70
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CHAPTER ONE
INTRODUCTION
1.0 BACKGROUND OF THE STUDY
Business is absolutely a complex activity. This is because it
involves a lot of technicalities ranging from the task of
planning to control of such plans in order to achieve the
desire objectives of profit maximization. It is in view of this,
that this study is mainly centered on the floating of a
business to a stage where it finds it difficult to keep it’s head
above water.
In the late 70s business was in its period of boom, the
economy was doing well at that point in time and the
exchange rate was appreciable within this period.
International trade was easy as a result of lesser trade
restrictions and foreign exchange control.
During this period, Faith printing press was a beneficiary of
the prevailing policies such as the importation of papers and
other printing materials. These goods were usually tax free
by the agencies concerned, as a result of the significance the
5
government attaches to the publishing sector and the
clearance procedures at the port were effective and efficient
then.
In the late 80’s as a result of the military take-over, various
decrees and policies came into place. The economy became
unbearable for the citizens and their purchasing power
became very low, thereby forcing business not to live up to
their required billing. What followed was that industries
started operating on short run, and later businesses started
folding up.
The various trade restrictions, VAT policies on goods
imported did not help matters. The result effect of all these,
was folding up of businesses. Against the business affected
was then within our locality the -Faith printing press. The
concerns shown people in the locality spearheaded an
agenda to resuscitate the company and prevent it from total
collapse.
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The process of doing this proved difficult due to the extent of
funds require to source for foreign exchange needed for the
importation of raw materials there were other problems that
seem intractable. But the people and company unite make
persistence efforts to resuscitate the company but the more
difficult problems that resulted, Motivated an interest to
study the problems of business failure and the possible
solutions.
1.1 HISTORICAL BACKGROUND OF FAITH PRINTING PRESS
Faith printing press is a sole proprietorship business. It is
own by Chief Gabriel O. Faith. It was established on 20 th
August 1969 and was situated at V.V.I Lagos/Keffi Street,
Uyo.
Faith printing press was set-up with the objective of
providing the best quality printing jobs to customers at
affordable prices and at the due appointed time. At the early
life of the press, it started with letterpress and binding
machine. Namely: Adana, Letterpress Heidelberg and
Cutting Machines.
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In the course of expansion, the press relocated to N.C-.3
Oshogbo Road, Uyo in 1979. The press increased its
machineries by purchasing Rota prints, plate maker, camera,
and kond. During this period the press has increased its area
of specialization from letter press to offset printing.
In 1985, the press moved to J.11 main street Badarawa Uyo
and finally relocated to its permanent site V.V. 15 Nassarawa
Road, Uyo in June 1993. in its present site, it has acquired
additional machines such as multilith 1850, Stitching
machine, computers and Ruling machines.
This organization is engaged in the publishing of companies
Annual reports, text-books, invoices, Receipts calendars,
invitation cards, Business cards e.t.c. Faith printing press is
an organization worthy to be emulated, Judging by its
achievement within the period of its existence. The
organization has render a lot of its services to prominent
companies & government parastatals within this country,
among them are: Nitel Headquarters- Lagos, National
electric power authority Uyo, Uyo state water board, Ahmadu
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Bello University Teaching Hospital, Uyo, Bayero University
Kano, Nice Top papers industries Uyo etc.
Below is a sample of what Faith printing press Organizational chart should look like.
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ManagingDirector
Press maintenance
Manager manager/ engineerProduction
CashierCashier Receptionist
Lithographer printing section Finishing section With And AndApprentices Apprentices Apprentices
Drivers Gate men
1.2 STATEMENT OF THE PROBLEM
Business entrepreneurs today are making a lot of efforts in
order to make their investment a perpetual going concern.
Every means available at their disposal are being made
available terms of capital base sophisticated equipments etc
so as to meet-business demands and sustain the completive
market environment.
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How ever inspite of these tremendous effort businesses are
still failing and these are owing to various factors that pose
myriads of problems.
1.3 STATEMENTS OF HYPOTHESIS
The following hypothesis has been formulated to serve as a
guide for this study:-
1. That efficient management of resources could not lead to
business failure of _Faith printing press
2. That inefficient management of resource could lead to
business failure in Faith printing press.
1.4 OBJECTIVES OF THE STUDY
This study intends to achieve the following objective
i. To find out how Faith printing press should operate to
avoid failure.
ii. To examine the implications of government economic
policies on the survival or failure of Faith printing press.
iii. To find out and how to avoid business collapse with
reference to Faith printing press
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iv. To examine the use and control of resources in Faith
printing press.
1.5 SIGNIFICANCE OF THE STUDY
This study is significant in that its will also identify possible
mistakes if any, which could lead to business failure.
It will also point out possible solutions to business failure
with reference to Faith printing press, Uyo. It will be also
investigate some important factors to be considered before
setting up a business and those that will be implemented in
the course of business.
Finally, the study will be useful to the management of Faith
printing press, Uyo as it will help in tackling the problems
militating against the operations of the company.
1.6 SCOPE AND LIMITATIONS OF THE STUDY
This study is untaken to find out the fundamental obstacles
of business failure and possible solutions for a sustainable
economic development with a case study of Faith printing
press Uyo. The study is concerned in the first place with the
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source of funds available for printing press firms and then
their management system i.e its efficiency; it will appraise
these two factors and provide possible solutions.
The selected firm is a small printing press, it however
engages in different types of activities ranging from supplies,
printing contacts and binding.
The limitations of this study are many, though not
unfamiliar, as every project work deals with such limits, it
includes the following:-
i. The time limit for the submission of this project will not
be sufficient. this is due to the compressed academic
calendar that makes up a semester during which the
research work is being made.
ii. In adequate finance.
iii. Lack of full co-operation from officials/workers of Faith
printing press whose views are important to this topic.
Despite these difficulties it is the hope of the researcher
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that this study will be of value to future researchers and
also printing (private) operators.
1.7 DEFINITIONS OF TERMS
This is an attempt which is aimed at explaining and defining
of terms and abbreviations used according to the meaning of
the contexts. Such terms includes the following:-
a. LIQUIDATION:- This is a process where a company
can no longer Maximize profit and
is being forced to wind up.
b. OVERHEAD COST:- These are the cost incurred as a
result of involvement in production
of goods and services.
c. WORKING CAPITAL:- This is the amount set aside for
the
running of the business.
d. MANAGEMENT:- The authorities that are
concerned with
decision making
e. CASH BOOK:- This is a principal book account
used for
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reading business transaction.
f. CAPACITY:- Ability to hold, contain, get hold of,
learn Things, qualities ideal
etc.
g. EFFECTIVE:- Is the ability to produce good
result, the
power to achieve desire goal or
objectives
h. EFFICIENT:- All the means or ways use in
producing a desire to
satisfactory result.
i. ENTERPRISE:- A business unit that needs courage
on that offers difficulties.
j. PROBLEMS:- Difficult situation, question, a
question
proposed for solution or discussion.
k. OBJECTIVE:- Are the goals, aims, and missions,
desire targets that an
organization must accomplish in other
to stay in business.
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l. PLAN:- Forecast, an action, method or
programme worth out
before hand. To draw or desire
a plan for Generally plan are
goals and objectives which in
organization seeks to seeks not to
achieve which an organization seeks to
achieve in executions of its
responsibilities.
m. RULE OF THUMB”- Something that is the usual
practice habit.
n. MOTIVATION:- Incentives that propel or arouse
one to put in more effort.
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CHAPTER TWO
LITERATURE REVIEW
2.0 INTRODUCTION
This chapter attempts to deal with the review of related
literatures by examining the conceptual views of some
writers on business failure.
The problem of business failure is so prevalent in all parts of
the country. Businesses are set up in order to expand and
provide essential services to every member of the society
but this contrary to its objectives more and more businesses
are winding up. When financial institutions which are
supposed to be reviewing business are victims of the same
problem. In a report by J.C Anyanwu in the “Business times”
title “Averting Bank failure in the 1990s” the author
diagnosed the cause of failures as the general economic
climate in which banks operates. For instance rapid inflation,
high interest rate and high variability in the rate of growth of
the money supply are very difficult conditions in which to run
a bank- Unfortunately, the conditions are glaringly prevalent
in the present Nigeria situation.
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Freeser J. (1990: pg 49-53), a study conducted by Dum and
Bradstreet in 1973 and the conclusion was that 95% of the
cause of failure stated from managerial inexperience and
incompetence. The evidence for inexperience and
incompetence was:-
i. Inadequate sales 44 percent
ii. Competitive weakness 24 percent
iii. Inadequate inventory control 4 percent
iv. Poor geographical location 2 percent
v. Heavy Operation Expenditure 9 percent
Lying behind these is failure to plan for planning and failure,
to control the consequence of the plans environmental
factors may be significant but only to the extent that they
are beyond the ability of the competent manager to predict
and control.
Allsopp M.J (1977: pg 73-81) also reported that in Eight
instances that companies losses were attributed to their
directors. Estimate made in average debt of 60 compared to
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an average of 30 in the previous year as at that time. It is
significant that bad debt is suffered to a great extent by
small company both in U.S.A and U.K.
Ogun Toyinbo. N.O (2003 pg 19) An article published in the
daily times, examined and diagnosed other causes of
business failures as interest discount income and credit
related free income, from substantial part of a bank’s
income.
2.1 DEFINITION OF BUSINESS
The word business means different things to different
people. Many authors have defined business based on their
purpose at a given time. The writer will therefore, examine
the various definitions as given by different authors.
According to oxford advance learners’ dictionary of current
English A.S. Horn by, business is defined as buying and
selling, commerce, trade shop, commercial enterprises etc.
while trade has been further analyzed by the same
dictionary to mean buying and selling which involves
exchange of goods for money or other goods.
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Also company and Allied matters Decree of 1990 defines it
as any trade, industry and profession and any other
occupation carried on for profit.
Having examine the above definition, one can see that all
the definition are centered in carrying on trade with a view
of making some profit.
Business can therefore, be define as any activity carried on
which produces and distribute goods and render services for
the purpose of making profits. All business involves
financing, purchasing, production selling and distribution of
goods for a reward of profit.
2.2 TYPES OF BUSINESSES
Businesses are of various types and can further be classified
two namely:-
i. Un-incorporated
ii. In- corporated
In the case of unincorporated it can further be classified into
viz sole proprietorship & partnership
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1a. THE SOLE PROPRIETORSHIP
This is the simplest form of business enterprise otherwise
known as one man business. They are very small business
organizations and are under the ownership and control of
one person. Here one person takes the responsibility of
providing the finance, making the operating decisions, taking
the risks and benefiting from the profits and losses
1b. THE PARTNERSHIP
S. Olokoyo (2000 pg 13) in his books “managing your small –
scale enterprises successfully’’-defines partnership as a form
of business that is a development over the sole
proprietorship. Partnership can be defined as “an association
of 2 or more people formed for the purpose of running a
business with a view to profit”.
Often individuals do not wish to operate in business in their
own but prefer to do so in conjunction with an agreement to
share responsibilities, the profits and losses. This is
commonly found in professions like medical doctors and law
practice. The ownership & control is in the hand of more
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than one-person. The formation of this type of organization
needs between 2-20 members.
The partnership is also subject to few legal requirements
other than the contract between the partners. Other legal
requirements include the following:-
a. All partners except in special cases are subject to
unlimited liability for all debts and obligations of the
business
b. The normal maximum number of partners is 20 and the
least is 2.
c. No restrictions on a partner: showing his/her intention
to withdraw its membership any time.
ii. Ellen.R (2004) financial times noted that the
incorporated form of business organization was a direct
result of 19th century limited liability Acts, remodified to
suit the 20th profit driven century, which was designed
to mobilize the savings of the community into company
finance. There are two types of this form, namely:-
(a) The private company (b) The public company.
22
1.A. Private COMPANY
The private company must have not less than two and not
more than fifty members. This form of organization is very
popular in the retail, whole sale trade and in those sections
of manufacturing industry in which only moderately amount
of capital are required.
b. PUBLIC COMPANY
Lipsey R.G et al (1992:pg 24-27) Economic –defines public
company as a business enterprise set up with no limit in the
number of members and a minimum number of seven. The
public company is the major instruments responsible for the
high rate of economic growth in most industrial countries.
The formation of joint stock company involves more legal
constraints than the other two forms of business in
organizations. Its formation involves the production of three
documents:-
a. MEMORANDUM OF ASSOCIATION:- This includes
the name of Company, its objectives, details of authorized
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Share capital. It must be signed by at least two persons in
the case of a private and at least seven people in the case of
a public company.
b. ARTICLE OF ASSOCIATION:-This document contains
Information on its issues and transfer of shares,
alteration of capital, dividend policy, a private company
has constraints on the right to transfer shares and
prohibition of public subscription.
c. STATUTORY DECLARATION:- Is a declaration by a
director or the acting solicitor for the company that the
conditions laid down in the company act for the formation of
companies have been complied with.
Except in the event of bankruptcy or a decision to wind up
the joint-stock company has no weakness of impermanence
as in the other two forms of business. The principle of limited
liability is of great importance. It means that the shareholder
is liable only up to the amount stated on the face value of
the shares.
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2.3 BASIC MANAGEMENT FUNCTIONS NEEDED FOR
BUSINESS
OPERATIONS
1. Ellen. R. (2004) Financial times sees management
functions as a combination of elements and task of
management processes combined for the effective running
of an enterprise or organization. They are therefore
considered very relevant in the discussion of management
roles and action.
Henri Fayol considered to be the father of management
stipulated the following functions of management.
a. PLANNING:- This is the role of using available data to
forecast future requirements of various human skills needed
at the various units of the organization.
b. ORGANIZING-This involves arranging organizational
activities into units and allocating specific schedules to
individual. It includes establishing a structural relationship of
Responsibilities and authority between and within the
component units.
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c. STAFFING: - This is a process of recruitment, selection
placement, retention and welfare during and after services
of people whose services are dispensed with.
d. CO-ORDINATING: - Co-ordination involves
ensuring that the personnel activities of the component units
are uni-directional, in line with approved schedules and
aimed at achieving goals of the organization.
e. REPORTING- This is the documentation of staff
performances, promotions, disciplinary actions, leaves etc.
All personnel officers keep data relating to staff and their
performances at work.
f. CONTROL: - It means exercise of authority to directs
workers on what to do and ensuring that deviations when
noticed are timely corrected.
g. BUDGETING- It means translating the quantity &
quality of materials needed for each department into
monetary terms. It is a means of stating possible salaries to
be paid workers within a given period and therefore earning
at a total cost of staff remunerations to ease decision on how
many new staff could be taken on board in relation to
26
output. This function’s are performed by the top level
management of the organization.
OPERATIVE – FUNCTIONS
2. Operative functions are the specific duties of the
personnel office in an organization, which are performed on
day-to-day basis. Generally operative duties of the personnel
office are performed by junior and middle level office of the
personnel office working under the supervision of more
serious personnel officers. These duties are:-
a. RECRUITMENT:- Determining the type and sources
of human Skills to be brought into the organization.
b. STAFF SELECTION:- The responsibility of choosing
who should be taken amongst the various applicants for the
job.
c. LABOUR RELATIONS:- Every worker comes into an
organization with needs and expectations which tend to
influence his behaviour at his place of work. It is the
responsibility of the personnel office to give good counseling
27
to employer and ensure speedy resolutions of conflicts
between workers or workers & management.
d. WAGES ADMINISTRATION:- This involve matching
human skills qualifications, experience and official
responsibilities with monetary and non-monetary
compensation packages for workers. Generally this is done
in line with existing labour legislations, policies on
government salaries and wages, the company’s productivity
level and other such related factors.
e. STAFF TRAINING & DEVELOPMENT:- Each staff
needs to improve on already acquired skills particularly if the
schedule of duties involved using newly introduced
machinery. To develop new skills or improve on skills is for
all categories of workers so as to keep a breast of
development in their areas of work.
f. STAFF PERFORMANCE EVALUATION:- It is the
responsibility of the personnel office to assess the
performance of workers. But because of Complexities in
assessing workers of different skills, this activity is often
delegated to heads who observe the worker more regularly
28
and are more conversant with the workers schedule of
duties.
g. PROMOTION AND DISCIPLINE:- It is the
responsibility of the office to promote or discipline staff.
Even when procedures for promotion begin from the relevant
heads of departments they normally end with the personnel
office who eventually conveys such information. Similarly all
disciplinary measures ending with warning letter, demotions
in ranks, loss of jobs etc. are finalized in the personnel
office.
2.4 IMPORTANCE OF BUSINESS TO THE SOCIETY
The 3rd National Development plan (2001, p.353), define
small businesses as a “manufacturing establishments
employing less than ten people or whose investment in
machinery and equipment do not exceed N600, 000.
Business is a very important instrument to the society it
produces great benefits to the economy. The following are
some of the benefits of business to the society:-
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a. CREATION OF EMPLOYMENT OPPORTUNITIES:-
It is felt that the multiplicity of business will go away in
lessening the high level of unemployment. A close look at
the nature of unemployment will indicate that the number of
the unemployed falls into the group of skilled and semi-
skilled.
J. E. Ndagi (1994,pg:104) “Essentials of research
methodology for Nigeria” postulate that if these group
(above) of people are encouraged and given financial
assistance, they could start their own businesses in specific
areas where effective demand have been identified. And as
more people establish and operate their own business, they
would be in position to employ more of the excess labour
which will definitely reduce the rate of unemployment.
b. REDUCTION IN RURAL –URBAN MIGRATION
Sabir B (2000, PG 79) “entrepreneurship in Nigeria”
emphasis that establishing business in rural areas has been
an advantage in solving the problem of rural-urban
movement, by so doing rural labour is absorbed and the
30
establishment would also depend on the agricultural produce
of the rural dwellers.
This in turn will have a positive impact on agricultural output
and lead to a rise in its income and would encourage rural
dwellers to remain in the locality rather than move to urban
areas in search of wage employment.
c. EVEN DISTRIBUTION OF INDUSTRIES
Ndagi J.E. (1994, pg 47-49) “essentials of research
methodology” observed that the rapid growth in the small
scale businesses may also lead to a more even distribution
of industries nationwide. Taking into consideration that the
capital requirement in starting the business may be low and
with the backing of government policies. More business
operations would take of all over the country.
d. MOBILIZATION OF LOCAL RESOURCES
Chester B .et al (1999.pg:222) “Applied management” brings
to the fore that business has brought into view, the need to
switch emphasis from important dependent large scale
31
industries to small enterprises which can structure their
production emphasis to depend mostly on local sources with
local available resources include raw materials and supplies.
2.5 MODES OF OPERATION IN FAITH PRINTING PRESS
Faith printing press is a sole proprietorship organization, but
in the course of its operation these are level of authority that
official duties must proceed through. In order to access the
level of authority in the organization.
A managing Director who happens to be the proprietor, who
is in-charge of the affairs of the company, heads Faith
printing press. He also takes any/every responsibility for all
profits or losses made out of the business.
The managing Director delegate parts of its authority to the
press manager. The press manager over sees the affairs of
the press in the absence of the Director. He also supervises
and make sure that all activities in the press room are well
co-coordinated customers are satisfied for future patronage
and that staff welfare are met by company.
32
The production manager comes into focus next, he makes
sure the operators produce the right job to meet customers
satisfaction. Where there are deviations, he corrects the
staff.
Next in the hierarchy is the maintenance engineers who
make sure the machines are in order, he enquires from the
operator’s the state of the machines and effect the
necessary repairs.
Moreso, the press has own cashiers who make daily records
of sales and make deliveries to the book. Also there is a staff
within the reception, he specifies the cost of jobs to the
customers.
The press has the lithographic section, printing section and
finishing sections, in addition to its asset it has a pick-up van
used for deliveries.
The press has a total of twelve staff and 6 apprentices they
resume at 8:00 am and close 6:00 pm daily; they also work
on overtime and are paid weekly for their services.
2.6 SOURCES OF FUNDS FOR FAITH PRINTING PRESS
33
The sources of finance available to business organizations
are numerous. Faith printing press as a sole proprietorship
has limited sources as a result of its composition. The
sources available to the press are outline below.
a. PERSONNEL SAVINGS
A business can be financed through personnel savings. The
proprietor finances the operations of the press through his
savings in the bank. They are always used as last resort,
where he has used up all the available funds on him.
b. LOANS
The proprietor also applies for loans from reputable banks
where he owns account, also using his second house as
collateral. In the bid to finance jobs, capital is a problem, but
where the reputation of the press is respected they easily
obtain these loans with the right collaterals. Over years the
press’s relationship with the banks have being cordial and
this action has really helped to remain in business.
C. RETAINED PROFIT
Faith printing press is a company worthy to be emulated. It
is an organization that has continued to remain in business
34
based on its steady profits realized from its contractual
deals. The proprietor deemed it necessary to plough back his
profit into the industry so as to provide employment
opportunities for Nigerians and also make it possible for its
operations to survive though not without it’s own hard times,
which almost lead to it’s closure.
D. CREDITS
This source of finance has also being of great benefits to the
organization where there is no fund available material
credits are given to the organization e.g papers, inks, films,
plates etc. the organization settle the suppliers at agreed
dates without interests.
2.7. REASONS FOR BUSINESS FAILURE
S. Olokoyo (2000, pg 5) in his book “in his book “Managing
your small scale enterprise successfully” a guide to
entrepreneurs, managers and students emphasis that a
large number of new businesses fold up even before they
operate for three years for the following reasons:-
35
1. Plunging in without first testing the troubled water on a
small scale.
2. Under pricing of goods or services.
3. Under estimating how much time it will take to build a
market.
4. Starting with too little capital.
5. Starting with much capital and being careless in its use.
6. Going into business with little or no experience.
7. Borrowing money without planning how and when to
pay it back etc.
One of the major advantages and characteristics of a
company is that it has perpetual success from which implies
that it can live for a very long time.
When the entity can no longer function effectively with
regard to profit maximization, if its accumulating liability
then to profit the entity is said to have failed in its primary
objectives.
This chapter deals with the reason /causes/types of business
failure which will be discussed in the following paragraphs:-
36
a. Types and symptoms of business failures
Sabir .B. (2000, pg: 47) “entrepreneur in Nigeria” explained
that there are basically two types of business failure,
financial failure and economic failure. A firm is said to have
financial failure if it is suffering from either technical or
bankruptcy insolvency. If a business is unable to meet its
current obligations as they fall due, even though its total
assets exceed its total liabilities, it is technically insolvent.
Bankruptcy insolvency occurs, however, only where a firm’s
total asset could not meet the total liabilities. Economic
failure relates to a situation where firms total revenue do not
cover its total cost. Some symptoms of imminent business
failure includes the following:
a. Deterioting working capital;
b. Declining sales;
c. Declining profit;
d. Higher debt ratio.
B. STATISTICS ON BUSINESS FAILURE
37
It is relatively easier to obtain statistics on the mortality rate
of businesses in the Western European countries than in
Nigeria say “Sabir” most of the research in Nigeria deals with
the type, classification and registration of businesses, with
very little information on their performance rates or failure.
38
Table 1.1
Distribution of factors claimed to be responsible for business
failure of a selected sample.
Factors Number who give the factor as their main
cause of failure
Percentage
Luck 10 15.87Insufficient money 12 19.05Insufficient preparation
6 9.52
Lack of business connection
15 23.81
Low level of business education
5 7.94
Lack of experience 6 9.52Poor health 4 6.35Lack of management ability
3 4.76
Other factors 2 3.18Total respondents 63 100.00
Table 1.1
Sabir.B (2000:pg:44) put forward the following explanation
for the table.
It is noteworthy that almost 24% of our sampled
entrepreneurs indicated lack of business connection as their
39
number one cause of business failure. It is not dear from the
conclusion whether lack of business connection signifies
inability on the part of the particular entrepreneur to foster
fruitful relationships or whether some non- business
considerations predominate in the selection and
maintenance of would be customers. When it is noted that
almost 16% of the respondents also ascribe the cause of
their business failure to luck, while some people interviewed
in Nigeria especially in the retailing, wholesaling, distribution
and contracting sector is more of who you know, to what
party you belong and from what state you come from, rather
than whether that you perform effectively.
The result also reveal that over 19% of our sample agreed
that lack of money was the primary cause of their failure
though experience has shown that understanding how to use
money your own and that which you can borrow is key
function for success.
The level of ignorance of some entrepreneurs in record
keeping and financial management is appealing. Many of
40
them cannot or do not want to employ the services of
qualified accounts.
The result is that many businesses operate in confusion,
unable to differentiate between periodic gains and loses.
Profit tend to be overstated most of the time, and personal
expenses often are not distinguishable from business
expenses.
In the investigation about 10% confessed their lack of prior
business experience constitute their main worry. To know
the trick and the short cuts in business practices, there is no
alternative to experience.
Surprisingly, even some cases even fatal to their businesses.
Being in business is plain handiwork demanding full
commitment and diligence.
It is revealing and interesting to note that under factors
responsible for success, management ability was rated
first(by 22% of respondents) followed by experience (10%).
Government support and hand work comes closely after
41
experience(over 14%) to bracket the third rating. The fifth
factor in the list of priority was luck. It is significant that
almost 13% of sampled respondents mentioned luck as the
cause of their success. However only 6.35% mentioned their
connection with influential people.
When a business fails, the owner simply stops functioning.
This is true especially since there is no legal requirement
enforcing the registration of failure. Only publicly quoted
companies have to give notice of the intention to wind up.
Chioma. O.C a professional in (2005 on our guest program)
observes the rate of business discontinuance in Nigeria
believes that a greater number of people who enter the
business that a greater number of people who enter the
business world in Nigeria every year fail than succeed. Table
1.1, despite their limited sample provides an inside to the
pattern of this trend.
(c) FINANCE CONSTRAINTS
42
Finance is the backbone of any entity and where this is
lacking or inadequate the entity will lack enough finance to
run its activities properly, also it will not be able to increase
it’s working capital and this could force it into pre-mature
liquidation.
d. LACK OF GOOD MANAGEMENT
Cole G.A. (2003,pg 67) “management theory and practice”
put forward the fact that lack of good management is
another prominent factors which affects business
organizations in the sphere of appointing managers of the
firm. The appointment of these to run the affair of the entity
should be base on the number of shares held and proves
ability to manage the entity and not on the bases of
familiarity. Influence, recognition e.t.c. A director should be
able to plan and control the entity effectively and where this
is lacking then, the entity is due for main collapse.
e. INABILITY TO KEEP BOOKS OF ACCOUNT
Kootz.H.Whehrich .H. (2003) “management 12th edition
postulates inability to keep books of account this will
definitely have an effect on the business especially where
43
the volume of transaction is very large. If the firm does not
keep proper book of account it will not be able to ascertain
whether the business has made a profit or loss in a particular
year. All transaction should be recorded on a daily basis and
on double principle.
f. EMBEZZLEMENT OF FUNDS
Chester.B.et al(1994,pg :153) “Applied Management”
explains that it is a situation where funds of the company
will be greatly reduced and this affects other areas where
finance is urgently needed and this could lead to liquidation
of the firm.
g. LACK/ SHORTAGE OF RAW MATERIALS
Ndagi J.E. (1994, pg: 33) “essentials of research
methodology” observed that raw materials sourcing can
make or mar any company, in that without it the company
can not continue to operate, the absence of which paralyses
the company, because it is a basic requirement
44
REFERENCES
1. Allsopp Micheal.J (1999) Survival in Business London books ltd pg 11-152. Anyanwu J C (1990) Averting bank failures in the
business times pg 133. Chester. B. et al (1999) Applied management pg :153 – 222
4. Cole G.A (2000) management theory and practice Elst publishing pg 67
5. Chioma. O.C(2005) Our guest program. October.6. Frezer.J (1990) The management of business finance London pitman publishing ltd, p.49-537. Hornby A.S (2002) Oxford Advance learners dictionary of current English Oxford university press pg 1148. Ibadan press (2001) National Development plan vol.1, pg 353 9. Kootz.H.Whehrich.H (2003) Management 12th edition – Mcgraw Hill publishers, New York 10. Kotler & Armstong. G (2002) Principles of marketing Eastern co Edition Publishers Russie, pg 311. Ndagi J.C (2003) Essentials of research Methodology for Nigeria education –university press,
Ibadan Nigeria.12. Olokoyo.S. (2000) Managing your small scale Enterprises successfully. pg 5-13
13. Sabir. B. (2000) Entrepreneurship in Nigeria Jinjiri
publishers, pg 44
45
CHAPTER THREE
RESEARCH METHODOLOGY
3.0 INTRODUCTION
This chapter explains the various method used by the
researcher in collecting information necessary for the
validation of the findings in this research study.
Data collection is an important aspect of a research project
work. The research type employ in determining this research
work is descriptive. This is concern with the collection of
data for the purpose of describing and interpreting existing
conditions, prevailing practices on going process e.t.c.
The study is mainly based on data and information sourced
through preliminary survey, investigation, interviews and
questionnaires, the research observes the case study and
attempts to learn about the operations of the printing press.
Preliminary survey compared with observation fields a
broader range of information are effective for a greater
number of the research problem.
46
3.1 RESEARCH DESIGN
The method of data collection for this project write-up is both
primary and secondary
i. PRIMARY DATA
The primary data used in this work is through survey and
empirical method. The survey method was used specifically
because it is convenient and efficient investigative tool in a
realistic settings while employing relevant variables and use
of multi- variant statistics to analyze the data. Especially it
sought for information from Faith printing press and other
printing ventures around. The research conducted a
personal interview with some executive and staff of Faith
printing press.
ii. SECONDARY DATA
The secondary data collected for this project work was the
information obtained from some relevant textbooks
pamphlets of commerce ministries newspapers. Relevant
textbooks where intensively used by the researcher in the
course of this project, besides, the information gathered
47
from the organization and some relevant small-scale
ventures around Uyo, aided the researches substantially in
his conclusion and recommendations.
3.2 POPULATION SAMPLE SIZE OF THE STUDY
The population of this study consist of two branches of Faith
printing press at Uyo and Abuja. More attention is paid to the
branch in Uyo with a population sample of twelve (12)
workers out of a total of forty-three (43) therefore sampling
is based on Uyo branch as a chosen sample and study.
3.3 SAMPLING TECHNIQUES USED
The research decided to use simply random sampling, which
is a “method of drawing a proportion” (sampling) of a
population so that each member of the population has equal
chance of being selected. The researcher also employ the
use of convenience sampling as the technique used for the
data collection because it is unbiased and convenience to
the researchers and no member of the population has more
chance of being selected than the other.
48
3.4 INSTRUMENT USED IN DATA COLLECTION
Questionnaire was the instrument used in the data collection
by the researcher, which contains 16 questions written in
simple English for the easy understanding of respondents.
Alternative answers were provided for each question and few
cases, spaces were also provided for respondents.
3.5 PROCEDURES FOR THE ADMINISTRATION OF THE
INSTRUMENT
The two procedures which the researchers use was primary
and secondary sources of data collection for the study:
The primary sources of data is questionnaire and journals,
newspapers, and discussions with colleagues.
The secondary sources of data used include textbooks,
journals, dictionary etc.
49
Details of the administration of the questionnaire are shown
below.
Respondents Number of questionnaire administered
Number of questionnaire returned
Percentage of response %
Top management
1 1 25
Senior staff 3 3 8.2Junior staff 8 8 66.8Total 12 12 100
3.6 STATISTICAL TECHNIQUES USED
The data collected were tabulated and analyzed using
enumeration statistics, it involves the use of percentage
ratios and averages. The procedures enumerated were used
to ensure the validity and reliability of the data collected and
the researchers also make use chi-square method to show
the hypothesis.
50
CHAPTER FOURPRESENTATION AND ANALYSIS OF DATA
4.0 INTRODUCTION
The sample size of this research is twelve (12) and 12
questionnaires were administered, out of which all were
returned. The respondents were made up of 7 males
representing 58.3% and 5 females representing 41.7%.
Majority of the respondents fall within the age group of 18-
25 years representing 75% of the total sample and the
remaining 25% fall within the age of 26-45 years
respectively.
Data on their respective positions in the company shows
10% of the respondents are the top management, 20% as
line managers and another 20% as supervisors while the
bulk of 50% are lower level/junior workers.
TABLE 1Responses Frequency PercentageManaging director 1 10Manager 3 20Supervisor 3 20Junior staff 7 50Total 12 100
51
Source: questionnaire administered
It is clear from the above table that 50% of the respondents
are junior workers, while 10% represent the top
management level, 40% representing six of the respondents
account for the manager and supervisors. This also shows
that about 70% of the workers fall under workers category,
since even the supervisors will be supervising and rendering
touches here and there.
For how long have they been working in the company, shows
their responses in the following data
TABLE 2
Responses Frequency Percentage1-5yrs 3 256-10yrs 4 33.311 and above 5 41.7Total 12 100
Source: questionnaire administered
It is clear from the above table that 75 respondents have
being with the company for about 6-11 years while three of
the respondents representing 25% total sample have been
with the press for just 1-5 years. This shows that the majority
52
of staffs have stayed with the press for a long period and this
will naturally make them see it as part of their lives and they
may not be in support of either new comers and fresh brains.
TABLE 3RESPONDENTS
1-5 0% 6-10 % 11-15 % 16-20 %
Top management
------ ----- ----- ----- 1 8% ----- -----
Senior staff ------ ---- ----- 8% 2 17% ----- -----Junior staff ------- ----- ----- ----- 3 67% ----- -----Total ------- ----- 1 11 92% -----
When the question on the company’s staff strength asked,
the respondents claim that it is 5 or so while 1 of the
respondent felt that it’s about 6-10 staffs while eleven (11)
of the respondents representing about 92% indicated that
the staff strength is about (11) eleven to fifteen and finally
non of the respondents indicated the range of 16-20 staff
strength.
TABLE 4On how many of the staff are either skilled or unskilled.
RESPONSES Frequency PercentageSkilled 4 33.3Un skilled 8 66.7Total 12 100
Source – questionnaire administered.
53
From the table above, it shows that 8 of the 12 respondents
representing 66.7% are unskilled staff, while 4 of the 12
respondents representing 33.3% indicate the number of the
skilled staffs. What the company needs is to the skilled
workers.
TABLE 5 How many of your staff are educationally qualified in?Responses Frequency PercentagePrinting technology 4 33.3Business management 6 50Other fields of study 2 16.7Total 12 100Source- questionnaire administered
From the above table, it shows that the only 4 of the
respondent representing 33.3% of the sample, claim that the
company has staff qualified in printing technology, while
50% of respondent claimed such staffs are qualified in
business management while 16.7% a test to the fact that the
company also has staffs qualified in other areas. This shows
that the company should recruit more staffs that are well
qualified in printing technology, this is for the fact that such
steps will help in fast turning the companies activities the
54
printing quality will increase in line with modern work, there
will also be on time finishing of jobs. The 16.7% of other
should be increase to accommodate accountants and
mechanical engineers.
TABLE 6How would you rate the company’s annual turnover?RESPONSES Frequency PercentageHigh ------ ------Moderate/ median 9 67.0%Low 3 33.0% Total 12 100 Sources –Questionnaire administered
From the above table it shows that 67% of respondent claimed
that the company’s annual turnover has been moderate while
33.3% claim that there has being low turnover from the
responses it suggest that the company’s turn out has never
being high, because there was not a single respondent claiming
such. Therefore the company will have to find ways to increase
turnover to avoid bankruptcy or failure.
TABLE 7On the question which says that in your own opinion/ views what is your company’s production capacity.Responses Frequency PercentageLarge scale capacity
3 25
Small scale 3 25
55
production capacityModerate Capacity 6 50Total 12 100%Source: - Questionnaire administered
From the above table, it can be seen that 50% of the
respondents claimed that the company has the production
capacity of moderacy. While 25% representing 3 agreed that
the company’s production capacity is large-scale production.
25 % also agreed that the company production capacity is
small scale. This means that the company will have to increase
production to at least 75% large-scale production to be able to
stay top in the market.
TABLE 8
Profit maximization is every organization’s goal in what
ways do Faith printing press achieve this goal?
Responses Frequency PercentageQuality production 4 33.4%On time delivery/deadline
1 38.5
Quality consideration
6 50
Others 1 8.3Total 12 100
Source – Questionnaire administered
56
From table 8 the conclusion is that quantity production is a
top priority in Faith, which must be affecting it because
quality production is lacking behind, i e the company prefer
to mass produce than to consider quality in such production,
while quality is what they need to make a name. 8.3% of the
respondents feels that the company delivers on time which
is very small a time they ever meet such an objective, which
is suppose to be taken seriously.
TABLE 9Has business patronage been good so far?
Responses Frequency PercentageCertainly 3 25Mildly 5 41.5Not good 4 33.3Total 12 100Source:-Questionnaire administered
It is clear from the above table that 41.7 of the respondents
feels that business has not been that good but manageable.
25 % of respondents feels that the patronage has certainly
been ok, while 33.3% of respondents representing 4 staffs
claims that patronage needs a revival before it will finally
slumped.
TABLE 10
57
On the question of what major steps has been taken to increase patronage?. The following data was obtained and tabulated.
Responses Frequency Percentage
Advert placement 3 16.7Increase /easy communication 1 8.3Accessible road net work 8 75Total 12 100
Source:-Questionnaire administered
From the table above the result of the respondents shows
that 75% representing 8 all agree that road net work is to be
addressed if the company seek to increase patronage i.e the
company lack motorable road to attack customers or even
the lack of it is scaring away customers, while 16.7% of
respondents representing 3 feels that advert placement will
definitely increase patronage. The remaining 8.3% claims
that to increase patronage the company needs to
communicate more with the outside world.
TABLE 11Are the machineries and equipments used for production purposes up-to-date.
Responses Frequency PercentageYes 4 33.3No 5 50Not all of it 3 16.7Total 12 100
58
Source: questionnaire administered
The table above shows that 33.3% of the respondents all
agree that the machineries and equipment used by the
company are obsolete while 50% of the respondents feel
that the equipments are up to date. 16.7% representing 3
respondents claim that not all of it are up - to – date or in
good shape. This shows that the company will have to
update or even replace its machineries to be able to increase
production.
59
TABLE 12How does the company source for its capital?
Responses Frequency PercentageBank loans 4 33.3Family sources - -Personal saving 8 66.7Total 12 100
Source: questionnaire
From the table above it can be seen that respondents
representing 66.7% claim that the company’s source of
capital is from personal savings, while 33.3% respondents
representing 4 claim that the company’s source of capital is
from bank loans obtained by the company, maybe what the
company needs is that it should seek for more of the bank
loans so as to replace its obsolete machines, repair the road
which will in turn bring about more patronage and help in
the company to stay in business.
TABLE 13The relationship between the staff and management can best be described as?
Responses Frequency PercentageCordial 9 67Stable 2 20Unstable 1 1.3Total 100
Source: questionnaire administered
60
The table shows that 67% of the respondents claims that the
staff and management relationship has been cordial, while
20% feels that its only been stable and respondents 1.3%
claims that its unstable. What the company needs is that
those 1.3 that felt their working relationship has being
unstable should brought on board so as to discourage any
disaffection among the company workers.
TABLE 14In what ways has the company tried to motivate its staff.
Responses Frequency Percentage
Over-time payments 5 41.6Free health care provision 4 33.4Affordable education for dependents
- -
Gifts to staff during `ceremonies
3 25
Total 12 100Source: questionnaire administered
From the above table 41.6% of respondents representing 5
claims that the company’s motivational tool as been the
payment of over-times. While 33.4% of the respondents
claims that the company has been giving/providing them
with free health care to motivate them and 25% claims that
the company has made free gifts available for everyone
61
during celebrations/ceremonies it also shows that the
company has never made any arrangement for affordable
education of their dependents. The company needs to
increase the medical care been given as at now, because the
health of the workers definitely means fast and efficient job,
while bad health condition means less production and less
turnover. The company may also look in the possibility of
providing affordable education or other alternative
arrangement.
TABLE 15It was asked that what are the strategies employed to provide stable power supply? The responses thus:
Responses Frequency Percentage %Diesel generator 3 25Petrol generator 1 8.2Electricity 8 66.8Total 12 100
Source: questionnaire administered
From the above table it can be seen that 25% of the
respondents represent 3 claims that diesel generator is the
strategy the company has put in-place to for tale power
failure. 82% of the respondents disagree and said petrol
62
generator is what the company use sustain power, while
66.8% claims that all they had is electricity power supply,
which they so much relay on, to which we all know will not
favour any form of business. The company will have to weigh
between the use of diesel and petrol type of generator,
compare price, affordability and availability.
TABLE 16
Did you think that Faith printing has the following
business qualities?
Responses Respondents Frequency
Percentage
Good management Junior staffs 8 66.8Efficient supervisors Top
management1 8.2
Capital strength Senior staff 3 25Total All 12 100
Source: questionnaire administered
From the above table it can be seen that 66.8% of the
respondents who are junior staff claim that the management
team of Faith is nothing to write home about, while 25% of
respondents representing the senior staff claim that Faith
lacks capital and top management with 8.2% claims that the
63
problem is that Faith printing press lack sufficient
supervisors. What need to be done is co-operation instead of
pointing accusing fingers at each other.
64
4.1 TEST OF HYPOTHESIS
Testing of hypothesis refers to the testing or trying to draw
a conclusion about the hypothesis stated earlier on or put
forward in chapter one. It is however important to note that
any conclusion reached at this stage is strictly based on data
collection and analysis in the research work with the staff of
the case study. In chapter one tentative statement were
drawn to serve as a guide to the conduct of this research
work. These hypotheses therefore are to be tested as
against the data collected and see whether they can be
validated or otherwise.
a. First hypothesis, which states that “efficient
management of resources could have prevented failure
of printing press”.
HYPOTHESIS 1
H1: In efficient management of resources could not lead to
failure of Faith press.
H0: Inefficient management of resources could lead to
failure of Faith printing press.
65
In testing the validity of the statement can be analysed from
the following perspective of respondents in table 16 where
75% of the respondents agree that inefficiency and lack of
good management and inefficient supervising leads to
failure of Faith printing press. The hypothesis will be tested
using chi-square (2) testing 95% confidence level i.e.
assume it to be 95% accurate with 5% risk of error.
4.2 TEST OF HYPOTHESIS OBSERVED AND EXPECTED
FREQUENCY TABLE BASED ON TABLE SIXTEEN
Responses Manageme
nt
Staff Total
row
Good management 19 23 41
Efficient supervisor 7 5 12
Inefficient resource 0 3 3
Capital strength 5 21 26
Column total 31 52 83
Source: survey data
The expected frequency are observed using the formula
Row total x Column total Total observed
66
The level of confidence x=0.05
Degree of frequency df =(r-1) (c-1)(4-1)(2-1)=2
Testing statistics= 2 = (0-e) 2 E
Where 0= observed frequency
E=expected frequency
2= chi-square
Decision rule = you can accept H0 if your calculated value2 is
less than 2 value in the table i.e. accept H0 if 2<7.81
Computation
0 E 0-E (0-E) (0-E) 2 E
19 15.3 3.7 13.69 0.89
7 4.5 2.5 6.25 1.39
0 1.1 -1.1 -1.21 -1.1
5 7.8 -2.8 -7.84 1.01
23 14.4 8.6 73.96 5.14
5 3.1 1.9 3.61 1.16
3 0 3 9 9
21 13.2 7.8 60.84 4.61
Y2=20.08
67
4.3 CONCLUSION:
Since the calculated value of 2 is greater than the table
value (7.81), we therefore reject H0 and accept H1 and
conclude that efficient management of resources could have
prevented failure of Faith printing press.
Therefore efficient management of resources contributed in a
meaningful way of managing of Faith printing press.
68
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSIONS &
RECOMMENDATIONS
5.0 INTRODUCTION
From chapter four, the result are presented in this chapter
with variable conclusions drawn from the research findings
and appropriate recommendations for the improvement of
business and also providing possible solutions that will avert
business failures.
5.1 SUMMARY OF MAJOR FINDINGS
From chapter four, the following are the findings that are
related to the hypothesis of the research work.
From table iv it was found out that the company is largely
made up of unskilled staff (66.7%) as a result there is a poor
management. Also table 5 reaffirmed that only 50% of the
staffs are educationally sound in business management
rather printing technology.
69
The respondent in table 12 indicate the need for further
capital to implement its operations.
In table 16, the respondents accounting for about 66.8 felt
that the company in need of good management finally in
table 15 the respondent appear to all agreed that the
company relay much on electricity which we all know is
epileptic. The company also used generator to combat
electricity failure, which is 25% and inadequate and sub-
standard to implement the companies line of operations.
5.2 CONCLUSIONS
This project work was carried out to know the problems of
business failure and possible solutions with part reference to
Faith printing press Uyo.
The method used in collecting questionnaires were analysed
in the forth chapter and hypothesis testing was also made in
the same chapter and conclusion made also.
5.3 RECOMMENDATIONS
70
This aspect of project deals with the problematic areas
highlighted and brought to focus during this study. It is
anticipated that areas of weakness will be improved upon if
the recommendations listed below are fully implemented:-
1. It is recommended that efforts should be made to
employ educationally sound staffs in printing
technology to ensure efficiency and effectiveness in her
operations.
2. Since the analysis also shows that poor infrastructure is
contributing to the company’s failure, the company
should find ways of repairing the road or notifying the
appropriate authorities concern to come and see to the
matter.
3. Retained profits and other sources of funds should be
devised by the company to fund it’s operations.
4. Highly modernized diesel generator should be put in
place to prevent further power failure.
71
BIBLIOGRAPHY
ALLSOPP M. J(1999) Survival in Business London books L T D
London.
APPLEBY .B.C (1981) Modern Business Administration Pitman
publishing company ltd. London.
JAMES .J.C (1999) Marketing Channels (2 nd edition)
Petroleum publishing company
Oklahomu.
PIGORS .P et al (2002) Personal Administration. A point of
view and a method Mcgraw hill, New
York,
PETER P. B (2000) Management of Small Business. Harpen
and bow press New York,
WORTHINGTON et all(2002) Business Environment Pitman
publishing company ltd London.
72
73