Effect Of Market Understanding On The Growth And Sustainability Of Small Scale Businesses In Uyo, Akwa Ibom State

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Effect Of Market Understanding On The Growth And Sustainability Of Small Scale Businesses In Uyo, Akwa Ibom State


Chapter One


Introduction

1.1 Background Of The Study

SMEs (Small and Medium-Sized Enterprises) make up a large portion of the world’s businesses today. They account for more than half (50%) of all job openings, sales, and other economic activities. As a result, SMEs are critical tools for countries to maintain economic growth and development (Musa & Aisha, 2012; Ogujiuba, Fadila, & Stiegher, 2013,). Encouragement and development of entrepreneurship, utilization of labor-intensive technologies, reduction of unemployment, generation of quick and rapid investment returns to operators, development of both inter and intraregional linkages, and improvement of the socio-economic objectives of different economies are some of the other ways SMEs contribute to an economy. Mitchell and Reid (2000) went on to say that SMEs add value to any economy because of their flexibility, which allows them to operate in any environment. SMEs in various countries must be strengthened in order to improve these values. As a result, the sector’s shareholders, government and government agencies, as well as donor organizations, are putting more effort into developing policies, programs, and strategies that will support and promote SMEs’ activities through an integrated approach (Aris, 2017). As a result, a plethora of policies and programs have been implemented in various capacities to encourage SME operators in Nigeria. Despite these efforts, Nigerian SMEs continue to fail over time. For example, 80 percent of SMEs fail within the first two years of operation, according to statistics (Yoshikwa, 1994; Boachie-Mensah & Marfo-Yiadom, 2005 and Aris, 2017). Scholars have spent a lot of time trying to figure out why SMEs continue to fail (Watson & Everett, 1996; Etim, 2013). According to several studies, the reasons for failure fall into five categories: inability to cost their products (poor costing system), poor budgeting skills, inability to evaluate performance, inability to use decision support systems, and poor strategic management accounting skills (Wichman, 1993). Poor Management Accounting Practices (MAPs), which include costing techniques, budgeting, performance evaluation, and strategic management accounting, are another important factor (Hooper, Koga, & Goto, 1999). According to previous research, MAPs are a way for businesses to become more efficient and improve their overall performance (Ghosh & Chan, 1997). MAPs, in particular, could be useful to SMEs in terms of efficient information-processing systems for management in planning, controlling, and making decisions (Reid & Smith, 2014). Effective use of MAPs can also assist firms in remaining competitive in the market, coping with market dynamics, and improving their survival and performance (Mia & Clarke, 2009). While simply practicing MAPs may not guarantee success across all firms, failing to implement and practice them may ultimately jeopardize a firm’s performance and competitive advantage (Folk, Ray, & Eric, 2012). The use of MAPs in businesses helps to focus attention on problem areas and develop strategies to address them. These are the two most important accounting functions.


1.2 Statement Of The Problem

Despite the state government’s widespread economic reforms, small and medium-sized businesses appear to face a variety of challenges, including the difficulty of absorbing large fixed costs, the lack of economies of scale and scope as key factors of production, ineffective government monitoring mechanisms, and a lack of management knowledge According to preliminary discussions with some businesses, government-supported institutions lack formal feedback mechanisms for determining whether the assistance provided to small and medium-sized businesses is adequate and effective. Due to financial constraints, small and medium-sized businesses are unable to introduce modern equipment machinery to improve their products. Access to finance appears to have remained a major constraint for small and medium-sized businesses in Uyo LGA, and credit related to working capital is a constant source of concern for small and medium-sized businesses. Although small and medium-sized businesses appear to appeal to the majority of people, they are unable to compete with larger forms due to a lack of managerial expertise. In comparison to larger forms of business, the association provides a voice for the interests of small and medium-sized businesses. The lack of adequate power supply in Uyo LGA’s business environment is a major issue. This and other factors are to blame for the problems and poor performance of small and medium-sized businesses, which have resisted all government efforts to address them. Despite Uyo LGA’s efforts to entice foreign investors to invest in the country, the problems have kept them on the run over the years. It’s difficult to succeed in business in this climate because “the rate at which power is rationed these days can not help any businessman.” And as a result, you’ll find that your customer turnover is so low that you’re losing customers at the end of the day. The power supply isn’t exactly stellar. Here, business operations are severely hampered. At this time, the government should devote more resources to reviving the country’s business operations. Even after so-called privatization, supply has not improved, and this is killing business.


1.3 Objective Of The Study

  1. Examine the different management accounting practices employed by SMEs in Nigeria.
  2. Identify the factors that influence the application of management accounting practices in Nigeria SMEs
  3. Determine the relationship between management accounting practices application and the performance of SMEs in Nigeria

1.4 Research Questions

  1. What are the different management accounting practices employed by SMEs in Nigeria?
  2. What factors influence the application of management accounting practices in Nigeria SMEs?
  3. What is the relationship between management accounting practices application and the performance of SMEs in Nigeria?

1.5 Significance Of The Study

In terms of theory and practice, the findings of this study will be extremely important. In terms of theory, this research would contribute to the development of MAP theories in two ways. First, the study will offer practical advice on how to use MAPs most effectively. Second, the study will take a different approach than previous research on MAPs, focusing on how MAP practices affect the performance and survival of SMEs in the country. As a result, the study will be of interest to researchers and students because it will serve as a resource for those conducting similar research. It will also provide the necessary foundation for future research into accounting practices and the survival of the SME sector.


1.6 Scope Of The Study

The research focused on the effect of market understanding on the growth and sustainability of small scale businesses. Small and medium sixe businesses in Akwa Ibom, Uyo were used as case atudy.


1.7 Limitation Of Study

The scope of this project is limited to small and medium-sized businesses in the Uyo LGA, and it will focus on the government’s relationship with small and medium-sized businesses, as well as the provision of finance and managerial issues that small and medium-sized businesses face. Due to constraints such as a lack of material, a short time frame, and limited access to the selected auditing firm, the researcher finds it difficult to obtain all of the necessary and required information about the activities.


1.8 Definition Of Terms

Growth:

The process of increasing in size.

Sustainability:

The ability to be maintained at a certain rate or level.

According to the Act of 1953, (in America) a small business concern is “one which is independently and operated and not dominant in its field of operation”. That Act also authorizes the small business administration, in making a more detailed detonation to use such criteria as number of employees and sales volume.


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Effect Of Market Understanding On The Growth And Sustainability Of Small Scale Businesses In Uyo, Akwa Ibom State

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