HOW INDIGENOUS NIGERIAN FIRMS CAN ACHIEVE COMPETITIVE ADVANTAGE OVER MULTINATIONAL BUSINESSES

HOW INDIGENOUS NIGERIAN FIRMS CAN ACHIEVE COMPETITIVE ADVANTAGE OVER MULTINATIONAL BUSINESSES –CASE STUDY OF CONSTRUCTION INDUSTRY.

CHAPTER 1


INTRODUCTION


Indigenous Nigerian firms are the firms or companies which belong to Nigerians. They are companies which have been established in Nigeria or which originated in Nigeria and are owned by Nigerians themselves and not imported into Nigeria from somewhere else.


Multinational businesses on the other hand are business enterprises operating in several nations or existing in many countries and which are involved in world market.


A company has competitive advantage whenever it has an edge over rivals in attracting customers and defending itself against competitive forces. Firms in an industry tend to compete among themselves with their respective brands of a product(s) in order to gain competitive edge (Bovee and Thill, 1992, Stokes, 2000, Adindu, 2005, Stigler, 2006, Appel, 2009). The sole aim of wanting to gain higher hands in market places over other producers of similar products is to earn and control higher market share of the product (Grant, 1995; Ferrier, et’al, 1999, Dube and Renafghan, 1999, and Kin and Oh, 2004). This, the authors referred to as competitive advantage. Competitive advantage is an important concept of strategic management. It defines the ‘uniqueness' of an organization vis-à-vis its competitors.






There are many routes to competitive advantage, but the most basic is to provide buyers with what they perceive as superior value- a good product at a lower price, a superior product that is worth paying more for,or a best value offering that represents an attractive combination of price, features, quality, service and other attributes buyers find attractive.


















CHAPTER 2


HOW INDIGENOUS NIGERIAN FIRMS CAN ACHIEVE COMPETITIVE ADVANTAGE OVER THE MULTINATIONAL COMPANIES


Indigenous Nigerian firms can only achieve or defend competitive advantage over their multinational counterparts through (1) Government support and (2) Indigenous Company’s use of competitive strategies.


(1) GOVERNMENT SUPPORT


Without deliberate policies from Government it will be difficult for indigenous Nigerian firms to effectively compete with multinationals. In order to give them edge over multinational companies, Government support for indigenous firms may be in form of finance, attitude controls, policies, institution of working laws etc. This is necessary because many of these multinationals/ foreign companies in Nigeria are supported by their home governments.






In the case of Nigerian contractors, two important areas where the Nigerian Government can support them are through: increased patronage as opined by (Ogbebor, 2002; Akintunde, 2003 and Ogunlana, 2010) and sufficient commitment to policies that would promote the indigenous Nigerian contractor base (Akintunde, 1991). Increased patronage from Government and sufficient commitment of Government to policies that would promote indigenous contractors would increase the competence and boost the experience of indigenous contractors. (Somolu, 2003)






It is on record that 96% of the Nigerian Construction Industry is dominated by foreign contractors on the grounds that indigenous contractors cannot be entrusted with complex project because they are incompetent. (Ogbebor,2002) Increased Patronage from Government and Sufficient commitment of Government to practical policies that would promote indigenous contractors would:


Increase competence, boost experience, reduce Insolvency, reduce Dependence on foreign contractors, reduce the drain on the economy, improve rating among committee of Nations, boost National Pride, bring about increased ability to support research and reduce unemployment






















The Framework for Government’s Intervention






i. The government should nurture her contractors by promoting the development and use of indigenous technologies and resources so that indigenous contractors can acquire experience and become competent.


ii. The House of Representatives should expedite action on the Nigerian Indigenous Construction Company (motivation and protection) Bill 2009 which is currently at the Committee stage at the House of Representatives.


iii. When the Bill is passed into law, the Government should appoint a team of construction professionals who would be charged with the responsibility of enforcing the Bill contents because one of the greatest problems with the implementation of laws and policies in Nigeria has been the lack of enforcement in terms of provisions for penalties for violations.


iv. Hence forth, the government should tighten up its International Joint Venture policies. It should also appoint Economists and Construction professionals in the drafting of joint venture policies relating to the Construction Industry. These people should also be charged with the responsibility of monitoring International Joint Venture programmes especially in the area of transfer of relevant construction and materials technology.










(2) USE OF COMPETITIVE STRATEGY






An organization’s competitive strategy is the roadmap towards gaining competitive advantage. A company’s competitive strategy consists of the business approaches and initiatives it undertakes to attract customers and fulfil their expectations, to withstand competitive pressures and to strengthen its market position. Competitive strategy is the management’s action plan for competing successfully and providing superior value to customers. The core of a company’s competitive strategy consists of its internal initiatives to deliver superior value to customers. Competitive strategy is about being different; it means deliberately choosing to perform activities differently.










The Framework for Indigenous Nigerian Firms (Contractors’) Intervention





Five distinct competitive strategy approaches exist for Indigenous Nigerian Firms (contractors) to use to achieve competitive advantage over the multinational companies. These are:


1. A low-cost provider strategy






This involves appealing to a broad spectrum of customers based on being the overall low-cost provider of a product or service.






2. A broad differentiation strategy






This means seeking to differentiate the company’s product offering from rivals products in ways that will appeal to broad spectrum of buyers






3. A best-cost provider strategy






Here, customers are given more value for the money by incorporating good-to-excellent product attributes at a lower cost than rivals: the target is to have the lowest (best) costs and prices compared to rivals offering products with comparable upscale attributes.






4. A focused (or market niche) strategy based on lower cost






This requires concentrating on a narrow buyer segment and outcompeting rivals by serving niche members at a lower cost than rivals.






5. A focused (or market niche) strategy based on differentiation






This also requires concentrating on a narrow buyer segment and outcompeting rivals by offering niche members customized attributes that meet their tastes and requirements better than rivals products.






In addition, the following steps may be taken:





i. Indigenous Nigerian Firms (Contractors) should network with other R&D centres worldwide in order to develop competitive knowledge and maintain updates on new discoveries and inventions.


ii. Indigenous Nigerian Firms (Contractors) should consciously set money aside for R&D activities.


iii. Indigenous Nigerian Firms (Contractors) should intensify their use of ICT so as to keep abreast of latest innovations in Construction.


















CHAPTER 3






CONCLUSION






At the company level, the following actions can be taken to enhance the competitiveness of Nigerian firms in the international market and Nigeria’s national competitive advantage.






i) Nigerian companies must recognize the central role of innovation and the uncomfortable truth that innovation grows out of pressure and challenge. A company should seek out pressure and challenge. Nigerian firms as apart of their strategy should take advantage of the home front to create the impetus or force themselves to become innovative. They can sell to the most sophisticated and demanding buyers and channels; seek out those buyers with the most difficult needs; establish quality standards and performance levels that exceed the toughest regulatory hurdles or product standards; source from the most advanced suppliers and continuously upgrade the skills, attitudes and productivity of their staff.


ii) Nigerian companies should seek out the most capable competitors as benchmarks and motivators. They should respect and study competitors. They should seek the challenges coming from competitors as an opportunity to improve and upgrade their own products, processes and management practices. In other words they should welcome domestic rivalry and see their competitors as their friends.








































References


Akintunde, Nigerian Construction Industry: Past, Present, Problems and Prospects(p.56-68).Ibadan: Ibadan University Printery.






Akintunde, I. (1991).National Construction Policy. In I., Akintunde, Nigerian Construction Industry: Past, Present, Problems and Prospects(p.264-271).Ibadan: Ibadan University Printery.






Akintunde, I. (1994).Mileposts, Offsets and Benchmarks. In I., Akintunde, Nigerian Construction Industry: Past, Present, Problems and Prospects(p.121-140).Ibadan: Ibadan University Printery.






Akintunde, I. (2003). In I., Akintunde, Nigerian Construction Industry: Past, Present, Problems and Prospects: Ibadan University Printery.






Akintunde, Nigerian Construction Industry: Past, Present, Problems and Prospects(p.17-55).Ibadan: Ibadan University Printery.






Akintunde, Nigerian Construction Industry: Past, Present, Problems and Prospects(p.17-55).Ibadan: Ibadan University Printery.






Akintunde, Nigerian Construction Industry: Past, Present, Problems and Prospects(p.70-98).Ibadan: Ibadan University Printery.






Ogbebor, P.O. (2002). Enhancing Indigenous Construction Industry as a National Goal in Nigerian Development. In I., Akintunde, Nigerian Construction Industry: Past, Present, Problems and Prospects(p.230-239).Ibadan: Ibadan University Printery.






Ogunlana, S. (2010) .Sustaining the 20:20 vision through Construction: A Stakeholder Participatory Approach. Distinguished Guest Lecture Series. University of Lagos.






Somolu, A.F.(2003). In I., Akintunde, Nigerian Construction Industry: Past, Present, Problems and Prospects(p.vi-vii).Ibadan: Ibadan University Printery.


Thompson and Strickland, (2001-twelfth edition). Strategic Management; Concepts and cases (p149-152) McGraw-Hill Companies Printery.