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.

Transferability and Universality of Management

They are different views on management and whether it is a universal process or not. Those who argue for management as a universal process believe that management is a skill having fundamental principles with universal characteristics. Which means it enables managers to adequately and successfully apply his knowledge to a variety of industries.

In 1967 Drucker argued against this,he believed that management skill and experience are specific to an industry and as such cannot be applied to running of different institutions,as they have different goals or objectives underlying their existence.Dale was in support of drucker's view but considered the idea of universality as implying that management is a theory of universal principles applicable in every field. He does not believe that any one person can hold administrative capability in all fields,for example being a good administrator simultaneously in academics,business,millitary or religious concerns as it is believed that the underlying philosophy is so varied in nature and it is unfeasible for one person to know too much.

To a great extent,management principles are the same everywhere.However,their application will depend on the particular environment. Which means that for effective and efficient management,the principles must be modified to suit the particular environment.Thus environment must be considered in application of fundamental principles of management.

In summary,management principles are generic, i.e not specific or relating to a class or group of things.Management principles are generally applied rather than specific too a type of firm or organization. However it can be deemed universal only if managers have become familiar with the specific situation in which it is applied.

Similarly,comparative managers have different views and opinions as to whether management is transferable or not.In the scientific school of thought,scholars believe that the organization are faced with problems of scarcity of resources and must allocate the available men,machines,materials,time and money to varying needs and aims. In this school of though management is believed to be transferable because the problems of the organizations can only be achieved by trained managers,and since they were trained by someone that means that the management skill and knowledge where transfered in the process.

Scholars of the art school of thought believe that management skills cannot be transferred,since effective management depends on the personal characteristics of individuals in management positions.it is believed that management are born and not made,and personal characteristics cannot be easily transferred.

Drucker (2001) resolves this controversy by commenting that transferability of management depends on the aspect of management skill.According to him,art aspect of management cannot be transferred whereas,scientific aspect can be transferred.

 Universality
 There are evidence that the fundamentals of management are universal:
Basic principles about people's behaviour in a specific setting will remain the same irrespective of the environment

Humans called principles fact that different managers from different environment apply to their different environments

A manager can also apply his skill and knowledge in a wide variety of industries and services

There is evidence that great management workers like peter drucker, henri fayol, and f.w taylor are acknowledged all over the world for their contribution to the development of the field of management.

Management books written by experts from different parts of the world are identical in their discussion of management theory and principles.



Transferability
Theories developed in europe, America and asia are applied to third world countries

Management books written by authors in the context of their own environment are practicable in other environments too.

In the case of multinationals, managers might be moved from one location to another, but they take with them their skills and knowledge and apply them effectively.

Therefore,management is both universal and transferable, but universality and transferability of management form part of the sources of challenges that managers face.

THE HAWTHORNE STUDIES

A group of researchers and professors from the faculty of Business Administration,harvard University in Philadelphia U.S.A were invited to carry out studies at chicago hawthorne plant of western Electric.The experiments were in four phases and the aims of the experiments are as follows:
1. Determine the effects of changes in illumination on productivity.
2. Determine the effects of changes in hours and other working conditions
3. Conducting a plant wide interview programme to determine workers attitudes and sentiments.
4. Determination and analysis of social organisation and analysis of socal organisation at work.

THE HAWTHORNE STUDIES

A group of researchers and professors from the faculty of Business Administration,harvard University in Philadelphia U.S.A were invited to carry out studies at chicago hawthorne plant of western Electric.The experiments were in four phases and the aims of the experiments are as follows:
1. Determine the effects of changes in illumination on productivity.
2. Determine the effects of changes in hours and other working conditions
3. Conducting a plant wide interview programme to determine workers attitudes and sentiments.
4. Determination and analysis of social organisation and analysis of socal organisation at work.

THE HAWTHORNE STUDIES

A group of researchers and professors from the faculty of Business Administration,harvard University in Philadelphia U.S.A were invited to carry out studies at chicago hawthorne plant of western Electric.The experiments were in four phases and the aims of the experiments are as follows:
1. Determine the effects of changes in illumination on productivity.
2. Determine the effects of changes in hours and other working conditions
3. Conducting a plant wide interview programme to determine workers attitudes and sentiments.
4. Determination and analysis of social organisation and analysis of socal organisation at work.

Managers

Who are managers? Am sure as a worker or as a client of an organization, you would have come across different types of managers, such as the human resource manager, finance manager, business manager, principal manager, senior manager and so on.

A lay man's definition of a manager would be ''someone in an organization who bosses people around, and told people within the organization what to do and how to do it''. Now it isn't quite that simple a definition anymore. This is because the changing nature of the work place and business environment have imbibed some managerial ability or activity in job roles and job functions.
In the present day now, managerial responsibilities are shared by managers and team members. So how then do we define a manager?.

Managers

Who are managers? Am sure as a worker or as a client of an organization, you would have come across different types of managers, such as the human resource manager, finance manager, business manager, principal manager, senior manager and so on.

A lay man's definition of a manager would be ''someone in an organization who bosses people around, and told people within the organization what to do and how to do it''. Now it isn't quite that simple a definition anymore. This is because the changing nature of the work place and business environment have imbibed some managerial ability or activity in job roles and job functions.
In the present day now, managerial responsibilities are shared by managers and team members. So how then do we define a manager?.