ABSTRACT This thesis examined the effect of shared knowledge on the performance of firms in Nigeria. The objectives of the study are: (1) To determine the effect of shared knowledge on the performance of firms (2) To find out whether the contribution of shared knowledge to the performance of firms compares with national and international standards. (3) To determine the effects of knowledge learning capacity of workers on a sustainable competitive performance of the firms. (5) To ascertain the extent to which tacit knowledge helps to improve the performance of the firms. (5) To identify the principal mode of explicit knowledge that contributes to a sustained performance of the firms. (6) To investigate the extent to which knowledge based capacity is considered the most strategic resource for improving the profitability of the firms. The research design chosen in the study is a combination of a survey and oral interview. A representative sample of 504 respondents where chosen using the table of random numbers from a population of 735 respondents from Nigerian Breweries Plc., Guinness Nig. Plc. and Bendel Breweries Plc. The data presentation tools were tables. The data analyses tools were percentages Z test, Z test of population proportions and coefficient of determination. The Z test and Z test of population proportions were used to test the six hypotheses. The test-retest method of reliability and content validity were used. It was found that: (1) shared knowledge had a positive effect on the performance of the firms. (2) It was found that the contribution of shared knowledge to the performance of the firms compared favourably with national and international standards. It was also found that knowledge learning capacity of the workers had a positive effect on the sustained competitive performance of the firms. It was found that the tacit knowledge to a large extent helped to improve the performance of the firms. It was also found that combination and externalization were the principal modes of explicit knowledge that contributed to a sustained performance of the firms and lastly it was found that knowledge based capacity is considered to a large extent a strategic resource but not the most strategic resource as there were other resources such as men, materials, money time, energy, information and infrastructure. It was concluded that as shared knowledge increased, the performance of the firms also increased. It was recommended that the strategic managers of the firms studied should as a matter of policy continue to use shared knowledge as a tool for improving performance in their companies.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF STUDY
Shared knowledge and performance have been relevant in four epochs namely the era of early influences, the era of the industrial revolution, the era of scientific management movement and the modern era. Many records and ideas relating to management date from antiquity. Among these are the records of the Egyptians, the early Greeks, and the ancient Romans. In addition, there have been the experience and administrative practices of the Catholic Church, military organizations, and the cameralists of the sixteenth to the eighteenth centuries. Interpretation of early Egyptian papyri, extending as far back as 1300 B.C., indicate the recognition of the importance of organization (Koontz, O’donnel and Weirich, 2000:34).
The Industrial Revolution in Europe was the transitory phase from the manufacturing or putting-out system to the factory system. The present thesis will attempt to show that management was relevant during the three epochs of the Industrial Revolution in Europe, United States of America and Japan and so it was more of a Management Revolution than an Industrial Revolution (Berliner, 2003:5). Although Frederick Taylor, who did his work in the early years of the twentieth century, is
usually called the father of scientific management, many persons before Taylor considerable contributions to the development of management thought (Koontz, O’donnel and Weirich, 2000:34).
Knowledge management is a relatively new discipline and therefore has a short history. As a conscious discipline, it developed from the various published work of academics and pioneers such as Peter Drucker in the
1970s, Karl-Erik Sveiby in the late 1980s, and Nonaka and Takeuchi in the 1990s. It began when the concept of a “knowledge company” was introduced in published literature (Uriarte, 2008:32-38)
The 1970s
In the 1970s, there was increasing use of information and this led to an increase in the performance of the workers. Both implicit and explicit knowledge were relevant as valuable assets of organizations. Most organizations became learning organizations and emphasized the cultural dimension of managing knowledge. Management of knowledge became very relevant. Knowledge was seen as specialized information and information was seen as processed data and the output of the statistical system, the data processing system and the integrated computer system. Information became a very important resource which needed to be integrated with such other resources as the human resource, materials, money, time, energy, knowledge, and infrastructure. These resources when processed would lead to an improvement in the performance of the brewing staff as the output.
This growing recognition of the importance of organizational knowledge led to an increasing concern over how to deal with exponential increases in the amount of available knowledge and the complexity of products and processes. It was at this point that the computer technology, which in the first place contributed heavily to the great abundance of information, started to become part of the solution in a variety of ways.
Two examples of technology solutions that were available for use in early knowledge management systems can be cited.
The 1980s
Classical economic theory does not fully recognize the value of knowledge as an organizational asset. However, by the mid-1980s, the importance of knowledge as a competitive asset was already well- recognized, in particular, its expression in professional competence. Nevertheless, most organizations still did not have the strategies and methods for managing knowledge. It was during this period that Peter Drucker coined the term “knowledge worker”. He, together with other foresighted writers like Matsuda and Sveiby, wrote in-depth about the role of knowledge in organization. Thus by the late 1980s, the ideas that they had developed together with the work done in artificial intelligence and expert systems gave rise to such concepts as “knowledge acquisition”, “knowledge engineering” and “knowledge-based systems” and other computer-based ontologies. These developments gave further impetus to the growth of systems for managing knowledge.
As more thinkers and scholars publish their work, the phrase “knowledge management” formally became part of the lexicon of management. And in order to provide a technological base for managing knowledge, a consortium of U.S. companies started in 1989 the “Initiative for Managing Knowledge Assets”. As a result, numerous knowledge management related articles began appearing in journals like Sloan Management Review, Harvard Business Review, and others. Simultaneously, the first books on organizational learning and knowledge management were published, including Senge’s The Fifth Discipline and Sakaiya’s The Knowledge Value Revolution (Uriarte,
2008:32-38)
The 1990s
By 1990 a growing number of academics and consultants had started talking about knowledge management as the new business practice. At the same time, a significant number of large management consulting firms had begun in-house knowledge management activities and several well established U.S., European and Japanese firms instituted focused knowledge management programs. This came about as a result of the publication of the seminar book of Ikujiro Nonaka and Hirotaka Takeuchi (1995:198-230) titled The Knowledge Creating Company: How Japanese Companies Create the Dynamic of Innovation. And more and more articles on knowledge management began to appear in an increasing number of business journals. The agenda of many conferences also started to include knowledge management as a main item for discussion. But the introduction of knowledge management did not come until 1991 when Tom Stewart published the article “Brainpower” in Fortune magazine. This was followed by many more articles in widely read publications, most notably articles written by Nonaka, Stewart, and others. Nevertheless, business executives and professionals did not yet show widespread interest in the subject (Uriarte, 2008:32-38).
It was only in 1995 when knowledge management in its current form first received significant attention among corporations and organizations. The ability to create knowledge became a success factor that was very relevant in Japanese management. The Japanese did not have raw materials but they had the technical knowledge and other resources that were processed using machines, methods and maintenance to get an improvement in performance as their output. This led to an economic miracle. (Uriarte, 2008: 32 – 38)
By the mid -1990s, it became widely recognized that the competitive edge of some of the world’s leading companies was for the most part due to the robust knowledge assets of those companies. With this realization, the management of knowledge suddenly became a mainstream business objective. At the same time, nurturing knowledge assets such as
competencies, customer relationships and innovations became a focus of attention of many corporations. And other companies started emulating the knowledge management practices of the market leaders (Uriarte 2008,32-38)
The International Knowledge Management Network (IKMN), which started in Europe in 1989, went online in 1994. It was soon joined by the Knowledge Management Forum, based in the United States. Shortly thereafter, many other KM-related groups and publications started appearing. There was a tremendous increase in the number of knowledge management conferences and seminars as organizations focused on managing explicit and tacit knowledge and leveraging these resources to achieve competitive advantage. In the same year, IKMN published the results of a knowledge management survey conducted among European firms. In 1995 the European Community began offering funding for KM-related projects through its ESPRIT program.
By the end of the 1990s, big businesses started implementing “knowledge management solutions”. Knowledge management became a rage and came to be seen as a highly desirable alternative to the failed Total Quality Management (TQM) and business process re-engineering initiatives. As a result, knowledge management projects became big business and source of revenue for major international consulting firms such as Ernst & Young, Arthur Andersen, and Booz-Allen & Hamilton. In addition, a number of professional organizations interested in such related areas as benchmarking, best practices, risk management, and change management began exploring the relationship between knowledge management and their areas of special expertise. These included reputable organizations like the American Productivity and Quality Council and the American Society for Information Science (Uriarte,2008:32-38).
Knowledge management is popularized and has been spread across the industrial and the information research world in 2000s. Organizations
understand the significance of intellectual capital that is managed efficiently in order to improve the entire organizational performance by aligning the ability of employees in accordance with the overall business strategy. The knowledge management focuses on merging people, processes, and technology together by combining with the ability with the objective of providing corporate knowledge at an organizational standard. Knowledge management centralizes the multi-disciplined behavior for achieving organizational aspects by using the best of knowledge. Knowledge management focuses on processes that are composed of acquisition, creation, sharing and applying knowledge. Knowledge management is considered to be organizational innovation that shifts the overall business strategy and is transmitted in management practices.
Knowledge portrays a firm’s intellectual capital which is made up of experiences related to work, capability, knowledge and best practices (Nonaka, 1994:24). Today’s economy has changed into a knowledge driven economy. Organizational executives are concerned about developing strategies for knowledge creation, sharing, dissemination, and adaptation within the organization by using the ability of employees to achieve the knowledge enrichment management. That concept prioritized the effect of people and social networks on the knowledge creation process. A firm must also realize the value of cultural knowledge as it is a very sensitive subject. In today’s society, multiculturalism is widely accepted and it is important for organizations to realize that every culture does not require the same consistency or frequency of knowledge. It is more important to maintain retainability within a culture’s knowledge.
Some studies are using quantitative measures of knowledge management projects impact, like the return on investment (Anderson
2002:14). Finally, quite a few empirical studies are investigating into the causal relationships of knowledge management and/or information
technologies with performance (Nelson and Cooprider 1996: 409-429), Armistead 1999: 143-154, Chong et al 2000: 366-380).
In today’s business environment, change is constant and multi- dimensional. New competitors, new potential customers, advanced new technology, and intense global competition alter or completely modify most industries in unexpected manners. To perform excellently, organizations must use this turbulent environment as an opportunity rather than a threat. Organizations need to adapt quickly to new conditions. Knowledge sharing is considered an important factor related to the ability of both employees and organizations to respond quickly to a changing business environment. Prior studies focus only on knowledge sharing antecedents or consequences (Du, Ai & Ren, 2007:234; Hsu,
2008:48; Hsu, Ju, Yen & Chang, 2007:57; Kuo & Young, 2008:67; Law
& Ngai, 2008:86; Siemsen, Roth & Balasubramanian, 2008:45; Yang,
2007:40, 2008:8, 2009:62). Knowledge sharing has been cited as a precondition of organization competitiveness (Du et al, 2007:32; Hsu,
2008:42; Kearns & Lederer, 2000:71). In other words, the assumption here is that knowledge sharing can help organizations to outperform direct competitors. Meanwhile, Parker and Kyj (2006: 27-45) highlights the importance of revealing normally private information through the budgeting process to gain competitive advantage. Although top management believes that information technology enables knowledge sharing practices, the truth is that willingness and attitudes of individuals is the key factor (Yang, 2008: 530-543).
According to Bock & Kim (2002:14-21), knowledge sharing is considered the cornerstone of knowledge management. Also, (Inkpen 2000: 1019-
1043) asserts that: “unless individual knowledge is shared throughout an organization, the knowledge will have a limited impact on organizational effect”. Lin (2008: 1508-1521) describes this in operational terms: “the exchange of knowledge and sharing of experiences among different organizational units.”
The modern era in the study of shared knowledge and performance included the American management, the Japanese management and Nigerian management. In the case of American management, it has been backed by an economy that is very wealthy. The Ford use of modern techniques to have a mass production of cars was very spectacular. American managers do a lot of planning as the first management function but there is a lot of hurry. In the case of Japanese management, the planning is slow and thorough. The Japanese miracle is borne by the ability of the Japanese to import raw materials and manufacture and export finished manufactured goods in a lot of industries especially in electronics. Japanese management is characterized by employee longevity, culture bound management, life time employment, use of quality circles. In the case of Nigerian management, it is characterized by an impressive economic growth comparable to some countries in the Asian tigers. The Nigerian Bureau for Statistics did a rebasing to which the Gross Domestic Product growth rate between the last quarter of 2013 and the first quarter of 2014 gave a Gross Domestic Product growth rate of 7.4% making the Nigerian economy bigger than that of South Africa and the largest in Africa. But unfortunately, this economic growth is not backed by employment, poverty alleviation and change in many macro economics variables (Nigerian Bureau of Statistics, 2014:1).
1.2 PROBLEM STATEMENT
The inability to determine the impact of shared knowledge on performance leads to a difficulty for managers of manufacturing firms studied. There is a difficulty in determining the effect of shared knowledge on the performance of the manufacturing firms studied. This difficulty has led to the obstacle of the difficulty in finding out whether the contribution of shared knowledge to the performance of the manufacturing firms studied compared favourably with international standard. This led to the difficulty in determining the effect of knowledge
learning capacity of workers on a sustainable competitive performance of the manufacturing firms.
There is also the difficulty in ascertaining the extents to which tacit knowledge helps to improve the performance of the manufacturing firms studied. There is the difficulty in identifying the principal modes of explicit knowledge that contributed to a sustained performance for the manufacturing firms. It becomes difficult to investigate the extent to which knowledge base capacity is considered the most strategic resource for improving the profitability of the manufacturing firms under study. These difficulties lead to problems which lead to lack of gateways. It is these problems that this thesis attempt to address.
1.3 OBJECTIVES OF THE STUDY
The broad objective of this study is to determine the effect of shared knowledge on the performance of the brewing industry in Nigeria.
The following specific objectives have emerged:
1. To determine the extent of the effect of shared knowledge on the productivity aspect of performance of the manufacturing firms.
2. To find out whether the contribution of shared knowledge to the efficiency aspect of performance of the manufacturing firms compares favourably with international standard.
3. To determine the extent of the effect of knowledge learning capacity of workers on a sustainable competitive performance of the manufacturing firms.
4. To ascertain the extent to which tacit knowledge helps to improve the effectiveness aspect of performance of the manufacturing firms.
5. To identify the principal mode of explicit knowledge that contributes to a sustained performance of the manufacturing firms.
6. To investigate the extent to which knowledge based capacity is considered the most strategic resource for improving the profitability of the manufacturing firms.
1.8 RESEARCH QUESTIONS
This research attempts to provide answers to the following questions:
1. What is the effect of shared knowledge on the productivity aspect of performance of the manufacturing firms?
2. How does the contribution of shared knowledge to the efficiency aspect of performance of the manufacturing firms compare with international standard?
3. What is the effect of knowledge learning capacity of workers on a sustained competitive performance of the manufacturing firms?
4. What is the extent to which tacit knowledge helps to improve the effectiveness aspect of performance of the manufacturing firms?
5. What are the principal modes of shared knowledge that contributes to a sustainable performance of the manufacturing firms?
6. To what extent is knowledge based capacity considered the most strategic resource for improving the profitability of the manufacturing firms?
1.9 HYPOTHESES
Ho1: There is no positive effect of shared knowledge on the productivity aspect of performance of the manufacturing firms.
HA1: There is positive effect of shared knowledge on the productivity aspect of performance of the manufacturing firms.
Ho2: The contribution of shared knowledge to the efficiency aspect of performance of the manufacturing firm does not compare favourably with international standard.
HA2: The contribution of shared knowledge to the efficiency aspect of performance of the manufacturing firms compares favourably with international standard.
Ho3: There is no positive effect of knowledge learning capacity of workers on a sustained competitive performance of the manufacturing firms.
HA3: There is positive effect of knowledge learning capacity of workers on a sustained competitive performance of the manufacturing firms.
Ho4: Tacit knowledge to a large extent does not help to improve the effectiveness aspect of performance of the manufacturing firms.
HA4: Tacit knowledge to a large extent helps to improve the effectiveness aspect of performance of the manufacturing firms.
Ho5: Combination and externalisation are not the principal modes of shared knowledge that contribute to a sustainable performance of the manufacturing firms.
HA5: Combination and externalisation are the principal modes of shared knowledge that contribute to a sustainable performance of the manufacturing firms.
Ho6: Knowledge based capacity is not to a large extent considered the most strategic resource for improving the profitability of the manufacturing firms.
HA6: Knowledge based capacity to a large extent is considered the most strategic resource for improving the profitability of the manufacturing firms.
1.10 SIGNIFICANCE OF THE STUDY
This study is significant because it will produce information on the contribution of shared knowledge on:
1. The Shareholders and Members of the Boards of Directors of the brewing companies who formulate policies on shared knowledge and performance.
2. The Managers, Supervisors and Staff of the manufacturing firms who implement the policies that have been formulated.
3. The External Stakeholders: Contractors, Consultants, tax officials and other government officials who want to be paid their monies when they fall due.
4. Information, communication and telecommunication managers and staff: Information gathered here will guide them in their daily operations generally and marketing in particular.
5. The public at large and the present and potential customers who want the brewing firms to produce good quality goods and services.
6. Economic policy makers: Data gathered in this work will assist economic policy makers in their strategic policy making process to turn around the economy.
7. Researchers and students of Computer Science, Computer Engineering, Production Management, Brewing Science, Brewing Technology, Management and Business Administration: This work will be an epitomic of further research as well as making relevant data available for their use for further research.
1.11 SCOPE OF THE STUDY
The focus of the study is to determine the effect of shared knowledge on the performance in the brewing industry in South Western and South Southern Nigeria. The independent variables are shared knowledge, contribution of shared knowledge, knowledge learning capacity of workers, tacit knowledge, the principal mode of explicit knowledge and knowledge based capacity. The dependent variables are performance, productivity, efficiency and effectiveness of the manufacturing firms. The geographical scope is South Western Nigeria and South Southern Nigeria. The time scope is from 2010 to 2014.
1.8 LIMITATIONS OF THE STUDY
Attitude of the Respondents: The survey research design has the limitation that some respondents are reluctant to give answers to probes. This limitation is minimized by persuading the respondents and by also adding a covering letter.
Interviewing Situation Constraint: The oral interview has the limitation that the interviewing situation may differ from one occasion to another especially if some few data collections are used to do the field work. This limitation is minimized by the researcher doing most of the field work himself.
The Structured Nature Constraint: The questionnaire research instrument has the limitation that its structured nature may compel the respondents to give answers that they do not fully endorse. This limitation is minimized by also using another interview schedule. Difficulty in Analysis Constraint: The oral interview schedule has the limitation that it contained open-ended questions whose answers are difficult to analyze. This limitation is minimized by using rates of numbers divided by the number of schedule returned to give the frequencies.
Time Constraint: There is the limitation of the scarcity of time resources. This limitation is minimized by the use of time management techniques like hurrying up.
Financial Constraint: There is also the limitation of the scarcity of money resource. This limitation is minimized by having a balance budget.
1.12 DEFINITION OF TERMS
Shared knowledge is defined as an activity through which knowledge is exchanged among people, friends, families, communities or organisations.
The contribution of shared knowledge is defined as the proportion of shared knowledge above compared to a total of such other resources like the human resource, materials, money, time, energy, information and infrastructure all reduced to monetary terms.
Knowledge learning capacity is defined as the production capability of the facility of knowledge learning.
Tacit knowledge is defined as that knowledge that relies on common sense and intuition.
Explicit knowledge is defined as that knowledge that is very clear when it is shared by people.
Knowledge based capacity is defined as a production capability of a knowledge facility.
Performance is defined as the extent to which an organization is able to achieve its goals and objectives.
Performance of manufacturing firms is the performance of firms that produce tangible products.
Sustainable competitive performance is defined as long-lasting performance that makes a firm stand out over its rival firms.
Improvement of performance is defined as the process of enhancing performance or making it better.
Sustained performance is defined as long-lasting performance backed by economic growth whose proceeds are properly distributed and there is also spontaneous change.
Improvement of profitability is defined as the enhancement of the difference between sales revenue and total cost.
Information Technology is defined as that technology based on electronic data processing, office and factory automation, process control and telecommunication.
Manufacturing is defined as the aspect of production where both products, services and waste products are produced.
Manufacturing performance is defined as the extent to which the objectives and goals of the manufacturing firms are being achieved, the promises made to the stakeholders are being fulfilled and the behaviours of the staff are amenable to achieve the goals and objectives.
Development is defined as an increase from a lower to a higher socio- economic condition which is shown by increase in education, training and infrastructural development.
Sustainable Development is defined as the process of meeting the needs of the present day generation without jeopardizing the needs of the future day generation.
Sustainability is defined as the process of meeting the needs of the shareholders for a long time into the future.
Competitive Advantage is defined as that element of strategy that makes the manufacturing firm to have distinctive competence over and above other firms.
Knowledge is defined as an organized combination of ideas, rules, procedures and information (Marakas, 1999:12).
Core Knowledge is defined as that minimum scope and level of knowledge required for the company to survive.
Advanced Knowledge is defined as the knowledge that enables a firm to be competitively viable.
Ontology is defined as an explicit specification of a conceptualization, while a conceptualization is an abstract, simplified view of the world that we wish to represent for some purpose. (Gruber, 1993:24).
Innovative knowledge is defined as the knowledge that enables a firm to lead its industry and significantly differentiate itself from its competitors.
Performance is “an action or process of performing a task or function” (Oxford Concise Dictionary 1999: 1060). Important variables to be kept in mind are function, work, action, task, process and specific standard. Performance is the actual conducting of activities to meet responsibilities according to standards. It is indication of what is done and how well its is done (Winch, Bhattacharyya, Debay, Sarriot, Bertoli & Morrow 2003:2)
Productivity this refers to a state of yielding or furnishing results, benefits or profits. It is an organization’s outputs divided by its inputs, and group cohesiveness. It implies the quantity or volume of the major product or service that an organization provides. It includes capital investments, innovation, learning, and an employee’s motivation (Decenzo and Robbins 2000:360). Employees are performing well when they are productive (Decenzo and Robbins 2000:360). Productivity itsel implies both concern for effectiveness and efficiency.
Performance appraisal is defined as the means the observation and assessment of employee performance against pre-agreed and pre- established activities and standard.
Performance Management is defined as the Leading edge organization use performance management to gain insight into and make judgments about, the effectiveness and efficiency of their programmes, processes and people (Gore, 19997:4).
Performance measurement and evaluation are used to strengthen and improve performance practices. According to WCPS (2001:47), measures “… are the yardsticks used to determine how well work units and employees produced or provide d products r services”.
Skill refers to the ability to perform a task or a group of task which often requires the use of motor functions but also specific knowledge and skills.
1.10 PROFILES OF SELECTED MANUFACTURING FIRMS UNDER STUDY
GUINNESS NIGERIA PLC.
The multinational brewing company under study is Guinness Nigeria Plc. Guinness Stout is sold in over 140 countries of the World. Its popularity is based on its natural goodness and its unique flavour (Guinness Nigeria Plc., 2012). In 1759, Mr. Arthur Guinness established his brewery on a four-acre site near the western entrance to the city of Dublin, Ireland, called St. James’s gate. Although the gate has disappeared, the brewery now covers 66 acres and is one of the largest in the world (Guinness Nigeria Plc., 2012).
In 1936, the demand for Guinness made it necessary to build a second brewery at Park Royal near London. The third Guinness Brewery was opened in Nigeria at Ikeja in 1963. Unlike the breweries at Dublin and
Park Royal, Guinness in Nigeria is bottled at the brewery and the Ikeja brewery has the largest bottling hall of any Guinness brewery in the world. The worldwide popularity of Guinness has led to the establishment of breweries in Malaysia, Cameroon, Ghana and Jamaica. Guinness is brewed under Guinness supervision in Kenya, Sierra Leone, Australia, Trinidad, Canada, Mauritius, New Zealand, Seychelles, Liberia, Thailand, Indonesia and Venezuela (Guinness Nigeria Plc.,
2012).
In 1959, Guinness produced her first larger beer, called Harp in Ireland and shortly afterwards expanded this market and Harp was brewed in the Guinness Nigeria Limited brewery in Benin. Harp later failed due to a problem of quality, which could not be solved using the conventional brewing methods and so it had to be dropped. It was replaced by Satzenbrau which still trailed behind such popular larger bear brands like Star and Guilder brewed by the market leader in the brewing industry in Nigeria namely Nigeria Breweries Plc. (Guinness Nigeria Plc., 2012).
NIGERIA BREWERIES PLC.
Nigerian Breweries Plc, incorporated in 1946, is the pioneer and largest brewing company in Nigeria. Its first bottle of beer, STAR Larger, rolled off the bottling lines of its Lagos Brewery in June 1949. Other breweries were subsequently commissioned by the company, including Aba Brewery in 1957, Kaduna Brewery in 1963, and Ibadan Brewery in
1982. In September, 1993, the company acquired its fifth brewery in Enugu State, and in October, 2003, its sixth brewery, sited at Ama in Enugu. Ama Brewery is the largest brewery in Nigeria and one of the most modern worldwide. Operations at Enugu brewery were discontinued in 2004, leaving the company with five operational breweries.
The company has a portfolio of high-quality brands, including Star
Larger Beer launched in (1949); Gulder Larger Beer (1970); Maltina
(1976), which now has three varieties, namely Maltina Classic, Maltina Strawberry, and Maltina with Pineapple; Maltina Sip-it (2005), which was packaged in Tetrapaks; Legend Extra Stout (1992); and Amstel Malta (1994). The company also relaunched Heineken Larger into the Nigerian market in June, 1998 (Nigerian Breweries, 2012).
It started as a joint venture between the United African Company (UAC) International, UK and Heineken of Holland, Thus, at inception, it was
100 per cent foreign owned. By the early 1950s, when it began operating fully, some indigenous traders already involved with its products were invited to become shareholders. Under the indigenization policy of the early 1970s the foreign shareholders were forced to sell a significant proportion of their holdings. Today, the company is 60 per cent Nigerian owned and 40 per cent foreign owned. The 60 per cent Nigerian stake is held by company employees and members of the public, while the 40 per cent foreign ownership is split almost equally between UAC Holdings Limited (for Unilever) and Heineken Brouwerijen BV (Nigeria Breweries Plc, 2012).
The foreign partners now perform the role of technical advisers, with Unilever advising on commercial aspects such as accounting, purchasing, marketing and personnel, while Heineken does the same for technology. Organizationally, the company has four divisions: technical, finance, marketing and personnel, each of which is headed by an executive director (Nigeria Breweries Plc., 2012).
At its inception in 1949, NBPLC had only Star Larger (Nigeria’s first) on the market, over the years it has broadened its product range. Except for the period 1984 to 86, when sales volume suffered an annual average decline of about 18 per cent, turnover growth in the company has generally been accompanied by growth in profit and production volume. Thus, when normal growth was restored in 1987, the 51 per cent and 83 per cent increases in turnover and operating profit, respectively, for 1987
– 88 were accompanied by about 35 per cent volume growth. Similarly,
the turnover of about N1.7 billion recorded in 1991 was partially the result of 8 per cent growth in sales volume. However, from all indications, product pricing has been the major factor in the impressive growth in operating profits (Nigeria Breweries Plc, 2012).
The deteriorating results recorded by the company in 1984-86 reflected the foreign exchange rationing policy of the period, which was necessitated by the severe balance of payments crisis of the post-oil- boom era. The import licence allocation of the company could hardly satisfy one third of its foreign exchange requirements. The government’s mandatory backward integration policy in the mid-1980s saw the company establishing a 5,000 – hectare farm, estimated to be worth N30 million, in Niger State. The farm is highly mechanized and produces mainly maize, rice and sorghum, with soya beans and cowpeas as rotational crops. The main crops are used as replacements for barley malt. The changeover in input mix was assisted by the company’s N2 million R&D facility, which was commissioned in June 1987 and plant conversion costing about N100 million (Nigeria Breweries Plc, 2012).
The company works with highly structured plans, with annual budgets of intentions translated into explicit targets. The decision board sits towards the end of the year to deliberate on the report of each divisional head. Annual budget estimates are made in the middle of the year while decisions on annual plans are left till the end of the year (Nigeria Breweries Plc., 2012).
The company has experienced remarkable changes in its technical capability. In 1949 it used to take between 28 and 30 days to produce a bottle of beer but with technological improvement it now takes about two weeks. The change in input content in the late 1980s also involved changes in processing technology (Nigeria Breweries Plc, 2012).
Different measures of productivity are used for the technical division and other divisions. In the technical section, productivity is measured in
terms of the efficiency of plant operation and also in terms of capacity utilization. In other divisions, it is in terms of the accomplishment of assigned responsibility. The company is viewed as a leader in the national industry and in Africa it enjoys a high rating, in terms of both productivity and product quality (Nigeria Breweries Plc, 2012).
NBPLC concentrates on the production of its beer and related products, leaving ancillary services such as bottles, crown corks, labels, cartons and crates to be supplied by other local manufacturers. In fact, Nigerian law precludes a brewer from producing such ancillary services. Only the companies in the soft drinks industry appear to sponsor firms to produce such services. Backward integration into farming was a special concession granted to the breweries in 1984 following the stringent foreign exchange control measures introduced in that year. It also uses outside transport companies for 60 per cent of total distribution (Nigeria Breweries Plc, 2012).
BENDEL BREWERIES PLC.
The company entered into contract agreements with Henninger International, Frankfurt, West Germany. Consequently, Henninger Larger beer was introduced into Nigeria market, whose Franchise duration was ten years, subject to renewal of another ten years. The company’s product was launched on May 10th, 1975, but unfortunately it was not acceptable to the consumers, and the contract was terminated in September, 1976 (Bendel Brewery Plc 2006).
A new product known as Crystal larger beer came in to replace
Henninger Larger Beer, which was terminated on the 16th November,
1976, and was acceptable by beer consumers. The company signed a contract agreement of about N4m with Kosmos. Export, for the expansion of its production capacity form
N100,000 hectoliters to N300,000 hectoliters over per annum in 1976 and was completed in
1979 (Bendel Brewery Plc, 2006).
Bendel Brewery Limited was solely owned by the defunct Bendel State Government of Nigeria, with an initial share capital of N200,000 (100,000 ordinary share capital of N2.00 each), which was increased to N10m (5,000,000 ordinary share capital of N2.000 each) in 1987. Initially, the company recorded profits and dividends were paid to the State Government. There was crisis in the company, between the Board of Directors and management in 1989, which led to the collapse of the company, due to the removal of both the Board and General Manager, thereby bringing about the corporate collapse; problem of sourcing for funds (working capital); problem of overhauling of the equipment, problem of keeping abreast with the new trend in beer market. This led to the closure by the Government in December, 1990 (Bendel Brewery Plc., 2006).
The company was privatized online with the Federal Government Policies of commercialization and privatization of 1989. Offers were made by Nigeria brewery Plc, Guinness Brewery Nigeria Plc., Church-gate Institutes Nigeria Limited and Bendel Feed and Flour Mill Limited. Three of the above companies rejected the offer, and Church-gate Industries Nigeria Limited went ahead to sign the agreement for privatization of the company on the 25th November, 1992, as investor/manager with Technical Committee on privatization and commercialization on behalf of the defunct Bendel State Government; which now comprises Edo and Delta State, with Edo state own the company by virtue of assets sharing formula for state creation by the Federal Government (Bendel Brewery Plc., 2006).
The company’s equity share holding structures are as follows:
| Church-gate Industries Nigeria Limited | 51% |
| Edo State Government | 25% |
| Other Nigerians | 19% |
| Worker’s Trust | 5% |
| Total | 100 |
OF SELECTED MANUFACTURING FIRMS UNDER STUDY
Comparison of the historical sketches ofGuinness Nigeria Limited and
Nigerian Breweries Plc. Guinness Overseas Limited came in existence in
1759 in a factory at Saint James’ Gate in Dublin, Ireland. However, Nigerian Breweries started operating in Nigeria in November 1946. This was the same year that the first pre-colonial development plan was started in Nigeria by the British Colonial Government to harness raw materials from the colonies to enable Britain to win the Second World War. The first Nigerian Guinness Brewery was established in Ikeja, Lagos in 1963.
The two lager beer products of Nigerian Breweries Plc namely Gulder and Star lead the Guinness lager product called Harp. However, the leadership is not in all marketing areas as Harp also leads in some places. The ratio is Gulder 0.4, Star 0.35, Harp .25. However, Guinness Stout is a very big leader when compared to Nigerian Brewery Plc Stout. The malt products almost bracket.
The Gate Guinness Nigeria Plc factories are located in Benin, 1979, Ogba and Guinness is brewed at Dubic Breweries Aba and Jos Metropolitan Breweries Jos, Plateau State of Nigeria. Nigerian Breweries Plc factories are located at Lagos, Night Mile, Enugu, Aba and Kaduna. So both Breweries are almost equally dispersed geographically.
This material content is developed to serve as a GUIDE for students to conduct academic research
SHARED KNOWLEDGE AND PERFORMANCE OF MANUFACTURING FIRMS IN NIGERIA
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