Business Survival Strategies In A Depressed Economy
(A Case Study Of Fidelity Bank Plc)
Complete Business Survival Strategies In A Depressed Economy Project Materials (Chapters 1 to 5):
This research is an attempt to study the challenges of running small business in a depressed economy. The researcher identified that banking is in the midst of change that has arisen due to economic depression. As government seek to improve economic efficiency and better allocation of resources to solve the problem of economic depression, policy makers are shifting towards openness, competitiveness and market discipline. In response to the developments, banking business in Nigeria engaged in financial sanitizing, management strengthening corporate refocusing, Business Process Reengineering (BPR), merger and acquisition in order to survive the depressed economy. This whole process is called business survival strategies through corporate restructurings. The writer made efforts to discuss issues, facts and environmental factors surrounding the wave of banking business survival in a depressed economy like Nigeria. The impact of this research in bank was geared from the five performance indicators, namely total asset. Total deposits loans and advances, profit tax and holders’ funds of First bank of Nigeria Plc. The researcher looked at the position of these indicators before end after the sanitizing exercise undertaken by banks for survival and also, its impact on the entire banking system bearing in mind the effect of globalization on the financial market in a particular and the economy at large. Chapter four shows the presentation and analysis of first bank financial statement with the use of chart, tables, bar chart and graph. Chapter five show the summaries all that was discussed from chapter one to four and gave suggestions on how banking business can survive in a depressed economy. Finally, the researcher leaves this work open to constructive criticism and expects future scholar to device into further research and improve on the work.
Title Page
Approval Page
Dedication
Acknowledgments
Abstract
Table of Contents
CHAPTER ONE
1.0 Introduction 1
1.1 Background of the study 1
1.2 Statement of the problem 4
1.3 Purpose of the study 5
1.4 Research questions 6
1.5 Research hypothesis 7
1.6 Significance of the study 8
1.7 Scope of the study 9
1.8 Limitations of the study 9
1.9 Definitions of terms 11
1.10 Brief history of Zenith Bank Plc Enugu
CHAPTER TWO
2.0 Literature Review
2.1 Introduction
2.2 Conceptual framework
2.3 Theoretical framework
2.4 Empirical framework
2.5 Researchers position
CHAPTER THREE
3.0 Research methodology 25
3.1 Introduction
3.2 Research design 26
3.3 Sources of data 26
3.4 Methods of data collection
3.5 Area of study
3.6 Population and sample size 28
3.7 Sampling techniques 29
3.8 Validity and reliability of measuring instrument 31
3.9 Method of data analysis 31
CHAPTER FOUR
4.0 Data Presentation, analysis and interpretation 33
4.1 Introduction
4.2 Presentation of data 33
4.3 Analysis of data
4.4 Test of hypothesis 42
4.5 Interpretation of result(s) 47
CHAPTER FIVE
5.0 Summary of findings, Conclusion and
Recommendations 48
5.1 Introduction 48
5.2 Summary of findings 49
5.3 Conclusion 50
5.4 Recommendations 51
Bibliography 55
Appendices 57-60
INTRODUCTION
Nigeria economy is faced with national and global economic changes and as such, the financial institutions especially the banking sector has an option of sanitizing and restructuring its operational process in order to survive the depressed economy, as well as embarking on a consolidation exercise which would have some wider structural effect on the industry and on the economy as a whole.
1.1 BACKGROUND OF THE STUDY
Before the introduction of Structural Adjustment Programme (SAP) in 1986, the banking sector was characterized by few banks. The operators of these banks had almost total control of the business of banking as customers had to look for their services of which most of the times were of poor quality. The manager, because of the pressure to provide banking services, had little, time to market their bank service, had or design new product to improve their customers services and at the same time, they received change based on the approved tariff, competition was minimal and customers could spend long hours trying to obtain service in the banking hall due to long queues. The quality of the bank staff was poor, they were rude to their customer and most time, they felt they were doing a favour to their customers. As at that time, no Nigeria bank had neither a simple computer none a network of computer for online banking, in the area of credit appraisal, Ezeikpe (1993) observed that they were too conversation in extending credit facilities. The system was highly under banked while the payment mechanism was filled with imperfection such that locality draw cheques took more than one week to clear.
However, with the introduction of Structural Adjustment Programme (SAP) and its policy of deregulation and linearization, some structural reforms were ushered into the banking sectors. By its policy, direct management and rigid controls in banking and security business by the government were ensure for a driven process.
The traditional reforms were objective by the following:
1. A strategy for competition.
2. A sound organization structure and effective management
3. To ensure management critical financial and operating risk banking.
4. A system for planning, budgeting, and measuring performance.
5. Entrenching a programme for human management.
6. Ensuring a strong and effective internal control.
7. Putting in place the most appropriate Information Technology (IT) the automatic, the process, without any facilitate an effective mechanism for transmitting the effect of monetary policy to the real sector.
Some factors were identified as a cause of the distress that deseeded the banking system. These factors include:
1. Under capitalization which made the capital structure of some of bank to be inconsistent with their risk.
2. No theory defines lending policies and credit appraisal techniques.
3. Unprofessionalism in the conduct of bank staff.
4. High incidence or bad debts and non performing facilities.
5. Boardroom squabbles and undue interference of the board in the day to day management of the bank.
6. Poor staff quality which arose due to the absence of training and giving service attention to human premium.
7. Incompetent management
8. Conflict of interest and insider abuse a policy problems or delay and inadequate institutional arrangement and structural of the port of the regulating authority before implementing policy changes thereby creating unhealthy avoidable suspense and uncertainties.
In the face of these problems and uncertainties the option available for the system to have a better control of these factor is to sanitize the bank internally for survival, Adenigbe (1997) observed that for Nigeria banks to remain relevant in the next century, with the current incursion of technology and globalization of the world market. They have to learn how to sanitize their operations for survival. Also Elumely (1998:26-27) observed that recently 25 billion recapitalization of Nigeria banks has made banks to go into several arrangements for its continued relevant.
However, there are certain global factor have been identify as having contributed to the result in an upward in survival and sanitizing activities.
These include:
1. The dismantling of regulation barriers and regional economic grouping which jacked up the pace of globalization.
2. The recent advancement information technology (IT) and the new role of interest in banking.
3. Continue institutionalization of the market participant as opposed to individualization.
4. The need for an enhanced payment mechanism.
5. The increase competitor in the financial service delivery. The business survival strategy and the impact of sanitizing the Nigeria banks have resulted in emergence of a strong new local bank fully. 100% owned foreign bank or both local and foreign participation in owners as Cilibanks and NBM, Stanbic, merchant bank within the limit availability of component manpower.
1.2 STATEMENT OF THE PROBLEMS
Evidence has show that the banking business is undergoing several transfer motions with the increased deregulation and liberalization of the business, their structural change is unavoidable, hence the current wave of order to survive. Banks that are unable to restricted in line with the global revolution in the industry should be ready to go down the drain in the process and be liquidated.
Between 1991 and 1997, a total of 31 Nigeria bank have been liquidated by NDIC due to their protracted problems of distress, but some of the facilities would have been averted if appropriate restructuring strategies were implemented in the area of customer sophistication and advancement in information technology, bank management should learn to be proactive and more efficient global challenge more so, as customers are becoming aware of their environment and ready to move their funds to where their demand would be adequately met while yearning for more personalized services.
In consideration of the above challenge, one may ask, how effective are the various survive/option and stabilizing strategies adopted by banks in the face of economic depression? Has information technology been given adequate attention? Do bank merger achieve the desired energy? Has survival strategy through restructuring led loan improved bank performance?
1.3 PURPOSE OF THE STUDY
In dealing with the above stated problems, the study seeks to achieve the following objective:
1. To find out if the volume of assets of banks improved after business survival strategies were employed through sanitizing and restructuring.
2. To find out how business survival strategic adopted by the bank have affected deposit mobilization.
3. To ascertain the extent the depositor’s confidence have been restored in the business survival strategic.
4. To find out if the volume of loan and advances improved after adopting the business survival.
1.4 RESEARCH QUESTIONS
In trying to make a critical analysis of business survival strategic for banking business through sanitization of the banking industry for growth and stability. The following questions will be very importance as the researcher tries to provide answers to those mind buying questions which are:
1. Has there been any improvement in the bank’s asset as a result of the restructuring.
2. Has there increase in deposit mobilization?
3. To what extent has depositor’s confidence been restored?
4. Has there been increase in size of loans and advances?
5. How has strategy impacted on the bank profitability?
1.5 RESEARCH HYPOTHESIS
Hi: Business has made positive impact in the development of the Nigeria economy.
Ho: Business has not made positive impact in the development of the Nigeria economy.
Hi: Business has helped to implement government policies and programmes in Nigeria.
Ho: Business has not helped to implement government policies and programmes in Nigeria.
1.6 SIGNIFICANCE OF THE STUDY
Consequently, upon completion, this will look upon:
1. Detail out the various forms of survival and sanitizing strategies that are desirable for bank using the first bank as a case in point.
2. Recommend the approach or methodology to be followed in sanitizing and reengineering the business in bank for survival in a depressed economy.
3. Determine if the business survival strategies and sanitizing have restored confidence among Nigeria banking public.
1.7 LIMITATIONS OF THE STUDY
The major constraints encountered in this research work are: the obvious attempt by bank to classify most of their information that is necessary for the completion of this work due to certain management policies.
The escalating cost transport and financial impediment which mode the cost of carrying out of carrying to be expensive.
The inability to collect the annual report of many banks for various years was shows down to this research as the staff refused to disclose to the figure for analysis which necessitated the use of first bank plc as a case study on the whole academic stress and time factor added to the problem, but the researcher made the best effort sight of the quality of the final output. It essence these limitation do not impinge on the validity of this work.
1.8 DEFINITIONS OF TERMS
Management: This could be defined as the process of planning, organizing, controlling, coordinating, leading and directing organization resources to achieve stated organizational goals.
Small Scale Business: These are those businesses in which their sales turnovers do not exceed N500.00.
Depressed Economy: The period of trade and supply of money in a particular country or region, it’s a system of trade and industry by which the wealth of a country is made and used.
Business Strategies: The state of continuing to live or exist often in spite of difficulty in danger.
Borrower: A person or an organization that borrows money especially from a bank.
Funds: An amount of money that has been made available for a particular purpose.
1.9 BRIEF HISTORY OF FIDELITY BANK COMPANY PLC
Fidelity Bank Plc began operators in 1988 as Fidelity Union Merchant Bank Limited by 1990. It had distinguished itself as the fastest growing merchant bank in the country. It converted to a commercial bank in 1999, following the issuance of a commercial banking license by the central bank of Nigeria, the national banking regulator. That same year the bank rebranded to Fidelity Bank Plc. It became a universal bank in February 2001, with a license to offer the entire spectrum of commercial consumer, corporate and investment banking services.
The current enlarged Fidelity Bank is result of the merger with the former FSB International Bank Plc and Many Bank Plc (under the Fidelity brand name) in December 2005. Fidelity Bank is today ranked amongst the top 10 in the Nigeria banking industry, with present in all the 36 state as well as major cities and commercial center of Nigeria.
Fidelity Bank also known as Fidelity Bank Plc is a commercial bank in Nigeria. It is licensed as a commercial bank by the central bank of Nigeria, the control and national banking regulator.
Fidelity Bank Plc began operation in 1988, as Fidelity Union Merchant Bank Limited. In 1999 it converted to commercial banking and changes its names to Fidelity Bank Plc (the bank). It subsequently became a universal bank in February 20011, with license to offer the entire gamut of commercial, consumers and corporate /investment banking services. Over one year the bank has earned a reputation for integrity and professionalism. It also respected for the quality and stability for its management. Fidelity Bank enjoys the respect and partnership of a network of global institutions with which it has correspondent banking, confirmation line, credit and other relationship. These include ANZ London, Afr-Eximbank, Cairo, Egypt, ABSA South Africa, and commercial bank, Frankfurt, Citibank, N.A London and New York, FBN bank, UK Ltd, SCB London, HSBC, US Ex.Im Bank, USAID etc.
It is one bank that has enjoyed great stability in management. In its almost 23years history, fidelity has only two C.E.Os the current CEO is Mr. Reginald Ihejiahi, an M.Sc holder in finance from the London School of Economics and Political Science University of London, Mr. Ihejiahi is also a fellow of the association of chartered and certified accountant United Kingdom.
The introduction of Business Survival Strategies In A Depressed Economy should start with the relevant background information of the study, clearly define the specific problem that it addresses, outline the main object, discuss the scope and any limitation that may affect the outcome of your findings
Literature Review of Business Survival Strategies In A Depressed Economy should start with an overview of existing research, theoretical framework and identify any gaps in the existing literature and explain how it will address the gaps
Methodology of Business Survival Strategies In A Depressed Economy should describe the overall design of your project, detail the methods and tools used to collect data explain the techniques used to analyse the collected data and discuss any ethical issues related to your project
Results should include presentation of findings and interpretation of results
The discussion section of Business Survival Strategies In A Depressed Economy should Interpret the implications of your findings, address any limitations of your study and discuss the broader implications of your findings
The conclusion of Business Survival Strategies In A Depressed Economy should include summarize the main results and conclusions of your project, provide recommendations based on your findings and offer any concluding remarks on the project.
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