PRODUCT INNOVATION STRATEGY AND SURVIVAL OF MANUFACTURING FIRMS IN NIGERIA

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(A CASE STUDY OF PABOD BREWERIES LIMITED PORT HARCOURT)

Abstract

This study examined the relationship between product innovation and survival of manufacturing firms in Nigeria. The study was delimited to Port Harcourt with reference to Pabod Breweries Limited, Oginigba, Port Harcourt, Rivers State. The population of this study constitutes all senior and junior staff of Pabod Breweries Limited, Port Harcourt which was unknown. Therefore the judgmental sampling technique was used for selecting the sample of 75 respondents comprising of both senior and junior staff of Pabod Breweries Limited, Port Harcourt. A self-designed questionnaire on product innovation strategy and survival of manufacturing firms in Nigeria was used and administered for the collection of data from the respondents. The statistical test used in the testing of the hypotheses was Pearson Product Moment Correlation Coefficient. The result revealed that product innovation is a drive to enhancing the survival of manufacturing firms in Nigeria.  Based on the findings, the study recommends that the services offered by firms should be enhanced by their level of innovations. That firm’s range of products should be of 1st class innovation and that Brewery firms should aim at enabling customer’s access online. As concerns the level of satisfaction, it is determined by firm’s range of products, and therefore the firms should maintain a wide range of products by investing more in research and development.

Table of Contents

Cover Page i

Cover Page ii

Declaration iii

Certification         iv

Dedication  v

Acknowledgement         vi

Abstract      vii

Table of Contents viii

CHAPTER ONE  1

INTRODUCTION         1

1.1 Background of the Study  1

1.2 Statement of the Problem  3

1.3 Objectives of the Study     4

1.4 Research Questions 4

1.5 Research Hypotheses        4

1.6 Significance of the Study   5

1.7 Scope of the Study  5

1.8 Limitation of the Study     6

1.9 Definitions of Terms         6

CHAPTER TWO 8

REVIEW OF RELATED LITERATURE   8

2.1 Conceptual Framework     8

Fig. 1.2: A Conceptual Framework showing the relationship between Product Innovation and Survival      8

2.1.1 Concept of Product Innovation         9

2.1.2 Dimensions of Product Innovation    11

2.1.3 Concept of Survival       13

2.1.4 Measures of Survival     14

2.1.5 Product Innovation Strategies and Survival of Manufacturing Firms         18

2.2 Theoretical framework      19

2.2.1 Prospect Innovation Theory (Kahneman and Tversky, 1979) 19

2.3 Review of Related Empirical Studies    19

2.4 Summary of Review of Related Empirical Studies  23

CHAPTER THREE       25

RESEARCH METHODOLOGY      25

3.1 Introduction   25

3.2 Research Design      25

3.3 Population of the Study    25

3.4 Sampling Techniques Used         25

3.5 Sample Size    26

3.6 Sources of Data       26

3.6.1 Primary Source (s) of Data      26

3.6.2 Secondary Source of Data       26

3.7 Research Instrument for Data Collection       26

3.8 Validity and Reliability of Instrument  27

3.9 Techniques for Data Analysis/ Test of Hypotheses 27

CHAPTER FOUR         28

DATA PRESENTATION AND ANALYSIS       28

4.1 DATA PRESENTATION AND ANALYSIS 28

4.2 Data Analysis 29

4.3 Descriptive Statistical Analysis  31

4.3 Testing of Hypotheses       34

4.4 Discussion Findings 36

CHAPTER FIVE 38

SUMMARY, CONCLUSION AND RECOMMENDATIONS         38

5.1 Introduction   38

5.2 Summary       38

5.3 Conclusion     38

5.4 Recommendations   39

References  40

Appendix I 44

Appendix II          Error! Bookmark not defined.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Innovation leads to a process of change in organizations and its market offerings, and is a key weapon that marketing strategists use to win customers and markets, through the development of sustainable competitive advantage. In the words of Peter F Drucker (1954) ‘there is only one valid definition of business purpose: to create a customer’ and ‘the business enterprise has two and only two basic functions: marketing and innovation’. Innovations use assets and competencies (skill and knowledge in both technical systems and management systems) of the organization along with innovation processes to bring about new or different market offerings, which when successful in the market bring in immense value to the firm. Innovations also lead to the creation of assets called intellectual property; intellectual property rights called IPRs include copyrights, patents, trademarks, trade secrets and industrial designs.

Product innovation according to Gunday, Kandah, & Ranch, (2011) is broadly seen as an essential component of competitiveness, embedded in the organizational structure, processes, products, operations, and services within a firm. Product innovation is one of the fundamental instruments of growth strategies to enter new markets, to increase the existing market share and to provide the company with a competitive edge. However, developed and developing economies around the world have come to realize the value of manufacturing firm; they are seen to be characterized by dynamism, innovations, efficiency, competition, technological development (Ibidunni, Iyiola and Ibidunni, 2014).

According to Kamakia (2014), Product innovation is the introduction of a goods or service that is new or significantly improved regarding its characteristics or intended uses; including significant improvements in technical specifications, components and materials, incorporated software, user friendliness or other functional characteristics. Bakar and Ahmad (2010) added that the capability in product and business innovation is crucial for a firm to exploit new opportunities and to gain competitive advantage. Product innovation is inevitable if businesses are to remain relevant and sustainable (Bakar and Ahmad, 2010). Product innovation allows firms to not only develop new market segments but also expand its current market segments and product portfolios; however, it is also associated with higher costs as well as higher risks and management challenges (Davcik & Sharma, 2017).

Regionally, the effects of product innovation are felt by the manufacturing companies in Africa, they are introducing new models along with novel approaches to business process, all aimed at increasing firms’ services penetration and production, expanding market share, driving profits and cutting costs. Some manufacturing companies have been going through a period of growth as result of product innovations. As opposed to importation of new technologies from the western world in the past, Africa now has tried to be more innovative by motivating employees to be more innovative as well as provide an enabling environment for product innovation. As a result of these, some companies in Africa have grown to global level. However, those companies in Africa which continue to depend on imports continue to face challenges in the market and eventually shrink (Moodley, 2012). From the foregoing therefore, the study is determined to examine the relationship between product innovation strategies and survival of manufacturing firms in Nigeria with reference to Pabod Breweries Limited, Port Harcourt as case study.

1.2 Statement of the Problem

The lack of product innovation strategies is caused by among others lack of sufficient funds and lack of expertise which are important ingredients to successful product innovation. Another challenge to this is the changing customer needs and the existing regulations which hinder development of certain products. Some manufacturing firms also lack research and development departments in their management team.

Most manufacturing firms enter the market with high expectation; the result is not always what they expect. Some products do not survive to see the growth stage, while others do not really grow as per their expectations. Most manufacturing firms have been struggling to survive in the market and they have been reported to be downsizing in an effort to remain afloat (Noonan, 2012). These manufacturing firms in most cases end up scaling down their employees, being unable to sustain themselves and therefore closedown.

For this reason, this study aims at examining the relationship between product innovation and the survival of manufacturing firms in Nigeria, with an aim of establishing the best product innovation strategies that the manufacturing firms (Pabod breweries) should employ in order to grow and lastly establish the ability of good product innovation strategies to facilitate growth of these firms to their potentials.

1.3 Objectives of the Study

          The main objective of the study is to examine the relationship between product innovation and survival of manufacturing firms in Nigeria. The specific objectives are as follows;

1.       To examine the relationship between product style and the survival of manufacturing firms.

2.       To examine the relationship between product packaging and the survival of manufacturing firms.

3.       To examine the relationship between product technology and the survival of manufacturing firms.

1.4 Research Questions

1.       Does product style influence the survival of manufacturing firms?

2.       Does product packaging influence the survival of manufacturing firms?

3.       Does product technology influence the survival of manufacturing firms?

1.5 Research Hypotheses

H01: There is no significant relationship between product style and the survival of manufacturing firms.

H02: There is no significant relationship between product packaging and the survival of manufacturing firms?

H03: There is no significant relationship between product technology and the survival of manufacturing firms?

1.6 Significance of the Study

The relevance of this study, this time, is as crucial as the study will help to highlight benefits the companies in this industry will derive. The information collected will expose the management of the companies in product innovation, and know the quantity to produce in order to avoid losses.

This study will afford a successful and thorough examination of current practices of product innovation in Nigerian Breweries, as well as expose influential and critical factors and processes that determine the success of product innovation.

Furthermore, it will highlight the socio-economic impact to product innovation in manufacturing firms in Nigeria and as well provide recommendations for enhancing the proficiency of the process with the view to increasing the growth and success of manufacturing firms.

Finally, it will provide a guide to operations of manufacturing companies and government policy makers on the proper frame to adopt towards product innovation of manufacturing companies with the view of enhancing growth and success.

1.7 Scope of the Study

The study is delimited under the following heading: content scope, geographical scope and unit of analysis.

Content Scope: The content scope of this study involves an investigation to ascertain the relationship between product innovation strategy and survival of manufacturing firms. The dependent variable is survival measured by sales volume, market share and sales growth. While independent variable is product innovation strategy measured by product style, product packaging and product technology.

Geographical Scope: This study is delimited to Port Harcourt with reference to Pabod Breweries Limited, Oginigba, Port Harcourt, Rivers State.

Unit of Analysis: The unit of analysis in this research involves both senior and junior staffs of Pabod Breweries Limited, Port Harcourt at the time of the study.

1.8 Limitations of the Study

The study was limited by the following:

The level of frankness in response to questions by the respondents is quite doubtful.

Finance: Accessing fund for the research work was difficult and this to a great extent limited the quality of research activity.

Time: The time allocated to the research work was not sufficient to give room for further intensive work on the field of study.

Organization Policy: Policies of the organization limited the level of information received. The personnel of the firms were not willing to give information, stating that it was against the organization’s policy.

1.9 Definitions of Terms

In this study, it will be very important to define key terms that will be featuring. They include the following:

Innovation: It’s the process of translating an idea or invention into goods or service that create value or for which customers will pay. To be called an innovation, an idea must be replication asan economical cost must satisfy a specific need.

Product innovation: This is the creation and subsequent introduction if goods and services that is either new or improved version of previous goods and service. In other words it helps to create new product that customers will love and want to follow. They also track how customer responds to their product.

Survival: The act or fact of surviving, especially under adverse or unusual circumstances.

Packaging: It is the science, art and technology of enclosing or protecting products for distribution, storage, sale, and use.

Technology: It refers to methods, systems, and devices which are the result of scientific knowledge being used for practical purposes. 

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