SWOT Analysis of Nigerian business environment

 

Every country has its own business environment, just as every organization has its own set business culture and business etiquette. In the previous post we explained the Nigeria Business culture and Nigeria business etiquette.

While undertaking a business either locally or abroad, the managers or owners of the organizations have to account for and consider all the external and internal as well as macro and micro economic factors, which are likely to contribute to the success or failure of the business.

This post examines the factors responsible for improving or hampering the competitiveness of business operations with the use of SWOT analysis of Nigeria business environment to judge their vulnerability of success or failure against those factors.

SWOT is an acronym and it stands for “strengths, weaknesses, opportunities and threats”. In this post, we shall be using the SWOT analysis to analyze the business environment in both local and global perspectives.

The Strengths

Nigeria is a combination of people of various ethnicity, races, and languages. There are many strong factors which ensure a successful business in the country (local) and abroad (global).

• Local Environment

Nigeria has a high potential of growth and stability. It is a strong environment for the businessmen to flourish their business. Since it has been included in the list of N-11 countries, its goodwill and expectations of growth have given great hope to future investors.

The monetary policy of Nigeria is mobilized and in control to manage the supply of money in a way which does not result in excessive appreciation or devaluation of the currency. The country also have a current estimated  population of about 200million people and the rate of active and mobile population reaches to 40%. This is a positive point when it comes to obtaining labor force for new and existing businesses in the country.

• Global Environment

The country can take advantage of going global. It has its strong oil and gas sector which can help her earn a lot of foreign exchange in the field of exports. The petroleum exportation also serves as a source for foreign reserve.

 

 

The Weaknesses

Since Nigeria is a developing country; there are many factors which are responsible for hampering the country’s competitiveness locally and globally.

 

• Local Environment

In the previous post we talked about the Challenges of Nigeria Business Environment, click HERE to read more.

These problems have been compounding for many years and have forced the manufacturers and businessmen to either close down their businesses or relocate to other foreign countries.

• Global Environment

Nigeria as a country is deficient in her economies and therefore requires foreign assistance and investments to improve and enhance her managerial and capital base. An inadequate internal resource is a big weakness that hampers her productivity and competitiveness on the global platform.

In order to globalize its business, the Nigerian company will have to integrate itself by embarking upon diversifying her economy and export base so that it does not concentrate on sector only. Plus, she must start introducing a new and advanced technology.

 

 

The Opportunities

In SWOT analysis, the element of opportunities involves the external available resources or chances of expansion or improvement that a business organization could utilize.

 

• Local Environment

Having a high population of about 200million people, the demand for products and services is high and brought about large market place for the business, thereby it guarantees patronage and give room for the betterment of a business

• Global Environment

The country has opportunities to form good bilateral relations by increasing its export base, diversifying its economy by going global, exchanging goods and services, and even laborers.

The exchange of laborers also, would provide further growth opportunities and space for acquiring modern skills for coping up with the tough competition effectively. In this way, the competitiveness and productivity will boost with the passage of time and making it companies more innovative.

 

 

The Threats

Threats on the other hand refer to those aspects of a place or organization, which if taken up, could harm the reputation, profitability, or any other part of business.

• Local Environment

As a result of an increasing rate of crimes, frauds, and scams in the country, it has been years since the stories of water shortages have prevailed in the country and still, her weak and abnormal resources management and maintenance continued to dominate.

There was also a time when deregulation, corruption and fuel scarcity occurred in Nigeria. Thus, these factors have led to the reputation of local businesses been fallen. It also impedes the productivity and become an obstacle in the way of enhancing business competitiveness.

• Global Environment

The Nigerian companies lack sufficient capital to invest, are also short of material resources, and have low standards of products and services. They are not equipped with advanced machinery, newer and innovative production methods, as well as educated and skilled labor. Thus, most of them fail when going on international environment.