SWOT Analysis of Nigerian Business Environment
Every country has its own business environment just as every organization has its own set culture and business surroundings. While undertaking a business locally or abroad, the managers or CEOs of the organizations have to account for and consider all the external and internal, macro and microeconomic factors which are likely to contribute to the success or failure of the business. Though, managing a business in home country seems to be easier than going global, however, there are certain factors responsible for improving or hampering the competitiveness of the business operations both at home and abroad.
These factors are sometimes controllable but mostly the factors like inflation, unemployment and those which take place due to the boom-and-bust of economic conditions are uncontrollable. The developing or the Third World countries mostly have to keep these external and internal factors of doing business in focus, as it may harm their economic condition or spoil their goodwill. For the purpose of identifying such underlying factors, many tools like SWOT and PEST analyses are used.
They evaluate the hidden forces and enable the country or organization judge their vulnerability of success or failures against those factors. This essay would outline and briefly discuss such forces or
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As far as the economy and business of Nigeria is concerned, the country has a fastest growing economy and an attractive business place. Nigeria has been one of the most prominent members of Commonwealth Nations and is listed among the other countries in ‘Next Eleven’ economies. The concept of ‘Next Eleven’ or N-11 countries refers to the list of those eleven nations which possess a great potential and ability to become the world’s largest economies in 21st century.
Nigeria is one of those countries which rely heavily on their natural resources, especially oil. Though, corruption, political instability, poor management and lack of infrastructure prevail, but it has been classified as a newly emerging market (CIA, 2010). Since the year 2007, the country has been experiencing high GDP and the government has been trying constantly to curb the mismanagement and inflation and is imposing new policies and reforms to improve the financial and services sector of the country.
Though, the country provides an attractive place for investments in its different business sectors but the inadequacy of utilities and infrastructure prevents the entrepreneurs to set up their businesses. Moreover, the existence of ethnic groups and diverse languages makes Nigeria a more complex country. Starting up a business from the scratch either at home country or in a foreign country is a very complex matter. There are many factors which need to be undertaken in order to account for the vulnerability of the business operations to many sensitive issues.
For this purpose, the business and management gurus have devised tools and strategies to identify and analyze those factors which are vital for the success of the business and those which contribute adversely towards it. One such tool is SWOT Analysis. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. It is an instrumental framework in which is used to identify and evaluate the external value creating (destroying) factors and the internal value creating (destroying) factors in Value Based Management and Strategy Formulation (Value Based Management, 2010).
Nigeria, being a diversified social structure and complex business environment, also poses many merits and demerits for companies both which are going global and operating locally. Thus, a SWO analysis becomes an essential step to be undertaken. The main factors for supporting or hindering the Nigerian company’s competitiveness as obtained by SWOT are as under: • Strengths Nigeria is a combination of people of all the ethnicities, races and languages. There are many strong factors which ensure a successful business in the country and abroad.