ABSTRACT

This research work focused on influence of environmental variables on the production capacity of business organizations: A study of DANGOTE (Ibesie Plant) and LAFARGE (Ewokoro and Sagamu Plants) companies in Ogun state, Nigeria. Beyond the broad objectives, the study sought out specifically to identify the strategies used by the companies with their level of impact on the company’s production capacity, examine the application of cost control techniques in the production system of the business organizations, analyze the impact of capital related cost on production capacity for Dangote and Lafarge cement and determine the environmental factors affecting the production capacity of the business organizations. Both primary and secondary data were used for this study. The primary data was collected using copies of questionnaires while the secondary data were sources from the annual reports of the companies from 2007-2016. The data gotten from the annual reports included cost of labor, salaries, wage, fuel, raw materials, board size, number of board meetings, committee meetings etc. A total population of 1200 staff of both companies was used and Taro Yamen formula employed to narrow the sample size to 300 and copies of questionnaires issued to them. A cross – sectional survey design with an exploratory and descriptive design was used as the research design. The statistical tools of analysis were frequency, tables, percentage, likert scale, multiple regression analysis and panel regression analysis. Control of production cost and inventory control were the most adopted cost control techniques while the establishment of performance budgets was least utilized (r = 0.634 p > 0.5). Also, capital related cost on production capacity showed that current liabilities and debt were statistically significant firm specific environmental factors at 1% respectively. More also, the companies employed several strategies such as marketing mix policies and environmental scanning and the multiple regression model showed that environmental factors such as competition, government policy, technological advancement and weather were negatively related while resource availability and road availability were positively related. Cost control techniques such as inventory control, control of production cost were the most relevant to production capacity (r = 0.156 > 0.5). Financial and inadequate infrastructural facilities were major hindrances to production capacity. It was recommended that government should provide infrastructural facilities and businesses should design proactive and strategic plans to deal with environmental factors. The management of the organizations should properly implore cost management techniques to increase production and enhance their decision making abilities for improved production capacity.