Home Accounting Project Topics IMPACT OF REORGANISATION ON THE PERFORMANCE OF AHMADU BELLO UNIVERSITY PRESS LIMITED

IMPACT OF REORGANISATION ON THE PERFORMANCE OF AHMADU BELLO UNIVERSITY PRESS LIMITED

31
0

ABSTRACT

Reorganisation is a financial and corporate management strategic device to salvage undertakings facing difficulties. Ahmadu Bello University Press Limited had been sustaining substantial trading losses in the past and this led the management opting for reorganisation to salvage the company from total collapse. Eventually, after few years of the exercise there was no empirical evidence to substantiate whether the company had responded to the exercise. This study examines the impact of the reorganisation exercise on the performance of ABU Press Limited. Both Operational and Financial Performance indicators are studied. Profitability, turnover, efficiency, asset turnover and cost to profit margin were used as financial performance variables, while, productivity, quality of personnel, fixed asset investment, incentives and advertisement expenses are variables used for operating performance. Data for the study were sourced from annual financial statements and staff personal record files of the company, for the period of 2000-2005 and 2007-2012 dichotomised as pre and post reorganisation time span. Sample paired test was used as tool for the analysis to assess any significant difference recorded during the two periods. The results revealed that reorganisation has significant impact on the financial as well as operating performance variables except two variables; efficiency and incentives, which show no significant impact. The study concluded that, reorganisation has significant impact on financial and operating performance. The study recommends among other things; introduction of new products and customer oriented marketing activities to boost revenue, capital and management reorganisation should be pursued vigorously, shift in ownership structure of the university presses in the country to enhance profitability and productivity.

 

 

TABLE OF CONTENTS

Reorganisation is a financial and corporate management strategic device to salvage undertakings facing difficulties. Ahmadu Bello University Press Limited had been sustaining substantial trading losses in the past and this led the management opting for reorganisation to salvage the company from total collapse. Eventually, after few years of the exercise there was no empirical evidence to substantiate whether the company had responded to the exercise. This study examines the impact of the reorganisation exercise on the performance of ABU Press Limited. Both Operational and Financial Performance indicators are studied. Profitability, turnover, efficiency, asset turnover and cost to profit margin were used as financial performance variables, while, productivity, quality of personnel, fixed asset investment, incentives and advertisement expenses are variables used for operating performance. Data for the study were sourced from annual financial statements and staff personal record files of the company, for the period of 2000-2005 and 2007-2012 dichotomised as pre and post reorganisation time span. Sample paired test was used as tool for the analysis to assess any significant difference recorded during the two periods. The results revealed that reorganisation has significant impact on the financial as well as operating performance variables except two variables; efficiency and incentives, which show no significant impact. The study concluded that, reorganisation has significant impact on financial and operating performance. The study recommends among other things; introduction of new products and customer oriented marketing activities to boost revenue, capital and management reorganisation should be pursued vigorously, shift in ownership structure of the university presses in the country to enhance profitability and productivity.

 

 

CHAPTER ONE

INTRODUCTION
1.1 Background to the Study
Change and adaptation to change remain a constant phenomenon in the lives of business organisations. Reorganisation is a financial strategic device to salvage undertakings facing difficulties. The purpose of reorganisation may varies from one firm to another, but its central objective is to improve performance in line with the value added objective of a firm (Edward, Harbir, Michael and Raja; 1999). They further, described reorganisation as an agent of change and transformation that involves the review, refocusing and redesigning of one or more aspects of an organisation due to a number of different factors.
Kaplan (1989) identified with other scholars that viewed reorganisation in a broader perspective to have included merger and acquisition, recapitalisation, managerial restructuring, staffing, takeovers, downsizing, rightsizing, privatisation, management buyout and organisational change among others. Vetsuypens and Hite (1989) viewed that organisational restructuring recently, has included the redrawing of divisional boundaries, flattening of hierarchic levels, spreading of spans of control, reducing product diversification, revising compensation, streamlining process, and reforming governance. The downsizing of employee ranks is often a by-product of reorganisation.
Ahmadu Bello University Press Limited (ABU Press Limited) was established in 1973 with the mandate of promoting academic excellence through scholarly publishing i.e. publish and print books and other related materials, especially for the tertiary institutions. It operates
11
within Printing and Publishing Industry with main focus on scholarly publishing to meet the needs of tertiary institutions. It plays an important role as a media in the achievement of the University main mandate of teaching and research.
University Presses have no commercial focus from their initial conception. The main objective is to complement and service teaching and research activities in academia generally, particularly in the owner institutions. University Presses world over were established as non-profit making organisation, and so they are usually not incorporated and hope to be like their counterparts such as Oxford University Press and Cambridge University Press at United Kingdom, Harvard University Press and Indiana University Press at United States of America etc. Funds for operation are allocated to the press by the institutions and annual receipts, especially surpluses, ploughed back into the institution to enhance scholarship, or even to expand the press to be able to cope with expanded activities (Areo; 2009). Nigerian University Presses were not in exception, they were established with the aforementioned premise.
Over the years, realities such as inadequate funding, inconsistent policies and challenges faced by publishing and printing industry in Nigeria like any other manufacturing outfit changed the tides and subdue them to commercial activities to cater for themselves. From the perspective of their Universities, inadequate subvention from Government and quest for Internally Generated Revenue (IGR) to meet their huge overhead have changed their corporate objectives of scholarly publishing and printing to revenue generating outfits.
Presently, Nigerian Universities that owned Presses includes; Universities of Lagos; Ibadan;
12
Benin; Ilorin; Jos; Maiduguri; ABU, Zaria; UNN, Nsukka; OAU, Ile-Ife; UDU, Sokoto; Bayero University, Kano, Unilag Press etc. Among all these University Presses in Nigerian Universities system, only ABU Press was incorporated as Limited Liability Company (independent business entity). These yet to be incorporated University Presses were identified with problems of bureaucratic and administrative bottleneck that made them difficult to operate at optimum capacity, as they are operating as a unit of their respective Universities, under Libraries, Vice-Chancellor‟s office, Bursary or Registry Departments.
ABU Press was incorporated as a Limited Liability Company on 30th January, 1978. It is one of the Companies established and solely owned by the Ahmadu Bello University to diversify its sources of revenue. It‟s an independent and fully commercialized venture with its own Management and the Board of Directors. The activities of ABU Press Limited have been seen to be undermined by its ownership structure (institutional private/single ownership) and the University set-up. The Managing Director is appointed by the University Management from the senior academic staff who may not have any printing, publishing or business background, as an addition to his other responsibilities of teaching and research (part-time) and most time last for only within the tenure of the Vice-Chancellor that appointed him. This put the Company at the mercy of University politics and crises. Such insecurities threatened the corporate existence of the company and this becomes even more serious considering that the bulk of printing work handled by the Company comes from the University units.
An investigation committee set-up by the University management on allegations of mismanagement against the Managing Director, ABU Press Limited in February, 2001 and the Yashim Technical Consultants Report that undertook Technical Assessment of the
13
Company‟s Machinery in June, 2002 identified several problems tagged as stumbling block to its performance. These included: in adequate share capital (450,000 shares of N1.00 each); inability to attract and engage qualified and technical manpower due to poor conditions of service; eroded working capital; obsolete machinery and equipment that resulted to sub-standard output production; low patronage; arm-chair marketing strategy and delay in payment of printing Orders serviced for the University, among others.
The aforementioned problems, among others, have continuously undermined the company‟s capability to generate funds and publish scholarly works. Yashim (2002) further reveals that due to the company‟s inadequate working capital; inventories and spare parts could simply not replenished timely and the company heavily relies on the quality and price of raw materials available on the local market (within Zaria, Kaduna or Kano) which may not necessarily be adequate or appropriate for the kind of durability and competition expected. Strong competition posed by other commercially oriented presses continues to jeopardize and threaten its market, as they are accessing and utilising modern equipment and procedures. Furthermore, the report observed that the company‟s potential for growth is favourable, but its ownership structure frustrates several efforts to raise additional working capital. Hence, the company is unable to effectively compete favourably with other commercial presses.
In 2006, with the view to addressing the aforementioned identified problems among others, the management of ABU Press Limited opted for reorganisation exercise aimed at repositioning and refocusing the company toward profitability (reverse the trend of sustaining substantial trading losses over the years) to salvage the company from total collapse. This is to meet its redefined objectives of serving as revenue vehicle to Ahmadu Bello University (its
14
sole Owners), as well as to provide the needed services required by its community. The reorganisation programme implemented actualised the Management restructuring: A Managing Director with cognate working experience in Printing and Publishing was recruited outside the University environment for the first time. The Company Accountant, Internal Auditor and other staff of the Bindery Division of Kashim Ibrahim Library (KIL) were redeployed to their respective Bursary, Internal Audit and KIL respectively. The vacant positions of technical staff were filled through internal and external advertisement. Organizational restructure: A simple, functional and cost effective organisational structure that separated the company into four departments namely: Finance & Administration; Marketing & Product Development; Editorial & Publication and Production was designed and adopted.
On Layoff, the staff found not suitable due to over-age, over staffing, unproductive, not trainable and those whose schedule of duties were phased-out due to technological advancement were disengaged and terminal benefits due to them were settled accordingly. The staff conditions of service (remunerations and scheme of service) were reviewed upward to attract qualified and technical personnel. Staff training and development programmes cutting across senior and management categories were introduced, nominated and sponsored. This is in addition to a Tailor made programme introduced in conjunction with Nigerian Publishers Association for middle level staff of Editorial, Computer and Marketing disciplines. The share capital of the company was increased from 450,000 ordinary shares of N1.00 each to 50 million authorized and 20 million issued and fully subscribed share capital of N1.00 each. The increase in share capital facilitates the acquisition and installation of some
15
needed modern pre-press, press and post press printing machinery and equipment. Whereas most of the obsolete machinery and equipment were disposed-off to cater for the installation of newly acquired machinery and equipment. Customer focussed marketing activities such as Radio jingles, newspaper adverts and interviews, participation in local and international Book fairs, sales promotion, cataloguing, exhibition etc were introduced and new products and market were developed to cater for the expected improved capacity and patronage.
Although reorganisation is always targeting performance improvement, its success, or how quickly the improvements manifest, is a subject of empirical inquiry. However, Andreas and Florian (2010) states that, reorganisation is one of the most complex and fundamental phenomena that management confronts, as numerous reorganisation exercises have failed in practice, which has resulted in vast criticism of the process. There is therefore, the need to ascertain the results of the reorganisation programme of the ABU Press Limited.
1.2 Statement of the Research Problem
Substantial literatures exist on the interaction between reorganisation and firm performance. The findings of these studies established divergent results. The positions of such researches are unresolved. While some researchers such as Kaplan (1989), Megginson et al (1996), Asante (1998) and Jerome (2008) concluded that, reorganisation significantly impacted on the performance of firm, others such as Dash (2004), Laitinen (2011) and Asediolen (2004) among others concluded that it is destructive. The literatures and their conclusions range from one organisation and industry to another, and from developed to developing economies. The findings of some studies such as Atikson et al (1995), Simons (2000), Einarsson & Persson
16
(2007) and Barbosa & Louri (2005) on reorganisation and firm performance further argued that reorganisation impacted more on financial than operating performance indicators of a firm; while other researchers such as Vetsupens & Hite (1989), Ramamurti (1997), Kaplan & Norton (2001) Jonad (2004) and Xiang & Chao (2004) hold a contrary view that it is operating performance that is better explained and influenced by reorganisation than financial performance of a firm. It has been noted that most of these studies were carried out in the context of developed countries, the results of which cannot be adopted/applicable to developing nations such as Nigeria; given the differences in nature of economies, technological advancement and high level of business sophistication. To the best of the researcher‟s knowledge, no such study conducted on the impact of reorganisation on the performance of Nigerian University owned Presses, may be considering their unique nature and mode of operations. University presses is an arm of the university that is frequently misunderstood and occasionally attacked by faculty and administration (Harvard University Press, 2004). Their main objective is to compliment and service teaching and research activities in academia generally and their university in particular. But found themselves with renewed mandates of serving their objective and commercially oriented to cater for themselves, as well as for profit making.
Reorganisation is expected to improve performance of a firm. This performance can be profitability from financial performance perspective and productivity from operating performance perspective among several other performance indicators. However, the question still remains as to the extent and significance does the reorganisation impacted on operating performance of ABU Press Limited? Does reorganisation influence the financial performance
17
of ABU Press Limited? The study therefore, seeks to examine the impact of implementation of reorganisation exercise on the financial and operating performance of ABU Press Limited.
1.3 Objectives of the Study
The main objective of this study is to examine the impact of reorganisation on the performance of ABU Press Limited. The specific objectives are:-
1. To determine the impact of reorganisation on financial of ABU Press Limited.
2. To examine the impact of reorganisation on the operational performance of ABU Press Limited.
1.4 Research Hypotheses
In line with the objectives of the study, the following hypotheses have been formulated in null form:-
H01 Reorganisation has no significant impact on the financial performance of ABU Press Limited.
H02 Reorganisation has no significant impact on the operating performance of ABU Press Limited.
1.5 Scope of the Study
The study appraised the impact of reorganisation programme on the financial and operating performance of ABU Press Limited for the period of twelve (12) years. The period 2000-2005 and 2007-2012 are dichotomised as pre and post reorganisation periods respectively. The year
18
2006 was observed as the base year (i.e the year or period when most of the reorganisation exercise took place). It is our opinion that the desired result may not show immediately within the same year of implementation, hence, the need to regard the 2006 as base period.
The financial performance is proxied by profitability, turnover, efficiency, asset turnover and cost to profit margin. The operating performance is proxied by productivity, quality of personnel, machinery and equipment, incentives and advertisement cost.
1.6 Significance of the Study
The study is expected to contribute toward the needs for managers to understand and overcome certain difficulties and uncertainties associated with reorganisation exercise for improved performance. The study will add to the sparse literature that examines the relationship between reorganisation and firm performance especially in the light of developing nations. The study will also serve as guide/blue print to management and other stakeholders of Nigerian University Presses to reorganise the operations of their University Presses for improved performance and to serve as a resource material to other Universities nursing the idea of establishing a new University Press. Finally, the study is expected to guide policy makers of Nigerian University Presses in coming with sound policies related to reorganisation and their performance.
19

GET THE FULL WORK >>

LEAVE A REPLY

Please enter your comment!
Please enter your name here