ASSESSING THE CRITICAL FACTORS IN CUSTOMER SATISFACTION IN BENUE STATE HOSPITALITY INDUSTRY

ASSESSING THE CRITICAL FACTORS IN CUSTOMER SATISFACTION IN BENUE STATE HOSPITALITY INDUSTRY

ABSTRACT

The rising failure rate of small scale businesses in Nigeria is a serious problem demanding for urgent attention.  In respect of this, the research project seek to evaluate the constraints to credit access by new small and medium scale businesses in Benue state, and in relation to this, explore those challenges which dampen the ability of small scale businesses from realizing their full potentials. This study also looks at their prospects for possible improvement and development. The chi-square (x²) model test was applied on the data obtained through questionnaires from some selected small scale businesses in Benue state. The  findings  indicate that inadequate infrastructure, paucity of finance, lack of qualified personnel ,and poor accounting records, in that order, are the major challenges affecting small scale businesses in Nigeria. Out of the 20 respondents that participated, 41%, 28%, 17% and 14% respectively considered poor infrastructure, paucity of finance, unqualified personnel and poor accounting records as the greatest impediments to credit access and survival of new small scale businesses, respectively. It is suggested therefore that nurturing the small scale businesses with dogged commitment could, place the state on the path to economic reform that would be a turning point in facilitating the recovery of Nigerian economy and purposeful national development. The collective efforts of both the government, Non-Governmental Organizations, other stakeholders, and especially small scale business operators are strongly advocated.

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Western economies realized long ago that Small and Medium Enterprises Are the main drivers of the economy. While big businesses are necessary to preserve and maintain structure within the economy, they have considerable problems of their own. Mega corporations of the earlier era increasingly lost their edge to smaller organizations which have sprouted all over the western landscape. Nigeria, like any other nation has witnessed dramatic changes in its industrial landscape. These changes are largely due to the efforts of the government to convert the economy from agricultural to an industrialized one. This arises from the belief that industrialization besides minimizing dependence on the developed economies, increases the country‘s national output, generates funds for the government, and leads to the conservation of foreign exchange earnings.  The  path  towards  industrialization  in  Nigeria  has  not  been  easy because of the disparity in resources endowment of the economic units and the low level  of investment  in  the economy.  While some units have resources beyond their immediate needs, others may have need for resources beyond what they can presently generate. Pass and Pike (2003) opined that the level of investment in an economy is one of the major elements in determining its future productive capacity and ultimately the growth in the real living standards of its people.  Also, other authors (Ekpenyong & Nyong (2002), Adeyemi & Badmus (2000) argued that shortage of finance is a critical limiting factor in industrial growth and the realization of an entrepreneur‘s dream.

In the light of the above and in realization of the fact that industrialization is required for rapid economic development, successive governments in Nigeria formulated many policies and sometimes reversing earlier ones to ease industrialization. To solve the financing problems, particularly of Small and Medium Enterprises (SMEs), a number of specialized financial institutions like the Bank of industry (BOI), which is a product of the former Nigeria Industrial Development Bank (NIDB); the Nigerian Bank for Commerce and Industry (NBCI); alongside the newly introduced Microfinance Banks have been established besides the formulation of many favourable credit policies. It is pertinent to state that Nigeria like many Less Developed Economies (LDEs) has an economy that is characterized by many micro firms.  Micro, small and medium enterprises in Nigeria account for 95 percent of non-oil productive activities outside agriculture (Jamodu, 2001). Thus, the Small and Medium Enterprises are accorded high priority and resource commitments by government

The SMEs are well suited to the factor endowment of the Nigerian economy. This is because they promote the use of local raw materials, low technologies, light industries that employ greater number of persons per unit of capital employed than Large Scale Enterprises (LSEs), serve as entrepreneurial development centres and can facilitate balanced development since they can be operated at remote and rural areas in addition to having short gestation period.

As a result of the immense potential contributions of the SMEs to the industrialization of a country as seen in the middle east, especially the Gulf region led by Dubai which has become a role model and reference point in industrial and trade development to many nations of the world, Nigeria is not left out in the scheme of activities aimed at developing the Small and Medium Scale Enterprises. It is in the light of the above, and contributing to the various insights and knowledge of the factors that militate against the success of the SMEs that the research work focus on evaluating the constraints to credit facilities by small and medium scale enterprises in Benue State, Nigeria, with the aim of proffering practicable suggestion on how to alleviate this problem.

1.2       Statement of the Problem

The association of Nigerian development finance institutions in 2004 issued a statement in relation to why SMEs performed poorly in Nigeria. They opined that finance is usually a constraint to SMEs. The most pervasive constraints for SMEs has been and will remain the lack of finance at reasonable conditions especially form external sources (Egbon, 2004; CBN, 2005).

While this may be true, empirical evidence shows that finance contributes to only about 25 percent of the success of SMEs (Ogujuiba 2004). Thus the creation of other appropriate support system and enabling environment are indispensable for the success of SMEs in Nigeria.

While the contributions of small scale businesses into development are generally acknowledged, entrepreneurs in this sector face many obstacles that limit their long term survival and development. Scholars have indicated that starting a business is a risky venture and warn that chances of small business owners making it past the five year mark are very slim (ILO, 2005). Some researches into small business development have also shown the rate of development of small scale businesses in developing countries is higher than the developed world (Marlow, 2009).

In Nigeria in particular, despite the support and incentive programmes to small scale businesses, Akabueze (2002), succinctly stated that it seems unreasonable to expect that small scale businesses will grow and flourish, but the rate of business failure continues to increase because of the obstacles affecting business performance, which finance is attributed as the main factor. Most of these enterprises cannot access loan on a long and short term basis. In a World Bank report in 2001, it was reported that almost 50 percent of micro, 39 and 37 percent of the small and medium scale firm are financially constrained in Nigeria as oppose to 25 percent of the very large firm (World Bank, 2001). The implication of this shows that small and medium scale enterprises are either discriminated against or cannot access funds at the credit market.

Also in Benue State, efforts are being made by successive governments at revitalising and encouraging potential investors to invest in SME’s in the State. This could be inferred from a radio broadcast of May 29, 2012 (i.e Democracy day) by Governor Gabriel Suswam. He reviewed that the state government has disbursed the sum of N1 billion as a loan to those interested in starting up small scale businesses in the state. In spite of all these efforts by government at revitalising small scale industries in the state, most of them if not all have gone into extinction, while few surviving ones are on the verge of collapse and are making frantic efforts to survive. Experts most often attributed this to stringent financial conditions attached to loans and credit which they posited discourages industries from accessing credit from the bank. This factor has largely undermined the capacity of small and medium scale enterprises in Nigeria. Even where SMEs can access the loan, it is usually a short term loan and what SMEs requires in building capacity is a long term loan which can be rolled on investment overtime. This issue has generated heated debate between the SMEs operator and the Banks. While SME operators have been claiming that Banks request stringent conditions and terms of approval, the Banks on the other hand had claimed that SMEs operators don’t present bankable projects. Nevertheless, Ogujuiba (2004) in a report on SMEs claimed that 20percent of SMEs have reported being constrained in receiving long term loan. This has forced SMEs to use their internal financing which is usually unsustainable and leads to the vulnerability of SMEs as a result of low capital base. Even at the establishment of the Second-Tier Security Market of the Nigerian Stock Exchange as a palliative measures  to  solve  the  financial  problem  of  SMEs,  most  SMEs  shunned  it because of the tight procedure and administrative bottlenecks in the assessment of credit facilities.

It is against this backdrop that this research work intends to empirically evaluate and explore the constraints to credit facilities that has hitherto bedevilled small scale enterprises in Benue State, Nigeria, over years and vis-à-vis proffer practicable suggestion on how to alleviate, if not totally curtail this financing problems.

TABLE OF CONTENTS

Title Page                                                                                                                                i

Declaration                                                                                                                  ii          

Certification                                                                                                                 iii

Approval Page                                                                                                                        iv

Dedication                                                                                                                   v

Acknowledgement                                                                                                      vi

Table of contents                                                                                                        viii

Abstract                                                                                                                                   xi

CHAPTER ONE: INTRODUCTION

1.1       Background to the Study                                                                                1         

1.2       Statement of the Problem                                                                              5

1.3       Objectives of the Study                                                                                  8

1.4       Research Questions                                                                                       9         

1.5       Research Hypotheses                                                                                    9

1.6       Significance of the Study                                                                               10

1.7       Scope and limitation of the study                                                       11       

1.8       Definition of Terms                                                                                         12

Reference                                                                                                                               14

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1       Introduction                                                                                                     16

2.2       Conceptual Framework                                                                                  16

2.2.1    Services                  19

2.2.2 Customer service                20

2.2.2.1 Customers Needs              21

2.2.3 Customer satisfaction                                                                            25

2.2.3.1 Price of Service and Customer Satisfaction    29

2.2.3.2 Quality of Services and Customer Satisfaction    30

2.2.3.3 Hotel Image and Customer Satisfaction      32

2.2.4 Relationship between Employees and Customers    35

2.2.5 Customer’s expectations                                                                                   36

2.3       Theoretical Framework                                                                                  38

2.4       Measuring Customer Satisfaction                                                      40

2.5       Handling of Customer Complaints                                                     43

2.6       Strategies for enhancing customer satisfaction in the hospitality industry                                                                                                     45

2.7       Management Commitment                                                                46

2.8          Empirical Review of Past Literature                                                   48

Reference                                                                                                                               51

CHAPTER THREE: RESEARCH METHODOLOGY

3.1              Introduction                                                                                                     57

3.2              Research Design                                                                                            57

3.3              Population of the Study                                                                                  58

3.4              Sample Size Determination                                                                59

3.5              Sampling Procedure                                                                                       60

3.6              Sources and Nature of Data                                                               61

3.7              Techniques of Data Analysis                                                              62

3.8              Model Specification                                                                                        64

3.9              Definition of variables                                                                         64

3.10          Weakness of the Methodology                                                                       65

Reference                                                                                                                               67       

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1       Introduction                                                                                                     68

4.2       Data Presentation and Analysis                                                                      68

4.3       Testing of Research Hypotheses                                                       80

4.4       Discussion of Findings                                                                                    82

Reference                                                                                                                               85

CHAPTER      FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATION

5.1       Introduction                                                                                                     86       

5.2       Summary of Findings                                                                         86

5.3       Conclusion                                                                                                      89

5.4       Recommendations                                                                                         90

Bibliography                                                                                                                92

Appendix                                                                                                                                 100

TOPIC: ASSESSING THE CRITICAL FACTORS IN CUSTOMER SATISFACTION IN BENUE STATE HOSPITALITY INDUSTRY

Chapters: 1 - 5
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