ABSTRACT
This study investigated “The effect of innovation on competitive advantage of selected Manufacturing Firm in South East Nigeria”. The study sought to ascertain the extent to which technology advancement affects productivity, establish how process innovation affects product life cycle, assess the extent to which promotional strategy affects sales growth, determine how patent right affects organizational creativity, examine how product redesign affects customers brand loyalty. The study adopted survey research design. The population of the study was 7112 staff from ten (10) manufacturing firms that were selected purposively from South-east, Nigeria. The sample size of 553 was obtained using Godden’s statistical formula for calculating sample size from a finite population (at 5% error margin). A proportional stratified random sampling technique was used to select the respondents in each of the selected manufacturing firms. Primary data were collected from the questionnaire and interview. The questionnaire was designed on a 5 point likert scale format. Secondary data were collected from books, journals and internet. Out of the 553 copies of the questionnaire administered, 526 copies were returned and used while 27 copies were not returned. The research instrument was given to five experts from the manufacturing industries and academics to measure face and content validity. Spearman rank order correlation coefficient was used to test the reliability of the instrument given a coefficient of 0.83, indicating the reliability of the instrument. The hypotheses were tested using ordinal logistic regression (OLR) model. The findings of the study revealed that technology advancement had positive and significant effect on productivity ( = 14.291, p = 0.008 < 0.05); process innovation positively affects product life cycle (β = 1205.307, p = 0.013 < 0.05); promotional strategy had a positive and significant effect on sales growth ( = 78.234, p = 0.009 < 0.05); patent right had a positive effect on organizational creativity (β = 680. 780, p = 0.026 <
0.05) and product redesign positively affects customer’s brand loyalty (β = 1248. 727, p = 0.000 < 0.05).Based on the findings, the study recommended that manufacturing firms should regularly innovate in the area of technology as it has been found to significantly improve productivity; organizations involved in manufacturing should regularly improve their processes of production, including selling and distribution of their products and services in order to enhance the products life cycle; manufacturing organisations should regularly embark on sales promotion campaign, because of their positive implications on turnover; manufacturing organisations should develop patents for their products because of its positive effect on creativity. Finally, manufacturing companies should strategically redesign their products for higher quality to ensure brand loyalty of their customers which enhances overall organizational performance.
CHAPTER ONE INTRODUCTION
1.1 Background of the Study
The term innovation was first used by Joseph Schumpeter at the beginning of the 20th century during which he saw it as a major propelling force towards organizational advantages in the market place by way of products, processes and organizational changes arising from combination of already existing technologies and their application in a new context (Zizlavsky, 2011). Since then, there have been many researches and positions arising there from.
Bernard (2001) has argued that organisations should always have a bucketful of ideas to tap from in order to navigate through changing and challenging times.
The business environment is ever challenging especially in capitalist and mixed economies. This is because similar firms (in same industry) in the private sectors in these economies are in constant competition with each other due to the characters of their environment. These include the market-driven nature of the environment (which entails that goods and services are produced and provided in the market place at a price to be determined through the interaction of the forces of demand and supply); enterprise driven largely profit motive-which means that enterprises are not embarked upon for the ordinary sake of it but mainly to make profit in the process of providing goods and services; existence of legal framework and regulations that promote business undertakings, and existence of infrastructures. These infrastructures include good transport system (by road, air and sea), good water supply, regular/adequate power supply (electricity), communication, and among others. There is also the aspect of government enforcing regulations in order to ensure there is healthy competition among firms and businesses (Adair, 2004)
Pitra (2006) states that innovation is the result of employee’s creativity in an organization and must be always targeted at customers and bring added value. In this way, it acts as a catalyst of growth (Ezenwakwelu and Ikon, 2014).
The capacity to innovate is recognized today as one major way to gain competitive advantage in the marketing of products and services in particular and corporate world in general. An innovative firm would readily lend its support to new ideas, novelty, experimentation and the creative processes that may result in new product, services,
or technological process (Fulmer, Gerhart and Scott, 2003). One traditional means of achieving competitive advantage is to create new products that cannot be easily copied. Low-cost products as a competitive advantage also suffer from sustainability while the brand name as competitive advantage is possible only if there is a strong brand (Fulmer et al, 2003).
Globally, successful firms have been those that embarked on one form of innovation or the other. In the United States of America and other Western countries, many of the companies that embraced innovation as a competitive strategy include Ford Motors, Microsoft, Vertex Pharmaceuticals, Incyte, Amazon.com, Adobe Systems, Coca Cola, AVIC Aviation Engine, etc. In the developing world and especially the African continent and Nigeria, innovation has also been embraced by many organizations which include MTN, Globacom, Airtel, Etisalat, Konga, Jumia.Com.Nig, Famous Brands, Iroko TV, East African Breweries, Nando’s food and Beverages etc (Sonny and Kunnathar, 2014).
In an environment of high speed change, short product life cycle, mass customization, and narrowing customer niches, the successful integration of technology and marketing capabilities for a given product conveys little long term strategic advantage to firms (Fowler, King, Marsh and Victor,2000).
Innovation strategy is that part of strategy which deals particularly with the growth of an organization through the development of new products, services, processes or business models. An innovation strategy then becomes a plan of how to use the development of new products, services, processes or business models to achieve certain objectives (Abbing, 2010).
Most importantly, to create growth, to sustain performance and to develop performance in such a dynamic and changing environment, one way is to make innovations (Cottam, Ensor and Band, 2001). Innovation is a main strategic tool to have a competitive advantage in such complex environments (Gardaker, Ahmed and Graham, 1998).
Organizations need to differentiate themselves from other players in the market. In most cases, leading companies continuously use innovative strategies to create an edge over their competitors. One way is to update their process through innovation
strategies. These strategies will help them to have fewer inventories, react faster to market changes and lead times and costs (Gardaker et al., 1998).
Global competition has driven businesses to hold fewer inventories and to get their products to market both faster and with more precise timing than in the past. Competition has also driven local and global corporations to become leaner and more efficient and to react faster to both changes in the marketplace and in the internal business environment. Constantly shifting business priorities, increasing seasonality of products, faster business cycles, and more frequent redesign of product are some of the market conditions that lead to intense pressure on productivity to increase efficiency while still providing flexibility to the business to allow it to react to changing demands (Carter, Bauer, Persich and Dalm, 2010).
In today’s highly dynamic and competitive business environment, firms are exposed to strict challenges with meeting the ever-increasing market and customer needs and expectations, coping with sophisticated requirements, and facing technological obsolescence. In this regard, the concept of innovation is gaining prominent significance as a means of sustaining performance and growth. It has been an area of intense research and various conceptualizations have been put forward (Fartash and Davoudi, 2012).
Many manufacturing firms in Nigeria had failed due to their inability to be creative and innovative in the face of challenging situations. These situations include scenarios created by the introduction of new government policies that may increase their cost of production. For instance, due to the introduction of the Structural Adjustment Programme (SAP) in Nigeria in 1986, the cost of importation of raw materials by many domestic manufacturing companies significantly increased. This was a result of the devaluation of the Naira against major currencies such as the Dollar (USD). At the same time, similar goods to those domestically manufactured were being imported. These, though often of better quality (produced at low costs) were to compete with the domestically manufactured ones.
In recent time, Nigeria is in a recession, making it compulsive that manufacturing firms must innovate in order to have competitive advantage in the market place. Nigeria’s recession is a product of many contradictions- neglect of manufacturing sector due to massive importation of finished manufactured goods, mono culturism, non-diversification of the country’s economy, inadequate capital investment and weak
infrastructure development, high cost of doing business in the country, high unemployment, declining real gross domestic product growth rate, declining foreign exchange earnings, among others (Onwumere, 2016).
Many manufacturing firms in the country especially in the South East must innovate in order to have competitive advantage. There in, lie the challenges and the problem of the study.
1.2 Statement of the Problem
Capitalist and mixed economies have always provided opportunities for firms to be innovative in order to survive the terrain of competition. These are largely market- driven economies that allow firms as well as individuals to compete, be innovative in order to have certain advantages over others, and reap from their initiatives, among others. Innovation has ideally resulted in competitive advantage.
In the advanced developed countries, manufacturing organizations have more to grapple with innovation in order to have competitive advantage. This is because ideally, the congenial environment to do business is largely provided- ease-of- doing business, friendly policies are in place; adequacy of infrastructural provision such as good roads, water provision, largely uninterrupted electricity and other means of energy provision, adequate communication infrastructure, macro economics stability, etc.
In Nigeria and most developing countries, the operating environments have made it more imperative for manufacturing firms to be innovative in order to not only survive and grow but to have competitive advantage among peers. Their environments are mostly not business friendly, imbued with inadequate infrastructural facilities such as power (electricity), and roads, etc.
Studies on the Nigerian manufacturing revealed that many of the firms had collapsed or failed due to their inability to align technology with productivity, promotional strategies with sales growth, creativity with access to patent right, and product redesign with brand royalty. Firms are finding it difficult to procure relevant raw materials especially, imported ones, due to devaluation of Naira against major currencies- the US Dollar, British Pound, and all currencies. Competition in the market is stiffer against relevant low-cost imported finished goods.
The situation with manufacturing in Nigeria especially in the South East need to improve, otherwise, more manufacturing concerns are bound to fail. The consequences of not addressing the highlighted problems are enormous. These will have negative implications on outputs and services, employment and the general price level in the economy.
However, the study focuses on effects of innovation on competitive advantage of some selected manufacturing firms in South East, Nigeria.
1.3 Objectives of the Study
The broad objective of the study is to examine the effects of innovation on competitive advantage of selected manufacturing firms in South East, Nigeria. The specific objectives are to:
i. Ascertain the extent to which technology advancement affects productivity in the selected manufacturing firms.
ii. Establish how process innovation affects product life cycle in the selected manufacturing firms.
iii. Assess the extent to which innovative promotional strategy affects sales growth in the selected manufacturing firms.
iv. Determine how patent right affects organizational creativity in the selected manufacturing firms.
v. Examine how product redesign affects customers brand loyalty in the selected manufacturing firms.
1.4 Research Questions
The research attempts to provide answers to the following questions:
i. To what extent did technological advancement affect productivity in the selected manufacturing firms?
ii. How did process innovation affect product life cycle in the selected manufacturing firms?
iii. What was the extent to which innovative promotional strategy affect sales growth in the selected manufacturing firms?
iv. How did patent right affect organizational creativity in the selected manufacturing firms?
v. How did product redesign affect customers brand loyalty in the selected manufacturing firms?
1.5 Research Hypotheses
To achieve the objectives of this study, the following hypotheses were tested;
i. Technology advancement did not have positive and significant effect on productivity in the selected manufacturing firms.
ii. Process innovation did not positively affect product life cycle in the selected manufacturing firms.
iii. Innovative promotional strategy did not have positive and significant effect on sales growth in the selected manufacturing firms.
iv. Patent right did not have positive effect on organizational creativity in the selected manufacturing firms.
v. Product redesign did not positively affect consumer brand loyalty in the selected manufacturing firms.
1.6 The Significance of the Study
The study will help the government, shareholders and manufacturers in formulating policies that will encourage innovation in the manufacturing sector, ensuring its implementation and creating enabling environment for competition.
It will enable managers understand the role of innovation management tools and how to gain competitive advantage through successfully planned and implemented innovation strategies.
The study will serve as a reference material for future researches.
1.7 The Scope of the Study
The study was carried out in ten selected manufacturing firms in South East Nigeria: Hero Breweries Plc Onitsha, Anambra State; Nigerian Breweries plc located in Nineth Mile, Enugu State; Juhel Ltd located in Emene, Enugu state; Innoson Ltd in Emene, Enugu state; Guinness plc located in Aba, Abia state; Tonimas Ltd in Aba, Abia state; Orange Drugs Ltd located in Owerri, Imo state; Pollyfoam Ltd in Owerri, Imo state; and Camela Group Ltd located in Abakaliki, Ebonyi state. All the selected manufacturing firm operating within the South-East Nigeria. These firms were purposively selected because they were certified by National Agency for Food and Drug Administration and Control (NAFDAC), Standard Organization of Nigeria (SON) and Consumer Protection Council (CPC). They also have high employee strength and operate on high ethical standards. The study will cover the period of (2012-2017).
1.8 Limitation of the Study The major constraints of the study are: Attitude of the Respondents
Some of the respondents show negative attitude towards the study because there was no financial benefit attached; some refused to supply the necessary information required probably for fear of leaking the secret of their organization or due to ignorance of the purpose of the study. To handle this, the researcher re-assured them of the confidentially of their views.
Paucity of Data
There were very few works carried out on innovation and competitive advantage, particularly in the manufacturing sector. In spite of the paucity of data on the subject matter, the researcher was able to make use of the materials available.
1.9 Operational Definitions of Terms
In the course of this study, the following terms and concepts were highlighted. Innovation: This refers to changing or creating more effective processes, products and ideas, and can increase the like-hood of a business succeeding (Daniels, 2002). Competitive Advantage: This is a set of capabilities or resources that allow an organization to differentiate its product or service from those of its competitors to increase market share (Clark et al., 2008).
Innovative Strategy: This is a plan made by an organization to encourage advancements in technology or services, usually by investing in research and development activities (Akman and Yilman, 2008).
Organizational Performance: This comprises the actual output or result of an organization as measured against its intended outputs, goals and objectives (Iyanda,
2004).
Performance Measurement: This refers to regular measurement of outcomes and results, which generates reliable data on the effectiveness and efficiency of programs (Grahovac and Miller, 2009).
Process Innovation: This is the implementation of a new or significantly improved production or delivery method including significant changes in techniques, equipment and or software (Slocum, 1998).
Creativity: This is the tendency to generate or recognize ideas, alternatives or possibilities that may be useful in solving problems, communicating with others, and ourselves and others (Rumelt,2000).
Brand Loyalty: This is the extent of consumer faithfulness towards a specific brand and this faithfulness is expressed through repeat purchases and other positive behaviors such as word of mouth advocacy, irrespective of the marketing pressures generated by the other competing brands (Rothwell and Zegveld, 1997).
Product Redesign: This is the process of creating a new product to be sold by a business or enterprise to its customers (Davila, Epsetin, and Shelton, 2006).
Sales Growth: This is the growth rate of sales of a product that is expressed as a percentage increase over the course of a year (Grahovac and Miller, 2009). Technological Advancement: This is the generation of information or the discovery of knowledge that advances the understanding of scientific relations or technology (Lim, Schultmann, and Ofori, 2010).
Promotional Strategy: This is refers to raising customer awareness of a product or brand, generating sales, and creating brand loyalty (Tjosvold and Ziyou, 2007). Patent: A Patent is a right that is granted for an invention, which is a product or a process that provides, a new way of doing something, or offers a new technical solution to a problem (Ranjit, 2004).
1.10 Profile of Organizations Understudied
(i) Nigerian Breweries PLC, (NBL)
Nigerian Breweries Plc., the pioneer and largest brewing company in Nigeria, was incorporated in 1946. The company recorded a landmark when the first bottle of STAR lager beer rolled off the bottling lines in its Lagos Brewery in June 1949. This brewery has undergone several optimization processes and as at today boasts as one of the most modern brew houses in the country. Over the next decades Nigerian Breweries Plc. commissioned breweries across the breadth of Nigeria, Aba Brewery in 1957, Kaduna Brewery in 1963, and Ibadan Brewery in 1982. In 1993, the company acquired its fifth brewery in Enugu. In October 2003, a sixth brewery, sited at Ameke, in Enugu State was commissioned and christened Ama Brewery. Ama Brewery is today, one of the biggest and most modern breweries in Africa. Operations in the Old Enugu Brewery were however discontinued in 2004, while the company acquired a malting Plant in Aba in 2008. In October 2011, Nigerian Breweries acquired majority equity interests in Sona Systems Associates Business Management Limited, (Sona Systems) and Life Breweries Limited from Heineken N.V. This followed Heineken’s acquisition of controlling interests in five breweries in Nigeria from Sona Group in January 2011. Sona Systems’ two breweries in Ota and Kaduna, and Life Breweries in Onitsha have now become part of Nigerian Breweries Plc., together with three brands: Goldberg lager, Malta Gold and Life Continental lager.
Brand Portfolio
Nigerian Breweries Plc. has a rich portfolio of high quality brands: Star Lager Beer, the first in its portfolio, was launched in 1949; this was followed by Guilder lager beer in 1970; Maltina, the nourishing malt drink, was introduced in 1976, followed by Legend Extra Stout in 1992. Amstel Malta was launched in 1994 while Heineken lager Beer was relaunched into the Nigerian market in 1998. Maltina Sip-it, packaged in Tetrapaks was launched in 2005, while Fayrouz was launched in 2006. In 2007, the company introduced Star, Heineken and Amstel Malta in Cans. In 2011, the company
sold a total of 29 Stock Keeping Units (SKU’s) including Gulder Can, Legend Can, Heineken Magnum, Maltina Can, Fayrouz Cans, Fayrouz P.E.T, Climax Energy drink as well as Goldberg lager, Malta Gold and Life Continental lager which became part of the family in October 2011.
Ancillary Industries
As a major brewing concern, the company encourages the establishment of ancillary businesses. Many of these organizations and individuals depend largely on the company for their means of livelihood. These include manufacturers of bottles, crown corks, labels, cartons, plastic crates and such service providers as hotels/clubs, Distributors, Transporters, Event Managers, Advertising and Marketing Communication Agencies etc.
Corporate Social Responsibility
Nigerian Breweries Plc. is a socially responsible corporate organization with a good track record of corporate social initiatives in identified and strategic areas. The Company’s Corporate Social Responsibility is driven by a vision to always “Win with Nigeria”. Over the years, Nigerian Breweries Plc. has been very active in supporting our national development aspirations in line with our commitment to “Winning with Nigeria”. We have continued to identify and respond to major challenges confronting our nation through our corporate social investments especially in the areas of education, the environment, water, youth empowerment, talent development and sports, amongst others. The company in 1994 established an Education Trust Fund with a take-off grant of N100 million to take more active part in the funding of educational and research activities in institutions of higher learning, all in an effort to provide and encourage academic excellence in Nigeria. This is in addition to its secondary and university scholarship programmes for children of its employees. The company is also involved in the development of leadership, musical and movie talents, through various programmes. Some of these activities are captured in the company’s Social and Environmental Report. As Nigeria’s foremost brewer of lagers and related beverages, we are passionate about our vision to be world-class in all our activities.
We regard our people as core and indispensable to our continued success. If you truly desire a career in a world-class environment and are confident that you possess the
required mix of qualities, we invite you to come and have a chat with us. Join Nigerian Breweries Plc and become an essential part of our business. We will give you a chance to develop a career leading to the executive management of one of the leading beverage conglomerates in the world. Opportunities abound for you to achieve excellence in divisions such as Human Resources, Supply Chain, Logistics, and Marketing, Sales, Finance and IT where you will undergo a traineeship of 12 months. As a management trainee, you will be engaged in hands on experience in challenging operational projects both locally and internationally to gain valuable experience and develop your skills. We also have a mentorship programme in place whereby our pool of experienced professionals will help with your development programme and with a smooth integration into the Nigerian Breweries culture. This is to guide you towards a promising career with a possibility of becoming an international manager in Heineken B.V. Apart from rewarding career opportunities, Nigerian Breweries Plc also offers competitive remuneration. In addition to basic salary, performance related variable pay as well as a generous pension scheme, the job attracts housing allowance, car, paid annual leave, free medical coverage for self and family and other fringe benefits.
(ii) Nigerian Bottling Company Ltd. (NBC)
The Nigerian Bottling Company Ltd is one of the biggest companies in the non- alcoholic beverage industry in the country and is the sole franchise bottler of The Coca-Cola Company in Nigeria. The company serves approximately 160 million people by producing and distributing a unique portfolio of quality brands, bringing passion to marketplace implementation, and demonstrating leadership in corporate social responsibility. The operations of the Coca-Cola Hellenic Group span 28 countries, serving more than 581 million people. The group’s holding company, Coca- Cola HBC AG, is headquartered in Switzerland and has a premium listing on the London Stock Exchange as well as secondary listings on the Athens and New York stock exchanges.
Product Portfolio
We produce, sell and distribute a wide range of beverages, most of which are trademark products our product portfolio consists of leading brands Coca-Cola, Coca- Cola light, Fanta and Sprite local brands such as Schweppes, Five Alive, Limca and
Eva We continuously review opportunities to expand our product portfolio in order to offer consumers in Nigeria an increasing range of choices. Every measure is taken to ensure that our products are of the highest quality.
Sustainability
To ensure our long-term success, we must minimize our environmental footprint and contribute to the local quality of life. We have a longstanding commitment to doing so. Given the growing number of sustainability challenges, we focus on issues that are priorities for our business and for our stakeholders. These are: water stewardship, Energy climate protection, packaging and recycling Consumer health, people development, supplier engagement, benefiting communities, united nations compact. For each of these issues, we set goals and targets, measuring and monitoring our progress as rigorously as other parts of our business. We follow leading external standards and methodologies and report our progress transparently in our corporate social responsibility. We produce, sell and distribute to customers a range of non- alcoholic beverages including four of the world’s bestselling brands: Coca-Cola, Coca-Cola Light, Fanta and Sprite. At the Nigerian Bottling Company Ltd (NBC), we provide consumers with a broad variety of other sparkling, still beverages and waters. Staging promotions, together with trade partners, enables us to engage with our consumers, and to share the fun and enjoyment offered by our increasingly broad range of brands of products. The promotions provide a great opportunity for consumers to participate in a variety of events, including sporting and cultural presentations, contests and lucky draws, as part of their experience when enjoying their favorite beverages. The promotions provide a great opportunity for consumers to participate in a variety of events, including sporting and cultural presentations, contests and lucky draws, as part of their experience when enjoying their favorite beverages. Over the years, Nigerian Bottling Company Ltd has staged hugely popular promotions that have enabled people to join in including: 2012 Coca-Cola ‘Open Up and Win’ Promo 2010 ‘Naija at 50’ Promo, 2010 Coca-Cola Open Happiness Mystery Shopper Rewards, 2010 FIFA World Cup Fan Celebration promotion.
(iii) Guinness Nigeria Plc, (GNP)
This is the story of a truly successful company with a rich heritage and a great track record of growth and strong performance. Guinness Nigeria is not only regarded as an
iconic African company, renowned internationally for its brands of unmatched quality, but also as a company that believes in enriching the communities within which it operates, through investment and active participation in the positive evolution of society. Guinness Stout was first exported to Sierra Leone in 1827 and soon became popular across West Africa. In 1963, Ikeja in Lagos Nigeria was chosen as the first location outside the British Isles to brew the iconic dark beer. Two years later, in 1965, Guinness Nigeria was listed on the Nigerian Stock Exchange. Steady growth in markets for Guinness Stout and Harp Lager during the next 30 years prompted the building of three more major breweries in Nigeria. In 1974, the company built a second brewery in Benin, where it produced Harp lager beer. This facility was later expanded to accommodate a second stout brewery, commissioned in
1978. In 1982, a fourth Guinness brewery was built in Ogba, Lagos to brew Harp Premium Lager beer. This site too, was expanded to include Guinness Stout. Several years later, in 2004, Guinness Nigeria commissioned a new brewery at Aba, Abia State.
In 2011, the Benin and Ogba breweries were expanded to further increase capacity and meet the growing demand for Guinness Nigeria products which include the acclaimed brands: Guinness Foreign Extra Stout, Guinness Extra Smooth, Malta Guinness, and Harp Lager beer. Other brands include Gordon’s Spark, Smirnoff Ice, Armstrong Dark Ale, Satzenbrau Pilsner, Top Malt, Harp Lime, Dubic Extra Lager and most recently, Malta Guinness Low Sugar. Guinness Nigeria is committed to enriching the communities in which it operates and plays a leading role in the socio- economic development of its host communities. To ensure that efforts can be as effective as possible and are sustainable, the company concentrates on these focus areas: the provision of clean potable water (through the Diageo Water of Life initiative), Health and Education.
Core values
Our Purpose
Celebrating life every day, everywhere.
Our Vision
To be the best performing, most trusted and respected consumer Products Company in
Nigeria.
Our values
Our values are a critical element of our corporate strategy – influencing the way we work, every day and everywhere. We are passionate about our customers and consumers – our curiosity and consumer insights drive our growth. We cherish our brands; we are creative and courageous in pursuing their full potential. We are innovative, constantly searching for new ideas. We value each other – we seek and benefit from diverse people and perspectives. We strive to create mutually fulfilling relationships and partnerships. We give ourselves the freedom to succeed – we trust each other, we are open and seek challenge, and we respond quickly to the opportunities this creates. We are proud of what we do and how we do it – we behave responsibly with the highest standards of integrity. We strive to be the best – we are always learning, always improving. We set high standards, we stretch to exceed them and we celebrate success. Every year, Guinness Nigeria conducts an employee values survey, exploring how our values are being demonstrated individually and across the company.
Management
We always strive for the highest standards of corporate governance, responsibility and risk management. The Board of Directors is responsible for the company’s strategic objectives, business performance and supervision of the management of business. The directors have the skill, experience, independence and knowledge of the company necessary to carry out their Board responsibilities. The Guinness Leadership Team is made up of a mix of Nigerian and expatriate members reflecting the best of both worlds. The team reflects a variety of personalities, experiences and perspectives and we feel this creates a stimulating and rewarding working environment Board of Directors.
Vice Chairman, Dr. Nick Blazquez
Dr. Blazquez was appointed as a director of the Company in September 2004 and Vice Chairman in February 2006. He is the President of Diageo Africa and a member of the Diageo Executive Committee. He has worked for Diageo for 20 years in a number of senior roles in Aisa.
Managing Director/CEO, Mr. Rory John O’Keeffe
Mr. John O’Keeffe holds a Bachelor of Commerce degree from the University
College Cork, Ireland specializing in Economics and Marketing. He joined Diageo
Plc in 1994 and he has held a number of leadership responsibilities including Brand Manager, Diageo Ireland; New Product Development Manager, Diageo Ireland; Guinness Brand Manager, Non-Executive Director (NED), Professor J. O. Irukwu, SAN Professor Irukwu holds MBA and Ph.D. degrees as well as several honorary doctorate degrees. He is a Fellow of the Corporation of Insurance Brokers, a past president of the West African Insurance Companies Association and the Founding President of the Professional Reinsurers Association of Nigeria. He is a Professor of. Non-Executive Director (NED), Mr. Andy Fennell Mr. Andy Fennel holds an honours degree in Psychology from the Cardiff University in the UK. He joined Bass Plc as a graduate trainee and held various sales and marketing roles in both the soft drinks and beer divisions. He joined Guinness GB in 1997 and was appointed Marketing Director.
Non-Executive Director (NED), Mrs. Zainab Abdurrahman
Mrs. Zainab Abdurrahman holds an honours degree in Economics from the Ahmadu Bello University, Zaria specializing in Finance, Operations Research, Statistics, Project Evaluation, Accounting and Economic Analysis. She joined the Nigerian National Petroleum Corporation (NNPC) in 1979 where she held a number of increasing leadership responsibilities including Managing Director, Group. Non- Executive Director (NED), Mr. Philip John Jenkins Mr. John Jenkins obtained an honours degree in Accounting and Financial Analysis from the University of Newcastle-Upon-Tyne. Mr. Jenkins is a senior finance professional with a 20 year record of success in blue chip, sales, marketing and manufacturing environments, he is a member of the institute of Chartered Accountants. Mr. Non-Executive Director (NED) Ms. Yvonne Ike Ms. Yvonne Ike holds a Bachelor of Science Degree in Economics. She started her career as an auditor with Ernst and Young International and has been an FSA registered representative since 1994. She was a Managing Director at JP Morgan, where she spent 15 years of her career until 2009
Company Secretary, Sesan Sobowale
Sesan qualified as a Solicitor and Advocate of the Supreme Court of Nigeria and was admitted to the Bar in December 1990. Sesan has over 18 years of commercial legal experience in Nigeria’s leading commercial law firms including G. M. Ibru andCo., Udo-Udoma and Bello-Osagie and the Law Union.
Milestones
19th – Century Guinness Stout first imported into Nigeria.
1950s -Trading Company for Guinness established in Nigeria.
1962- First Guinness brewery outside of Ireland and Great Britain built in Lagos.
1962 – Guinness Eye Hospital built in Lagos University Teaching Hospital (LUTH).
1965 – Guinness Nigeria is quoted on Nigeria Stock Exchange with 1,200 investors.
1974 – 2nd ultra-modern brewery built in Benin to produce Harp Lager..
1978- 3rd brewery built at Benin to produce Guinness Stout.
1982 – 4th brewery built in Ogba to produce Harp Lager, and later Guinness Stout.
1986 – Guinness Nigeria invests in farming of maize and sorghum to replace imported barley.
1990 – Malta Guinness launched into the Nigerian market.
1990 – Guinness Nigeria invests N1.6billion (£45 million) in upgrading its breweries.
1991 – Another Guinness Eye Hospital built in Onitsha.
1997 – Guinness Nigeria becomes a subsidiary of Diageo Plc, thus gaining access to
Diageo’s range of global brands and technical support.
1997 – 1st Water of Life mini-water works commissioned at Oregbeni/Benin, Edo
State.
2001 – Guinness Nigeria records over 60,000 investors, share capital value of N354million (£2.1 million) with shareholders’ funds of N14, 158million (£84.95m)
2001 – Gordon Spark, an exotic ready-to-drink product is launched into the Nigeria market.
2003 – 1st Corporate Citizenship Report launched to highlight the company’s contributions to the society.
2004 – Guinness Nigeria commissions another brewery in Aba, Abia State.
2004 – Commissions the 2nd Water of Life mini-water works project in Aba, Abia
State.
2005 – Commissions the 3rd Water of Life mini-water works project in Badia Lagos.
2005 – Guinness Extra Smooth is launched in the Nigerian market.
2006 – Smirnoff Ice launched into the Nigerian market.
2007 – Guinness Nigeria becomes the 1st brewery in West Africa to be ISO
14000:2004 certified – the highest certification available for clean environmental standards globally.
2007 – Guinness Nigeria provides water to an additional 500,000 people in Nigeria under the Water of Life scheme with mini-water works located in Lagos, Anambra, Ogun, Imo, Rivers, Nassarawa, Niger, Ekiti, Kwara and Edo states respectively.
2007 – Guinness Nigeria becomes the 1st manufacturing company to become ISO
22000 certified for food safety standards.
2007 – The International Institute for Quality Selection, Bruxelles, endorses Foreign Extra Stout and Guinness Extra Smooth with Grand Gold Medals. Harp Lager and Satzenbrau awarded Gold Medals for surpassing international quality standards.
2008 – Ogba Brewery emerges as Africa’s best in the Guinness League of Excellence.
2008 – Guinness Nigeria goes live on SAP.
2008 – The International Institute for Quality Selection, Bruxelles endorses all Guinness Nigeria brands with Grand Gold Awards at the Monde’s 47th International Awards for surpassing international standards.
2009 – Brand Guinness celebrates 250 years of iconic existence globally.
2010 – Guinness Nigeria celebrates its 60 years of brewing excellence in Nigeria.
2011 – Guinness Nigeria signs into the Convention of Business Integrity (CBi).
2011 – Harp Lime, a cool new flavored Harp Beer is launched into the Nigerian market.
2012 – Dubic Extra Lager, a beer with a great Nigerian heritage, is launched in Aba and Ibadan simultaneously.
2012 – The 1st solar-powered Water of Life mini-water works is commissioned in
Awba Ofemili, Anambra State.
2012 – Guinness Nigeria wins the Best Place To Work in Nigeria and the Best
Multinational Company in Nigeria Awards.
2012 – Malta Guinness Low Sugar, a new low-sugar Malta variant filled with top-of- the-world goodness and vitality is launched into the Nigerian Market.
Awards
Guinness Nigeria is proud of the high ethical standards with which it conducts its businesses. This has been independently acknowledged by various international and local standards organizations, professional bodies, the media and regulatory agencies. Here is a selection of some of our achievements:
2013-Most Socially Responsible Private Sector Company supporting the water sector
2012 – The Best Place to Work in Nigeria Award
2012 – The Best Multinational Company in Nigeria Award
2011 – Two SERA Awards: Most Socially Responsible Company in Labour Practices and Most Socially Responsible Company for Fair Operating Practices
2011 – Grand Award in CSR (Health Sector) by LEAD
2011 – Coolest CSR Stories for 2011 by Cool Brands Global at the 2011 SERA Awards
2009 – Company of the year Award 2009 by This Day Newspapers
2009 – Two SERA Awards for the Most Socially Responsible Company, and the Most
Environmentally Responsible Company in Nigeria
Other awards and recognition include:
Nigerian Stock Exchange President’s Merit Award since 1997.
The Top 10 Most Respected Companies in Nigeria Award by
PricewaterhouseCoopers
The best-kept industrial premises by Manufacturers Association of Nigeria
Fire Prevention Association of Nigeria Award for safety policies
The Best Improved Quality Award and Guinness Africa league for Quality
Excellence.
All the company’s products have consistently won the Standards Organization
of Nigeria (SON) Gold Quality Awards since 1982.
ISO 9002:1994 quality standards received in 2001; Guinness Nigeria became the first brewery in West Africa to be so honored.
The Ophthalmologic Society of Nigeria has also honored the Guinness Nigeria with a “Distinguished Service Award” for, in its own words, the company’s “enormous contributions” to eye care delivery in the country.
Compliance and Ethics
Compliance is all about adhering to the standards we have set for ourselves and our business. In Guinness Nigeria Plc., we strive to demonstrate the highest standards of integrity in everything we do and the way we behave towards each other and others outside our company. Our actions and interactions with our consumers, customers, employees, government officials, suppliers and shareholders and other stakeholders reflects our values, beliefs and principles. Our business is largely self-regulated and
we pride ourselves as leading our peers in the industry and Nigeria in this regard. In addition to self-regulation, we are committed to conducting business in accordance with applicable laws and regulations in Nigeria. We have adopted a risk-based compliance approach which helps us target our resources to those areas where they are most required. This helps us to be very efficient in our compliance interventions so that we identify and assess non-compliance risks proactively and apply appropriate compliance measures to control these risks. Some of the interventions used to embed a strong Compliance and Ethics work environment include: formal and informal compliance education (trainings, workshops, and mobile Compliance and Ethics clinics), monitoring, advisory support, breach management and other such tools to drive a culture and behavior change.
Convention on Business Integrity
To further sustain our commitment to good corporate governance, ethical business standards and the values of integrity, honesty and fairness, Guinness Nigeria signed up to the Convention on Business Integrity in September 2011.
Diageo Code of Business Conduct
We continue to demonstrate the highest standards of integrity in everything we do. Our purpose and values are at the heart of everything we do; they define our approach to the way we work and capture the essence of our passion, our ambition, our responsibility and our pride. Our business standards have been captured in the Diageo Code of Business Conduct which translates our commitment into actions that guide our daily activities. Our Code influences the way we work, every day, everywhere.
The Code is particularly important under our Compliance and Ethics Agenda as it outlines employee individual responsibilities to enable the business Win with Compliance. Pivotal to our Code and its application are the values, which as a Company, we have committed to upholding. In complying with the code, we bring our values to life. We run a very dynamic compliance agenda and we constantly seek and drive improvements through our compliance program. Breaching the Code or Diageo policies can have serious consequences for the company and for each of us as individuals. All employees are responsible for compliance with the Code of business Conduct and Diageo policies in addition to all laws, regulations and industry standards. We also expect temporary and contract employees, consultants, agents and any other third party who acts in our name to act in accordance with the principles of the Code. Those who fail to comply with the Code put themselves, their colleagues
and the company at risk. Key Diageo Code Policies, Additional Global Policies and Guidance in addition to our Code of Business Conduct, we are also bound by specific global or Key Code policies, Additional Global Policies, and Guidance which provide practical guidance on our corporate and individual responsibilities. Most are specific to certain activities and risk areas. These governance documents are regularly reviewed to ensure they continue to be relevant to the industry and our stakeholders and are often more stringent than the local laws and regulations.
Safety and Quality
Safety is the fundamental building block on which all our activities and processes are rooted. The safety of our people, contractors, customers and consumers is very close to the heart of Guinness Nigeria as a business. Due to our commitment to Zero Harm and In our journey to the implementation of Diageo Global Risk Management Standard (GRMS) and Severe and Fatal Incident Prevention Protocols (SFIPP) we have introduced and sustained the following Safety Processes:
i. Mandatory Safety Induction for all new joiners including Contractors ii. Mandatory Safety Induction to visitors to our locations
iii. Contractors Safety Passport Scheme
iv. Risk Assessment for hazardous task and Permit to Work System v. Task Based Risk Assessment
vi. Safety Capability Enhancement for Safety Manager (NEBOSH Certification) vii. Online Safety Training for employees Guinness Nigeria is the 1st Diageo Africa site to launch Demand Safety ” Hot-House “ (14th April 2012)
Quality
Guinness Nigeria is committed to providing our customers and consumers with the highest standard of quality alcoholic and non-alcoholic beverages everyday, everywhere. We recognize the consumer as the final judge of Quality and our commitment to them is defined in our Quality and Food Safety policies. Quality is at the heart of our brands, it is derived from the heritage of the brands themselves and the skills of our people. We have clearly defined Quality objectives that drive Good Manufacturing Practice in production processes covering raw materials, processing and finished products; with key focus on continual improvement and achievement of world class standards. To achieve this we deploy a highly trained quality team and
state of the art technology. Guinness Nigeria is currently certified to Quality
Management System – ISO 9001:2008, Food Safety Management System – ISO
22000:2005, and on course for Food Safety Systems Certification – FSSC
22000:2009. We have also been awarded NIS Diamond, Gold and Silver awards for our brands Our products have won Grand Gold, Gold and Silver medals at the World monde selection competition and was subsequently awarded the International Quality trophy for high quality beer Guinness Nigeria prides herself as being compliant and maintaining good working relationship with Local regulatory and government agencies including National Agency for Food and Drug Administration and Control (NAFDAC), Standards Organization of Nigeria (SON) and Consumer Protection Council (CPC), has operational bases also in Nigeria, Tanzania and Ghana.
(iv) Polly foam
Polly foam is the brand name of group enterprises Nigeria Limited. Group enterprises
Nigeria Limited is a wholly owned Nigeria company. Business: Manufacturing and marketing of foam products. Share capital: N10million
Chief Christopher O. Uba – chairman
Chief Evarist Uba – Chief executive Chairman Price Eugene Okoma – Admin manager Modesta Chime – Sales executive
(v) Camela Group
Camela Vegetable Oil Company Ltd formerly known as R.O Ikoro and Sons Ltd was incorporated in June 1960 as a Limited Liability Company dealing in Agricultural Produce and Palm Oil Milling. In 1985, the company expanded into Palm Kernel Nut Crushing for the extraction of Palm Kernel Oil (PKO) and Palm Kernel Cake (PKC). The next major expansion was in 1998 which was the installation of the Vegetable Oil Refining for the processing of palm kernel oil (PKO) into vegetable oil and fatty acid. The vegetable oil was branded Camela Vegetable Oil and hence the new name of the company in August 2000 to Camela Vegetable Oil Co. Ltd. The company having met all requirements of National Agency for Food, Drug and Alcohol Control (NAFDAC) and the Standard Organization of Nigeria (SON) have since being issued a NAFDAC number 01- 2016L and a Mandatory Conformity Assessment Certificate Program me
(MANCAP) Number: FT-697.Camela Vegetable Oil co. Ltd in 2007 expanded into fish farming and fish feed production. Presently it has an installed feed production capacity of 2metric tons per day and utilizes only 30% of it. The company has a
150MT per day palm kernel oil extraction plant and a 60MT per day vegetable oil refining plant.
Camela Vegetable oil
The company vegetable oil refining uses an ultra modern state of art physical refining to achieve bleaching and deodorizing of palm kernel oil. It has an installed capacity of
60 metric tons per day. Camela vegetable oil is completely fortified with vitamin A Deodorizing of Palm Kernel oil/Palm oil which are canned in 18 litres, 10 Litres and 5
Litres Can. Fatty acids are considered essential fatty acids. They are essential to human health but cannot be manufactured by the body. Fatty acid as one of our product is highly requested for both domestic and industrial use. Our Fatty Acid is of the highest grade, essentially for the production of high quality soap and also very good for distillation.
(vi) Orange Groups
History of Orange Drugs Limited
After working for the family owned Chemist shop; Eastern Industrial Chemist, for 13 years, Sir Tony Ezenna decided to establish his own pharmaceutical company, with the leadership and managerial skills acquired on the Job. The company; Orange Drugs Limited, was registered and incorporated on July 20th 1988 with No RC 115913. Its first office was in Ikenegbu, Owerri, and Imo state in 1989 and in order to be among the leading Pharmaceutical companies in Nigeria and compete with other companies in different parts of the world, the Company later moved its base to Lagos. The first Corporate Office was at 4B Okupe Estate, Mende, Maryland, Lagos and in 2001, the Company relocated to its present Head Office at 66/68 Town Planning Way, Ilupeju, Lagos with branches in different parts of the country. Orange Drugs Limited is a limited liability company with an authorized fully paid share capital of N5 Million Naira, involved in the marketing and distribution of well-tested drugs, manufactured in Indonesia, Italy, India, Germany and the United States of America with the Nigerian consumer in mind. Subsequently, Orange Drugs limited joined the Beauty care industries through the importation of Soaps, creams and other beauty products.
By 2006, the Company commenced the local production of different brands of their soaps in Lagos and this was aimed at boosting the Nigerian manufacturing sector and also creating jobs for the populace. In order to meet up with the challenges in the global economy, Orange Drugs Limited. Subsequently diversified its line of business by the establishment of Orange Kalbe Ltd and Orange West Africa Limited leading to the formation of Orange Groups.
Orange Kalbe Limited
History of Orange Kalbe Limited
Established in 1966, PT Kalbe Farma is the largest Pharmaceutical group in Indonesia and South East Asia with presence in the USA and Singapore. The Kalbe group came into Nigerian market through Orange Drugs Limited as its sole representative. Both Orange Drugs Ltd and Kalbe Farma have a proven business track record based on trust and competence spanning for over two decades. Due to the ban policy of imported paracetamol-based OTC products by NAFDAC in 2004, the two companies then agreed to set up a joint manufacturing firm in Nigeria with the name, Orange Kalbe Limited (OKL). The Factory, Orange Kalbe Ltd; was incorporated in 2005 as a manufacturing company. Construction commenced at the site in April 2006 and was completed in July 2008 while installation and commissioning of machinery and production trials commenced thereafter. OKL was registered by PCN and approved by NAFDAC in August 2008. The Factory was designed and built within GMP specification and its very highly technological equipment complies with WHO and GMP standard.
(vii) Hero Breweries Plc
Hero Breweries Plc was incorporated on 23rd January, 1976 with head office in Onitsha, Anambra State. It was listed on the Nigerian Stock Exchange in 1988. Proshare reports, shows that Hero Breweries Plc declared in 2008, 2009 and 2010 (audited results with N 42.225 million losses in 2010. The Stock Exchange weekly reports that Hero Breweries Plc’s audited result for the year ended 31st March 2008 shows Nil Turnover same as in 2007. Loss after tax stood at N23.005 million compared with N224.21 million in 2007. Consequently, if previous year’s losses are taken into account, the retained loss carried forward stood at N440.3 million compared to N417.3 million in 2007, (Hero Breweries Plc, 2011).
(viii) Juhel Nigeria Limited
Juhel Nigeria Limited is an indigenous pharmaceutical manufacturing company, founded in 1987 as the first pharmaceutical manufacturing company in old Anambra state, Nigeria. We manufacture a wide range of pharmaceutical products, from oral to intravenous medicines. With a total of over 100 Pharmaceutical products, we manufacture one of the largest range of pharmaceutical products in the country, all of which are NAFDAC and ISO certified, meeting high standards at affordable prices. The pharmaceutical manufacturing division of the company operates in two locations. The Oral Medicine Manufacturing Plant in Emene, Enugu State and the Parenteral Medicine Manufacturing Plant in Awka, Anambra State. The Enugu location contains the Tablet and Syrup Manufacturing Plants, the separate Antibiotic Capsule Manufacturing Plant, the Bottled Water and Beverage Manufacturing Plants and the dedicated Plastic Bottle Manufacturing Plant. The Anambra State location contains the large state-of-the-art Parenteral Drug Manufacturing Factory in w1ich Intravenous Medicines, Sterile Water For Injections, Ear Drops and Eye Drops are manufactured. With these under their belt, the company is not only one of the largest Pharmaceutical Drug manufacturing companies in Nigeria, they also remain the largest manufacturer of high-quality blow-fill-seal aseptically manufactured intravenous medicines in West Africa. The presence in Nigeria and other countries throughout West-Africa has been maintained as a result of their product quality and reliability in ensuring these reach the customer as they want, at prices they can afford. At Juhel Nigeria Limited, customer’s satisfaction is the business.
(ix) Innoson Group
Innoson Vehicle
Innoson Vehicle Manufacturing Company (IVM) was commissioned by His Excellency, President Goodluck Ebele Jonathan at Nnewi. IVM is part of the Innoson Group of Companies founded by the visionary Chairman, Mr. Innocent Chukwuma, Officer, of the Order of the Niger (OON). IVM introduces automotive products from China, Japan and Germany. Its product line includes heavy duty vehicles, middle and high level buses, special environment friendly vehicles. The company carries out optimization design and assembly according to West African road condition so as produce suitable products at affordable prices. The company also provides good
services for repairs and parts supply. All these actions are engineered to meet the customers’ special requests, attain the highest possible performance and safety standards and also make the vehicles suitable for the West African market.
Innoson Technical and Industrial Company
Innoson Technical and Industrial Co. Ltd produce the best plastic, products in the country. Products include chairs, jerry can, drums, motorcycle parts etc. Innoson Technical and Industrial Limited is a subsidiary of Innoson group of companies and was incorporated in 2002 with its Head Office/Factory situated at Plot W/L Industrial Layout, Emene, Enugu State, Nigeria. Full scale operations and production commenced in October 2002. It is an indigenous blue chip company engaged in the manufacturing of Plastic Chairs, Tables, Trays, Plates, Spoons, Cups, Jerry Cans of different sizes and many other allied products. Since inception, this company ranks the biggest plastic industry in Nigeria It produces the highest quality range of the plastic products of international standard and has a production’ over 10,000 pieces of chairs and tables per day. Due to the rapid demand of these products, the company’s twelve production lines of injection moulds have since been increased with tremendous and near perfect production lines of international standard. It was also established to further consolidate our leading position in the Motorcycle industry by producing the motorcycle plastic requirement of Innoson Nigeria Limited which is a sister company. This effort was in direct response to the Federal Government policy direction towards encouraging private sector as the engine of growth for the economy. Over six hundred indigenous employees and few expatriate staff are working in the company. The company has an annual turnover of 3.6 billion Naira. The ‘foreign partners are critic industries Co. Ltd. (China) whose wealth of experience is unquantifiable.
Innoson Nigeria Ltd
Innoson Nigeria Limited is an indigenous blue chip company engaged extensively in the importation, assembly and marketing of automotive components, accessories and motorcycles. Incorporated in July, 1 87, the company has grown to become one of the major or importers, sup1iers and assemblers of motorcycles and motorcycles spare parts to outermost part of West African sub-region an4 beyond. Innoson Nigeria Limited started in 1986 as a trading outfit by buying Honda Motorcycle parts and over
a period of time was recognized as the major dealer of Honda Motorcycle parts of the time. As time progressed, Innoson started importing the motorcycle parts and accessories into the country and having had the vast knowledge and experience in the motorcycle business sometime in 1994, we entered into joint venture of assembling motorcycle in Nigeria with a Chinese Motorcycle Manufacturer. The assembly was in manual form and this usually forced the price of assembled motorcycle up and at the end we was making little or no profit. The Company has never relented in its efforts in breaking through it dream in making sure that motorcycles are sold to the masses at affordable prices hence in 1995, it installed a fully automated assembly plant which can produce’ up to 1,000 units of motorcycle per day and has helped reduce the prices of our different brands of motorcycle. The company is working, extremely harder to ensure that her factory in Emenë, Enugu State produce most of its components used in the assemblage of motorcycles.
Members of Innoson Group
Innoson Technical and Industrial Company
Innoson Technical and Industrial Co. Ltd produces the best plastic products in the country.
Products include chairs jerry can, drums, motorcycle parts. lnnoson Vehicle Manufacturing Company
Innoson Vehicle Manu1acturing Company is a world class company and the first indigenous vehicle manufacturing company in Nigeria.
Innosor General Tyres and Tubes Co. Ltd
lnnoson Tyre Manufacturing company is using the abundant rubber resources in the country, to produce premium tyre.
This material content is developed to serve as a GUIDE for students to conduct academic research
EFFECTS OF INNOVATION ON COMPETITIVE ADVANTAGE OF SOME SELECTED MANUFACTURING FIRMS IN SOUTH EASTNIGERIA
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