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i
MANUFACTURING STRATEGIES FOR THE CASSAVA INDUSTRY IN NIGERIA
BY
UBONG PIUS EKPE (PG/MENG/04/35972)
A PROJECT SUBMITTED TO THE SCHOOL OF POSTGRADUATE STUDIES AND THE DEPARTMENT OF MECHANICAL ENGINEERING, UNIVERSITY OF NIGERIA,
NSUKKA, IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTERS OF ENGINEERING
DEPARTMENT OF MECHANICAL ENGINEERING
FACULTY OF ENGINEERING
UNIVERSITY OF NIGERIA
NSUKKA
JANUARY, 2008
ii
CERTIFICATION
Mr. Ubong Pius Ekpe, a postgraduate student in the Department of Mechanical
Engineering, specializing in Industrial Engineering Management, has satisfactorily
completed the requirements for course and research work for the award of the degree
M.Eng. in Mechanical Engineering. The work embodied in this thesis is original and has
not been submitted in part or full for any degree of this or any other university.
…………………………… ….…………………….
Prof. S. O. Onyegegbu (supervisor) (External Examiner)
……………………………………..
Prof. S. O. Onyegegbu (Head of Department)
iii
DEDICATION
To My Uncles
Raphael Paul Ekpe Dominic Alexander Ekpe Joseph Clement Atata
And Aunts
Josephine Ekpe Cecilia Enwenwen
iv
ACKNOWLEDGEMENT
My gratitude goes to my project supervisor Prof. S. O. Onyegegbu for his thorough review of the
manuscript, helpful suggestions, constructive criticisms and motivation. My deep affection and appreciation to my beloved wife Mary and children Ubon, Jeremiah,
Anthonia and Edidiong for their patience, love and encouragement I am also grateful to my dear mother, uncle Raphael Ekpe, brothers, sisters, inlaws , my room
mate Mr. Bedung Polycarp, Dr. C. C. Chinaka of the National Root Crops Research institute(NRCR), Umudike, and staff of cassava industries used in the study.
The invaluable contributions of friends, colleagues, individuals and relations who are too
numerous to mention is also appreciated.
To God Be The Glory
v
ABSTRACT
This study employs the “SWOT matrix” technique to formulate manufacturing strategies
for the cassava industry in Nigeria. The motivation for the study is the seemingly wide
gap between the supply and demand for manufactured cassava products despite the
industry’s potentials in the area of abundant raw materials and high demand for its
products. A strategic analysis was carried out on eight industries in Akwa Ibom state
using “environmental scanning” technique. Data from strategic analysis was used to
construct a profile of strength (S), weaknesses (W), opportunities (O) and threats (T) that
influence the industry’s ability to achieve its manufacturing goals. The “SWOT matrix”
technique of strategy formulation was then applied to analyze the profile and evaluate
various strategic options that were generated by the interaction matrix to arrive at twelve
strategies. Findings from the study show that government has a greater role to play in
developing the manufacturing capacity of the cassava industry. Most cassava industries
were also found to be operating below installed capacity due to lack of funds, erratic
public power supply, irregular supply of raw materials, use of obsolete machineries, poor
plant facility layout and below average managerial skills. The study recommended that
modern cassava machineries such as the cassava-peeling machine be imported and
redesigned by Nigerian engineers for local use. An alternative method of disbursing
loans to cassava industries that emphasizes less on collateral was also recommended.
vi
TABLE OF CONTENTS
Title Page . . . . . . . . . . . i Certification . . . . . . . . . . . ii Dedication. . . . . . . . . . . . iii
Acknowledgement. . . . . . . . . . . iv
Abstract. . . . . . . . . . . . v
Table of contents. . . . . . . . . . . vi
List of figures. . . . . . . . . . . viii
List of Tables. . . . . . . . . . . ix
CHAPTER ONE: INTRODUCTION 1.1 Background of the study. . . . . . . . . . 1
1.2 Statement of problem. . . . . . . . . . 2
1.3 Purpose of the study . . . . . . . . . 3
1.4 Significance of the study . . . . . . . . . 3
CHAPTER TWO: LITTERATURE REVIEW 2.1 The cassava industry: Products, processes and machines. . . . . 4
2.2 Manufacturing concepts and the cassava industry. . . . . . 7
2.3 Dimensions of manufacturing strategy. . . . . . . . 8
2.3.1 Internal dimensions of a manufacturing strategy. . . . . . 8
1.Product concept, design and development. . . . . . 8
2.Manufacturing plants and facilities. . . . . . . 9
3. Manufacturing technologies and practices.. . . . . 10
4. Logistics and material control. . . . . . . 11
5. Human resource management. . . . . . . 13
6. Organization and management systems. . . . . . 13
2.3.2 External dimensions of manufacturing strategy. . . . . . 15
1.Competitive factors. . . . . . . . 15
2. External success factors . . . . . . . 15
2.4 Manufacturing strategy formulation process. . . . . . . 16
2.4.1 Step 1: Strategic analysis. . . . . . . . . 17
2.4.2 Step 2: Strategic choice. . . . . . . . . 19
vii
2.5 Generation of options. . . . . . . . . 19
1. Concentration or specialization strategy. . . . . . 19
2. Innovation strategy. . . . . . . . 19
3. Growth strategies. . . . . . . . . 19
4. Stability, do nothing, consolidation or no change strategy. . . 20
5. International strategy . . . . . . . . 20
6. Retrenchment strategies. . . . . . . . 21
2.6 Evaluating the strategic options. . . . . . . . 21
2.7 The SWOT matrix: A conceptual model. . . . . . . 22
2.8 Related empirical studies. . . . . . . . . . 26
2.9 Summary of literature review. . . . . . . . . 27
CHAPTER THREE: METHODOLOGY AND STRATEGIC ANALYSIS 3.1 Methodology. . . . . . . . . . . 28
3.2 Scope of the study. . . . . . . . . . 29
3.3 Data and information sources for the study. . . . . . . 29
3.4 Area of study . . . . . . . . . . 30
3.5 Strategic analysis result . . . . . . . . . 31
3.6 Summarizing strategic analysis result into a swot profile. . . . . 34
3.6.1 Identifying strengths , weaknesses, opportunities and threats from strategic analysis . 36
3.7 SWOT profile for the cassava industry . . . . . . . 37
CHAPTER FOUR: SELECTION OF MANUFACTURING STRATEGIES 4.1 Strategies for the strength and opportunities (SO) segment. . . . . 39
4.2 Strategies for the strength and threat (ST) segment. . . . . . 39
4.3 Strategies for the weakness and opportunities (WO) segment . . . . 40
4.4 Strategies for the weakness and threat (WT) segment . . . . . 41
CHAPTER FIVE: RESULT, CONCLUSION AND RECOMMENDATIONS 5.1 Result . . . . . . . . . . . 43
5.2 Conclusion. . . . . . . . . . . 44
5.3 Recommendations . . . . . . . . . 45
Bibliography . . . . . . . . . . . 46 Appendix I : Profile of Industries used for the study . . . . . . 51 Appendix II: Details of Strategic analysis . . . . . . . 52 Appendix III: Analysis of interaction matrix of strategic segments . . . . 56
viii
LIST OF FIGURES
2.1 Schematic illustration of some important cassava products manufacturing processes . 5 2.2 Supply chain schematics for the cassava industry in Nigeria . . . . 6 2.3 Graphic definition of manufacturing . . . . . . . 7 2.4 Model of manufacturing strategy elements . . . . . . 16 2.5 Operational activities leading to the SWOT matrix analysis . . . . 22 2.6 Strategies indicated by the SWOT matrix analysis . . . . . 23 2.7 Associating weakness with relevant strategic dimensions . . . . 25 3.1 Model of strategy formulation elements. . . . . . . . 28
ix
LIST OF TABLES
2.1 Important considerations for SWOT profile . . . . . . 18
2.2 Relationship between generic strategies and the Swot matrix technique . . . 25 3.1 Strategic analysis of the cassava industry . . . . . . . 31 3.2 Important considerations for SWOT profile . . . . . . 35 3.3 SWOT profile for the cassava industry . . . . . . . 37 4.1 Interaction matrix of strategic factors . . . . . . . 38 4.2 Selected strategies from interaction matrix . . . . . . 42 5.1 Collation of formulated strategies . . . . . . . 43 A1 Interaction matrix for strength and opportunities (SO) strategic segment. . . 56
B1 Analysis for table A1. . . . . . . . . . 57
A2 Interaction matrix for strength and threat (ST) strategic segment . . . . 58
B2 Analysis for table A2. . . . . . . . . . 58
A3 Interaction matrix for weakness and opportunities (WO) strategic segment. . . 59
B3 Analysis for table A3. . . . . . . . . . 60
A4 Interaction matrix for weakness and threat (WT) strategic segment . . . . 63
B4 Analysis for table A4. . . . . . . . . . 63
1
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
With Nigeria as the current highest producer of cassava in the world1, the Cassava industry
holds high hopes towards the diversification of the nations industrial base from hydrocarbon(oil) which
is non sustainable to a carbohydrate based economy that involves the conversion of renewable biomas
resources such as cassava into useful chemicals and fuel. Processed Cassava products in addition to
being food for humans have gained significant recognition as a source of raw materials for livestock,
textile, chemical and plastic production. As at the last count, about 2500 products can be derived from
the cassava crop2. It is also reputed in the Food and Agricultural Organization (FAO) document1 as
having more utilization than any known crop.
Technically, Nigeria could be a world market leader in cassava products as climate, market, high
yielding varieties, planting materials, human resources, capital availability and infrastructural adequacy
are known and available3. Processed Nigerian cassava products have also gained an improved
patronage in the international market. If government sustains its present policy of discouraging import,
the increased demand for processed cassava products for export will continue. Thus, there is an
increased potential of the cassava industry in terms of industrialization, expansion, modernization,
poverty reduction, creation of wealth and job opportunities at the grass roots and reduction in rural
urban migration.
With such immense potentials, the cassava industry vis-à-vis its manufacturing functions, if
properly managed and developed using suitable strategies could lead to rural industrialization and
improve the industrial base of the nation. It will also create employment, supply raw materials to other
industries and improve the economy. More investors and entrepreneurs are therefore, required in the
establishment of cassava industries and manufacturing of processed cassava products for export to
sustain this tempo. Some progress has already been made in this direction. For example, Nigeria intends
to establish 500 cassava-processing plants nationwide2. Kogi State government in partnership with a
2
Chinese firm also plans to establish a cassava ethanol fuel factory in Kabba, Kogi State, a development
the Nigerian Television Authority (NTA) described in its 9p.m national network news of Sunday,
April 15, 2007 as a “revolution in the marriage of agriculture and energy”.
With this trend, there is also need for proper documentation of research findings and dedicated
publication of reading materials on the cassava industry and related issues cutting across all interests.
Nweke,51 asserted that “most researches on technical themes in the cassava industry are mostly
concerned with such issues as processing and utilization, technologies for storage and design of various
machines used in the cassava industry. but not much work has been done on the manufacturing
strategies for the industry so as to cub the wide gap that continues to exist between the supply of and
demand for processed cassava products’’. Thus, the cassava industry stakeholders are denied the
necessary guidance on adequate manufacturing techniques. They therefore continue to rely on outdated
and crude manufacturing methods which results in high cost of production, low quality products, low
capacity utilization, high cost of products and continuous importation of cassava products into the
country at the detriment of the economy. It is this disturbing trend in the cassava industry that has
motivated this effort at “formulating a manufacturing strategy” for the industry.
1.2 STATEMENT OF PROBLEM
Despite improvements in manufacturing efficiency over the years, production of cassava to near
real time demand is easier said than done4. Thus, the Nigerian cassava industry with it’s great potentials
is yet to be transformed from its present subsistent state to a large-scale industry, capable of providing
adequate job opportunities and products to meet internal consumption and export. What is on ground
are incidences of glut, low quality products, poor producer prices and low productivity which have
become its permanent features. The perennial underperformance of the cassava industry despite its
potentials and efforts by the government and private sector at once highlights an intriguing lacuna.
Traditionally, manufacturing is important for the success of any company and a flourishing
production system is a requirement for the socio-economic, political existence and rapid
industrialization of a country. Skinner5, asserted that manufacturing process in many industries has been
put aside in favour of financial and marketing influences. Hill6, also claims that if a company is to
succeed, there must be a clear-cut manufacturing policies or strategies. In this perspective,
3
manufacturing strategies are necessary for a company’s competitiveness and survival7. A manufacturing
strategy is therefore the fulcrum from which accelerated industrial growth can be leveraged.
The continuous failure of the government, her institutions, the public, and private sectors to
articulate the potentials of the cassava industry through suitable manufacturing strategy could continue
to be the cassava industry’s undoing. Consequently, the need for the formulation of a manufacturing
strategy for the cassava industry in Nigeria constitutes the problem this study intends to address.
1.3 PURPOSE OF THE STUDY
The purpose of this study is to help accelerate the development of the cassava industry by
formulating a manufacturing strategy that can be used to guide and manage its production functions,
realize its abundant potentials and spur rural industrialization in the country.
1.4 SIGNIFICANCE OF THE STUDY
This study is expected to benefit all the stake holders in the cassava industry particularly the
academics, government ministries and parastatals such as; the Ministries of Industry, Agriculture, and
Commerce, farmers, cassava entrepreneurs, engineers, industrialist and managers.
Thus, results from this study:
1) Will contribute to existing knowledge on the cassava industry and as a resource material for
subsequent studies
2) Will form the basis for policy formulation, review, and implementation
3) Will aid the engineers in the intricacies of managing and facing manufacturing strategy
formulation challenges
4) Will guide the farmers, industrialists, investors, cassava entrepreneurs and managers in the
establishment, management and operation of the manufacturing function in the cassava
industries
4
CHAPTER 2
LITTERATURE REVIEW
2.1 THE CASSAVA INDUSTRY: PRODUCTS, PROCESSES AND MACHINES
The Cassava industry utilizes its manufacturing functions to process cassava into various products
and thus, offer good opportunities for adding value to cassava. Eggleston, Bokanga and Jeon8 asserted
that manufactured cassava products offer such benefits as reduction in high post harvest losses,
increases labor efficiency, productivity and income. It also improves the hygienic quality of cassava
products, enhances cassava product’s shelf life and facilitates their transportation and marketing.
Nutritional values could also be improved during processing by addition of food composites or by
fortification.9
In the industrial processing of most cassava products, some mechanical processes are usually
applied (see figure 2.1). These include peeling, washing, grating, fermenting, squeezing, sieving,
drying, heating/cooking, sedimenting etc. These processes are applied using small equipment and
machines, such as dryers, expellers, millers, sifters, prime movers and so on. The choice of process is
based on factors like locality, quality product, product demand and level of known processing
techniques. Consideration is also given to the scale of production; family consumption (small scale) or
for export (medium to large scale). Consequently, popularly processed cassava products include:-
Cassava flour
Alcoholic Beverages
Cassava chips
Animal feeds
Cassava starch
Garri/fufu etc
Pellets
Industrial Ethanol
Glucose syrup
Monosodium Glutamate
Dextrose
Glue
Dried Yeast
Cassava stalk particle board
Malt Drink
Caramel
Bio-degradable shopping bag
Others are in the industrial production of paper, textile
and adhesives
5
Fermentation Dewatering Granulation Garifying Drying Sieving Milling Blending Packaging Gari (Yield of 20-25% at 10% Moisture content)
Soaking & Fermentation Pulping & sifting Sedimentation Dewatering Breaking & Granulation Drying Sieving Milling Blending
(i.e. sievate & milled Cassava grains mixed) Packaging Fufu flour (20 –25% of fresh tubers at 10% moisture Content)
Cassava Tubers Sorting Weighing
Peeling –Peels Washing
Adapted from: Umanah, E.17
Grating/Pulping
Fermentation Screening rasping Washing Settling purification Drying Pulverizing Sifting Packaging ( Moisture Content 10-13%. Yield15-20% of fresh tubers)
Starch Modification
Dextrose
Maltose Syrup
Glucose
Ethanol
Detoxified Cassava Starch
Screening Washing Settling Drying Pulverizing Sifting Packaging (At 10% moisture content. Yield is 15-20% of fresh tubers)
Normal Cassava starch
Dewatering (pressing) Drying (8hrs) Milling Sieving Packaging (At 10% moisture Content. Yield 20-25% fresh tubers)
Cassava four UQCE
Chipping Drying Packaging Cassava Chips (Moisture content about 10% Yield 25–30% fresh tubers)
Chipping Pressure Drying Packaging Cassava pellet (Moisture content about 10% Yield 25 –30% fresh tubers)
Figure 2.1: Schematic Illustration of Some Important Cassava Products Manufacturing Processes
Biodegradable Products
6 Various permutations and combinations of cassava products, manufacturing processes and machines
therefore form the basis for the establishment of several diversified cottage, small, medium or large
cassava industries some of which are listed below. The Supply chain schematic for some of the
industry’s products is also illustrated in figure 2.2.
Cassava starch industry Cassava flour industry
Cassava Ethanol industry Cassava Animal feed industry
Cassava pellet industry Garri industry
Cassava peeling industry Cassava grating industry
Cassava milling industry And so on.
Obviously, the cassava industry is a much-diversified industry in terms of types and products. It is also
characterized by non-application of modern production techniques to guide how manufacturing
activities are conducted3; and thus the need for the development of suitable manufacturing strategies as
advocated by Skinner5
Source: Phillips et. Al10
Figure2.2: Supply Chain Schematic for the Cassava Industry in Nigeria
7 2.2 MANUFACTURING CONCEPTS AND THE CASSAVA INDUSTRY
All elements of the industry associated with generating its products for profit define the
manufacturing process for the industry11. This definition of manufacturing as illustrated in figure 2.3
includes such upstream functions as product planning, design, and engineering as well as some elements
of such downstream functions as purchasing, sales, distribution and service.
Source: Dilworth, J. B11
Figure2.3: Graphic Definition of Manufacturing
Since the manufacturing function in an industry is at the heart of its success, having a strategy that
ensures a match, or congruence, between the company’s markets and the existing and future abilities of
the production system is essential12. A manufacturing strategy is therefore a long-term plan for future
success or development of all processes that transform the industry’s products and all associated
processes and services. According to Hill6, a manufacturing strategy is defined as a pattern of decisions,
which determine the capability of a manufacturing system and specify how it will operate to meet set
manufacturing objectives. Issues generally addressed by manufacturing strategy include manufacturing
capacity, production facilities, use of technology, vertical integration, quality, production
planning/materials control, organization, personnel etc. The concept of manufacturing strategy is traced
to Skinner's5 Harvard Business Review article, "Manufacturing- Missing Link in Corporate Strategy".
Skinner5 suggested a top-down approach to manufacturing and advocated that manufacturing objectives
should be derived while manufacturing strategies or policies are developed to address these objectives.
Market and Competitive Research
Basic Technology Research�
Corporate Strategy Planning�
Distribution and Service�
Production Operations�
Tooling and Facilities Design and Installation�
Process Planning Manufacturing Engineering�
Product Design and Engineering�
Product Planning�
Market and Competitive Research
Purchasing�
Broad Definition
Narrow Definition
8 Manufacturing objectives could include cost, quality, delivery etc. Trade-off decisions are also required
in some key areas in order to support the manufacturing objectives. The five main decision areas
advocated by Skinner5, where trade-off could be implemented are; plant and equipment, production,
planning and control, labour and staffing, product design and organisation and management. These
basic ideas (trade-offs and consistency of objectives/policies) have formed the foundation from which
the current understanding of manufacturing strategy has developed.
2.3 DIMENSIONS OF A MANUFACTURING STRATEGY
Pertinent factors whose analysis provides necessary information in the strategy formulation process
are termed6 “dimensions of manufacturing strategy”. According to Punk13, they are usually classified
into internal and external factors.
2.3.1 INTERNAL DIMENSIONS OF A MANUFACTURING STRATEGY
These are in six broad categories:-
1. PRODUCT CONCEPT, DESIGN AND DEVELOPMENT:
a. Technology (or R&D) Management Practices. These are processes used by Senior
management to assess:-
♣ The effectiveness and efficiency of its (R&D) resources for specific product planning and design
♣ The areas of technology on which to focus
♣ The approaches, tools and facilities to be invested
b. Product Planning Practices: These are approaches used for new product development and
product renewal planning. They include:
♣ The cycle times used
♣ The time limits.
♣ The kinds of external research underlying the planning process (e.g. market, competition,
technology trends).
♣ The personnel organizations involved in the planning process.
9 c. Advanced Engineering Techniques: Technologies and methods used to manage the product’s
engineering process as efficiently as possible. These techniques include:
♣ Considering previous products/designs for part or subassemblies in a family of parts (e.g, the use
of group technology systems)
♣ Controlling engineering changes and product configurations through formalized procedure
♣ Factoring design cost considerations into the total production cost calculations.
d. Project and Resources Management: These are computer-based tools and modern
management techniques used to manage efficient product development projects.
These might include.
♣ Project and resource matrix management structures
♣ PERT-type project management systems
♣ Time and cost recording systems
e. Design and Engineering Automation Aids: These include the use of:
♣ State of the art computer-aided design, engineering, and manufacturing tools and systems
♣ Design data bases
♣ Analysis and performance simulation aids.
♣ General-purpose engineering problem-solving computing tools
f. Integration of Product and Manufacturing Engineering: The use of fully balanced
multidisciplinary design teams for product development. The better these multiple engineering
functions are integrated, the more successful the product family and manufacturing.
2. MANUFACTURING PLANTS AND FACILITIES
a. Multiple Plants: This includes the distribution of facilities and their functions, capacities and
inherent cost factors (e.g., labor costs). The question of owning many plants, functional
specializations, and relative geographic and distribution factors can be the dominant issue in a
large enterprise.
b. Plant Facilities: This applies to the specific situation of each plant as well as the total network.
Such factors as the age of the facility, its present physical condition, its potential for
modernization, its size and expansion potential, and special constraints or assets associated with
10 that plant (e.g. zoning restrictions, proximity to power sources, availability and quality of local
labor) must all be enumerated and evaluated.
c. Production Philosophy: This factor involves the following considerations:
♣ Whether the plant is dedicated to a specific product or type of product or whether it is flexible
enough to manufacture a variety of products.
♣ Whether the production techniques are continuous flow in nature versus batch oriented
♣ Whether it is a high-volume operation or lower capacity, high-quality process
d. Plant Layout: The plant’s physical layout involves the following criteria:
♣ Whether machines are organized by type or by product or process cell.
♣ What approaches are used for internal material movement, how much flexibility there is for
altering this layout, and whether the layout is logical and efficient
e. Capacity Planning: This addresses the following areas:
♣ The approach taken to planning capacity requirements and how to meet them.
♣ Projecting and leading as opposed to following and catching up with market demands.
♣ Cycle times for reviewing capacity requirements
♣ Approaches to adjustments (e.g. layoffs, external contract production or use of overtime).
3. MANUFACTURING TECHNOLOGIES AND PRACTICES
a. Process Technologies: This considers the actual manufacturing process needed. Consideration is
given to whether the process is:
♣ Labor versus capital intensive
♣ Low medium or high technology oriented (with corresponding labor skill requirements).
♣ Propriertary versus generic
b. Production Scheduling and Control: The approaches needed for managing production
Materials, labor, and other resources. These include:
♣ Long- or short term planning cycles
♣ What type of feedback is needed
♣ What resources are critical
♣ What must be planned
11 c. Equipment Maintenance: Approaches used for the maintenance and management of
Production equipment.This includes:
♣ Preventive maintenance versus repairs only when necessary
♣ The basis and record keeping used for such maintenance scheduling
♣ The use of sensors on the equipment for detecting tool wear or machine problems
♣ The uptime availability records of the equipment.
d. Vertical Integration: These are the decision processes for outsourcing decisions; make versus
buy decision parameters; and concerns absolute excessive supplier dependence.
e. Quality Control: These are the approaches to maintenance of high quality standard including.
♣ Purchased good quality assurance programs
♣ Inline and sampled parts inspection techniques
♣ Assumptions about rejects or reworks (Versus a zero-defects policy)
♣ Monitoring after-sales warranty costs and servicing problems.
♣ Monitoring cost-of- quality parameters
4. LOGISTICS AND MATERIAL CONTROL
a. Supplier Relationship: These are used for procurement of raw materials, purchased
components, and services, including:
♣ Lowest-bid shopping
♣ Involvement of suppliers in design and planning processes.
♣ Methods of design and ordering data interchange.
♣ The role of purchasing department and suppliers in quality control issues
b. Purchasing and Ordering Policies: These are the philosophies used to determine:
♣ Order quantities and timing
♣ Full materials requirements planning (NRP) systems versus just-in-time (JIT) approaches versus
optimum lot size computations.
♣ How inventory at various stages of the production process is accounted for and built into product
cost
12 c. In-Process Inventories: Approaches to handling goods-in-process, including:
♣ Straight-through processes (i.e, no. in-process inventory monitoring) versus internal buffer stock
between asynchronous production stages.
♣ Number of times goods are counted and put into controlled storage facilities during production
♣ Use of bar coding or other automated inventory control techniques
d. Finished Goods Storage: Finished goods storage considerations addresses:
♣ The use of direct factory to user shipment as opposed to warehousing
♣ Central versus regional versus local warehousing
♣ Accountability of goods by sales or distribution departments versus by the production
organization and effectiveness of integration of those functions
e. Inventory management System: The type and capabilities of the manufacturing planning and
control systems (MPCS) used for inventory management, master production scheduling, short-
range scheduling, production and quality reports, and cost data must be determined. The
organization must consider:
♣ MRP and manufacturing resource planning (MRPI) systems
♣ JIT systems
♣ Online systems or batch-oriented ones
♣ Integrated production monitoring systems or standalone system
f. Materials Handling Technologies: Materials handing devices or systems for labor, time or
space saving and material movement control including automated storage and retrieval systems
(ASRS), automated guided vehicles (AGVs), computer-controlled conveyor systems, and
material- robots.
g. Transportation Practices: Techniques used for minimizing the costs and maximizing the
service of both inbound and outbound goods. Decisions in this area cover.
♣ The use of own truck fleet versus commercial shippers.
♣ Break-bulk versus consolidated shipment techniques.
♣ Computer-based systems for optimizing transportation routings
13 5. HUMAN RESOURCES MANAGEMENT
a. Hiring Practices: Policies and procedures regarding new employees, including
♣ Entry-level educational requirements
♣ Initial orientation and training sessions
♣ Skill level and job grade structure.
♣ Affirmative action programs
♣ Interviewing and follow-up procedures
b. Training Programs: In-house or outside educational opportunities for technical skills,
management skills, and general education
c. Performance Evaluation: Policies to manage personnel career path and salary levels
♣ Job performance and salary review procedure.
♣ Employee counseling practices
♣ Rotation and reassignment practices
♣ Promotion and title requirements
♣ Pay raise criteria
♣ Special incentive systems
c. Management Style: General approach to managing labor relationships
♣ Dictatorial versus consensus building style
♣ Management by the numbers versus management by walking around
♣ Use of labor councils or staff advisory groups
6. ORGANIZATION AND MANAGEMENT SYSTEMS
a. Organization: Type and structure of the organization
♣ Whether it is hierarchical or matrix based.
♣ Where it is functional or project or product oriented.
♣ Span of control policies and practices
♣ Number of management layers
♣ Relative strength of solid-and dotted line responsibilities
♣ Networks with counterparts in other plants or division
14
b. Reporting Procedures: Policy on reporting procedures:
♣ Frequency of reports
♣ Level of detail required
♣ Use of actual numbers versus variances or percentages
♣ Use of graphics
♣ Automated versus manual methods
♣ Narrative explanations
c. Communications Effectiveness: Both top-down and bottom-up communications in terms of:
♣ Clarity of organizational objectives and strategies to all levels
♣ Receptiveness to feedback from lower levels
♣ Facilities and encouragement for suggestions and complaints
♣ Use of informal versus formal results assessments
d. Information Systems: Information systems in terms of:
♣ Level of automation; cost-effectiveness (i.e., capital investment represented and annual expenses
relative to revenues, compared to industry averages)
♣ Flexibility and user friendliness of systems development and operations capabilities
♣ Accuracy and timeliness of data processing operations
♣ Relevance of MIS systems to strategic business unit objectives
e. Decision-Making Processes: These include the use of a task force or committee action as
opposed to decisions beign made only by senior management and delegated responsibilities as
opposed to bureaucratic procedures.
15 2.3.2 EXTERNAL DIMENSIONS OF MANUFACTURING STRATEGY
The analysis of these external factors provides information on the opportunities and threats in the
cassava industry for use in strategy formulation. These factors are:
1. COMPETITIVE FACTORS
This category of external factors provides information on the competitive position and or trend as
they affect the manufacturing functions. This includes;
a. Strength and uniqueness of manufactured cassava products in the market
b. Scope of competitive rivalry and operation between cassava industries (local, regional, national
etc.)
c. Customer loyalty and satisfaction with products
d. Market share/size controlled by the industry’s products (whether dominant, tenable or weak)
e. Products distribution channel
f. Customer concentration
g. Varieties of products in the market
h. Products market growth rate/potentials
i. Ease of entry of new firms into the industry
j. Intensity of competition and rivalry among firms
k. Degree of products substitutability
l. Degree of dependence on complimentary or supporting products and services
2. EXTERNAL SUCCESS FACTORS
a. Labour availability
b. Availability and supply of raw materials
c. Access to cheap infrastructures like water, electricity, good roads etc that could aid
manufacturing
d. Dependence on particular raw material
16 2.4 MANUFACTURING STRATEGY FORMULATION PROCESS
The manufacturing strategy formulation process is in three stages14:-
1. strategic analysis
2. strategic choice and
3. strategic implimentation
This is illustrated in the strategy formulation model for this study shown below in figure 2.4
Figure 2.4: Model of Manufacturing strategy elements ( Adapted from Johnson and Scholes14 )
External Analysis Internal
Analysis
1 Strategic Analysis
Resources
Organization Structure
People and systems
3 ���������
� � �� �� ����� �
2 Strategic Choice
Generation of options
Evaluation of options
Selection of strategy
Formulation of strategy itself
Often referred to as tactics
17
2.4.1 STEP 1: STRATEGIC ANALYSIS
The task of formulating a manufacturing strategy begins with a thorough analysis and evaluation of
the relevant internal and external factors with the sole aim of generating relevant data15. Fahley and
king16 and Aguila17 recommend the use of ‘‘environmental scanning technique’’ for this task. This
technique is accomplised by sourcing, evaluating and grading information on the relevant internal and
external factors using one or more of the following recommended sources:-Interviews, reports, personal
experience, conferences, questioneer, memoranda, meetings, employees, site visits, books,
journals,and litteratures. According to Guth18, it is also customary to summarise information gathered
from the internal environment as either strength or weakness, while that from the external environment
is usually summarised as opportunity or threat. This list of strengths, weaknesses, opportunities and
threats is known as SWOT Profile. [SWOT stands for strength, weaknesses, opportunities, and
Threats]. Table 2.1 lists key strategic areas to focus upon when summarizing the result of strategic
analysis into a SWOT profile.
Strength in this context refers to skills, expertise, resourses etc that may give the industry
advantage over its competitors. Weakness is something the manufacturing function of the industry
lacks or does poorly in comparison to others. It is also a condition that puts it at a disadvantage.
Opportunities are those things that offer important avenue for profitable growth of the manufacturing
functions. Threats stems from such factors as emergence of contending cheaper technologies, rivals
introduction of new or better products, entry of low cost foreign competitors products etc.
18 Table2.1: Important Considerations for SWOT Profile
Source: Thompson and Strictland15
INTERNAL ANALYSIS
STRENGTHS WEAKNESSES A distinctive competence No clear strategic direction
Adequate financial resources A deteriorating competitive position
Good competitive skills Obsolete facilities
Well thought of by buyers Sub par profitability
An acknowledged market leader Lack of managerial depth and talent
Well conceived functional area strategies Missing any key skills or competencies
Access to economies of scale Poor track record in implementing strategy
Insulated least somewhat from strong competitive pressures
Plagued with internal operating problems
Proprietary technology Vulnerable to competitive pressures
Cost advantages Falling behind in RxD
Competitive advantages Too narrow a product line
Product innovation abilities Weak market image
Proven management Competitive disadvantages
Others Below- average marketing skills
Unable to finance needed changes in strategy
others.
EXTERNAL ANALYSIS
OPPORTUNITIES THREATS
Enter new markets or segments Likely entry of new competitors
Add to product line Rising sales of substitute product
Diversify into related products Slower market growth
Add complementary products Adverse government policies
Vertical integration Growing competitive pressures
Ability to move to better strategic group Vulnerability to recession and Business cycle
Complacency among rival firms Growing Bargaining power of customers or suppliers
Foster market growth Changing buyer needs or tastes
Others Adverse demographic changes.
19 2.4.2 STEP 2 STRATEGIC CHOICE
This is the formal technique of generating, evaluating and selecting manufacturing strategies.
Figure2.4, segments this process into the following three (3) elements:-
1. Generation of options which involves identifying as many as possible of the potential course of
action
2. Evaluation of options and
3. Selecting the options, which may result in a single or strategy set that becomes the target for
strategic implimentation element of the process.
2.5 GENERATION OF OPTIONS
The variety of options or generic manufacturing strategies and the conditions under which they are
likely to be adopted are discussed below-
1. CONCENTRATION OR SPECIALIZATION STRATEGY
In this strategy, resources are utilized to pursue a single line of business, product, service and
purpose. This strategy is used when seeking to serve a particular target very well and gain a
competitive advantage through specialized knowledge and efficiency and to avoid the problems
involved in producing too many products. However, if the industry is shrinking or aggressive
competitors dominate the market, a concentrated cassava industry may be wiped out since it may have
no other line of business to fall back upon.
2. INNOVATION STRATEGY
In this strategy, new product or process change that fundamentally changes the industry’s methods
of doing business is introduced to gain certain advantages. Thus, if the cassava industry is vulnerable to
obsolescence, it may look for new ideas/products whose time has arrived.
3. GROWTH STRATEGIES
Growth strategies are usually pursued by means of vertical integration, horizontal integration,
diversification, mergers, and joint ventures.
20 (a) Vertical Integration
This growth strategy involves the acquisition of manufacturing functions of other
industries/organizations in the channels of distribution of the cassava industry. In backward vertical
integration, suppliers are acquired to ensure steady flow of raw materials while in forward vertical
integration, outlets for products or services are acquired to reach towards the ultimate users of products
for improved profit.
(b) Horizontal Integration
This strategy involves growth through the acquisition of the manufacturing functions of firms in the
same line of business. It is adopted in an effort to increase the size, sales, profits, and potential market
share.
(c) Diversification
This growth strategy takes the manufacturing function away from both existing products and
market by moving into new and profitable areas that may result in greater growth than would be
possible without diversification.
(d) Mergers and Joint Ventures
In a merger, the manufacturing functon of the cassava industry joins with other companies to form
a new one while in a joint venture, it only works with another company on a project too large for it to
handle by itself.
4. STABILITY, DO NOTHING, CONSOLIDATION OR NO CHANGE STRATEGY
Instead of innovation or expansion, the manufacturing function of the cassava industry may
continue to follow the tried and proven path, utilizing existing products and services, and letting others
make possible mistakes in innovation. This is a useful strategy where further growth is too costly and
may have detrimental effect on profitability. A cassava industry whose manufacturing function is in a
no growth or low growth situation may be forced to adopt a stability strategy.
5. INTERNATIONAL STRATEGY
This strategy involves repeating the approach that was successful in a home country and extending
its operation from there to different parts of the world. Multinational companies like Unliver, Nestle,
IBM
21
and so on practice this strategy. However, it might not be applicable to the cassava industry in Nigeria
that is predominantly rural in nature with entrepreneurial orientation.
6. RETRENCHMENT STRATEGIES
When the survival of a cassava industry’s manufacturing function is threatened and it is not
competing effectively, retrenchment strategies are often needed. The three basic types of retrenchment
strategies are liquidation, divestment, and turnaround
(a) Liquidation:
This strategy applies when the manufacturing function is terminated and its assets sold off.
(b) Divestment
This strategy involves selling the cassava Industry’s business or setting it up as a separate corporation.
(c) Turnaround
This strategy is needed to recover from forced liquidation (Bankruptcy). It usually involves getting
rid of unprofitable products, pruning the work force, trimming the distribution outlets and seeking other
methods of making the manufacturing function more efficient. It is the most complex strategy to pursue
2.6 EVALUATING THE STRATEGIC OPTIONS
The generic strategies discussed above provide an overview of possible approaches to manufacturing
strategy. In reality, these strategies are often used in combinations, thus making the Job of evaluating
and choosing of manufacturing strategies a very difficult task. Various approaches have been in use
over the years. For example, The Boston Consulting Group (BCG) developed the “Business portfolio
matrix”, which essentially shows the linkages between business growth and the relative competitive
position of the enterprises as identified by the market share. However, this approach was criticized by
Day19 as being to simplistic since it offers only general strategy recommendation without specifying
how such strategies could be implemented. Another useful matrix developed to overcome some of the
problems inherent in the business portfolio matrix is the General Electric (G.E) Business Screen,
which according to Hofer and Schendel20 also suffers some of the same limitations as business portfolio
matrix. For example, it does not solve the problem of determining appropriate product market nor offer
anything more than general strategy recommendations.
22 According to Weihrich12 the “SWOT Matrix” Technique that is applied for this study in which “S”
stands for strength “W” for weakness “O” for opportunities and “T” for threats, has a wider scope and
was introduced because of its systematic analysis. It is also most useful when a very limited amount of
time is available to address a complex strategic situation21. This approach balances the internal strengths
and weaknesses of the manufacturing function with the opportunities and threats that the external
environment presents. It suggests that the major strategic issues can be isolated through careful analysis
of each of these four elements and strategies based on them can then be formulated to address these
issues.
Source: Weihrich, Heinz12
Figure 2.5 Operational Activities Leading to SWOT Matrix Analysis
2.7 THE SWOT MATRIX: A CONCEPTUAL MODEL
Figure2.5 shows the more specific operational activities leading to the application of SWOT matrix
technique, while figure 2.6 shows the process of formulating a manufacturing strategy as encompassed
in the SWOT matrix technique. The SWOT matrix technique of strategy formulation as shown in
STRATEGIC ANALYSIS
INTERNAL ANALYSIS EXTERNAL ANALYSIS
STRENGTHS WEAKNESSES OPPORTUNITIES THREATS
SWOT PROFILE
SWOT MATRIX ANALYSIS
EVALUATION AND STRATEGIC CHOICE
23 figure2.6 indicates four conceptually distinct segments of alternative strategies represented by SO, ST,
WO, and WT. These strategic segments which overlap each other, may be pursued concurrently
and in concert. The focus therefore is always on the interaction of the four sets of variables
(strength, weaknesses, opportunities, threats) and the various strategies for each segment as
indicated. The lists of strength, weaknesses, opportunities, and threats are usually derived from
information generated during strategic analysis.
INTERNAL FACTORS
EXTERNAL FACTORS
List of internal strength (s)
(1)
.
.
.
List of internal weaknesses (w)
(1)
.
.
.
List of External Opportunities (O)
(1)
.
.
.
SO: Maxi-maxi
STRATEGY SEGMENT I
WO: Mini-Maxi
STRATEGY SEGMENT 3
List of External threats (T)
(1)
.
.
.
ST: Maxi-Mini
STRATEGY SEGMENT 2
WT: Mini-Mini
STRATEGY SEGMENT 4
Source: http://www.bnet.com/ Swot analysis21
Figure 2.6 Strategies Indicated by the SWOT Matrix Analysis.
24
(1) The SO strategy (Maxi-Maxi)
In this segment, the manufacturing function is playing from its strength, utilizing resources to take
advantage of opportunities and hence the objectives are generally to reduce internal weaknesses and
overcome external threats.
(2) The ST Strategy (Maxi-Mini)
The strategy in this segment is based on the strength of the manufacturing function that can deal
with threats in the external environment. The aim is to use the strength in order to deflect the threats.
The strength must however be used with great restrain and discretion by preferring actions that
circumvent the threats.22
(3) The WO Strategy (Mini-Maxi)
The strategy appropriate for this segment is the one that attempts to minimize the weaknesses and
to maximize the opportunities. The manufacturing function may identify opportunities in the external
environment but requires strength where it currently has a weakness that prevents it from taking
advantage of such opportunities. Without a strategic action to remove this weakness, the opportunities
may go to competitors which explains why Rowe et al22 calls this segment search.
(4) The WT Strategy (Mini-Mini)
The aim of the WT strategy is to reduce or minimize both weaknesses and threats. A manufacturing
function faced with external threats and internal weaknesses may be in a precarious situation that may
lead to liquidation and should adopt suitable manufcturing strategies such as retrenchment to avoid it.
Conclusively, evaluation of strategic options and subsequent selection of strategies using the
SWOT matrix techniques is usually conducted based on the relationship between the generic strategies
discussed and the swot matrix technique as illustrated in table2.2. Additionally, figure 2.7 guides in
establishing the association between common manufacturing weaknesses and the relevant strategy
dimensions23.
25 Table 2.2: Relationship Between Generic Strategies And The SWOT Matrix Technique
STRENGTHS WEAKNESSES
1. 2. 3. 4. 5.
1. 2. 3. 4. 5.
OPPORTUNITIES
SO STRATEGIES
WO STRATEGIES
1.
1. EXPAND GLOBALLY
1. JOINT VENTURE
2. 2. DOUBLE SALESPERSONS 2. ACQUIRE COMPETITOR 3. 3. DOUBLE ADVERTISING 3. EXPAND NATIONALLY 4. 4. DEVELOP NEW PRODUCTS 4.BACKWARD INTEGRATION 5. 5. DIVERSIFY 5. FORWARD INTEGRATION
THREATS
ST STRATEGIES
WT STRATEGIES
1.
1. DIVERSIFY
1. LIQUIDATION
2. 2. ACQUIRE COMPETITOR 2. DIVESTITURE 3. 3. EXPAND LOCALLY 3. RETRENCHMENT 4. 4. INCREASE PROMOTION 4. RESTRUCTURE 5. 5. RE-ENGINEER 5. DOWNSIZE
(Source:http//home.ubalt.edu/ntsbmilb/step5.html)24
Figure2.7 Associating Weaknesses with Relevant Strategy Dimensions
WEAKNESSES
STRATEGY DIMENSIONS
Poor Quality Product Concept Design And Development
Late To Market With New Features Manufacturing Plants and Facilities
Insufficient Product Range Manufacturing Technologies and Practices
High Inventory Levels Logistics And Material Control
Poor Project Control Human Resources Management
Inflexible Equipment
Organization And Management System Source: Dilworth, J. B11
26 2.8 RELATED EMPIRICAL STUDIES Anowai25, Ezeifidi26, and Akwaji27 carried out some studies on the cassava industry. However,
none of these studies is directly related to the context of this study, which is on formulation of
manufacturing strategies for the cassava industry. This therefore creates a necessary gap that this study
intends to fill.
Anowai25 was motivated by the need to replace existing traditional art of making Garri in small
quantities with a modern technology for production at high capacity to carry out a study on the
“Economic viability of manufacturing Garri processing machines.” According to the study, the lack of
economically viable and developed indigenous industries such as the cassava industry is among the
critical factors hampering the establishment of the required technological base for Nigeria’s industrial
development and thus her continuous dependence on foreign industrial entrepreneurs to plan and run
even her small industrial projects at a very high cost to the economy. Consequently, he recommended
an urgent reappraisal and for government to formulate favourable strategies and policies to promote and
encourage indigenous industries such as the cassava industry.
Ezeifidi26 in his contribution to the development of the rural cassava industry carried out a
“Production design of a cassava starch mill.” The design according to the study was based on an
informed selection of machines and equipment built from available materials to suit the needs of the
rural cassava industries as well as other criteria such as affordability of technology, cost, ease of
operation and maintenance by the local populace for which the mill is intended.
Akwaji27 carried out a study to identify the work-skill modules required by secondary school
graduates for success in cassava processing enterprises in Cross Rivers state. For the study, he used four
sets of questionnaires to collect data from forty-two teachers of Agriculture as well as from cassava
processors in four different groups of Fifty-four, Thirty, Thirty-three and Thirty six.
Findings from analyzing the data indicated the various work skill items that were required in processing
various types of cassava products in the cassava industry.
Consequently, he recommended that the identified work skill items be packaged and integrated into a
skill acquisition training programs for preparing and training youths for success in cassava processing
enterprise or industries.
27 2.9 SUMMARY OF LITERATURE REVIEW
The reviewed literature provided an overview of the manufacturing functions of the cassava
industry; its products, machines, equipment and the production processes applied which are mostly
mechanical in nature and thus the consequent need to formulate suitable manufacturing strategies for the
industry. The review explained manufacturing processes, defined manufacturing strategy and
deliberated on its underlying concepts. The origin of manufacturing strategy was traced to Skinner's
“Harvard Business Review” article, which he suggested a top-down approach to manufacturing and
advocated that manufacturing objectives be derived then manufacturing strategies/policies developed to
address these objectives. Major factors otherwise called dimensions of manufacturing that are usually
considered and analysed when formulating manufacturing strategy were identified and classified into
external and internal factors. The internal factors identified in the review were: 1.Product concept,
design and development, 2. Manufacturing plants and facilities, 3. Manufacturing technologies and
practices, 4.Logistics and material control, 5.Human resources management, 6.Organization and
management systems. The external factors identified were 1.Competitive components, and 2.Other
success factors.
The three major Steps involved in the formulation of a manufacturing strategy were mentioned as
strategic analysis, strategic choice and strategic implementation. The relevance of the SWOT matrix
technique in analyzing and selecting the relevant manufacturing strategies from available generic
options discussed in the review was also emphasized.
The review of previous empirical studies indicated that Anowai25, Ezeifidi26 and Akwaji27 did some
work on the cassava industry, but none of the study was on the formulation of a manufacturing strategy.
Admittedly, the reviewed literature provided good insight to the subject matter under study, and this
study derived much from the reviewed literature. However, the “manufacturing strategy formulation’’
perspective on the cassava industry was completely missing from the reviewed literatures and therefore
further highlights the need to carry out this study.
28
CHAPTER THREE
METHODOLOGY AND STRATEGIC ANALYSIS
3.1 METHODOLOGY The methodology for this study is derived from the strategy formulation model advocated by
Johnson and Scholes14, which segments strategy making process into three interacting elements of (1)
Strategic analysis, (2) Strategic choice and (3) Strategic implementation, as shown in figure 3.1
This model is chosen because of its convenience, popularity and application by many authors, for
example (Des and Miller)28 and (Rowe, Mason, Dickel, Man and Mockler)22, and so has been met in
much of the literatures used for this study. Another reason for adopting this model is that it allows the
manufacturing strategy formulation process to be organized systematically without loosing sight of the
interactive nature of the strategic elements28.
Adapted from Johnson and Scholes14
Figure 3.1 Model of Manufacturing Strategy Formulation Elements
External Analysis Internal
Analysis
1 Strategic Analysis
Resources
Organization Structure
People and systems
3 Strategic
Implementation
2 Strategic Choice
Generation of options
Evaluation of options
Selection of strategy
Formulation of strategy itself
Often referred to as tactics
29
3.2 SCOPE OF THE STUDY
Based on the model, the study will specifically:
1. Perform a strategic analysis on the manufacturing function of the cassava industry using
“environmental scanning technique” so as to have a better understanding of it’s internal and
external operating conditions, problems, trends, short and long term opportunities, threats, current
and evolving competitive advantages and disadvantages, current and evolving performance
potentials, processes, behaviour and so on.
2. Determine and formulate appropriate manufacturing strategies for the cassava industry based on
information generated in step 1. above.
3.3 DATA AND INFORMATION SOURCES FOR THE STUDY
One or more of the following sources and methods of gathering information and data for
strategy formulation purposes is recommended17; Journals, Reports, Books, Personal experience,
Conferences, Committees, Memoranda, Meetings, Interview of colleagues, board members, employees,
friends and so on. Consequently, this study used a multi-method approach thus:
a. Documents and Qualitative analysis reports ( expert views, trend analyses, background reports,
averages, etc )
b. Site visits, observations, and structured interviews on selected cassava industries in Akwa Ibom
State. In addition, a cassava processing industry owned and managed by the National Root
Crops Research Institute, (NACRI), Umudike, Abia State was used as a benchmark on issues
and factors considered relevant in formulating a manufacturing Strategy.
Harbour Peters30 recommends these methods especially when subjects may not be able to read and
write properly as is the case in this study. The methods also has the following additional advantages31.
1. Enables information to be collected in their natural setting (first hand information)
2. Enables the collection of in-depth information
3. Enables the researcher to ask pertinent questions that were not remembered before the interview
as a result of the release of some hidden facts by the respondent
30 4. The interviewer and the interviewee can seek for more clarification on issues as the interview
progresses.
5. The researcher may use the words spoken directly from the respondents, which may be
considered more appropriate.
6. There is freedom to schedule and conduct the interview in a way that suits both parties.
3.4 AREA OF STUDY The area of study is Akwa Ibom state. Its choice is based on its status as a major cassava producing
state in the country. The cassava industries used for the study were selected based on the industry status
accorded them by “International Institute for Tropical Agriculture (IITA)2” as well as “Raw Materials
Research and Development Council4 (RMRDC), who are authorities on cassava industry.
31 3.5 STRATEGIC ANALYSIS RESULT
Details of the strategic analysis conducted on selected industries using “environmental scanning
technique” is provided in appendix II. The result from the analysis in appendix II is presented below in
a standard format wherein pertinent facts, relevant concepts and other considerations earlier discussed
are pulled together in a systematic fashion.
Table 3.1 STRATEGIC ANALYSIS OF THE CASSAVA INDUSTRY
1. PRODUCT CONCEPT DESIGN AND DEVELOPMENT a.) PRODUCTS ( R & D )PRACTICES 0% Weak Neutral (50) Strong 100% 1. Reseach and development expertise and capability �
2. New product development and new product renewal planning practices �
3. Application of advanced engineering technique in product design and development �
4. Use of project management approach in product design �
5. Investment in new product development �
2. MANUFACTURING PLANTS AND FACILITIES
b.) PLANT FACILITY 0% Weak Neutral (50) Strong 100% 1. Use of multi-plants for production � 2. Plant capacity utilization (Time based)
�
3. Age and physical condition of plants and facilities
�
4. Sophistication of plants and equipment � 5. Potentials for modernization of plant and
facilities �
6. potentials for expansion of plant facilities
� 7. Proximity of plant to public power source
� 8. Availability of public power for plant use
� 9. Availability of labour for plant use
� 10. Availability of Raw materials
� c.) PLANT PRODUCTION PHILOSOPY 0% Weak Neutral (50) Strong 100% 1. Dedication of plant to produce particular
products �
2. Range and variability of other products that could be produced
� 3. Ease of adaptation of plants to
manufacture other products �
4. Application of continous production method
�
5. Volume of product output � 6. Production process innovation capability � 7. Rate of innovation in industry
� 8. Production effectivenss and delivery
schedule �
9. Production capacity planning
�
32 d.) PLANT LAYOUT 0% Weak Neutral (50) Strong 100% 1. Plant facility layout design �
2. Provision for material handling in plant layout � 3. Plant layout innovation capability �
3. MANUFACTURING TECHNOLOGIES AND PRACTICES
e.) PROCESS TECHNOLOGIES 0% Weak Neutral (50) Strong 100% 1. Intensity of labour to produce to product � 2. Technical and manufacturing skills
possesed �
3. Level of technology applied in production
�
4. Mastery of special technology � 5. Access to modern/latest available
cassava manufacturing technologies �
6. Intensity of capital requirement to produce products
�
7. Patented or proprietary nature of product/process
� 8. Possesion of patents/trademarks
�
9. Strength of patent if any � 10. Application of production planning and
control �
11. Level of value added to product �
f.) QUALITY CONTROL 0% Weak Neutral (50) Strong 100% 1. Purchased goods quality assurance program �
2. Inline and sampled quality control techniques � 3. Products quality � 4. Aftersales warranty and services �
g.) MAINTENANCE 0% Weak Neutral (50) Strong 100% 1. Practice of maintenance principles
�
2. Uptime availability records of equipment �
3. General maintenance documentations � 4. Maintenance scheduling based on
documentations �
4. LOGISTICS AND MATERIAL CONTROL h.) SUPPLIER RELATIONSHIP 0% Weak Neutral (50) Strong 100% 1. Involvement of suppliers in planning process �
2. Incorporation of purchasing department and supplier in quality control issues �
3. Practice of lowest bid shopping �
33 i.) PURCHASING AND ORDERING POLICIES 0% Weak Neutral (50) Strong 100% 1. Economic order quantities and timming �
2. Full materials requirement planning � 3. Routine inventory auditing � 4. Practice of in process inventories �
5. Provision for finished goods storage � 6. Application of material handling
technologies �
7. use of own truck fleet to transport goods � 8. Computation of transportation routings �
5. HUMAN RESOURCE MANAGEMENT
j.) HIRING PRACTICES 0% Weak Neutral (50) Strong 100% 1. Entry level educational requirement � 2. Initial orientation and training session
�
3. Skill level and job grade structure � 4. Interview and follow up procedures �
5. Ability to attract and retain highly creative people
� 6. Inhouse or outside educational
opportunities for employees �
7. Performance appraisal and incentive system
�
k.) PERFOMANCE EVALUATION 0% Weak Neutral (50) Strong 100%
1. Job performance and salary review procedure
�
2. Employee counselling practices �
3. Rotation and reassignment practices � 4. Pay raise criteria � 5. Special incentive system �
6. ORGANIZATIONAL AND MANAGEMENT SYSTEM
l.) GENERAL ADMINISTRATION 0% Weak Neutral (50) Strong 100% 1. Entrepreneurial orientation � 2. Existence of organizational structure �
3. Strength of solid and dotted line responsibilities
�
4. Flexibility of organizational structure �
5. Number of management layers � 6. Networks with counterparts in other
plants or division �
7. Level of cordination and intergration � 8. Management communication and control
network �
9. Use of labour council and staff advisory groups
�
10.Receptiveness to feedback, suggestions and complaints from lower level
� 11. Effectiveness of decision making process � 12. Detailed reporting procedures �
34 7. EXTERNAL ENVIRONMENT
m.) COMPETITIVE COMPONENT 0% Weak Neutral (50) Strong 100% 1. Strength and uniqueness of products in
the market �
2. Scope of competitive rivalry between cassava industries (local, regional, national etc.)
�
3. Customer loyalty and satisfaction with cassava industry’s product
� 5. Relative level of technology used by
foreign based competitors �
6. Importation of high quality cassava products into the market
� 6. Market share/size controlled by products
(whether dominant, tenable, weak) �
7. Products distribution channels � 8. Customer concentration � 9. Range/varieties of cassava products in the
market �
10. Products market growth rate/potentials � 11. Advantage taken of market growth
potentials �
12. Ease of entry of new firms into the cassava industry’s business
� 13. Intensity of competition and rivalry
among cassava firms �
14. Degree of cassava products substitutability
� 15. Degree of dependence on complimentary
or supporting products and services �
n.) EXTERNAL SUCCESS FACTORS 0% Weak Neutral (50) Strong 100%
1. Labour availability constraints on manufacturing activity
�
2. Raw materials supply constraints on manufacturing activity
� 3. Dependence on particular raw material � 4. Access to cheap public infrastructure eg
water, electricity, etc that could aid manufacturing
�
3.6 SUMMARIZING STRATEGIC ANALYSIS RESULT INTO A SWOT PROFILE
Much of the information generated during strategic analysis is not relevant in formulating
manufacturing strategy. The standard practice is to filter, and reduce the information to a manageable
quantity of summarized key strategic issues32. This is usually done using grids of four columns one each
for strengths, weaknesses, opportunities and threats and then to list the relevant factors beneath the
appropriate headings21. The analyzed internal factors usually constitute the list of strength or
weaknesses while the external factors are usually summarized as opportunities or threats. Such list of
strength, weaknesses, opportunities, and threats is known as a SWOT Profile. [SWOT stands for
35 strength, weaknesses, opportunities, and Threats]. Table 3.3 list several strategic key areas to focus
upon when summarizing the result of strategic analysis into a SWOT profile.
Table3.2 Important Considerations For SWOT Profile
INTERNAL ANALYSIS
STRENGTHS WEAKNESSES A distinctive competence No clear strategic direction
Adequate financial resources A deteriorating competitive position
Good competitive skills Obsolete facilities
Well thought of by buyers Sub par profitability
An acknowledged market leader Lack of managerial depth and talent
Well conceived functional area strategies
Missing any key skills or competencies
Access to economies of scale Poor track record in implementing strategy
Insulated least somewhat from strong competitive pressures
Plagued with internal operating problems
Proprietary technology Vulnerable to competitive pressures
Cost advantages Falling behind in RxD
Competitive advantages Too narrow a product line
Product innovation abilities Weak market image
Proven management Competitive disadvantages
Others Below- average marketing skills
Unable to finance needed changes in strategy
others.
EXTERNAL ANALYSIS
OPPORTUNITIES THREATS
Enter new markets or segments Likely entry of new competitors
Add to product line Rising sales of substitute product
Diversify into related products Slower market growth
Add complementary products Adverse government policies
Vertical integration Growing competitive pressures
Ability to move to better strategic group Vulnerability to recession and Business cycle
Complacency among rival firms Growing Bargaining power of customers or suppliers
Foster market growth Changing buyer needs or tastes
Others Adverse demographic changes Source: Thompson and Strictland15
36 3.61 IDENTIFYING STRENGTHS , WEAKNESSES, OPPORTUNITIES AND THREATS FROM
STRATEGIC ANALYSIS
Strength is something the manufacturing function is very good at doing or a characteristic that
gives it an important capability. It can be a skill, important expertise, a valuable organizational resource
or competitive ability or an achievement that put the cassava industry in a position of advantage like
having a better product, stronger name recognition, superior technology or better customer service.
Strength can also result from alliances or corporative venture with a partner having expertise or
capabilities that enhance the cassava industry’s competitiveness.
Weakness on the other hand is something the manufacturing function lacks or does poorly in
comparison to others. it is also a condition that put it at a disadvantage.
Opportunities are those things that offer important avenues for profitable growth, those where it
has the most potentials for competitive advantage and those which it has the resources to pursue.
Threats on the other hand stems from such factors as emergence of cheaper technologies, Rivals
introduction of new or better products, the entry of low cost foreign competitors into the cassava
industry market strongholds and new regulations that are burdensome to the cassava industry.
37 3.7 SWOT PROFILE FOR THE CASSAVA INDUSTRY
The SWOT profile for the cassava industry based on table 3.1 and table3.2 is presented below in
table 3.3
TABLE 3.3 SWOT PROFILE FOR THE CASSAVA INDUSTRY
STRENGTHS INDICATORS ON THE STRATEGIC ANALYSIS RESULT (TABLE3.1)
1. Abundance of primary raw material (cassava)
b10
2. Industrial expansion,modernisation and growth potentials
b5, b6, b7
3. Availability of manpower (labourers) for production
b9
4. Wide range of products with innovation capabilities
c2, c3
WEAKNESSES 1. Irregular supply of raw material i1, i2, h1, n2
2. Low capacity utilization b2, c4, c5, c8, c9
3. Non standardised low quality products a2, a3, f1, f2, f3, f4
4. Poor plant facility layout d1, d2
5. Poor product research and development (R&D) capability
a1, a2, a3, a4, a5
6. Use of low level manufacturing technology / machinery
b4, c4, c5, c8, c9, e1, e3, e4, e5,e10
7. Below average managerial / manufacturing / engineering skills
a1, a2, a3, a4, a5, d1, d2, e3, e4, e10, e11, f1, f2, f3, g1, g2, g3, g4, i1, i2, i3, i4, i5, i6, i7, i8, i9, i10, i11, i12
8. Inadequate public power (electricity) availability
b8
OPPORTUNITIES 1. Favourable and highly demanded
products with high market share m1, m3, m6, m7, m8, m10
2. Ability to expand product lines to meet broader range of customer needs
m9
3. Insulated from strong competitive pressures
m2
THREATS
1. Use of improved technology by foreign based competitors.
M4
2. Rising sales of cassava products substitutes (corn starch, millet, etc.)
M14
3. Importation of high quality cassava products into the market
M5
38
CHAPTER FOUR
SELECTION OF MANUFACTURING STRATEGIES
The SWOT matrix technique used in selecting manufacturing strategies from generic strategies is shown in table 4.1. It provides a good framework for identifying strategic relationships, which in turn becomes the basis for strategic choice and selection. For proper analyse and identification strategies, a “+” sign is used to indicate a match between the factors while an “O” indicates a weak or none existent relationship. Each of the four indicated strategic segments (SO, ST, WO, and WT) in table 4.1, have been carefully analyzed in detail and evaluated independently in appendix III. The explanations that follow below for each strategic segments and the resulting strategies presented in table 4.2 are based on the detailed analysis carried out in appendix III. TABLE 4.1: INTERACTION MATRIXES OF STRATEGIC FACTORS
STRENGTH (S) WEAKNESSES (W) INTERNAL FACTORS
EXTERNAL FACTORS
(S1) (S2) (S3) (S4)
Abundance of primary raw material (cassava) Industrial expansion, modernisation and growth potentials Availability of manpower (labourers) for production Wide range of products with innovation capabilities
(W1)
(W2)
(W3)
(W4)
(W5)
W6)
(W7)
(W8)
Irregular supply of raw material
Low capacity utilization
Non standardised low quality products
Poor plant facility layout
Poor product research and development (R&D) capability
Use of low level manufacturing technology / machineries
Below average managerial / manufacturing / engineering skills
Inadequate public power (electricity) availability
OPPORTUNITIES (O) S1 S2 S3 S4 W1 W2 W3 W4 W5 W6 W7 W8
(O1)
Favourable and highly demanded products with high market share
O1 + + 0 + O1 + + + 0 0 + 0 0
(O2)
Ability to expand product lines to meet broader range of customer needs
O2 + + 0 + O2 + 0 + + + + + +
(O3) Insulated from strong competitive pressures
O3 0 0 0 + O3 0 0 0 0 0 0 0 0
THREATS (T)
S1 S2 S3 S4 W1 W2 W3 W4 W5 W6 W7 W8
(T1)
Use of improved technology by foreign based competitors.
T1 0 + 0 0 T1 0 0 + + 0 + 0 0
(T2)
Rising sales of cassava products substitutes (corn starch, millet, etc.)
T2 0 + 0 + T2 0 0 0 0 0 0 0 0
(T3) Importation of high quality cassava products into the market
T3 0 + 0 0 T3 0 0 + 0 0 0 0 0
39 4.1 STRATEGIES FOR THE STRENGTH AND OPPORTUNITIES (SO) SEGMENT
Successful manufacturing strategies build on the firm’s strength, to take advantage of opportunities.
The cassava industry is no exception. The strength of the cassava industry based on the SWOT profile
lies in such areas as abundance of primary raw material (cassava), industrial expansion, modernisation
and growth potentials, availability of manpower (labourers) for production, and wide range of products
with innovation capabilities. As indicated in the detailed analysis of this strategic segment in appendix
II, the suitable strategies for this segment would be to increase the scale of production in order to take
advantage of economics of scale for higher profitability. Based on appendix II, these should be
actualized by:
1. Increasing the volume of manufactured products viz a viz production capacity significantly than is presently obtainable. S1(O1), S1(O2)
2. Expanding production facilities with modern machineries. S2(O1)
3. Investing in new innovative cassava products. S2(O2), S4(O1), S4(O2), S4(O3)
These strategies will thus utilize the listed strengths to take advantage of such opportunities as
favourable and highly demanded products with high market share, ability to expand product lines to
meet broader range of customer needs and insulated from strong competitive pressures
4.2 STRATEGIES FOR STRENGTH AND THREAT (ST) SEGMENT
Major threats based on figure4.2 are importation of high quality cassava producst into the market as
against the prevailing low quality products, and rising sales of cassava substitutes such as corn, millet
etc. These threats coupled with the improved manufacturing technologies used by foreign based
industries, when compared to ours implies that imported products will gradually gain preferential
acceptance because of their high quality and eventually dominate the market to the detriment of the
Nigeria cassava industry. To reduce this threat, the analysis in appendix II suggests the following
strategies.
1. Expand manufacturing facilities with modern machineries/technologies. S2(T1), S2(T2), S2(T3)
2. Manufacture new and innovative products to disuade rising sales of substitutes such as corn,
millet, etc. S4(T2)
40 4.3 STRATEGIES FOR WEAKNESS AND OPPORTUNITIES (WO) SEGMENT
Irregular supply of raw primary material, Low capacity utilization, Non standardised low quality
products, Poor plant facility layout, Poor product research and development (R&D) capability, Use of
low level manufacturing technology / machineries, Below average managerial / manufacturing /
engineering skills, and Poor public power (electricity) availability are the weaknesses that prevent the
cassava industry from taking advantage of available opportunities. Consequently the under listed
strategies derived from the analysis of this segment in appendix III would minimize these weaknesses
and utilise the opportunities listed in figure 4.2 .
1. Cassava industries should own cassava farms and encour