Global Enterprise And Innovation Commerce Essay

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The case study country used in the analysis is Nigeria, known as a country abundant with natural resources located in West Africa with a long coastline along the Atlantic Ocean. It is ranked 32 in the world in terms of total area. However, it is a middle income nation with developed financial, communication and oil sector. In the report few points will be looked at which are the internal and external analyses of the business environment in Nigeria and how it can promote innovation and attract investors with various economy components. Also going to discuss how National innovation system is related to different mechanisms and approaches of innovation.

In the business environment analysis of Nigeria, strategic models will be deployed which are the pestel and sw analysis. This model will be a guide in giving a well-structured breakdown of the Nigerian economy, in exploring the internal and external environment.

External environment (pestel model): The external environment of a business comprises of a set of economic conditions operating outside the business of an organisation or economy, which structures the life and existence of the business. These conditions could affect the business positively or negatively. Therefore the pestel will be used to capture the external business environment of Nigeria.

Political factors: This highlights the role of government in the business environment; they have been able to employ trade restriction, so as to encourage production and export of locally made goods. However, the government has had an effect in infrastructure, health and education, which in the long run will pave way for innovation.

Economic factors: These refer to macro-economic factors such as exchange rates, business cycles and inflation rate. These affect how business operates in an economy. The exchange rate affects the cost of exporting and importing goods in the Nigerian economy.

Social factors: This includes the changing cultures and demographics in the economy. The development in social factors affects the demands of a business/company products and how these organisations operate/ work.

Technological factors: These refer to innovation such as internet, rise of new composite materials and technological incentives. A technological shift can affect the cost and quality of business, which results to the stimulation of invention, innovation and diffusion.

Environmental factors: This includes the climate condition and environment pollution, which may affect production of products in an economy. However, may involve creation of new market and exist of older ones.

Legal factors: This embraces legislative change on business operation in an economy, which might be through health and safety legislation or restriction of mergers and acquisition.

Internal Environment (SW model): The internal business environment of a given country consists of the main factors which are Strategies and innovation, entrepreneurial skills and abilities, and employee abilities. The business environmental factors of Nigeria will be analysed using the SW analysis model.

Strengths: The business environment has a strong financial and banking sector, well governed and managed by the boards of banking affairs and a vibrant and fast growing oil and telecommunication sector.

Weaknesses: There is lack of basic infrastructure in the economy e.g. failure of power supply, roads, and technology. However, with the abundance of resources it is unable to diversify these resources.


The NIS can be defined as the interaction between private and public firms, universities, and government agencies aiming at the production of innovation, science and technology (Niosi et al., 1993).The concept of National Innovation System (NIS) has being gaining intellectual and practical consistency over a number of decades, enjoying initial adoption by OECD and most developing economics. It is the focus to be able to address the recent issues for developing economics. Policy makers view NIS as a powerful conceptual framework that can be used to help bridge the gap between the developed and the developing economies.


The government components of the National innovation system to foster innovation are tailored towards polices made by government institutions guiding the affairs of product quality and innovation. The standard organisation of Nigeria (SON) focuses its point in matters of standardisation, quality and technical competence of products through factory inspection, and NIS product certification exercise which is organised by (SON) for product certification. There were series of units initiated by the government institutions, this promoted product quality and innovation. The production registration unit helped the economy through obtaining information on the standards or technology bases for products and services, and prevention of substandard products produced or imported into Nigeria. These strategies facilitated consumer-protection functions and also assist in national development programmes. Secondly the quality system training units, assisted in organising special training courses on product quality management, innovation and environmental management systems specifically for company officials in the industry segment and commercial sector of the Nigerian economy. This polices has helped increased the rate of innovation in the Nigerian economy by increasing the rate of foreign direct investment into the country. The second government agency that has helped in creating innovation and professionalism in the Nigerian economy is the Nigerian Communication Commission (NCC). The commission is the independent national regulatory authority for the telecommunication industry in Nigeria. However, known as one of the sector performing well in the Nigerian telecommunication industry, the policies and functions of the commission has helped in the increase of innovation in the economy through; offering, approving, dissemination and imposing technical specifications and standards for importation and communication equipment used in Nigeria. However, it also helped the economy, in the progress and observing of the performance standards and indices relating to the quality of telephone and communication services. The telecommunication commission created a platform for innovation in the industry by introducing innovative services and practises in the industry, in-line with international standards and best practises. However, this encouraged local and foreign investments in the communication industry, which helped in the establishment of communication companies and organisations by indigenes of the economy. This facilitated the efforts in developing an effective research and development department by all communication industry practitioners. The two institutions mentioned above, has helped in the positive increase of innovation in the economy. Although there are various government institutions in the Nigerian economy, but these institutions were preferred because of the institutional polices and decisions that has had a positive effect in the economy. This has created a platform for the innovative process of goods delivered and services delivered in the economy.


There are various sets of financial institutions that are relatively involved in the operational level of finance and the capital market. These institutions are central bank of Nigeria (CBN), security and exchange commission (SEC), and Nigerian stock exchange (NSE). These institutions help in the regulatory, monitoring and development of operational financial system in the Nigerian economy. The financial sector reforms in Nigeria began with the deregulation of interest rates in 1987. Since that period, there have been policy measures initiated and implemented. These measures are licensing of new banks, capital market reforms, and reduction of interest rates to SMEs. In recent years, the financial system has witnessed the merger and acquisition of banks and the establishments of microfinance banks in the economy, for the purpose of lending money to SMEs and other large enterprises in the economy that will create an organisation atmosphere and reduce strategic barrier. The microfinance institution has had a positive effect in the Small and medium enterprises in the economy, through provision of loan and a low interest rate in the economy. Pre-intervention of this policy of the financial sector, the SMEs faced series of difficulties and problems in the economy. This created operational and strategical barriers for a rapid development of the SMEs sub-subsector in crafting innovation skills/techniques and development among companies or organisations. Assessing finance has been identified as key challenges that affect SMEs in the Nigerian economy, because of poor management and accounting practises by owners (Anazodo, 2000). However, this also duo the fact that most business owners do not have good collateral to get a loan from the bank, and most that succeeded in acquiring a loan found it hard to pay back. This is because of the high rate of interest rate attached to the loan previously collected. In recent time, the microfinance bank has helped the SMEs in the economy through the process of easy access to loan with a minimal collateral and low interest rate. The central bank of Nigeria recently came up with a litany of intervening measures that will make SMEs sub-sector fly economically and globally. The CBN intervened with #200million SME credit guarantee scheme fund and SMEs refinancing and restructuring fund. However, this was focused on various critical factors which include macro-economic stability, innovativeness, information and communication technology (ICT), and competitiveness, strong and reliable financial system. The CBN also supported the establishment of entrepreneurship development centres (EDCs) in Kano, Onitsha, and Lagos as another form of initiative not just a focus on funding. This in the long run will create success and better global enterprise in the economy. The financial resource allocation of CBN will result to innovation in the economy.


The Universities and the science and technology (Research) institute are key components of the national innovation system responsible for crafting out economic opportunities and the nation's wealth. The economic strength of both institutions in an economy determines the extent at which there will be prosperous economic development and global competitiveness among individual nations. In developing countries like Nigeria, the national innovative system in the area of science and technology does not work effectively in the system of the economy; this has contributed to the inability of technological development in the economy. However, the first science and technology was launched in 1986, with the aim to transfer foreign technology to local firms through technical assistance, R&D, and training and operations. In 1990, there was a need to link the science, engineering and technology sectors to fit in the macro-economic development activities, which became the key issues of the science and technology community. The policy governing the science and technology community had specific objectives, which includes provision of attractive investment incentives and a well-structured national innovative system (NIS), and the provision of skilled manpower. Though the recognition of information technology in economic development, and technological advancement led to the formulation and approval of information technology policy in March 2001, and the development of information technology development agency established to help facilitate the implementation of the IT policy. This has brought about advancement of technology in Nigeria with an increase in large IT and software firms. However, for the economy to operate globally, the UNESCO developed a plan of cooperation with Nigeria to assist the country in process of technology development (Nigeria/UNESCO, 2005). The science and technology component of the plan is tailored towards the capacity structure of reforms and the Nigeria science and innovation system. This helped in the increase of macro-economic objectives, such as employment creation, increase in the Gross Domestic Product and also help open opportunities for foreign direct investment. There is little interaction between universities and research institutes in Nigeria. According to Bamiro (2000) observed that areas of interaction between universities and research institutes in Nigeria are focused on health (Development of vaccines and drugs from local resources), food processing (development of local foods and the process of technologies) and oil processing because of the high demand of oil in the economy. This has brought about industry competitive among pharmaceutical organisations in Nigeria because of the development in the industry. In the area of local food, it has reduced the rate of food importation and an increase in export in the economy. This has introduced the process of strategic development in the economy, because of external competitors and high rate of export on oil.


The Nigerian economy has various industrial sectors involved in the operational system of the economy. There are two specific industries that have brought innovation and have had a positive effect on the Gross Domestic Product of the economy. These sectors are the telecommunication and oil sector which a different multidimensional, integrated and a dynamic view of innovation. However, the point of focus will be on the oil sector, because of the enormous impact it has had in the economy. The oil and natural gas industry is the largest industrial sector in Nigeria. According to (Economy watch, 2005) 'it reports that the oil industry accounts for more than 90% of the annual national production and also generates about 80% of the government revenue and also ranks 8th in the whole world in terms of oil exportation' . According to Nigerian Daily (Business DAY, 2011) 'Reports that the nation's revenue from oil export rose 46% from 2009 to #9.15trillion ($59 billion) in 2010, as companies raised economic output on improved security in the Niger Delta. With these figures there have been forms of innovation and high foreign direct investment within the sector. The sector is controlled by joint venture operations between the Nigerian government and six major international companies, which are Shell, Chevron, Mobil, Agip, Elf and Texaco. This has created opportunity for this joint venture to explore innovation process in the economy e.g. Shell a MNC operating in Nigeria have been perfectly flexible in the area of innovative strategy in the economy, because of the high rate of demand on oil. This has created and maintained a strong investment in research and development and also created a platform for innovation in the energy industry. However, the high demand on oil in the Nigerian economy has created a radical and incremental change of innovation in the organisations, especially Shell. This has added positively to the macro economic development of the economy and an increase in employment and R&D. This has created a process of open innovation in shell, because of the strong investment in R&D and an adopted policy called Gamechanger.


From the above economic analysis, investing in the Nigerian market will by far be profitable and productive to an investor or entrepreneur. On a general note the market policy creates a platform/network for companies/organisations to innovate and apply strategic principles. This is because of the guiding principles initiated by government institutions on specified products introduced into the market and the quality standard of communication in the economy, which will encourage the radical and incremental change of innovation in the economy. There will also be a decline in strategic and operational barriers because of the financial support rendered to the SMEs by the apex bank of the country; however, this will create an opportunity for open innovation and easy start-ups of business in the economy. Finally the economy provides a holistic approach that crates an avenue for investors/entrepreneur to embrace important determinants of innovation, through its economic recognition on important factors like routines, rules and laws within the system that forms the context in which organisation innovates. The only challenge most investors/entrepreneurs may face might be corruption, which the economic and financial crime commission (EFCC) is combating in the economy.