CHAPTER ONE

INTRODUCTION

1.1.    Background of the study

Manufacturing companies, businesses, organizations, etc, needs finance to meet their demands in the economic world. The business activity fully depends on the finance. Finance is the backbone of a business organization. Be it asmall, big or medium scale enterprise, they need finance to help them complete their business activities. Nowadays, all the activities are linkedto and related with the economic activities and very particular to earning profit through any venture or activities. The major goal of any business is to make profit. According to the economics concept of factors of production, rent given to landlord, wage given to labour, interest given to capital and profit given to shareholders or proprietors, a business needs finance to meet all the demands. Therefore finance can be seen as capital, investment, fund etc. Thus, increasing the profit is the major goal of any kind of economic activity.Financeis defined as the art and science of managing money. This eclipse both financial service and financial instruments. Finance is also said to be the supply of money at the time when it is needed. The goal of finance is the obtaining of funds and their effective utilization in business engagements. Finance comes in form of capital, funds, money, and amount.

Financial management is an essential part of overall management. Its Objectives is broadly divided into integral parts; profit maximization and wealth maximization.It is linked with the duties of the financial managers in the business organization. Financial management is said to be concerned with the efficient use of an integral part an economic resource, capital funds. The most widely used and accepted definition of financial management was given by S.C. Kuchaland it states that “Financial Management deals with procurement of funds and their effective utilization in the business”

Financial Management mostly deals with the effective funds management in the business and is practiced by business firms.

Financial Management and Production Management is the functional part of the business, which helps to multiply the money into profit. Profit of the organization hugely depends upon the production performance. Production performance needs finance, because production department requires raw material, machinery, wages, operating expenses etc. These expenditures are decided and estimated by the financial department and while the finance manager assigns the appropriate finance to production department. The financial manager also must be aware of the operational process and finance required for each process of production activities. The financial manager or the department is in charge of allocating the needed finance to the marketing department. Therefore, marketing and financial management have mutual relationship and also depends on each other.

Strategic financial management is the process of carefully evaluating both present and future environments, formulating the organizations objectives, implementing and controlling decisions focused on achieving these objectives in the present and future environments. Strategic financial management is involved in deploying a firm’s internal strengths and weakness to take advantage of its external opportunities and minimize its external threats/problems.

In the world of geo-political, social and economic uncertainty, strategic financial management is in a progressive process of change, which requires a reexamination of the key assumptions that cut across the traditional boundaries of the subject in other to proffer corporate performance.Strategicfinancial management is centered on the belief that an organization, manufacturing companies should without any interruption monitor internal and external events and trends so that well-timed changes can be made as needed. An organization or company must be capable of completely identifying and adapting to change.

1.2.    Statement of the general problem

The poor management of business organizations in Nigeria has led to the liquidation of several companies and has increased the level of unemployment in Nigeria as lack of strategic financial management and expertise has led to the laying off of workers which has by extension affected the economic development of Nigeria; this is because no economy can thrive with a huge population of unemployed youths. The poor corporate performance of business establishment has led to the poor level of foreign investment into Nigerian companies. Foreign investors watch out for the corporate image of organizations before investing as they want to be sure that they would recoup their investments. This has unfortunately not been the case in West African organizations especially Nigerian thus leading to the low level of foreign investments which has also affected the socio economic development of the country.

1.3.    Aims and objectives of the study

The major aim of the study is to examine strategic financial management and its impact on corporate performance of organizations in Nigeria. Other specific objectives of the study include;

1.  To examine the relationship between strategic financial management and the profitability of organizations in Nigeria.

2.  To evaluate the level of financial management evident in business organizations in Nigeria.

3.  To examine the relationship between strategic financialmanagement and foreign direct investments.

4.  To determine the importance of strategic financial management to business organizations.

5.  To determine the relationship between strategic financial management and the economy of Nigeria.

6.  To recommend ways of improving strategic financial management in Nigerian companies.

1.4.    Research Questions

1.  What is the impact of strategic financial management on the corporate performance of organizations?

2.  What is the relationship between strategic financial management and the profitability of organizations in Nigeria?

3.  What is the level of financial management evident in business organizations in Nigeria?

4.  What is the relationship between strategic financial management and foreign direct investments?

5.  What are the importance of strategic financial management to business organizations?

6.  What is the relationship between strategic financial management and the economy of Nigeria?

7.  What are the ways of improving strategic financial management in Nigerian companies?

1.5.    Research Hypotheses

H0: Strategic financial management does not influence on the corporate performance of manufacturing companies

H1: Strategic financial management influences the corporate performance of manufacturing companies

H0: There is no significant relationship between strategic financial management and foreign direct investments in Nigeria

H1: There is a significant relationship between strategic financial management and foreign direct investments in Nigeria

H0: There is no significant relationship between strategic financial management and organizational profitability

H1: There is a significant relationship between strategic financial management and organizational profitability

1.6.    Significance of the study

The study would be of immense importance or benefit to captains of industries, government at levels, economic policy makers and business managers as it would reveal the impact of strategic financial management on the corporate performance of manufacturing industries. The study would also be of importance to students, researchers and scholars who are interested in further studies on strategic financial management and the corporate performance of profitability of business organizations.

1.7.    Scope of the study

The study is limited to strategic financial management and its impact on the corporate performance of manufacturing industries using a case study of manufacturing industries in Nigeria.

1.8.    Limitation of the study

Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview)

Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.