THE EFFECT OF RESEARCH AND DEVELOPMENT EXPENDITURE ON THE GROWTH OF NIGERIAN BREWERIES PLC

ABSTRACT

This research work titled “the effect of research and development expenditure on the growth of Nigerian Breweries Plc” the researcher identified the effect of research and development expenditure on growth of an organization. The relationship existing between  research and development expenditure and return on investment. The researcher equally determined how research and development expenditure affects the turnover of organizations. Data for the study was sourced from two main sources which include Primary and Secondary sources of data Collection. Primary data: questionnaires and oral interviews were used to collect information from the respondents. Secondary data: journals, and other relevant materials relating to the area of my investigation will be review. Extensive literature review was carried out on the direct literature and indirect literature on books, journals and past works. The research instrument used in this study includes oral interview and questionnaire. The questionnaire is structural as to contain both close and open ended question. Simple tables and percentages was used in treatment of data. The researcher found out that Research and development expenditure affects the growth of an organization. It was also discovered that there is significant relationship between  research and development expenditure and return on investment. The research equally discovered that research and development expenditure affects turnover of an organization positively. Based on the findings the researcher recommends that The management of Nigerian Breweries Plc should invest more research and development for effective growth and development of the organization. The management of Nigerian Breweries Plc should train their staff on research and development to enable them have on maximum return on investment. Government and private institutions should embark on research and development programs for maximum turnover on its expenditure.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Nigeria Breweries Plc, a pioneer and public company quoted on the Nigeria stock exchange was incorporated on the 6th of November 1946 under the Nigerian breweries Limited. The name was changed on the 7th of January 1957 to Nigerian Breweries Limited and thereafter to Nigeria breweries Plc in 1990 when the companies and Ailied matters act of the year came into effect. The company is a subsidiary of Heineken N.V of the Netherland which holds a 54.09% interest in the equity if Nigerian Breweries Plc.

Its research and development expenditure on research activities, undertaken with the prospect of gaining. new scientific and technical knowledge and understanding is recognized in profit or loss as incurred.

Research activities in Nigeria Breweries involves a plan or design used by the industry to improve its manufacturing process. The research and development is a process by which new innovations are’ designed to – enhance the industry’s agricultural and-raw materials.

Nigeria Breweries plc, being a brewery industry its major        source of raw material, water and sorghum. Sorghum is a genus of grasses, with about 30 species, one of which are raised for gain and many of which are used as fodder plants, either cultivated or as past of pasture. The plants are cultivated in warm climates worldwide. These sorghum include corn, wheat, cassava.

The effect of research, on the productivity ‘of the company’s product involved in activities aimed at development of new sorghum hybrids with the potential of increasing the quality of malt produced and yield/output for the sorghum growers. The activities include evaluation of available raw sorghum varieties with the aim of identifying peculiarities of the seeds and impact on malt production. These will help stimulate the sorghum industry and define a sustainable malting process which will guaranty the production of high quality sorghum malt that will consistently meet all specifications for beverage making in our breweries. The company also has a subsisting consultancy agreement with a Nigerian professor on the development of sorghum seeds.

Development activities design for the production of new or substantially improved products and processes. Development expenditure is capitalized only if development costs can be measures reliably the product or process is technically and commercially feasible, future economic benefits are probable and the company intends to have sufficient resources to complete development and to use or sell the asset. The expenditure capitalized includes the cost of material, direct labour, overhead costs that are directly attributable to preparing the assets for its intended use and borrowing cost on qualifying assets for which the commencement date for capitalization is on or after 1st January.

Other development expenditure is recognize in profit and loss as incurred. Capitalized development expenditure is measured at cost less accumulated a moralization and accumulated impairment

losses.

The effect of research and development expenditure has improved the agricultural and rain materials of breweries the available raw sorghum with the aim of indentifying a peculiar seed to enhance the malt production.

The research aim to increasing the quality of malt productivity and stimulate the industry by defining a sustainable malting process to improve the company profitability and enhance the economic growth. Through this research and development expenditure, the company strategies use its productivity by using wheat as its source of raw material in its malting process.

The use of wheat in the production process have reduced the cost of production for the firm and added a- great advantage to its profitability ad turnover. The means of production helps the industry to maintain its stand as the world class brewery industry.

1.2 STATEMENT OF PROBLEM

Nigerian Breweries Plc, a pioneer company and a world class brewery industry undergoes several challenges to kill maintain its stand as world class brewery industry. These challenge stand as a problem facing the industry and ‘most manufacturing industries in the country.

1.     Problem of research techniques and production- process.

2.     Its agricultural and raw material development process.

3.     The site the industry should be builds since water is the firms major source of production.

4.     Cost of production and profitability measure.

5.     Marketing strategies, to meet up with its market demand and productivity.

1.3 OBJECTIVE OF THE STUDY

1.     To identify the effect of research and development expenditure on the growth of organization.

2.     To examine the relationship existing between research and development expenditure and return on investment.

3.     To determine how research and development expenditure affect the turnover of Organizations.

To examine the extent to which research and development expenditure affect the market price per share of organizations

1.4 RESEARCH QUESTION

In this research worth, in relation to the topic research and development expenditure on the growth of Nigerian Breweries Plc. The importance of these questions is to enable the researcher achieve its objective on these work.

The questions are:

1. Does research and development expenditure affect the growth or organization?

2. Does significant relationship exist between research and development expenditure -and return on investment?

3.     How does research and development expenditure affect the turnover of organizations?

4. To what extent does research and development expenditure affect the market price per share or organization?

1.5 HYPOTHESIS OF THE STUDY

The following research questions are formulated and tested in the study.

The following hypothesis will be, used in the study.

1. Ho: Research and development expenditure does not affect the growth of organization

HI: Research and development expenditure does affect the growth of organization.

2.     Ho: A significant relationship does not exist between research and development expenditure and return on investment.

HI: A significant relationship does exist between research and development expenditure and return on investment.

3.     Ho: Research and development expenditure does not positivity affect turnover of organization.

HI:    Research and development expenditure does positivity affect turnover of organization.

4.     Ho: Research and development expenditure does not affect the market price per share of organization to a very great extent.

HI: Research and development expenditure does affect the market price per share of organization to a very great extent.

1.6 SIGNIFICANT OF THE STUDY

This project is expected to be beneficial to the following:

1. Researchers

It will serve as a reference point for any other researcher especially on the related topic.

2. Business Organization

This research work will serve as an eye opener to investors as basis on assessing the survival and growth of corporate organizations.

3. Me, the Writer/Researcher

This research work enables me to understand and know the importance of research in production process.

1.7 SCOPE OF THE STUDY

In the process of this study, only research and development expenditure are concentrated on organizational sector growth. The researcher also choose the following classes of personnel. The management level staff, the junior staff to whose questions are ask and examined carried out.

These organizations have grown from strength to- strength in recent years in terms of research and development expenditure.

LIMITATION OF THE STUDY

In this process of study, the researcher came across a list of problems, one of which is poor and non-challant attitude of some respondents. Some are reluctant in responding to questions. Another problem encountered in the course of writing this research work was time. The researcher did not find it easy combining class work with the time and attention needed for a successful completion of this study.

1.8 DEFINITION OF TERMS

The terms associated with this study will be clearly defined.

1. Research: this is a systematic inquiry to describe, explain, predict and control the observed phenomenon.

Research involves inductive and deductive method.

Inductive method analyse the observed phenomenon and identify the general principles, structure or processes underlying the phenomenon observed. Deductive method verify the hypothesis principle through observation.

2. Development:

Development is the systematic use of scientific and technical knowledge to meet specific objective or requirements.

3. Growth

An increase in size, number value or strength enlargement, act of growing development and maturation.

Growth is an organization’s future ability to generate large profit, expand its workforce and ramp up its production.

4. Expenditure:

Oxford dictionary defines expenditure as amounts of money spend. Expenditure are those expenses organization spend to produce its revenue through running its main operations for the time period.