ASSESSMENT OF THE EFFECTS OF ECONOMIC RECESSION ON THE SUSTAINABILITY OF CORPORATE ORGANIZATIONS UNDER PRESIDENT TINUBU'S ADMINISTRATION (A CASE STUDY OF SHOPRITE, LUGBE)

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Business sustainability entails conducting operations without causing adverse effects on the environment, community, or society at large (Ashby, 2020). Sustainability in business primarily encompasses two key aspects: the environmental impact of business operations and the societal impact of business activities (Bouma, 2022). The objective of a sustainable company strategy is to provide a favourable influence on at least one of those domains. If firms neglect to accept accountability, it can result in adverse consequences such as environmental deterioration, disparity, and societal inequity. Sustainable enterprises take into account a diverse range of environmental, economic, and social concerns when making business decisions. These organisations conduct monitoring of their operations to ensure that immediate profits do not transform into enduring liabilities (Moore & Richardson, 2019). 

According to Carvalho (2017), businesses globally are increasingly prioritising sustainability due to their acknowledgment of their responsibility in tackling global crises and promoting good environmental, social, and economic transformations. It has evolved from a mere trendy term to an essential requirement for any contemporary organisation. Nevertheless, pursuing sustainability poses significant difficulties for firms, as they face a range of fundamental obstacles that require careful strategic consideration (McWilliams, 2020). Corporate sustainability, as defined by Laine & Nathan (2019), encompasses a company's capacity to effectively handle its financial, social, and environmental risks, responsibilities, and prospects in a way that guarantees sustained success in the long run. 

Based on a literature assessment, the idea of corporate sustainability incorporates features from four well-established concepts: 1) sustainable development, 2) corporate social responsibility, 3) stakeholder theory, and 4) corporate accountability theory (Wilson et al., 2017). Sustainable development delineates the specific domains of performance that firms should prioritise. It also encompasses the overarching vision and societal objectives that corporations should strive for, specifically encompassing environmental preservation, social fairness and equality, and economic advancement. Corporate social responsibility plays a role in promoting ethical justifications, while stakeholder theory offers business justifications for why firms should strive to achieve these objectives. Corporate accountability justifies the need for firms to disclose their performance in these areas to society.

Amid economic recessions, organisations encounter heightened difficulties in upholding sustainability due to diminished consumer expenditure, disruptions in the supply chain, and financial limitations. Gaining insight into how business organisations handle these issues is essential for formulating strategies to improve their ability to withstand and maintain their operations.  Scholes (2022) argues that during periods of economic decline, the prioritisation of sustainability may appear less important for both organisations and individuals. Nevertheless, implementing sustainable practices can serve as a strategic manoeuvre to not only endure the challenges of an economic downturn but also to emerge more resilient and prosperous afterwards. Sustainable practices cover not just environmental problems but also social aspects. Parks, Thompson & Hawken (2019) argue that companies that place a high importance on the well-being of their employees are able to cultivate a workforce that is more engaged and productive. During a period of economic decline, when the stability of employment is uncertain, it becomes crucial to cultivate a constructive work atmosphere in order to retain and motivate employees. Implementing sustainable initiatives, such as offering flexible work arrangements, providing health and wellness programmes, and practicing ethical labour standards, enhances a company's commitment to social responsibility and improves employee happiness (Hagenah, 2019).

Recessions necessitate the ability to adjust and a focus on long-term goals. Sustainable practices promote a long-term perspective for businesses, urging them to examine the wider consequences of their actions (Gond & Kang, 2022). Companies can enhance their ability to withstand economic volatility by adopting a long-term strategy that prioritises environmental and social responsibility. This progressive strategy enables organisations to flourish in a dynamic environment where sustainability is becoming more and more essential for achieving success. Amidst the economic recession of 2008-2009, the car industry encountered unparalleled difficulties. Toyota, renowned for its dedication to sustainability, capitalised on this crisis to strengthen its environmental endeavours. The business launched fuel-efficient hybrid models such as the Prius, taking advantage of the increasing demand for environmentally-friendly vehicles. Toyota's strategy decision not only enabled it to navigate the recession more effectively than its competitors but also strengthened its standing as a frontrunner in sustainable mobility (Coulson et al., 2018).

Shoprite is a prominent retail conglomerate in Africa, renowned for its extensive assortment of consumer products. The Lugbe branch, situated in Abuja, functions as a prominent commercial centre, drawing in a wide range of customers. Shoprite, as a prominent participant in the retail industry, offers important insights on the overall effects of economic recessions on corporate organisations in Nigeria. The objective of this study is to evaluate the impact of the economic downturn on the long-term viability of corporate entities under President Bola Tinubu's tenure, with a particular emphasis on the case of Shoprite in Lugbe, Nigeria.

1.2 Statement of the Problem

Economic recessions provide substantial risks to the sustainability of corporate entities, affecting their functioning, profitability, and long-term survival. During President Bola Tinubu's tenure, Nigeria has been facing a difficult economic situation marked by elevated inflation, devaluation of the currency, and increasing unemployment. These circumstances have increased the demands on corporate organizations, requiring a thorough evaluation of their capacity to maintain operations during such volatile periods.

During an economic downturn, both large and small businesses may implement workforce reductions as a cost-cutting measure, particularly if they require fewer employees to match the diminished demand for their goods and services (Johnnie, 2022). The productivity per employee may rise, however, the morale may decline due to the increased workloads and stagnant or halted pay gains, coupled with the possibility of additional layoffs. Wages exhibit stickiness, indicating that workers are hesitant to agree to reductions in salary, even when layoffs are the most probable option (Aza, 2021). During an extended and severe economic downturn, labour and management may engage in negotiations to secure cost concessions necessary for the company's survival and the preservation of jobs, which may involve reducing wages and benefits. If the company operates as a manufacturer, it might be compelled to shut down its facilities and terminate underperforming product lines, resulting in significant workforce reductions (Johnnie, 2022).

The main objective of this study is to investigate the impact of the economic recession of President Tinubu's administration on the long-term viability of corporate entities, with a specific focus on the instance of Shoprite in Lugbe. Examining the larger effects of economic downturns on retail corporations can be done by analysing Shoprite, a prominent retail company in Nigeria.

Objectives of the study

The primary objective of this study is to critically assess the effects of economic recession on the sustainability of corporate organizations under president Tinubu's administration (a case study of Shoprite, Lugbe). Specific objectives of this study are to:

To assess the extent economic recession affected the purchasing power of Shoprite customers, Lugbe

To assess the extent economic recession affected the daily sales performance of Shoprite, Lugbe.

To determine the extent economic recession affected the the financial performance of Shoprite, Lugbe.

To determine the extent economic recession affected the the continuity of Shoprite, Lugbe.

1.4 Research Questions

The following research questions which are in line with the objectives of this study will be answered in this study:

What is the extent economic recession affected the purchasing power of Shoprite customers, Lugbe?

What is the extent economic recession affected the daily sales performance of Shoprite, Lugbe?

What is the extent economic recession affected the the financial performance of Shoprite, Lugbe?

What is the extent economic recession affected the the continuity of Shoprite, Lugbe?

1.5 Research Hypothesis

To determine the effectiveness of this study, the following research null hypotheses will be formulated to guide the study and it will be tested at 0.05% levels of significance.:

Ho: There is no significant impact of the economic recession on the sustainability of Shoprite, Lugbe.

Ha: There is a significant impact of the economic recession on the sustainability of Shoprite, Lugbe.

1.6 Significance of the study

An examination of the impact of an economic recession on the long-term viability of corporate entities, specifically focusing on the case of Shoprite in Lugbe during President Tinubu's administration, offers valuable insights into various aspects such as the ability of businesses to withstand challenges, the effects on employment, changes in consumer behaviour, the dynamics of supply chains, financial well-being, implications for policies, strategic adjustments, and impacts on the community. These insights are essential for comprehending the wider economic consequences of recessions on corporate entities and guiding governmental and business policies targeted at improving corporate sustainability and economic resilience.

Corporate organisations can be significantly affected by economic recessions, which can have a detrimental impact on their financial well-being, operational stability, and market competitiveness. Examining how a prominent retailer such as Shoprite manages economic downturns offers valuable insights into tactics for maintaining corporate stability and planning for the future. Shoprite, being a large organisation, plays a crucial role in providing employment opportunities within the communities it operates in. Gaining insight into the impact of economic recessions on employment levels and local economies is essential for evaluating wider socio-economic consequences.

In addition, prominent firms such as Shoprite play a crucial role in fostering community development and providing support. Examining their sustainability during an economic downturn illuminates their capacity to uphold corporate social responsibility efforts, bolster local suppliers, and contribute to community welfare. During recessions, companies frequently implement strategic changes, such as implementing cost-cutting measures, expanding their range of product offerings, or innovating their marketing techniques. An analysis of Shoprite's methods can provide valuable insights for other firms on how to successfully navigate economic downturns and strategically position themselves for recovery.

Furthermore, the actions and measures implemented by the government during an economic downturn can have a substantial influence on the long-term viability of businesses. Examining the Shoprite instance during President Tinubu's administration offers valuable insights into the efficacy of government initiatives in bolstering private sector resilience and promoting economic recovery.

 Moreover, upcoming researchers will employ it as a comprehensive analysis of the existing literature. As a result, other students who are interested in studying this subject will have the chance to use this work as reliable information that can be thoroughly assessed. 

1.7 Scope of the study

Broadly, this study focus is to critically assess the effects of economic recession on the sustainability of corporate organizations under president Tinubu's administration. Specifically, this study seeks to assess the impact of the economic recession on the daily operations of corporate organisations, evaluate the financial performance of corporate organisations during the recession and assess the impact of the recession on the corporate social responsibilities of orgasnisations.

Further, this study will focus on analyze the influence of government policies on the sustainability of corporate organizations and it also seeks to find out the long-term implications of the recession on corporate organisations’s sustainability and derive lessons for future preparedness.

1.8 Limitations of the study

Like in any human attempt, the researchers encountered several small limits during the investigation. The primary constraint was the scarcity of comprehensive literature on the topic, as there is a paucity of data regarding assessment of the effects of economic recession on the sustainability of corporate organizations under president Tinubu's administration. Therefore, a substantial investment of time and effort was required to find the suitable materials, books, or information and collect data. 

Moreover, this study is limited by its limited sample size and restricted geographical reach, namely concentrating just on Nigeria. Hence, the findings of this study cannot be extrapolated, thereby necessitating additional research. 

Furthermore, the researcher's limitations were predominantly attributable to budgetary restraints, as they are a student and lack a means of financial support. The research location's transportation charges were difficult to afford due to the exorbitant cost of transportation, which is directly impacted by the current inflation in Nigeria.

In addition, the researcher encountered a time limitation as a result of having to conduct this research while simultaneously meeting the responsibilities of attending lectures and engaging in other educational pursuits.

1.9 Definition of terms

Sustainability: Sustainability means meeting our own needs without compromising the ability of future generations to meet their own needs. Sustainability is the quality of not being harmful to the environment or depleting natural resources, and thereby supporting long-term ecological balance

Economic recession: Economic recession as: "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales

Inflation: Inflation is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.