Varsity Don Proffers Solutions To Distressed Organisations In Nigeria - EDU-BIZNEWS


Sunday, July 10, 2022

Varsity Don Proffers Solutions To Distressed Organisations In Nigeria

A Professor of Accounting and Taxation at the Babcock Universitity, Ilishan-Remo, in Ogun State , Folajimi Adegbie has asked business managers in Nigeria to fuse their personal and corporate objectives to create value for their shareholders.

The don who made the call  while delivering the 36th inaugural lecture of the university, says "when value is created for the shareholders, value of the organization is enhanced and shareholders would be in a position to receive full benefits".

The professor in his paper titled "Resuscitating Financially Distressed Profit Oriented Organization: Reinventing and Regenerating Pragmatic Strategic Approaches For Business Sustainability, identified some of the strategies to reinvent and regenerate a distressed profit oriented organization

He listed the strategies to include redefining the vision of the organization, putting in place an integrated corporate governance as well as the philosophy of interplay between environment, shareholders value and corporate governance for value drivers.   

Adegbie added that if all the above pragmatic strategies articulated were adhered to, organizations would be freed from financial distress and be able to move to evergreen sustainability.

He expressed the view that, in a dynamic and fast growing business environment, only the organisations that employ sustainability models in proffering solutions and create value delivery would continue as going concerns. 

He said such organization should, among others, ensure a healthy working capital, be able to execute profitable projects, and invest in non-current assets to generate income with operating profit margin to efficiently manage the cost of production.

While noting that value creation was dying at an alarming rate and putting investors in a big dilemma thereby undermining wealth creation,Adegbie advised organisations to use ‘sales growth rate’ to create a free cash flow to earn a greater amount of income.
“Companies need to sell as much as possible (sales growth) at a determined price with quality products to gain market niche. 

They must also consider competitive environment using Michael E. Porter’s Five Forces model (2008) such as  working capital investment, fixed capital investment, cost of capital, operating profit margin, income tax, value growth duration to determine the competitive situation of the company”, he said. 

Adegbie said it was painful to see companies that contributed to national growth and welfare of workers being forced to close down due to distress, concluding that there was no other alternative to business sustainability other than focusing on value creation and value delivery.   

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