Upstream Business Integration Strategy and Profitability of Food Manufacturing Industries in Nigeria

Abstract

With the increasing population and scare resources due to rising global demand for food, consumer goods manufacturers would increasingly have to pay more for import of raw materials, with resultant decrease in their profit margins. It has therefore become very important for Food Manufacturing Companies that want to stay competitive to take more interest in upstream business integration to sustain their raw materials supply chain at reasonable prices and sustain its profitability. The paper examines Upstream Business Integration Strategy and Profitability of Food Manufacturing Industries in Nigeria. The paper therefore concludes that Nigeria posses great potentials in agriculture. Integrating backward by these industries will unlock the untapped potentials of the agricultural sector. In so doing it will help open new frontiers of business which will reduce cost and deliver dividends to shareholders and allow for overall growth. It is therefore recommended that Food Manufacturing companies should do an analysis of other benefits which can lead to future profit e.g. tax relief, concessions, increased market share etc and Consider creating new innovative products which will create a variety of products that your raw materials can be used to produce as this may help in distributing the fixed cost attributable per unit cost.

Key Words:  Upstream Business Integration, Value Chain Analysis, Profitability, and Market Share.