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FACTORS MILITATING AGAINST PUBLIC LIMITED COMPANIES: A CASE STUDY OF SOME SELECTED COMPANIES

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

Public limited companies are essential components of the modern business landscape, playing a crucial role in economic development and providing opportunities for investment and growth. However, despite their significance, these entities often face numerous challenges that impede their effectiveness and success. This paper aims to explore the various factors that militate against public limited companies, drawing insights from a case study of selected companies within the contemporary business environment.

The regulatory environment significantly influences the operations and performance of public limited companies (Smith, 2019). Changes in regulations pertaining to corporate governance, financial reporting, and taxation can impose compliance burdens and increase operational costs for these entities (Jones, 2021). Moreover, inconsistent regulatory enforcement and loopholes in legislation may create opportunities for unethical practices, undermining investor confidence and market stability (Brown & Jackson, 2018).

Financial constraints represent another significant challenge faced by public limited companies (Johnson et al., 2022). Access to capital is vital for expansion, innovation, and strategic initiatives. However, fluctuations in capital markets, stringent lending criteria, and high-interest rates can restrict funding options for these companies (Anderson & White, 2017). Additionally, economic downturns and market volatility may exacerbate liquidity challenges, limiting the ability of firms to meet their financial obligations (Clark & Evans, 2020).

Market competition poses a continuous threat to the viability and profitability of public limited companies (Greenwood & Rogers, 2018). In today's globalized economy, businesses encounter intense competition from domestic and international rivals. Factors such as technological advancements, changing consumer preferences, and disruptive business models contribute to market saturation and price pressures (Hill & Turner, 2019). Failure to innovate and adapt to market dynamics can render companies obsolete and erode their competitive advantage (Kaplan & Norton, 2023).

Corporate governance deficiencies can undermine the performance and reputation of public limited companies (Mitchell, 2017). Weak board oversight, conflicts of interest, and lack of transparency in decision-making processes can foster a culture of mismanagement and fraud (Wilson & Stokes, 2021). Moreover, ineffective risk management practices and failure to address stakeholder concerns may lead to governance failures and legal repercussions (Smith & Johnson, 2018).

Technological disruptions present both opportunities and challenges for public limited companies (Chen et al., 2022). While digitalization and automation can enhance efficiency and productivity, they also require substantial investments in technology infrastructure and workforce upskilling (Lee & Kim, 2020). Furthermore, cybersecurity threats and data privacy concerns pose significant risks to companies operating in digital environments, necessitating robust cybersecurity measures and compliance frameworks (Wang & Zhang, 2019).

Environmental, social, and governance (ESG) considerations have gained prominence in recent years, influencing the strategic priorities of public limited companies (Martin & Jones, 2023). Stakeholders increasingly demand accountability and transparency regarding environmental sustainability, social responsibility, and ethical business practices (Brown et al., 2019). Failure to address ESG issues can lead to reputational damage, regulatory scrutiny, and investor backlash, affecting long-term sustainability and shareholder value (Garcia & Martinez, 2021).

In conclusion, public limited companies face a myriad of challenges that can hinder their performance and sustainability. From regulatory complexities to financial constraints, market competition, governance deficiencies, technological disruptions, and ESG considerations, these factors collectively shape the operating landscape for businesses. Understanding and addressing these challenges are essential for companies to thrive in today's dynamic and competitive environment.

STATEMENT OF THE PROBLEM

The modern business landscape is fraught with challenges that impede the effectiveness and success of public limited companies. These challenges encompass various aspects, including regulatory complexities, financial constraints, intense market competition, governance deficiencies, technological disruptions, and the increasing prominence of environmental, social, and governance (ESG) considerations. Regulatory changes and inconsistent enforcement can increase compliance burdens and operational costs, undermining investor confidence. Financial constraints, exacerbated by market volatility and stringent lending criteria, limit companies' ability to access capital for growth and innovation. Intense market competition, driven by technological advancements and changing consumer preferences, threatens companies' profitability and sustainability. Governance deficiencies, such as weak oversight and lack of transparency, create opportunities for mismanagement and fraud, eroding trust in corporate institutions. Technological disruptions require significant investments and pose cybersecurity risks, while ESG considerations demand accountability and transparency regarding sustainability and ethical practices. Collectively, these challenges create a complex operating environment for public limited companies, warranting a comprehensive understanding and strategic approach to address them effectively.

OBJECTIVES OF THE STUDY

Main Objective: The main objective of this study is to analyze the factors militating against public limited companies, utilizing a case study approach to gain insights into the contemporary business environment.

Specific Objectives:

1.  To examine the regulatory challenges faced by public limited companies and their implications on operational efficiency and investor confidence.

2.  To assess the financial constraints encountered by public limited companies, analyzing their impact on capital access, liquidity, and strategic initiatives.

3.  To investigate the effects of market competition on the viability and profitability of public limited companies, considering technological advancements, changing consumer preferences, and disruptive business models.

RESEARCH QUESTIONS

1.  How do regulatory challenges impact the operational efficiency and investor confidence of public limited companies, and what are the specific implications of regulatory changes on compliance burdens and operational costs?

2.  What are the effects of financial constraints on public limited companies, particularly in terms of capital access, liquidity management, and the execution of strategic initiatives?

3.  How does market competition influence the viability and profitability of public limited companies, considering factors such as technological advancements, shifts in consumer preferences, and the emergence of disruptive business models?

RESEARCH HYPOTHESES

H1: Regulatory challenges have a significant negative impact on the operational efficiency and investor confidence of public limited companies.

H0: Regulatory challenges do not have a significant impact on the operational efficiency and investor confidence of public limited companies.

H1: Financial constraints exert a detrimental effect on public limited companies, leading to difficulties in capital access, liquidity management, and the execution of strategic initiatives.

H0: Financial constraints do not significantly affect public limited companies' ability to access capital, manage liquidity, or execute strategic initiatives.

H1: Market competition significantly influences the viability and profitability of public limited companies, with technological advancements, shifts in consumer preferences, and the emergence of disruptive business models playing key roles.

H0: Market competition does not have a significant impact on the viability and profitability of public limited companies.

SIGNIFICANCE OF THE STUDY

This study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.

SCOPE OF THE STUDY

The scope of this study encompasses an in-depth investigation into the factors militating against public limited companies, with a specific focus on regulatory challenges, financial constraints, and market competition. The research will analyze these factors within the context of the contemporary business environment, considering recent developments from 2017 to 2023. The study will involve a case study approach, examining selected companies to gain comprehensive insights into the challenges faced by public limited companies across different industries. The geographical scope of the study will encompass companies operating in various regions, allowing for a diverse and representative sample. However, it is important to note that the study will not delve into the specific internal operations or financial data of individual companies but rather focus on broader trends and patterns. Additionally, while the study will emphasize the aforementioned factors, other relevant aspects such as governance deficiencies, technological disruptions, and environmental, social, and governance (ESG) considerations may be considered within the broader context of the research questions and objectives.

LIMITATION OF THE STUDY

The demanding schedule of respondents at work made it very difficult getting the respondents to participate in the survey. As a result, retrieving copies of questionnaire in timely fashion was very challenging. Also, the researcher is a student and therefore has limited time as well as resources in covering extensive literature available in conducting this research. Information provided by the researcher may not hold true for all businesses or organizations but is restricted to the selected organization used as a study in this research especially in the locality where this study is being conducted. Finally, the researcher is restricted only to the evidence provided by the participants in the research and therefore cannot determine the reliability and accuracy of the information provided.

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.

DEFINITION OF TERMS

Regulatory Challenges: Regulatory challenges refer to the obstacles and complexities posed by government regulations and compliance requirements that public limited companies must navigate in order to operate legally and ethically within their respective industries. These challenges may include changes in legislation, regulatory enforcement, and compliance burdens that impact the operational processes and strategic decisions of companies.

Financial Constraints: Financial constraints pertain to limitations or barriers faced by public limited companies in accessing capital, managing liquidity, and executing strategic initiatives due to various factors such as market conditions, lending criteria, and economic fluctuations. These constraints may impede the company's ability to invest in growth opportunities, meet financial obligations, or innovate in response to competitive pressures.

Market Competition: Market competition refers to the rivalry and contest among companies within an industry or market segment for customers, market share, and profitability. This competition may arise from factors such as technological advancements, changes in consumer preferences, pricing strategies, and the entry of new competitors. Public limited companies must continuously adapt and differentiate themselves to maintain or improve their competitive positions in the market.

Technological Disruptions: Technological disruptions refer to significant changes or innovations in technology that disrupt traditional business models, processes, or industries. These disruptions may include the introduction of new technologies, such as artificial intelligence, blockchain, or automation, which fundamentally alter the way companies operate, create value, and interact with customers. Public limited companies must embrace and adapt to technological disruptions to remain competitive and relevant in the rapidly evolving business landscape.

Environmental, Social, and Governance (ESG) Considerations: Environmental, social, and governance (ESG) considerations encompass factors related to sustainability, corporate social responsibility, and ethical business practices that impact the long-term performance and reputation of public limited companies. These considerations may include environmental impact, social responsibility initiatives, diversity and inclusion practices, and ethical governance standards. Integrating ESG considerations into business strategies and operations is increasingly important for companies to meet stakeholder expectations, mitigate risks, and enhance long-term value creation.

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