THE ECONOMIC ANALYSIS OF THE PROFITABILITY OF SMALL SCALE SACHET WATER PRODUCTION IN A BUSINESS ORGANIZATION
Abstract
The paper examines the profitability or viability of small-scale packaged water factory in Nigeria using JABU packaged water factory as a case study. The paper uses a combination of descriptive analysis and simple mathematical formulae to compute the profitability and the degree of operating leverage of the factory. The result reveals that the firm is able to make some profit at the end of the first year from which the entrepreneurship dividend could shared showing that the firm is able to break-even. This suggests that the packaged water business is a viable business in Nigeria if the same scenario operates in other packaged water factories in Nigeria while the break-even analysis supports the production of bottled water. This therefore suggest that the packaged water production should be encouraged in Nigeria under a guided atmosphere such that non-registered packaged water factories are not allowed to produce untreated water for human consumption, that the water source be subjected to periodic test by analysts and that packaged water should be produced under hygienic condition that conforms with the standard required by the World Health Organization
Chapter one
Introduction
Background to study
Water has been identified to be very important to human existence because it is very necessary for survival. Water ranked second to oxygen. A reliable supply of clean wholesome water is crucial in an attempt to promote healthy living amongst the inhabitants of a well defined geographical region (Mustapha and Adam, 1999). In an attempt to proffer solution to water problem, it was estimated that 1.2 billion people around the world does not have access to clean safe water and about 2.5 billion people are not provided with adequate sanitation (Third World Water Forum, 2003). Majority of the affected people that lack access to clean safe water and adequate sanitation are located in the developing countries because the standard industrialized global model for safe water delivery and sanitation technology is not affordable (Gadgil and Derby, 2003).
Narrowing down to Nigeria, the supply or provision of public drinking water is not reliable (Egwari and Aboaba, 2002). As a result, this has adversely affected the good health of Nigerians most especially during the dry season (Adesunkanmi and Ajao, 1986). In Nigeria, ground water and pipe borne (tap) water are the major sources of drinking water. These sources are said to be unsafe sources of drinking water because findings indicated that ground water sources contain trace elements, dissolved solids and pathogens in excessive quantities that may be dangerous to the health of the people. Consequently, most of the investigations carried out on ground water samples from different parts of Nigeria revealed that most of the available sources of water or water types are polluted or contaminated hence, were not fit for drinking purpose (Ogunbanjo, 2004 and Tijani, 2003) cited in Olaposi (2009) unpublished PhD Thesis. In addition, physical assessment of many public supplied pipe-borne water samples also testified to their poor quality.
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