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Digitally Signed by: Content manager’s
DN : CN = Webmaster’s name
O = University of Nigeri
OU = Innovation Centre
Ugboaku, Edith J.
FACULTY OF BUSINESS ADMINISTRATION
DEPARTMENT OF DEPARTMENT OF DEPARTMENT OF DEPARTMENT OF MANAGEMENTMANAGEMENTMANAGEMENTMANAGEMENT
STRATEGIC PLANNING AND ITS IMPACT ON THE PERFORMANCE
ON MANUFACTURING INDUSTRY
(A CASE STUDY OF EMENITE AND INNOSON LTD, ENUGU)
CHUKWU EDITH C.
PG/MBA/12/64175
1
: Content manager’s Name
Webmaster’s name
Nigeria, Nsukka
Innovation Centre
NISTRATION
MANAGEMENTMANAGEMENTMANAGEMENTMANAGEMENT
STRATEGIC PLANNING AND ITS IMPACT ON THE PERFORMANCE
ON MANUFACTURING INDUSTRY
(A CASE STUDY OF EMENITE AND INNOSON LTD, ENUGU)
CHUKWU EDITH C.
PG/MBA/12/64175
2
STRATEGIC PLANNING AND ITS IMPACT ON THE PERFORMANCE
ON MANUFACTURING INDUSTRY
(A CASE STUDY OF EMENITE AND INNOSON LTD, ENUGU)
BY
CHUKWU EDITH C.
PG/MBA/12/64175
FACULTY OF BUSINESS ADMINISTRATION
DEPARTMENT OF MANAGEMENT
UNIVERSITY OF NIGERIA
ENUGU CAMPUS
JANUARY, 2015
3
STRATEGIC PLANNING AND ITS IMPACT ON THE PERFORMANCE
ON MANUFACTURING INDUSTRY
(A CASE STUDY OF EMENITE AND INNOSON LTD, ENUGU)
BY
CHUKWU EDITH C.
PG/MBA/12/64175
BEING A PROJECT PRESENTED TO THE DEPARTMENT OF MANAGEMENT
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF
MASTER OF BUSINESS ADMINISTRATION (MBA) IN MANAGEMENT
FACULTY OF BUSINESS ADMINISTRATION
DEPARTMENT OF MANAGEMENT
SCHOOL OF POSTGRADUATE STUDIES
UNIVERSITY OF NIGERIA
ENUGU CAMPUS
SUPERVISOR: BARR. DR. CHUKWUEMEKA NNADI
JANUARY, 2015.
4
CERTIFICATION
I Chukwu Edith Chianugo with registration number PG/MBA/12/64175
certify that I actually carried out this work. And that the work embodied in
this research project has not been submitted din part or full for any other
masters or degree or any other University.
____________________ __________________
Chukwu Edith C. Date
(Student)
5
APPROVAL
This project work has been read, approved and accepted as meeting the
requirement of the Department of Management, University of Nigeria, Enugu
Campus in partial fulfillment of the requirement for the award of masters of
Business Administration (MBA).
____________________________ ________________
Barr. Dr. Chukwuemeka Nnadi Date
(Project Supervisor)
____________________ __________________
Dr. O.C. Ugbam Date
(Head of Department)
___________________ __________________
External Examiner Date
6
DEDICATION
To my family and well wishers
7
ACKNOWLEDGEMENT
My gratitude goes to my parents who have been supporting me through my
education both morally and financially and to God almighty for his
continuous guidance and protection.
I also acknowledge the effect of my project supervisor, Barr. Dr. C. Nnadi, in
putting me through the writing of this project. I appreciate his corrections and
tips which made the project come out just fine.
My lecturers are also not left out for their immense effort in making sure that
we were well enlightened in the field of business.
8
ABSTRACT
This research investigated strategic planning and its impact on the
performance of manufacturing industries. It was geared towards finding out
the extent to which manufacturing industries and their stakeholders are
involved in strategic planning of their businesses, assessing the impact of
strategic planning on the performance of manufacturing industries and to
highlight the challenges impinging on strategic planning in manufacturing
industries. Using survey method, 310 respondents which were later narrowed
down to 250 respondents due to poor completion and some of the
questionnaires not returned were sampled to obtain the data necessary for this
study. The main instrument for data collection was the questionnaire.
Observation and interview methods were also employed to gather more
information regarding the study. Data obtained from the study were presented
in tabular form using simple percentage (frequency) distribution and the
hypotheses tested using the statistical tool known as Chi-square. The study
revealed that indeed strategic planning has a great impact in the performance
of manufacturing industries. Based on the findings, conclusion was drawn and
recommendations made.
9
TABLE OF CONTENTS
Title page … … … … … … … … … i
Certification … … … … … … … … … ii
Approval … … … … … … … … … iii
Dedication … … … … … … … … … iv
Acknowledgement … … … … … … … … v
Abstract … … … … … … … … … vi
Table of contents … … … … … … … … vii
List of tables … … … … … … … … … ix
List of figures … … … … … … … … … x
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study … … … … … … 1
1.2 Statement of Problem … … … … … … 3
1.3 Objectives of the Study … … … … … … 4
1.4 Research Questions … … … … … … 4
1.5 Research Hypotheses … … … … … … 5
1.6 Significance of the Study … … … … … 6
1.7 Scope of the Study … … … … … … 7
1.8 Limitations of the Study … … … … … … 8
1.9 Operational Definition of Terms … … … … 9
References … … … … … … … … 14
CHAPTER TWO: LITERATURE REVIEW
2.1 Introduction … … … … … … … … 15
2.1.1 Definition of Planning … … … … … … 16
2.1.1.1 Various Kinds of Planning … … … … … 16
2.1.2 Definition of Strategy and Strategic Planning … … 18
2.1.2.1 Steps Involved In Developing a Workable Strategic Plan 20
2.1.3 Strategic Management and Strategic Planning … … 20
2.1.3.1 Levels and Stages of Strategic Management … … 22
2.1.3.2 The Process of Strategic Management … … … 24
2.1.3.3 Model of Strategic Management Process … … … 28
10
2.2 Essential Ingredients to Effective Strategic Planning … 28
2.3 Strategic Evaluation and Control … … … … 30
2.4 Importance of Strategic Planning and Management to
Business Organizations … … … … … … 37
2.5 Impact of Strategic Planning on the Performance of Manufacturing
Industries … … … … … … … … 38
2.6 Problems and Challenges Facing Strategic Planning … … 39
References … … … … … … … … 42
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Introduction … … … … … … … … 43
3.2 Research Design … … … … … … … 43
3.3 Sources of Data … … … … … … … 44
3.4 The Population of Study … … … … … … 44
3.5 Sample Size Determination and Sampling Technique … … 45
3.7 Description of Research Instrument … … … … 46
3.8 Method of Data Analysis … … … … … … 46
References … … … … … … … … 48
CHAPTER FOUR: PRESENTATION AND ANALYSIS OF DATA
4.1 Distribution and Return of Questionnaire … … … 49
4.2 Test of Hypotheses … … … … … … … 59
4.2.1 Test of hypothesis I … … … … … … 60
4.2.2 Test of hypothesis II … … … … … … 62
4.2.3 Test of Hypothesis III … … … … … … 64
4.2.4 Test of hypothesis IV … … … … … … 66
4.3 Discussion of Findings … … … … … … 68
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND
RECOMMENDATIONS
5.1 Summary of Findings … … … … … … 69
5.2 Conclusion … … … … … … … … 69
5.3 Recommendations … … … … … … … 70
Bibliography … … … … … … … 72
Appendix … … … … … … … … … 74
Appendix I: Questionnaire … … … … … … 75
Appendix II: Interview Schedule … … … … … 77
11
LIST OF TABLES
Table 3.1: The Population of the Study - - - - 45
Table 4.1: Data on the educational qualification of respondents - 50
Table 4.2: Data on the best qualification for a managerial position - 51
Table 4.3: Data on employees’ awareness of their company’s planning 52
Table 4.4: Data on the duration of the plan of companies under
survey activities - - - - - - 52
Table 4.5: Data on workers’ participation in the formulation their
company’s strategic plan - - - - - 53
Table 4.6: Data on whether the companies under survey have benefited
from strategic planning - - - - - 54
Table 4.7: Data on the effect of strategic planning on the profit and
Performance of manufacturing companies - - 54
Table 4.8: Data on the effect of strategic planning on employees’ work 55
Table 4.9: Data on the rating of other manufacturing companies’
planning activities - - - - - - 56
Table 4.10: Data on the main reason why some manufacturing industries
do not embark on strategic planning - - - 57
Table 4.11: Data on the relevance of strategic planning in assessment
of workers’ performance - - - - - 58
Table 4.12: Data on the effect of strategic planning on productivity source 59
12
LIST OF FIGURES
Fig. 1: Four Phases in Strategic Management Process - - 25
Fig. 2: Comprehensive Model of Strategic Management - 28
Fig. 3: The evaluation process for operational control - - 36
13
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Good planning is one of the most important and also most neglected
ingredients in business operations. Planning is essentially a form of decision-
making (Ezeh, 1999:8).
The environment in which business owners operate undergo rapid changes
with time, hence they have to develop a mission to attain long term goals for
their businesses and evolve strategies on how to realize such mission in order
to maintain focus amidst these rapid changes (Hellenbillst and Krallinger,
1989:168).
In order to achieve effective strategic planning, business owners must
understand the objectives of their businesses, know what strategy to use in
organizing and directing the resources of the firm to be able to develop the
operational tactics to carry out the strategy to attain the objectives (Dyson,
1990:3).
Strategic planning gives owners, managers, and employees a clear idea of the
objectives of the firm. It helps members of the team to work together with a
common vision making all segments of the business to focus on the
predetermined objectives. Strategic plan also provides an anchor for making
adjustments to meet changes in customer tastes and preferences because
14
market size fluctuates, with more intense, competition and technological
transformation of products and services. Swift action and reaction are possible
when the firm’s strategy is understood by everyone involved (Ezeh, 1999:92).
Operations are driven by the strategic plan, as individual units, departments
and other specialized elements of the business organize their actions based on
the overall business strategic plan. (Bateman and Zeithaml, 1990:187-9)
Strategic planning does appear to improve financial performance only when
considerable attention is paid to the implementation phases of planning. It is
fairly well used by private companies, but by no means universally acceptable
by the industry. Firms that perform at “high level”, pay considerable attention
to the environmental situation, involve the board of directors and senior line
executives in the process, and use planning departments as catalysts. They
also ensure full participation by the chief executive in the process and plan on
a continuous rather than sporadic basis (Hrebiniak and Joyce, 1984:187).
A number of manufacturing industries in Nigeria have benefited immensely
from effective strategic planning activities. A research by C. Grim and G.S
Andrews also showed that the South African building materials industry (and
perhaps South African firms in general) appears to lag behind the more
developed countries in the application of formal strategic planning. It was
15
discovered that only half of the respondent from companies sampled, practice
formal strategic planning.
Robinson and Pearce research (1984) in Lyles et al (1993) shows a rather
consistent, positive relationship between the extent of planning function and
performance of small business. This relationship is found despite differing
definitions of small business, ways of assessing formality of planning, and the
types of performance measures utilized. Therefore, it is important that
aspiring entrepreneurs and manufacturing industries who are yet to plan their
businesses strategically or carry out efficient strategic plan of their businesses
should begin to do so in order to gain increasing control over environmental
turbulence to improve business performance.
It is against this background that this study seeks to address the impact of
strategic planning on the employees performance in manufacturing industries.
1.2 STATEMENT OF PROBLEM
Business environment in Nigeria is harsh and unfavourable, hence, only few
businesses survive presenting the need for entrepreneurs and owners of
manufacturing industries to evolve long-term strategies for their businesses to
thrive.
Consequently, manufacturing industries fail to provide jobs and drive
economic development.
16
Manufacturing industries do not plan strategically and thus are unable to elicit
the inputs of key stakeholders. Plans are not effectively implemented arising
from lack of strategic policy.
1.3 OBJECTIVES OF THE STUDY
The main objective is strategic planning and its impact on the performance of
employees in Nigerian manufacturing industries. The specific objectives are
as follows:
i. To ascertain the extent to which manufacturing industries use strategic
planning.
ii. To assess the impact of strategic planning on the performance of
employees manufacturing industries.
iii. To assess the extent to which all the management of manufacturing
industries are favour/endorse the use/application in strategic planning.
iv. To find out the challenges impinging on strategic planning in
manufacturing industries.
1.4 RESEARCH QUESTIONS
In pursuit of the research objectives, the following questions have been raised
to help in gathering information necessary for this study.
i. To what extent do manufacturing industries practice strategic planning?
17
ii. What are the impacts of strategic planning on the performance of
employees in manufacturing industries?
iii. To what extent do management get involved in effective
implementation of a strategic plan in manufacturing industries?
iv. What are the challenges facing strategic planning practice in
manufacturing industries?
1.5 RESEARCH HYPOTHESES
i. Ho: Manufacturing industries in Nigeria do not plan strategically.
H1: Management of manufacturing industries in Nigeria do
significantly apply strategic plans.
ii. Ho: Strategic planning does not increase the turnover and
profitability of manufacturing industries.
H1: Strategic planning practice do significantly improve employees
performance in Nigeria manufacturing industries.
iii. Ho: Employees are not involved in the formulation of strategic plan
of manufacturing industries.
H1: Employees are significantly involved in the formulation of
strategic plan of manufacturing industries.
iv. Ho: Lack of skilled manpower does not hinder strategic planning in
manufacturing industries.
18
HI: Lack of skilled manpower significantly hinders strategic
planning application in manufacturing industries.
1.6 SIGNIFICANCE OF THE STUDY
i. Management of manufacturing firms:
The importance of this research can not be overemphasized. It moves to
provide the impact of strategic planning on the performance of manufacturing
industries.
This study will help business owners and managers to understand the need to
practice strategic planning knowing that profitability of their organizations is
only assured through proper strategic planning activity.
It will also provide them with guidelines which they will follow to achieve
effective strategic planning. Aspiring entrepreneurs are not left out as this
study will help them to develop a model or a guide before embarking on any
business venture.
ii. Shareholders of manufacturing firms:
Shareholders typically affect company operations and decisions
differently than other stakeholders concerned with the business.
Profit objectives companies with shareholder have historically had a
single primary objective of maximizing profit. While many companies try to
19
balance shareholder interests with those of other stakeholders, profit
objectives are typical still in focus with shareholders.
iii. Future researchers:
Researchers have investigated the effects of strategic planning on
financial performance in small firms. Many have concluded that there is no
consistent association between the strategic planning process and
performance.
Strategic planning does not attempt to make future decisions or even
forecast future events.
1.7 SCOPE OF THE STUDY
Geographical Scope: The geographical scope will base on the climate or thus
product base on this case study. The product of Innoson and Emenite
manufacturing industries include: Heavy duty vehicles, middle and high level
buses, chairs, tables, plates, home equipment etc.
All the product enjoy excellent consumer franchise and this will be clearly to
be reader by the understanding of the geographical scope relating will be
product range.
Time Scope: The scope is about how to distribute goods manufacture from
the industry to the purchase inadequate not to give disappointment to the
purchase.
20
1.8 LIMITATIONS OF THE STUDY
This research work would have been better off and of more importance of it
had stretched it tentacles to cover all the manufacturing industries in Nigeria
but because of the following, it is not so.
Financial Constraint
Financial constraint problems was encountered by the researcher to carry out
the research as detail as possible due to the limited capital at the researcher
disposal to gather materials and travel to and fro, interview some of the
personnel in the industries.
Time Constraint
The researcher also encountered time constraint in getting the research work
completed because the curriculum of the degree programs is designed in such
a way that though courses are registered with project in the final year, thereby
creating difficult in conducting intensive research work.
Attitude of the Respondents
It is not an easy task to break the barrier or huddle of collecting information
from the respondents because of the secrecy and security of the information in
the hands of the employees. Their attitudes were so uncompromising to the
researcher. However, we penetrated them through humility and prayers.
21
1.9 OPERATIONAL DEFINITION OF TERMS
Polyvinyl Alcohol (PVA): Also known as Poly (ethenol), Ethanol
Homopolyrner; Pvoh; Polyviol; Vinol; Alvyl; Alkotex; Covo; Gelvatol;
Lernol; Mowiol is a water-soluble synthetic polymer, not to be confused with
(Polyvinyl acetate), a popular wood glue. PVA has excellent film forming,
emulsifying and adhesive properties. It is also resistant to oil, grease and
solvents. It is odourless, and non-toxic with high tensile strength and
flexibility as well as high oxygen and aroma-barrier properties.
PROFILE OF THE CASE STUDY FIRMS
The profiles of the two manufacturing industries (Innoson Technical and
Industrial Company Ltd and Emenite Ltd) under study are discussed below.
INNOSON TECHNICAL AND INDUSTRIAL COMPANY LTD
Innoson Technical and Industrial Company Ltd is a subsidiary of Innoson
Group of Companies which (Innoson Group) is made up of four
manufacturing companies including Innoson Technical and Industrial
Company Ltd. These companies include:
Innoson Nigeria Ltd which specializes in the production of motorcycle and
parts. It is a blue chip company engaged extensively in the importation,
assembly and marketing of automotive components, accessories and
motorcycles.
22
The second is Innoson Vehicle Manufacturing Company which is the first
indigenous vehicle manufacturing company in Nigeria. The company
introduces automotive products from China, Japan and Germany with product
line including heavy duty Vehicles, middle and high level buses, special
environment-friendly vehicles. It also provides repairs and parts supply
services.
The third is Innoson Tyre Manufacturing ltd which uses the abundant rubber
resources in the country to produce premium tyre.
Innoson Technical and Industrial Company Ltd, the fourth and the company
of focus in this research, was incorporated in 2002 with its head office
situated at Plot W/L Industrial Layout Emene, Enugu state, Nigeria. The
company produces plastic products which include chairs, tables, plates, home
equipments, baby care products, drums, tanks, jerry cans, motorcycle parts,
etc.
It began operation producing chairs and tables only and as time went by,
increased the variety of chairs it produced, thus presently producing over 20
types of chairs. With time as well, the company started producing other kinds
of plastic products as have been listed above.
Since its inception, Innoson Technical and Industrial Company Ltd ranks the
biggest plastic industry in Nigeria. It produces the highest quality range of
23
plastic products of international standard and has a production capacity of
over 10,000 pieces of chairs and tables per day. Due to rapid demand of these
products, the company’s twelve production lines of injection moulds have
since been increased with tremendous and near perfect production lines of
international standard. It was also established to further consolidate the
leading position in the motorcycle plastic requirement of Innoson Nigeria Ltd,
the sister company.
The company has an annual turnover of 3.6 billion Naira. Its foreign partners
are CRETEC Industries Co. Ltd (China) whose wealth of experience is
unquantifiable.
Mission: To satisfy the industrial and household requirements of its clients
using the highest standard automation and technology and with well
motivated and trained indigenous work force to ensure adequate returns to the
stakeholders.
Vision: To be a dominant player in the industrial scene producing products of
first choice in Nigeria.
Awards: Standard Organization of Nigeria (SON) quality award, Best plastic
company- International plastic monitoring group.
24
EMENITE LTD
From its premises at Emene on the outskirts of the coal city, Enugu, the
capital city of Enugu state, situated in the south eastern part of Nigeria,
Emenite Ltd, formally known as Turners Asbestos Cement Company Nigeria
Ltd which started operation in 1963, controls the manufacture and marketing
of its fibre cement ceiling, roofing and modular house products.
Since its incorporation in 1961, the company has gained a wealth of
experience through meeting the requirements of the construction industry in
promoting the development of Nigeria through the manufacture and
marketing of its fibre cement, roofing and ceiling products and is poised to
help in the future through the supply of high quality goods and services. With
the assistance of its European partners, the Belgian Etex Group, the company
is well able to meet the requirements of the demanding market through a
continuing program of technical requirements, strict quality controls, and
emphasis on customer satisfaction.
Mission: The mission of Emenite Ltd is to be the leader in the manufacture
and sale of high quality building products with zero waste management
culture and to sustain the business in a profitable manner with knowledge that
Emenite will stand by their customers while continually improving the
creativity, motivation and safety of her employees.
25
Emenite Environmental Hazard and Safety (EHS) Policy: Emenite Ltd is
renowned for her high level of safety awareness and implementation among
its staff, management and stakeholders. The management continually pursues
a safe, healthy, accident-free and pollution-free environment for the entire
staff and public. It is in continuation of these efforts that a well articulated set
of safety rules, health hazards, precautions and prevention were put together
in a General Information, Rules and Regulation on Health, Safety and
Environment in Ernenite Ltd.
It may be of interest to know that Emenite Ltd replaced asbestos with
Polyvinyl Alcohol (PVA) fibre in the year 2000 to make her products
asbestos-free.
In conclusion, both Innoson Technical and Industrial Company Ltd and
Emenite Ltd carry out strategic planning. It can be seen from their company
profile that they engage iii effective strategic planning as evidenced by their
achievements and awards. The performances of these organizations have
greatly improved with time as their products are of high quality and
international standard.
26
REFERENCES
Onodugo, V.A Ugwuonah G.E, & Ebinne E.S (2010), Social Science
Research: Principles, Methods and Applications, Enugu: El ‘Demak
Publishers.
Ezeh, J.A (1999), Fundamentals of Small Business Management, Enugu:
Glanic Ventures.
Hrebiniak L.G and Joyce, W.F. (1984), Implementing Strategy, Enugu:
Macmillan Press Ltd.
Thomas B. Bateman and Carl P. Zeithamal (1990) Management function and
strategy, Enugu: Richard D. Irwin Inc.
Karsten G. Hellebust and Joseph C. Krallinger (1989) Strategic planning
work book, Enugu: John Willey and Son, Inc.
Robert G. Dyson (1990), Strategic Planning Models and Analytical
Techniques, Enugu: John Willey and Son Ltd.
http://www.emenite.com
http://www.innoson.com
27
CHAPTER TWO
LITERATURE REVIEW
2.1 INTRODUCTION
The environments in which businesses operate differ a lot with time and
place. In the past changes in the environment were slow and gradual and offer
much time for business operators to plan and adjust. With time however, the
terrain became warlike. Rapid changes took over the usual gradual pace and
sharp competition overtook monopolies and cartel businesses.
Small business owners face the challenge of how to maintain focus amidst
these rapid changes. They have to develop a mission and long term goals for
their businesses and evolve strategies on how to realize such missions (Ezeh,
1999:89).
The owners of businesses before embarking on any business venture should
first determine where they want to go, and then how to get there. And because
they hope to run the business for years and years, they need to take a long-
ten-n perspective. They need to plan for the future as well as for today.
The mission statement of a company or an organization is a statement of the
trip’s destination- where the company wants to go. It specifies the goals and
purposes of business. Strategic planning which will later be discussed fully in
this study is simply a plan on how to achieve these goals- how to get there.
28
2.1.1 DEFINITION OF PLANNING
Planning is one of the management functions which involves looking ahead,
anticipating problems and deciding actions to take. It involves all the
resources available to the manager. Good planning is one of the most
important and also one the most neglected ingredients in business operations.
It is essentially a form of decision making (Ezeh, 1999:8). It is the process of
deciding which objectives to pursue within a specific future time period and
how to achieve those objectives.
Planning is the first of the managerial functions because it is the cornerstone
upon which everything else is built. The results of planning are felt
throughout the entire organization.
2.1.1.1 VARIOUS KINDS OF PLANNING
Planning is such a fundamental activity in human enterprise that many terms
exist for various kinds of planning which are as follows:
Long-range planning Vs. Short-range planning
Planning can be either long-range or short-range. Long range planning
typically pertains to a period, which starts from the end of the current fiscal
year and extends to 3 to 7 or more years into the future. Circumstances vary
from organization to organization and from industry to industry and so the
appropriate time frame for a long-range plan changes with the nature of the
29
specific environment and activity. For example, “long-range” for lumber
companies may be the decades needed to grow trees, while “short-range” may
cover the several years necessary for clearing a major section of land. In
contrast, “long-range” in certain parts of the electronics industry might mean
anything from 6 months and above. As is the case in objectives, some people
utilize the term “intermediate range planning”. When used, intermediate-
range planning normally covers a span of one to three years (Ezeh &
Onodugo,2002:98).
Formal planning Vs. Informal planning
There are differences in the methods that managers employ and the structure
they adopt in their planning activities. Informal planning is the planning that
is carried out on a casual basis. It occurs when managers do not manage in an
identifiable process and do not record their thoughts but rather carry them
around in their heads. Formal planning refers to a planning system that
operates on the basis of some systematic and/or orderly set of procedures. It
almost always results in some type of written plan. A formal plan can vary
from a one-page document to a massive planning manual.
Formal planning is preferred to informal planning as a result of many reasons.
Probably, the most important reason is that unless a formal system has been
30
established, daily problems almost always take precedence over planning. The
result is that little, if any, planning is done (Ezeh & Onodugo, 2002:99).
Another reason is that formal planning forces collaboration among different
managerial levels and different organizational units. However, a significant
amount of informal planning will occur even when a formal system is in
place.
Strategic planning Vs. Tactical planning
Strategic planning is a top-level, long-range planning which is an orderly
process by which top management determines organizational objectives,
strategies needed to realize these objectives, and short-range top-level actions
necessary for proper implementation of the strategy.
Tactical planning refers to short-range planning that is oriented towards
operations and concerned with specific and short-range details.
2.1.2 DEFINITION OF STRATEGY AND STRATEGIC PLANNING
In business circles, strategy is adapted to mean “a general programme of
action and a deployment of emphasis and resources towards the attainment of
comprehensive objectives” (Koontz and 0’ Donnel, 1976). The threats and
opportunities from the environment are always changing making it necessary
for managers to realign their strategies to reflect the changing trends. It is
31
pertinent to note that the ultimate end of strategy is to make a firm survive in
the face of competition and change.
According to Ezeh (1999), strategic planning is the process by which an
organization determines how it will seek to achieve the long-term objectives
spelled out in its mission statement. A strategic plan (or strategy) is thus a
design for action which can later be developed into a complete and
comprehensive business plan. When the plan becomes a formal written
document, it can be used in many ways. For example, as the firm develops the
structure of its financial strategy, lenders and investors will want to see the
plan. Business plans have made it possible for hundreds of small businesses to
arrange for thousands of loan and investment dollars.
Strategic planning is concerned with the broader issues about an
organization’s and the way in which an organization will cope with change.
For example, the company size, the range of products/services, which markets
to serve, the financial structure of the company, how best to exploit the
special skills of employees, the types of production technology.
It is concerned with the broad, longer-term future of an organization. As a
result, it is subjected to far greater uncertainties, must necessarily avoid too
much detail, and it is more difficult to assess its value to the organization than
32
in the case with management or operational planning (Scholes & Klemm,
1987:6)
2.1.2.1 STEPS INVOLVED IN DEVELOPING A WORKABLE
STRATEGIC PLAN
Below are the steps involved in developing a workable strategic plan.
i. Develop the firm’s mission statement.
ii. Examine business conditions, including general economic trends, the
competitive situations in the specific market, the size of that market, the
availability of suppliers and distributors, and the prospects for adequate
financing.
iii. Visualize what the business will be like and how it will fit within its
industry.
iv. Examine the internal strengths and weaknesses and the external
opportunities and threats to develop a sense of target market niches and
competitive advantages that might exist for the firm. The inspection of
strengths, weaknesses, opportunities, and threats is called a SWOT
analysis and is used by planners of businesses of all sizes.
2.1.3 STRATEGIC MANAGEMENT AND STRATEGIC PLANNING
Planning is employed in strategic management to consider the future
implications of current decisions and to determine objectives as well as
33
courses of action. Strategic management requires planning at all management
levels and use plans as a means of co-ordination and communication.
Strategic management as known today has evolved from and is still very
closely related to the planning function of management. At the strategic
planning level, there is a shift from the entrepreneur to the system and
structure, just as there is a shift from the short term to the long term
perspective to goal setting and pursuit. The theoretical thrust of this phase
centers around analyzing the environment to identify threats and opportunities
which when matched with organizations’ resources and capability, facilitates
in the setting of specific objectives in the core functional areas of business.
The major challenge at this stage is to ensure that all the various departments
align themselves to the central goals and missions of the organization.
At the strategic management level, it goes beyond looking at the process of
setting goals for the various functional areas, to the entire process of
formulating, implementing and controlling strategic decision for a large
organization. At this stage, management is completely divorced from
ownership and the organization is highly decentralized.
The strategic management process needs to be embedded in a robust system
of general management guided by an effective results monitoring. A strategic
management process gets the strategic plan to work.
34
Strategic management should provide the organization with:
i. A tool for co-ordinating and integrating operations, which occur
simultaneously in different geographical locations.
ii. A means of anticipating and preparing for change.
iii. A way of ensuring a more meaningful involvement of non-domestic
affiliates in global concerns.
iv. The critical link between formulation and implementation of strategy.
Strategic management therefore can be defined as the dynamic process
of formulation, implementation, evaluation and control of strategies to realize
the organization’s strategic intent (Azhar, 2008:19). From the definition, it
can be seen that strategic management is not a one-time, static or mechanistic
process but is a continual, evolving, iterative process. By being iterative, an
activity may not be required to be performed only once but repeated over time
as the situation demands.
2.1.3.1 LEVELS AND STAGES OF STRATEGIC MANAGEMENT
There are three distinct levels of strategy which are intricately linked, with the
levels of management that exist in a very large organization. The traditional
classification of management levels recognizes top level management
otherwise known as Corporate Level. Other levels include the Middle or
35
Executive Level Management and first line level management otherwise
known as the Supervisory Management Level.
The major distinguishing factor across these levels derives from the time and
scope influence of the decisions taken at these levels. In the same manner,
there are three categories of strategy namely:
Corporate Strategy
Business Strategy
Functional Strategy (Ezeh & Onudugo, 2002: 90-91)
Corporate Strategy: This is strategy as it concerns and affects those in the
top echelons of multiple-product and multiple-market business organizations.
It is a set of business decision, which adds up to form the central idea or
objective of the business organization and how individual businesses would
be managed to achieve it. The major question it answers is: what business
should we engage in? The time scope of business strategy is quite long,
between 5 years to 10 years or even more.
Business Strategy: This is the responsibility of divisional management. As a
sub-set of corporate strategy, it centres on the production and distribution of a
product(s) within a particular production-market area or an industry. Its main
focus is how to gain competitive advantage over other rival organizations in
36
the industry. It however, does that within the ambit and confines allowed by
the corporate strategy.
Business strategy ensures a synergistic relationship among the functional
areas within the product/service division. The question it answers is: How do
we compete in the industry? Business strategy is of medium time span i.e.
between 2-5 years.
Functional Strategy: This is the strategy that is designed and implemented
within a particular department or functional area of a division. For instance,
production department aimed at realizing its production target at minimal
cost. Naturally, functional strategy works to enhance the objectives of
business strategy.
The focus of this strategy is on how to effectively combine and maximize the
available resources to realize the target before it. The time span of functional
strategy is short and covers daily, weekly and monthly operations.
2.1.3.2 THE PROCESS OF STRATEGIC MANAGEMENT
There are four phases in the strategic management process. These four phases
are considered to be sequentially linked to each other and each successive
phase provides a feedback to the previous phases. However, in practice, the
different phases of strategic management may not be clearly differentiated
from each other. According to Azhar (2008), it is preferable to call them
37
phases rather than stages or steps (as some authors do) to signify that the
different phases, at the interface, may exist simultaneously and the strategic
activities gradually emerge in one phase to merge into the following phase.
The feedback arising from each of the successive phases is meant to revise,
reformulate or redefine the previous phases, if necessary. Such a
representation yields a dynamic model of strategic management which takes
into account the emerging factors as the process moves on.
Fig. 1: Four Phases in Strategic Management Process
Source: Adapted from Azhar Kazmi, “Strategic Management and Business Policy”, Third Edition.
New Delhi: Tata McGraw-Hill, 2008. P.20. ©2008 by Tata McGraw-Hill Publishing Company Ltd.
The first phase consists of establishing the strategic intent for the
organization. Strategic intent is the hierarchy of objectives that an
organization sets for itself. Within this, there are the vision, mission, business
definition and objectives. The aim of strategic management is to help the
organization realize its strategic intent.
The second phase of the formulation of strategies is concerned with the
devising of a strategy or a few strategies. This phase is also called strategic
Establishment
of strategic
intent
Implementation
of strategies Strategies
evaluation
Formulation
of strategies
38
planning (Azhar, 2008:20). Essentially, this an analytical phase in which
strategists (managers who are responsible for strategic management in an
organization) think, analyze and plan strategies.
The third phase of implementation is the ‘putting into action’ phase. The
strategies that are formulated are implemented through a series of
administrative and managerial actions.
The fourth and last phase of evaluation and control involves assessing how
appropriately the strategies were formulated and how effectively they are
being implemented. Depending on the outcome of assessment, actions could
be taken ranging from fine-tuning implementation to a drastic reformulation
of strategies.
Each phase of the strategic management process consists of a number of
elements, which are discrete and identifiable activities performed in logical
and sequential steps. It should be noted that most or all of the following are
considered as parts of the strategic management process.
A. Establishing the hierarchy of strategic intent:
i. Creating and communicating a vision
ii. Designing a mission statement
iii. Defining the business
iv. Adopting the business model
39
v. Setting objectives
B. Formulation of strategies:
vi. Performing environmental appraisal
vii. Doing organizational appraisal
viii. Formulating corporate-level strategies
ix. Formulating business-level strategies
x. Undertaking strategic analysis
xi. Exercising strategic choice
xii. Preparing strategic plan
C. Implementation of strategies:
xiii. Activating strategies
xiv. Designing the structure, systems and processes
xv. Managing behavioural implementation
xvi. Managing functional implementation
xvii. Operationalizing strategies
D. Performing strategic evaluation and control:
xviii. Performing strategic evaluation
xix. Exercising strategic control
xx. Reformulating strategies (Azhar, 2008:21)
40
2.1.3.3 MODEL OF STRATEGIC MANAGEMENT PROCESS
The process of strategic management is depicted through a model which
consists of different phases; each phase having a number of elements. Most
authors agree on dividing the strategic management process into four phases
consisting of about twenty elements. The model of strategic management
process is represented in the diagram below:
Fig. 2: Comprehensive Model of Strategic Management
Source: Adapted from Azhar Kazmi, “Strategic Management and Business Policy”, Third Edition.
New Delhi: Tata McGraw-Hill, 2008. p.21. ©2008 by Tata McGraw-Hill Publishing Company Ltd
2.2 ESSENTIAL INGREDIENTS TO EFFECTIVE STRATEGIC
PLANNING
The total planning process is complex because it involves:
1. Understanding the mission of the business.
2. Knowing what strategy to use in organizing and directing the firm to
complete that mission, and
3. Being able to develop the operational tactics required to carry out the
strategy (Ezeh, 1999:92-93).
Strategic Intent
Vision
Mission
Business
Definition
Business Model
Objectives
Strategic Formulation
Environmental Organizational
Appraisal Appraisal
SWOT Analysis
Corporate-level Strategies
Business-level Strategies
Strategic analysis and choice
Strategic plan
Strategic
Implementation
Project
Procedural
Resource allocation
Structural Behavioural
Functional &
Operational
Strategic Evaluation
41
There is no one perfect plan but every plan must include some consideration
of markets, money and motivation.
The strategic plan must always include an analysis of the targeted market,
who will buy the product offered? How many items will they buy? Is there
competition to fight? How will potential customers find out about the
business? These are just a few of the questions that must be answered in a
strategic plan.
The amount of money that will be needed for capital investment and for day-
to-day operations must also be specified in a strategic plan. Money is required
to acquire assets for the business, pay employees, make rent or mortgage
payments, and for other business expenses. Where should the money come
from? How much is needed? When will it be available? Will there be enough
of it? Will profits be enough to make the risks of running the business
worthwhile? These and other questions should be answered in the strategic
business plan.
Finally, motivation, both internal motivation and employee motivation, is
necessary for business success. The owner-manager-entrepreneur must keep
himself or herself going for a long stretches when success is not a sure thing.
What keeps a person working hard in the face of discouragement? of fatigue?
of meager rewards? What does it take to motivate employees to treat
42
customers in such a way as to bring them back? All these fall within the
purview of what psychologists call MOTIVATION.
2.3 STRATEGIC EVALUATION AND CONTROL
The purpose of strategic evaluation is to evaluate the effectiveness of a
strategy in achieving organizational objectives. Thus, strategic evaluation and
control could be defined as the process of determining the effectiveness of a
given strategy in achieving the organizational objectives and taking corrective
action wherever required (Azhar, 2008:489).
During the two preceding phases of strategic management process, the
strategists formulate the strategy to achieve a set of objectives and then
implement the strategy. Now, there has to be a way of finding out whether the
strategy being implemented is guiding he organization towards its intended
objectives. Strategic evaluation and control, therefore, performs the crucial
task of keeping the organization on the right track. In absence of such a
mechanism, there would be no means for strategists to find out whether or not
the strategy is producing the desired effect. In this manner, through the
process of strategic evaluation and control, the strategists attempt to answer
two sets of questions such as these:
(a) Are the premises made during strategy formulation proving to be
correct? Is the strategy guiding the organization towards its intended
43
objectives? Are the organization and its managers doing the things
which ought to be done? Is there a need to change and reformulate the
strategy?
(b) How is the organization performing? Are the time schedules being
adhered to? Are the resources being utilized properly? What needs to
be done to ensure that resources are utilized properly and objectives are
met?
Importance of Strategic Evaluation
The importance of strategic evaluation lies in its ability to coordinate the tasks
performed by individual managers- and also groups, divisions or small
business units (SBU5) through control of performance. In the absence of
coordinating and controlling mechanisms, individual managers may pursue
goals which are inconsistent with the overall objectives of the department,
division, SBU or the whole organization.
Besides the basic reason of coordinating tasks, there could be several other
motives for strategic evaluation as described below:
Need for feedback, Appraisal and Reward: Feedback on current
performance is very necessary within an organization so that appraisal can be
done and good performance rewarded. This is essential for the motivation of
employees.
44
Check on the validity of strategic choice: Strategic evaluation helps to keep
a check on the validity of a strategic choice. An ongoing process of evaluation
would, in fact, provide feedback on the continued relevance of the strategic
choice made during the formulation phase. This is due to the efficacy of
strategic evaluation to determine the effectiveness of strategy.
Congruence between Decisions and Intended Strategy: During the course
of implementation, managers are required to take scores of decisions.
Strategic evaluation can help to assess whether the decisions match the
intended strategy requirements. This is due to inherent nature of any
administrative system which leaves some amount of discretion in the hands of
managers. In the absence of such evaluation managers would not explicitly
know how to exercise such discretion.
Successful Culmination of the Strategic Management Process: Strategic
evaluation helps in successful culmination of the strategic management
process through its process of control, feedback, rewards and review.
Creating Inputs for new Strategic Planning: The process of strategic
evaluation provides a considerable amount of information and experience to
strategists that can be useful for new strategic planning.
In addition to the obvious reasons described above, there are certain other and
not-so-obvious reasons why managers use strategic evaluation and control
45
which include: using control systems to overcome resistance to change,
communicating new strategic agenda, ensuring continuing attention to new
strategic initiatives, formalizing beliefs, setting boundaries on acceptable
strategic behaviour and motivating discussions and debates about strategic
uncertainties.
Requirements for Effective Evaluation
When strategy drives the control system, evaluation is likely to be more
effective. For instance, an organization implementing a cost leadership
strategy needs to emphasize tight cost controls, have a system whereby
frequent and comprehensive reports to monitor costs are produced and apply
incentives based on explicit financial targets.
The basic issue in all evaluation needs to be that control should be dictated by
strategy. There are needs to be needs to be a vertical fit between the strategy
requirements and the evaluation and control exercised over performance.
Strategic controls take into account the changing assumptions that determine
a strategy, continually evaluate the strategy as it is being implemented and
take the necessary steps to adjust the strategy to the new requirements. In this
manner, strategic controls are early warning systems and differ from post-
action controls that evaluate only after the implementation has been
completed. You can think of strategic control as analogues to the continuous
46
evaluation system used in a business school and distinguish it from the end-
of-term examination system used in traditional universities. Operational
control however is aimed at allocation and use of organizational resources
through evaluation of the performance of organizational units such as
divisions, small business units, etc., to assess their contribution to the
achievement of organizational objectives. It is concerned with action or
performance and this is probably the reason why it is so extensively used in
organizations (Azhar, 2008:495). The guidelines below are suggested in order
to make controls effective.
• Control should involve only the minimum amount of information as too
much information tends to clutter up the control system and creates
confusion. There should be balanced emphasis on the level of
complexity of the process of strategic evaluation itself. Too complex a
system of evaluation may make it difficult to implement while a
simplistic system may be inadequate.
• Control should monitor only managerial activities and results even if
the evaluation is difficult to perform.
• Controls should be timely so that corrective action can be taken
quickly. Timeliness is important in the sense that evaluation must be
done at the time when it is required. Performing evaluation too early or
too late may not be appropriate.
47
• Long-term and short-term controls should be used so that a balanced
approach to evaluation can be adopted. Strategies by their very nature
have a long-term effect. Evaluating short-term results may not truly
reflect the actual performance of an organization.
• Controls should aim at pinpointing exceptions as nitpicking does not
result in effective evaluation. The ‘80:20 principle’ where 20 per cent
of the activities result in 80 per cent of achievement, needs to be
emphasized.
• Getting bogged down with the activities that do not really count for
achievement makes the evaluation ineffective.
• Reward of meeting or exceeding standards should be emphasized so
that managers are motivated to perform. Excessive emphasis on
penalties tends to pressurize the managers to accentuate efficiency
(doing the things right) rather than effectiveness (doing the right things)
(Azhar, 2008:493)
Process of Evaluation
The process of evaluation for exercising operational control basically deals
with four steps:
1. Setting standards of performance
2. Measuring of performance
3. Analyzing variances
48
4. Taking corrective action
The strategies, plans and objectives result in a set of performance standards
which form the basis for evaluation through measurement of performance.
The comparison of actual and standard performance leads to the analysis of
variances. Feedback from the analysis results in either a check on
performance, revaluation of standards, or reformulation of strategy, plans or
objectives. Due to the inherent nature of operational control, corrective action
is aimed mainly at performance and adjustment of standards, rather than at the
reformulation of strategy. The reformulation task is performed usually on the
basis of strategic control, especially implementation control.
The four elements of the evaluation process mentioned above and how they
relate to each other, are depicted in the figure below:
Fig. 3: The evaluation process for operational control
Source: Adapted from Azhar Kazmi, “Strategic Management and Business Policy”, Third Edition.
New Delhi: Tata McGraw-Hill, 2008. p.496. 02008 by Tata McGraw-Hill Publishing Company Ltd
Strategy/Plan/
Objectives
Setting
standards of
performance
Actual
performance Management
of
performance
Setting
standards of
performance
Feeback
Refo
rmu
late
Ch
eck stan
dard
s
Ch
eck p
erform
ance
49
2.4 IMPORTANCE OF STRATEGIC PLANNING AND MANAGEMENT
TO BUSINESS ORGANIZATIONS
Systematic strategic thinking helps you to find, and decide what to do about
the handful of really big issues facing your business or any other organization.
It is the size and impact of these strategic issues that gives rise to the
importance of the strategic plan which are as follows:
1. One major benefit of strategic management and planning is that they
help organizations to remain focused and maintain direction amidst
change and distractions. Strategic management is a more careful and
systematic approach to change.
2. Strategic planning gives owners, managers, and employees a clear idea
of the objectives of the firm.
3. It helps ensure that members of the team work together with a common
vision and that all segments of the business will be focused on
predetermined objectives. It ensures that all parts and segments are
headed in the same direction.
4. Strategic plans also provide an anchor from which to make adjustments
as customer tastes and preferences change market size fluctuates,
competition becomes more intense, and technology transforms products
50
and services. As a result of this, organizations that plan strategically
continuously remain relevant to their target market.
5. Swift action and reaction is possible when the firm’s strategy is
understood by everyone involved.
2.5 IMPACT OF STRATEGIC PLANNING ON THE PERFORMANCE
OF MANUFACTURING INDUSTRIES
Research findings in Europe and America as reported by Ansoff et al in Ezeh
(1995) show that firms who strategically plan were more accurate in
predicting the outcome of major strategic action and outperformed non
planners in terms of several financial criteria. There is a definite relationship
between the mission and goals, the proper identification of strategies,
implementation, and controlling to the amount of profit produced in an
organization. According to Schoeffler et al (1974), in a diversified company,
the usual practice is for business plans to be prepared by each product
division or other operating unit. These plans are then reviewed by corporate
executives, often with assistance of corporate staff specialists. Among the key
elements of each unit’s plan are of course, estimates of investment
requirements and profits for the future periods.
51
There is growing evidence that strategic planning is an important element for
helping companies break into new international markets ensuring a more
meaningful involvement of non-domestic affiliates in global concerns.
An understanding of the strategic management process is an aid to
appreciating the relationship of an individual to the whole organization as
well helping the individual see ways to advance his or her career by making
important contributions to the organization.
Strategic plans in addition to maintaining the relevance of private firms to
their target market, increase their customer base which in turn increases
profit.
2.6 PROBLEMS AND CHALLENGES FACING STRATEGIC PLANNING
There is no doubt that managers encounter problems and challenges in their
strategic planning activities and processes. Some of these challenges are
described below:
1. Much of the frustration and friction which occurs in business planning
results from efforts to co-ordinate the plans of the various functions
and/or divisions of the organization. This is a continuing problem that
occurs at all levels of planning. In strategic planning, this is a particular
problem. A publishing company may wish to launch a new magazine
into the market. To do this successfully, it needs to ensure that each of
the business functions plans its activities to be consistent with the
52
others. For example, there is no point running the television advertising
campaign until the production departments are ready with their print
rim. In turn, they are unable to print final copies until all editorial work
is complete and advertising material has been typeset.
2. Environmental influences such as economic climate, social changes,
and legal changes pose challenges to strategic planning. Most
companies’ plans are affected by the economic climate, but not always
the same way. Whereas perhaps the majority of companies feel that a
growing economy best suits their purpose, this is not universally true.
A buoyant economy may lead to considerable “trading-up” in
purchasing patterns, e.g. the DIY (do it yourself) enthusiast buys power
tools instead of hand tools; food consumption moves away from basic
such as bread to more sophisticated tastes; preferences within leisure
and entertainment also change- away from watching league football to
newer sports or more family weekends away from home (Scholes &
Klenim, 1987:51).
3. Time span: The greater the time span, the greater the number of
mistakes. Present conditions are usually dominant in the planner’s mind
when he initiates a plan and these may be overstressed. For example, a
new building for a computer based upon present ideas (i.e. for use by
the fmance function only) may be found to be too small, if, in fact, all
53
functions make use of the computer, a larger computer building may be
needed. A good illustration of the effect of time on planning can be
seen by company long and short term weather forecasts (Appleby,
1994:98).
4. Unforeseen events and lack of communication: Many events are
obviously unforeseen, but planning can be aided by techniques given
suggested probabilities of events taking place. Wider consultation with
workers is needed, to enable them to understand the nature of obstacles
and the reason why management is taking a certain course of action to
overcome them.
5. Size of organization: The larger the scope of the plan, the more
complex the planning (e.g. plans for a department and plans for a group
of departments).
6. Lack of skilled manpower: In companies, mostly small business firms,
the owner-manager may lack the expertise and knowledge in the area of
strategic planning and its impact in the performance of his business.
8. Inadequate or lack of finance may not be a direct challenge to strategic
planning in manufacturing industries but can indirectly pose a problem
at the stage of execution of the plans. Money is required to acquire
assets for the business, pay employees, make rent or mortgage
payments, and for other business expenses.
54
REFERENCES
Ansoff, H.I, Avner J, Brandenburg R.G, Poriner F.E, & Radosevich R.
(1971), “Does Planning Pay? The Effect of Planning on the Success of
Acquisitions in American Firms”, Long Range Planning, Vol. 3, Part
12, P.3.
Applyby Robert, C. (1994), Modern Business Administration, Sixth Edition,
London: Financial Times; Pitman Publishing.
Azhar Kazmi (2008), Strategic management and Business Policy, Third
Edition, New Delhi: Tata McGraw-Hill Publishing Company.
Ezeh, J.A (1999), Fundamentals of Small Business Management, Enugu:
Glanic Ventures.
Ezeh, J.A and Onodugo, V.A (2002), Business Policy and Strategic
Management: Issues & Trends, Enugu: Kinsmann Publishers.
Grim, C. (1982), The Effectiveness of Strategic Planning in the South African
Building Materials Industry, Unpublished MBA Research Project
Report, Graduate School of Business Administration, University of
Witwatersrand, Johannesburg.
Grim, C and Andrews, G.S (1985), “The Impact of Strategic Planning on
Corporate Performance in a Turbulent Environment”, The Investment
Analysts Journal. p.47.
Lyles M.A, Baird LS, Orris B.J, & Kuratko D.F (1993), “Formalized
Planning in Small Business: Increasing Strategic Choices”, Journal of
Small Business Management, Vol. 31.
Schoeffler Sidney, Buzzell Robert .D, & Heany Donald .F (1974), “Impact of
Strategic Planning on Profit Performance” Harvard Business Review.
Scholes Kevan and Klemm Mary (1987), An Introduction to Business
Planning, Houndmills, Basingstoke, Hampshire RG2I 2XS & London:
Macmillan Press.
http://www.hrb.org/1974/03/Impact-of-strategic-planning-on-profit-
performance
http://www.planware.org/strategic plan. html
httpquestia.com/google scholar.qst%3Fd
http://www.simply-strategic-planning.com.
55
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 INTRODUCTION
This chapter focuses on the research design, sources of data, population of
study, sample size determination and sampling, technique, description of
research instrument, method of data analysis, reliability of research
instrument and validity of research instrument.
3.2 RESEARCH DESIGN
In this research study which is descriptive, the researcher adopted survey
designs. The survey research design was considered appropriate because it
provides a factual descriptive picture of the situation as they exist in their
natural setting and the reveal the need for change. It also allows orderly
collection, easy analysis, interpretation and reporting of pertinent facts and
information about subjects as far as condition and circumstances permit.
The research work was designed in such a way to avail the researcher the
opportunity of using close-ended and open-ended questions in the
questionnaire to obtain the necessary information from respondents. Also
interview and some degree of observation were employed by the researcher in
this study to obtain qualitative data.
56
The pretext interactions in Ements and Innson Ltd firms provided information
on the population in each firm, the total population and gave due to the
sample size. The interaction helped to perfect the research instrument.
3.3 SOURCES OF DATA
SOURCES OF DATA
This research involves both primary and secondary sources of data. The
primary source which according to Uzoagulu (1998) contains the data
originally assembled by the researcher who actually observed the
phenomenon was by survey which was carried out using the questionnaire.
Interview and some degree of observation were also employed during the data
gathering process.
The secondary sources which though were needed for this study, were
collected primarily for another study (Onodugo et al, 2010:68) involved the
use of textbooks, the library, and the internet.
3.4 THE POPULATION OF STUDY
This is the aggregate of the total number of persons or objects for
investigation or research in a particular area of study. From preliminary
investigation conducted, it was realized that Innoson Technical and Industrial
Company Ltd has 1,511 workers (managers inclusive), 700 of which are
casual workers. During our data collection we will be making use of the
57
major staff of the organization which gives us a total of 811 employees.
Emenite Ltd has a total of 560 employees (managers inclusive). Therefore,
our population of study is 1,371.
TABLE 3.1: THE POPULATION OF THE STUDY
FIRMS NUMBER OF EMPLOYEES
1 Innoson Technical and
Industrial Company Ltd
811
2 Emenite (Nig) Ltd 560
Total 1,371
3.5 SAMPLE SIZE DETERMINATION AND SAMPLING TECHNIQUE
As it is difficult to study the entire population of study, the researcher arrived
at a fraction or segment of the total population whose characteristic is used to
represent the entire population. Using the Yamane Yaro’s formula used for
finite population, we can determine sample size in the following ways:
nN/[1+N(e)2]
where n = Sample size;
N = The finite population;
e = Level of significance (or limit of tolerable error); and
1 = Unity (is a constant).
Since total population = 1,371
e = 0.05
Therefore, 1,371
1+1,371 (0.05)2
= 1,371
1+1,371 (0.0025)
= 1,371
4.4275
� 310
58
3.7 DESCRIPTION OF RESEARCH INSTRUMENT
The main instrument for data collection was the questionnaire which was used
to gather data from respondents that helped in the analysis of the study. The
questionnaires which some were filled by the respondents in the presence of
the researcher and some left to be filled and returned later, contained
structured fixed answers (close-ended questions) which the respondents were
required to select the ones they thought suitable as well as open-ended
questions where they can provide more information to a question.
Data was also collected through observation and interview which provided
some qualitative data in this study.
3.8 METHOD OF DATA ANALYSIS
There was a need to tabulate the data obtained for better understanding using
the percentage (frequency) distribution. Each item in the questionnaire has its
own table which is interpreted and analyzed individually.
The hypotheses were also tested using the chi-square statistical tool in order
to arrive at a decision concerning the relationship among the variables. The
formula for Chi-square is a follows:
X2 (R-1)(C-1), α = ∑ (Oi-ei)
2
ei
Where X2 = Chi-square;
59
(R-1)(C-1) = Degree of freedom;
α = Level of significance;
∑ = Summation;
Oi = Observed frequency; and
ei = Expected or Theoretical frequency
60
REFERENCES
Appleby Robert, C. (1994), Modern Business Administration, Sixth Edition,
London: Financial Times; Pitman Publishing.
Azhar Ka.zmi (2008), Strategic management and Business Policy, Third
Ezeh, J.A and Onodugo, V.A (2002), Business Policy and Strategic
Management: Issues & Trends, Enugu: Kinsmann Publishers.
Grim, C and Andrews, G.S (1985), “The Impact of Strategic Planning on
Corporate Performance in a Turbulent Environment”, The Investment
Analysts Journal. p.47.
Lyles M.A, Baird I.S, Orris B.J, & Kuratko D.F (1993), “Formalized
Planning in Small Business: Increasing Strategic Choices “, Journal qf
Small Business Management, Vol. 31.
Onodugo, V.A, Ugwuonah G.E, & Ebrnne E.S (2010), “Social Science
Research: Principles, Methods and Applications”, Enugu: El ‘Demak
Publishers.
Scholes Kevan and Kiernm Mary (1987), An Introduction to Business
Planning, Houndmills, Basingstoke, Hampshire RG21 2XS & London:
Macmillan Press.
61
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF DATA
The data obtained during survey were collated and presented in tables.
Each item in the questionnaire has its own table and the responses (data)
gathered from the respondents were computed in the table using percentage
(frequency) distribution. The tables representing questions in the
questionnaire that are relevant to testing of the hypotheses were extracted and
used in hypothesis testing accordingly. The chi-square statistical tool was
employed in testing the hypotheses. Using this method, the value (critical
value) in the chi-square distribution table is compared with the calculated
value (test statistics) obtained from the data from this research to know
whether to accept the null hypotheses and reject the alternate hypotheses or
vice versa with the help of the decision rule.
4.1 DISTRIBUTION AND RETURN OF QUESTIONNAIRE
A total of 310 copies of questionnaire were prepared and distributed to the
respondents from the two selected organizations. Out of the above number, a
total of 252(81.3%) were duly completed and returned. Moreover out of the
252(81.3%) returned questionnaire, 2(0.6%) were wrongly filled; hence
56(81.1%) were not returned. Therefore the researcher based his analysis on
the total number of 252 duly completed and returned. The date will be
presented in tabular form using percentage frequency distribution as follows:
62
QUESTIONNAIRE ADMINISTERED TO THE STAFF OF INNOSON
TECHNICAL AND INDUSTRIAL COMPANY LTD AND EMENITE LTD
Question 4: What is your highest educational qualification?
Table 4.1: Data on the educational qualification of respondents
ALTERNATIVE
RESPONSES
OBSERVED FREQUENCIES TOTAL
FREQUENCY INNOSON EMENITE
GCE O’Level and
equivalent 50 = 38.46% 48 = 39.34% 98 = 38.89%
Technical
certification 33 = 25.38% 19 15.57% 52 = 20.63%
First degree 42 =32.31% 51 =41.80% 93=36.90%
Postgraduate
degree 4 = 3.08% 2 = 1.64% 6 2.38%
Others 1=0.77% 2=1.64% 3=1.19%
TOTAL 130 122 252
Source: Survey data, 2015
Analysis: A cross examination of the table shows that 38.89% of the
respondents has qualification of GCE O’Level and equivalent, 20.63% has
technical qualification, 36.90% are first degree holders, 2.38% has
postgraduate degree, while 1.19% has other qualifications which include first
school leaving certificate, ICAN qualifications.
63
Question 5: Which of these qualifications do you think is best for a position
as a manager?
Table 4.2: Data on the best qualification for a managerial position
ALTERNATIVE
RESPONSES
OBSERVED FREQUENCIES TOTAL FREQUENCY
INNOSON EMENITE
OLevel 1 = 0.77% 0 = 0.00% 1 0.40%
Diploma 3 230% 10 = 8.20% 13 5. 16%
B.A]B.Sc 34=26.15% 11=9.02% 45=17.86%
MBA 55 = 42.30% 62 = 50.8 1% 117 = 46.43%
PhD 37 28.46% 39 = 31.97% 76 = 30.16%
TOTAL 130 122 252
Source: Survey data, 2015
Analysis: A cross examination of the table shows that 0.40% of the
respondents think that O’Level, 5.16% think that Diploma, 17.86% think that
B.A/B.Sc, 46.43% think that MBA, and 30.16% think that PhD is the best
qualification for a manager.
Question 6: Are you aware of whether your company embarks on any
planning at all?
64
Table 4.3: Data on employees’ awareness of their company’s planning
activities
ALTERNATIVE
RESPONSES
OBSERVED FREQUENCIES TOTAL FREQUENCY
INNOSON EMENITE
Yes 130=100.00% 120=98.36% 250=99.21%
No 0=0.00% 2=1.64% 2=0.79%
TOTAL 130 122 252
Source: Survey data, 2015
Analysis: A cross examination of the table shows that 99.21% of the
respondents agreed, while 0.79% disagreed that their company has benefited
from its strategic plan.
Question 7: If yes, what is the duration of the plan?
Table 4.4: Data on the duration of the plan of companies under survey
ALTERNATIVE
RESPONSES
OBSERVED FREQUENCIES TOTAL FREQUENCY
INNOSON EMENITE
Long term 84=64.62% 52=42.62% 136=53.97%
Medium term 30=23.08% 3=2.46% 33=13.10%
Short term 0=0.00% 2=1.64% 2=0.80%
All of the above 16=12.31% 65=52.28% 81.32.14%
TOTAL 130 122 252
Source: Survey data, 2015
65
Analysis: A cross examination of the table shows that 53.97% of the
respondents said that their company embarks on long term planning, 13.10%
of the respondents said that their company embarks on medium term
planning, 0.80% of the respondents said that their company embarks on short
term planning, while 32.14% of them responded that their company embarks
on all of them.
Question 8: As a worker in your organization, do you participate in
formulating this plan?
Table 4.5: Data on workers’ participation in the formulation their
company’s strategic plan
ALTERNATIVE
RESPONSES
OBSERVED FREQUENCIES TOTAL FREQUENCY
INNOSON EMENITE
Yes 96=73.85% 109=89.34% 205=81.35%
No 34=26.15% 12=10.66% 47=18.69%
TOTAL 130 122 252
Analysis: A cross examination of the table shows that 81.35% of the
respondents participate while 18.65% do not participate in formulating their
company’s strategic plan.
66
Question 9: Has your company benefited from this plan?
Table 4.6: Data on whether the companies under survey have benefited
from strategic planning
ALTERNATIVE
RESPONSES
OBSERVED FREQUENCIES TOTAL FREQUENCY
INNOSON EMENITE
yes 130=100.00% 120=98.36% 250=99.21%
No 0.0.00% 2=1.64% 2=0.79%
Short term 0=0.00% 2=1.64% 2=0.80%
All of the above 16=12.31% 65=52.28% 81.32.14%
TOTAL 130 122 252
Source: Survey data, 2015
Analysis: Cross examination of the table shows that 99.21% of the
respondents agreed, while 0.79% disagreed that their company has benefited
from its strategic plan.
Question 10: Do you agree that this plan has helped to improve the profit and
performance of your company?
Table 4.7: Data on the effect of strategic planning on the profit and
performance of manufacturing companies
ALTERNATIVE
RESPONSES
OBSERVED FREQUENCIES TOTAL FREQUENCY
INNOSON EMENITE
Yes 130 = 100.00% 96=78.69% 226=89.68%
No 0=0.00% 26=21.31% 26=10.32%
Source: Survey data, 2015
67
Analysis: A cross examination of the table shows that 89.68% of the
respondents agreed, while 10.32% disagreed that their company’s
performance and profit have been improved by their strategic plans.
Question 11: Is there any improvement in your work since the plan was put
in place?
Table 4.8: Data on the effect of strategic planning on employees’ work
ALTERNATIVE
RESPONSES
OBSERVED FREQUENCIES TOTAL FREQUENCY
INNOSON EMENITE
Yes 130=100% 122=100% 252=100%
No 0=0% 0.0% 0=0%
TOTAL 130 122 252
Analysis: A cross examination of the table shows that 100% of the
respondents agreed, 0% both disagreed and were undecided that their work
has improved since they started working in their company.
68
Question 12: Without bias, how can you rate other manufacturing companies
with respect to how they plan their businesses?
Table 4.9: Data on the rating of other manufacturing companies’
planning activities
ALTERNATIVE
RESPONSES
OBSERVED FREQUENCIES TOTAL
FREQUENCY INNOSON EMENITE
Excellent 28 =21.54% 19 15.57% 47 =18.65%
Good 37=28.46% 31=25.41% 68=26.98%
Fair 48 = 36.92% 40 32.79% 88 = 34.92%
Poor 17=13.08% 32=26.23% 49=19.44%
TOTAL 130 122 252
Source: Survey data, 2015
Analysis: A cross examination of the table shows that 18.65% rated other
companies ‘excellent’, 26.98% rated them ‘good’, 34.92% rated them ‘fair’,
while 19.44% rated them ‘poor’ on how they plan their businesses.
69
Question 13: What do you think is the main reason why some manufacturing
industries do not embark on strategic planning?
Table 4.10: Data on the main reason why some manufacturing industry
do not embark on strategic planning
ALTERNATIVE
RESPONSES
OBSERVED FREQUENCIES
TOTAL FREQUENCY
INNOSON EMENITE
Lack of Finance 60 =
46.15% 42 34.43% 102 = 40.48%
Lack of Skilled
Manpower 55=42.31% 63 =51.64% 118=46.83%
Unfavourable
Business
Environment
4 3.08% 11 9.02% 15 5.95%
All of the above 11=8.46% 6=4.92% 17=6.15%
Total 130 122 252
Source: Survey data, 2015
Analysis: A cross examination of the table shows that 40.48% of the
respondents think that lack finance, 46. 83% thinks that lack of skilled
manpower, 5.95% thinks that unfavourable business environment, while
6.15% thinks that lack of finance, lack of skilled manpower and unfavourable
70
business environment are the major reasons why some manufacturing
industries do not embark on strategic planning.
Question 14: Do you agree that strategic plan helps an organization to assess
the performance of staff and organization?
Table 4.11: Data on the relevance of strategic planning in assessment of
workers’ performance
ALTERNATIVE
RESPONSES
OBSERVED FREQUENCIES TOTAL FREQUENCY
INNOSON EMENITE
Agree 26=20.00% 37=30.33% 63=25.00%
Strongly Agree 99=76.15% 82=67.21% 181=71.83%
Disagree 0=0.00% 0=00% 0=00%
Undecided 5=3.85% 3=2.46% 9=3.17%
TOTAL 130 122 252
Source: Survey data, 2015
Analysis: A cross examination of the table shows that 25.00% of the
respondents agreed, 71.83°/b strongly agreed, 0.00% disagreed, 0.00%
strongly disagreed, while 3.17% were undecided that strategic plan helps an
organization to assess the performance of staff and organization.
71
Question 15: Do you agree that strategic plan increases productivity? Table
4.12: Data on the effect of strategic planning on productivity Source:
ALTERNATIVE
RESPONSES
OBSERVED FREQUENCIES TOTAL FREQUENCY
INNOSON EMENITE
Agree 31=23.85% 40=32.79% 71=28.17%
Strongly Agree 99=76.15% 82=67.21% 181=71.83%
Disagree 0=0.00% 0=00% 0=00%
Undecided 0=00% 0=0.00% 0=0.00%
TOTAL 130 122 252
Survey data, 2015
Analysis: A cross examination of the table shows that 28.17% of the
respondents agreed, 7 1.83% strongly agreed, 0.00% disagreed, 0.00%
strongly disagreed, and 0.00% were undecided that strategic plan helps an
organization to assess the performance of staff and organization.
4.2 TEST OF HYPOTHESES
Using the chi-square method for testing hypotheses, the formulated
hypotheses in this research shall be tested as follows:
Test Statistic: X2(R1)(C1),α =∑(Oi-ei)
2
ei
Where X2 = Chi-square;
(R-1)(C-1) = Degrees of freedom;
α = Level of significance (=0.05);
72
∑ = Summation;
Oi = Observed frequency; and
ei = Expected or Theoretical frequency.
4.2.1 Test of hypothesis I
Ho: Manufacturing industries in Nigeria do not plan strategically.
Hi: Most manufacturing industries in Nigeria plan strategically.
α= 0.05, Sample size, n = 252
Using the data in table 4.4:
ALTERNATIVE
RESPONSES
OBSERVED FREQUENCIES TOTAL FREQUENCY
INNOSON EMENITE
Long term 84 52 136
Medium term 30 3 33
Short term 0 2 2
All of the above 16 65 81
TOTAL 130 122 252
Source: Survey data, 2015
From the Chi-square distribution table, X2
(4-1)(2-1),0.05 = X2
3,0.05 = 7.81 = Critical
value.
Decision Rule: Reject Ho if X23,0.05 (calculated value) is greater than X
23,0.05 =
7.81, otherwise do not reject.
Calculation of Expected Frequency, ei
73
ei ncnR
n
Where nc = Total number in column;
nR = Total number in row; and
n = Sample size
1st Row: 130 x 136 = 70.16 122 x 136 = 65.84
252 252
2nd
Row: 130 x 33 = 17.02 122 x 33 = 15.98
252 252
3rd
Row: 130 x 2 = 1.03 122 x 2 = 0.97
252 252
4th
Row: 130 x 81 = 41.79 122 x 81 = 39.21
252 252
Oi ei Oi-ei (Oi-ei)2
(Oi-ei)2/ei
84 70.16 13.84 191.5456 2.73013
52 65.84 -13.84 191.5456 2.90926
30 17.02 12.98 168.4804 9.89897
3 15.98 -12.98 168.4804 10.54320
0 1.03 -103 1.0609 1.03000
2 0.97 1.03 1.0609 1.09371
16 41.79 -25.79 665.1241 15.91587
65 39.21 25.79 665.1241 16.96312
61.08426
Therefore, test statistic = ∑ (Oi- e
i)2 is approximately 61.08
ei
74
Decision: Since X2
3,0.05 = 61.08 is greater than X2
3,0.05 7.81, we reject the null
hypothesis (Ho). This means that we accept that most manufacturing
industries in Nigeria plan strategically.
4.2.2 Test of hypothesis II
Ho: Strategic planning does not increase the turnover and profitability of
manufacturing industries.
Ho: Strategic planning the turnover and profitability of manufacturing
industries.
α = 0.05, sample size, n = 252
Using the data in table 4.7:
ALTERNATIVE
RESPONSES
OBSERVED FREQUENCIES TOTAL FREQUENCY
INNOSON EMENITE
Yes 130 96 226
No 0 26 26
TOTAL 130 122 252
Source: Survey data, 2015
From the Chi-square distribution table, X2
(2-1),(2-1),0.05 = X21,0.05 = 3.84 =
Critical value
Decision rule: Reject Ho if X21,0.,05 (calculated value) is greater than X
21,0.05 =
3.84, otherwise do not reject.
Calculation of Expected frequency, ei
75
ei ncnR
n
Where nc = Total number in column;
nR = Total number in row; and
n = Sample size
1st Row: 130 x 226 = 116.59 122 x226 = 109.41
252 252
2nd
Row: 130 x 26 = 13.41 122 x 26 = 12.59
252 252
Oi ei Oi-ei (Oi-ei)2
(Oi-ei)2/ei
130 116.59 13.41 179.8281 1.54240
96 109.41 -13.41 179.8281 1.64362
0 13.41 -13.41 179.8281 13.41000
26 12.59 13.41 179.8281 14.28340
30.87942
Therefore, test statistic = ∑ (Oi- e
i)2 is approximately 30.88
ei
Decision: Since X2
3,0.05 = 30.88is greater than X23,0.05 3.84, we reject the null
hypothesis (Ho). This means that strategic planning turnover and profitability
manufacturing industries.
76
4.2.3 Test of Hypothesis III
Ho: Employees are not involved in the formulation of strategic plan of
manufacturing industries.
Hi: Employees are involved in the formulation of strategic plan of
manufacturing industries.
α = 0.05, sample size, n = 252
Using the data in table 4.5:
ALTERNATIVE
RESPONSES
OBSERVED FREQUENCIES TOTAL FREQUENCY
INNOSON EMENITE
Yes 96 109 205
No 34 13 47
TOTAL 130 122 252
Source: Survey data, 2015
From the Chi-square distribution table, X2
(2-1),(2-1),0.05 = X21,0.05 = 3.84 =
Critical value
Decision rule: Reject Ho if X21,0.,05 (calculated value) is greater than X
21,0.05 =
3.84, otherwise do not reject.
Calculation of Expected frequency, ei
ei ncnR
n
Where nc = Total number in column;
77
nR = Total number in row; and
n = Sample size
1st Row: 130 x 205 = 105.75 122 x205 = 99.25
252 252
2nd
Row: 130 x 47 = 24.25 122 x 47 = 22.75
252 252
Oi ei Oi-ei (Oi-ei)2
(Oi-ei)2/ei
96 105.75 -9.75 95.0625 0.89894
109 99.25 9.75 95.0625 0.95781
34 24.25 9.75 95.0625 3.92010
13 22.75 -9.75 95.0625 4.17857
9.95542
Therefore, test statistic = ∑ (Oi- e
i)2 is approximately 9.96
ei
Decision: Since X23,0.05 = 9.96 is greater than X
23,0.05 3.84, we reject the null
hypothesis (Ho). This means that strategic planning turnover and profitability
manufacturing industries.
78
4.2.4 Test of hypothesis IV
Ho: Lack of skilled manpower does not hinder strategic planning in
manufacturing industries.
Hi: Lack of skilled manpower hinders strategic planning in manufacturing
industries.
α = 0.05, sample size, n = 252
Using the data in table 4.10:
ALTERNATIVE
RESPONSES
OBSERVED FREQUENCIES TOTAL
FREQUENCY INNOSON EMENITE
Lack of Finance 60 42 102
Lack of skilled manpower 55 63 118
Unfavourable business
environment 4 11 15
All of the above 11 6 17
TOTAL 130 122 252
Source: Survey data, 2015
From the Chi-square distribution table, X2
(2-1),(2-1),0.05 = X21,0.05 = 7.81 =
Critical value
Decision rule: Reject Ho if X21,0.,05 (calculated value) is greater than X
21,0.05 =
7.81, otherwise do not reject.
Calculation of Expected frequency, ei
79
ei ncnR
n
Where nc = Total number in column;
nR = Total number in row; and
n = Sample size
1st Row: 130 x 102 = 52.62 122 x102 = 49.38
252 252
2nd
Row: 130 x 118 = 60.87 122 x 118 = 57.13
252 252
3rd
Row: 130 x 15 = 7.74 122 x 15 = 7.26
252 252
4th
Row: 130 x 17 = 8.77 122 x 17 = 8.23
252 252
Oi ei Oi-ei (Oi-ei)2
(Oi-ei)2/ei
60 52.62 7.38 54.4644 1.03505
42 49.38 -7.38 54.4644 1.10296
55 60.87 -5.87 34.4569 0.56607
63 57.13 5.87 34.4569 0.60313
4 7.74 -3.74 13.9876 1.80718
11 7.26 3.74 13.9876 1.92667
11 8.77 1.23 4.9729 0.56704
6 8.23 -2.23 4.9729 0.60424
8.21234
Therefore, test statistic = ∑ (Oi- e
i)2 is approximately 8.21
ei
80
Decision: Since X23,0.05 = 8.21 is greater than X
23,0.05 7.81, we reject the null
hypothesis (Ho). This means that strategic planning turnover and profitability
manufacturing industries.
4.3 DISCUSSION OF FINDINGS
A concise summary of the findings based on the analyzed data above are as
follows:
1) It was found that strategic planning system improves organizational
performance, which reveals that managers of business organizations
understand the importance of strategic planning system towards
enhancing organizational performance.
2) Strategic planning has common objective to be achieved; improved
performance via increase in the profitability ratio.
3. Organizations implement strategic planning system despite its
expensiveness.
4. Lack of competence is one of the factors that prevent managers from
installing strategic planning system.
5. In-service training for managers is necessary to gain competence for
effective implementation of strategic planning.
81
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
This study does provide interesting findings as well as some valuable building
blocks for future research in strategic planning:
5.1 SUMMARY OF FINDINGS
The analysis of data produced the following outcomes:
1. Most manufacturing industries in Nigeria plan strategically. Test of
hypothesis one approved of this outcome as ���= 61.08 > ��
� = 7.81
2. Strategic planning improves organizational performance.
3. Organizations implement strategic planning despite its expensiveness.
4. Nigerian organizations embark on formal strategic planning exercise.
5. Proper training of managers is an essential prerequisite for effective
implementation of strategic planning.
5.2 CONCLUSION
Strategic planning is essential in business. Manufacturing should evolve and
long-term strategies which will enable their companies to stand the test I” and
survive amidst the changing world.
Most Manufacturing Industries in Nigeria embark on strategic planning.
Effective strategic planning improves the profit performance of manufacturing
industries.
82
Manufacturing Industries should involve all the stakeholders in proper
implementation of their strategic plans and continuously evaluate their plans
to make sure it is still in line with their companies’ objectives and with the
changing trend in their environment.
Lack of skilled manpower impinges on strategic planning. Manufacturing
Industries are fond of employing their relatives who most often are
incompetent in the area of business management.
It is important to note that strategic planning does appear to improve profit
performance but only when considerable attention is paid to the
implementation phase of planning.
5.3 RECOMMENDATIONS
The following recommendations will be useful to Manufacturing Industries in
their strategic planning process.
i. Strategic planning is a continuous process and therefore requires
continuous evaluation for its effectiveness.
ii. Effective strategic planning also means that managers should involve
all stakeholders in the implementation of their strategic plans.
iii. Manufacturing Industries should provide motivation for their staff in
order to encourage them to work towards the attainment of the
organizational goals.
83
iv. Management should train the managers as well as other employees to
improve their competence in the area of strategic planning and
implementation.
v. Manufacturing should employ competent individuals to manage their
organization.
84
BIBLIOGRAPHY
Ansoff, H.I., Avner J, Brandenburg R.G, Portner F.E, & Radosevich R.
(1971), “Does Planning Pay? The Effect of Planning on the Success of
Acquisitions in American Firms “, Long Range Planning, Vol. 3, Part
12, p.3.
Appleby Robert, C. (1994), Modern Business Administration, Sixth Edition,
London: Financial Times; Pitman Publishing.
Azhar Ka.zmi (2008), Strategic management and Business Policy, Third
Edition, New Dethi: Tata McGraw-Hill Publishing Company.
Ezeh, J.A (1999), Fundamentals of Small Business Management, Enugu:
Glanic Ventures.
Ezeh, J.A and Onodugo, V.A (2002), Business Policy and Strategic
Management: Issues & Trends, Enugu: Kinsmann Publishers.
Grim, C. (1982), The Effectiveness of Strategic Planning in the South African
Building Materials Industry, Unpublished MBA Research Project
Report, Graduate School of Business Administration, University of
Witwatersrand, Johannesburg.
Grim, C and Andrews, G.S (1985), “The Impact of Strategic Planning on
Corporate Performance in a Turbulent Environment”, The Investment
Analysts Journal. p.47.
Kuprenas John, A. “Learn More About Strategic Planning in the Not-for-
Profit and Government Sector “Biackerb Associate.
Lyles M.A, Baird I.S, Orris B.J, & Kuratko D.F (1993), “Formalized
Planning in Small Business: Increasing Strategic Choices “, Journal qf
Small Business Management, Vol. 31.
Onodugo, V.A et al (2010), Social Science Research: Principles, Methods
and Applications, Enugu: El ‘Demak Publishers
Schoeffler Sidney, Buzzell Robert .D, & He any Donald .F (1974), “impact of
Strategic Planning on Profit Performance” Harvard Business Review.
85
Scholes Kevan and Kiernm Mary (1987), An Introduction to Business
Planning, Houndmills, Basingstoke, Hampshire RG21 2XS & London:
Macmillan Press.
http://www.emenite.com http://www.lirb.org/1974/03/Impact-of-strategic-
planning-on-profit-performance
http://www.innoson.com
http://www.planware.org/strategic plan. html
http://www.questia.com/google scholar. qst%3Fd
http ://www. simply-strategic-planning .com
86
APPENDIX
School of Postgraduate Studies
Faculty of Business Administration
Department of Management
University of Nigeria
Enugu Campus
21 January, 2015
Dear Respondent,
STRATEGIC PLANNING AND ITS IMPACT ON THE PERFORMANCE
OF MANUFACTURING INDUSTRIES
I am a student of the above-named institution carrying out a research for my
project. Please kindly help to fill this questionnaire for me, to able to gather
the data necessary for this research.
The purpose of the study is academic and so the information you provide will
be treated with stric confidentiality.
Thanks for your corporation.
Yours faithfully,
CHUKWU EDITH C.
87
APPENDIX I
QUESTIONNAIRE
INSTRUCTION: Please tick the appropriate answers to the following
questions or fill in as and when required.
1. Name (Optional) …………………………………………………….
2. Sex: Age: (a) 18-20 (b) 21-30 (c) 31-40 (d) Above 40
3. Marital status: Single [ ] Married [ ]
4. What is your highest educational qualification: (a)G.C.E O’level and
equivalent (b) Technical certification (c) First degree (d) Postgraduate
degree (e) Others (Please specify)………………………
5. Which of these qualifications do you think is best for a position as a
manager?
(a) O’Level (b) Diploma (c) B.A/B.Sc (d) MBA (e) PhD
6. Are you aware of whether your company embarks on any planning at
all?
(a)Yes (b) No
7. If yes, what is the duration of the plan?
(a) Long term (b) Medium term (c) Short term
8. As a worker in your company, do you participate in formulating this
plan?
(a) Yes (b) No
88
9. Has your company benefited from this plan?
(a) Yes (b) No
10. Do you agree that this plan has helped to improve the profit and
performance of your company?
(a) Yes (b) No
11. Is there any improvement in your work since the plan was put in
place?
(a) Yes (b) No (c) Undecided
12. Without bias, how can you rate other private companies with respect to
how they plan their businesses?
(a) Excellent (b) Good (c) Fair (d) Poor
13. What do you think are the main reasons why some private
organizations do not embark on strategic planning?
(a) Lack of finance (b) Lack of skilled manpower (c) Unfavourable
business environment (d) All of the above.
Any other explain……………………………………………….
Agree Strongly
Agree Disagree Strongly
Disagree
Undecided
14.
Do you agree that strategic plan helps
an organization to assess the
performance of staff and organization?
[ ]
[ ]
[ ]
[ ]
[ ]
15.
Do you agree that strategic plan
increases productivity?
[ ]
[ ]
[ ]
[ ]
[ ]
89
APPENDIX II
INTERVIEW SCHEDULE
1. Are you aware of strategic planning?
2. If yes, have your organization started implementing strategic planning?
3. Do minimum challenges encountered affect the application of strategic
planning?
4. Is there high level of readiness about strategic planning in your
industry?
5. Does strategic planning have prospects in Nigeria manufacturing
industries?
6. How is training and development carried out in your industry?
Recommended