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CYPRUS INTERNATIONAL UNIVERSITY
INSTITUTE OF GRADUATE STUDIES AND RESEARCH
Business Administration Department
IMPACT OF STRATEGIC MANAGEMENT IN BANKING
INDUSTRY: A CASE STUDY OF ACCESS BANK
NIGERIA PLC
(M.Sc Thesis)
Kehinde Tyson ADELEYE
Nicosia – 2014
CYPRUS INTERNATIONAL UNIVERSITY
INSTITUTE OF GRADUATE STUDIES AND RESEARCH
Business Administration Department
IMPACT OF STRATEGIC MANAGEMENT IN BANKING
INDUSTRY: A CASE STUDY OF ACCESS BANK
NIGERIA PLC
(M.Sc Thesis)
Kehinde Tyson ADELEYE
Supervisor
Assoc. Prof. Dr. M AGA
Nicosia – 2014
CYPRUS INTERNATIONAL UNIVERSITY
INSTITUTE OF GRADUATE STUDIES AND RESEARCH
Thesis Approval Certificate
The thesis study of Energy Systems Engineering Department
graduate student Kehinde T. Adeleye with student number
20131129 titled Impact of strategic management in banking
industry: a case study of Access bank Nigeria plc has beenapproved with unanimity / majority of votes by the jury
established by the decision of the Institute’s Board of
Directors dated --.01.2015 and numbered 2014/--/---and has
been accepted as a Master of Business Administration
Thesis.
Thesis Defense Date: --/01/2015
Jury Members Signature
1)
.....................
2)
.…................
3)
....….............
Director of
the Institute
ACKNOWLEDGEMENT
I wish to thank my supervisor Assoc. Prof. Dr. Mehmet AliYavaz for his constructive criticism and for patiently
guiding me through the process of writing this thesis.
I am grateful to my advisor (research assistant) Ahmad for
his help and suggestions.
A special thanks to my mother and brother for their
financial support and constant encouragement in my academic
study.
My colleagues from the Institute of Graduate and Research
Studies supported me during my research work. I want to
thank them all for their supports, interests, valuable
hints and for providing a quite enjoyable atmosphere all
through.
Finally, I want to thank my sister Temitayo Adeleye for her
positive attitude, motivation and patience throughout my
study.
i
ABSTRACT
The content of a strategic management plan reflects
entrepreneurial judgments about the long-term direction of
the organization on whether there is a need for major new
initiatives and actions aimed at keeping the organization
in position to enjoy sustained success. Strategic
management is the focal point of any business organization
and both the sequence of actions and the speed of the
implementation process are important aspects of uniting the
entire organization behind strategy accomplishment. A good
strategy is one that is right for the organization
considering all the relevant specifics of its situation.
The entrepreneurial task of formulating strategy is always
ii
requiring heavy doses of situation analysis and judgment
with the aim of achieving good fit between strategy and all
relevant aspects of the organization’s internal situation
and external environment. Indeed, one of the special values
and contributions of managers is the ability to develop
customized solutions that fit the unique feature of an
organization’s situation.
iii
TABLE OF CONTENTS
ACKNOWLEDGEMENT ……………………………………………………………...i
ABSTRACT……………………………………...……...………………………............ii
TABLE OF CONTENTS…………………...........……………………………….........iii
ABBREVIATIONS…………………...…………………………………………..........vii
LIST OF TABLES ......……………………………………………...…………..….....viii
INTRODUCTION ..............................................
...........................................................
..1
CHAPTER 1 LITERATURE REVIEW ………………………………………………6
1.1 INTRODUCTION ……………………………………………………….6
1.2 THE HISTORY OF STRATEGY ………………………………………..6
1.3 CONCEPTUAL FRAMEWORK ……………………………………….7
1.3.1 Strategy Levels ………………………………………………….9
1.3.2 Strategic Management Process
………………………………….9
1.3.2.1 Agreement on the procedure
…………………………..11
1.3.2.2 Identification and
elucidation of the association’s
mission, targets and current techniques
……………….11
1.3.2.3 Identification of the asociation’s
inner qualitiesiv
and shortcomings …………………………………….....12
1.3.2.4 Assessment of dangers and
opportunities in the
outer environment ………………………………………13
1.3.2.5 Identification of key constituents
and stakeholders,
their desires and assets ……………………………...
…..14
1.3.2.6 Identification
of key Strategic Issues …………………..15
1.3.2.7 Design, investigation, and choice
of system
options and alternatives to oversee
issues recognized
in 1.3.2.6…………………….…………………………16
1.3.2.8 Implementation of the system
………………………….16
1.3.2.9 Monitoring and survey execution
………………………17
1.3.3 The Environment
………………………………………………....17
1.3.3.1 External
Environment…………………………...............18
1.3.3.2 Internal Environment
………………………………...…19v
1.3.4 Strategic Planning
…………………………………………...……19
1.3.5 Strategic Thinking; The soft side of
Strategic
Management ……………………………………………...………21
1.4 THEORETICAL FRAMEWORK: SCHOOLS OF
STRATEGIC MANAGEMENT ………………………………………..23
1.4.1 The Deign School: strategy as a process
of conception ……….…23 1.4.2 The Planning School:
strategy formation as a
formal process ……………………………………………………24
1.4.3 The Positioning School: strategy
formation as an
analytical process …………………………………………………24
1.4.4 The Entrepreneurial School: strategy
formation as a
visionary process …………………………………………………25
1.4.5 The Cognitive School: s trategy
formation as a mental
process……………………………………………………………25
1.4.6 The Learning School: strategy formation
as an emergent
process………………………………………………………….....26
1.4.7 The Power School: strategy formation as
a process ofvi
negotiation ……………………………………………………….26
1.4.8 The Cultural School: strategy formation
as a collective
process …………………………………………………………...27
1.4.9 The Environmental School: strategy
formation as a reactive
process ……………………………..…………………………..…27
1.4.10 The Configuration School: strategy
formation as process
of Transformation ………………………………………………28
1.5 EMPIRICAL FRAMEWORK ………………………………………….28
CHAPTER 2 RESEARCH METHODOLOGY
2.1 INTRODUCTION ……………………………………………………...31
2.2 BRIEF HISTORY OF ACCESS BANK PLC ………………………….31
2.3 RESEARCH DESIGN ………………………………………………….33
2.4 RESEARCH HYPOTHESIS …………………………………………...33
2.5 SAMPLING INCLUDING SAMPLING FRAME …………………….33
2.6 DATA SPECIFICATION/MATERIALS ……………………………….34
2.7 METHODS OF DATA COLLECTION ………………………………..34
2.8 METHOD OF DATA ANALYSIS …………………………………...…35
CHAPTER 3 DATA ANALYSIS AND PRESENTATION
3.1 INTRODUCTION …………………………………………….………..37
3.2 PRESNTATION AND ANALYIS OF DATA …………………………..37
3.3 TEST OF HYPOTHESIS ………………………………………………40vii
SUMMARY, CONCLUSION AND RECOMMENDATIONS……………………..48
REFERENCES ……………………………………………………………………..…53
ACRONYMS AND ABBREVIATIONS
ANOVA Analysis of Variance
ASM Adoption of strategic management
BC Before Christ
CBN Central Bank of Nigeria
ID Identity Document
MBO Management by Objectives
viii
PLC Public Limited Company
R & D Research and Development
PER Performance
SM Strategic Management
SP Superior Performance
ix
LIST OF TABLES
Tables
Page
4.1 Response on the Strategic Management and Performance
……………………..42
4.2 Model Summary 1 ………………………………………………………...……42
4.3 ANOVAb 1………………………………………………………………………43
4.4 Coefficientsa 1…………………………………………………………………..44
4.5 Response to the Adoption of Strategic Management and
Superior Performance …………………………………………………………. 45
4.6 Model Summary 2 ……………………………………………………………...45
4.7 ANOVAb 2 ……………………………………………………………………...46
4.8 Coefficientsa 2 ………………………………………………………………….47
x
xi
INTRODUCTION
In Nigeria, the banking system has over the years witnessed
a revolutionary which can be classified into six major
periods, the free banking period (up to 1952); the pre-
central banking era (1952-1959); the era of banking
legislation (1959-1970); the indigenization era (1970-
1977); the post Okadigbo era (1977-1995) and the post
consolidation era (1996-date). This revolutionary trend has
brought about a characteristic performance in the behavior,
growth and survival of the industry and it is this need to
survive that has generated a lot of research in the overall
management of the banks to bring about the best in them.
It is therefore; to this end that strategy formulation is
largely an excursion in entrepreneurship. The content of a
strategic management plan reflects entrepreneurial
judgments about the long-term direction of the organization
on whether there is a need for major new initiatives and
actions aimed at keeping the organization in position to
enjoy sustained success.
Broadly viewed, the management task of strategy
implementation is one of scrutinizing the whole internal
organization to diagnose what strategy approaches are
1
needed and what actions to take in order to accomplish
them. In addition, there is the need for the different
pieces of the implementation plan to be arranged into a
pattern of action that will produce an orderly change from
the old practice to the new strategy rather than creating
disruption and dissatisfaction with the way things are
being handled.
Strategic management is the focal point of any business
organization and both the sequence of actions and the speed
of the implementation process are important aspects of
uniting the entire organization behind strategy
accomplishment.
A good strategy is one that is right for the organization
considering all the relevant specifics of its situation.
The entrepreneurial task of formulating strategy is always
requiring heavy doses of situational analysis and judgment
with the aim being to achieve goodness of fit between
strategy and all the relevant aspects of the organization’s
internal situation and external environment. Indeed, one of
the special values and contributions of managers is the
ability to develop customized solutions that fit the unique
features of an organization’s situation.
Business organizations are constantly making decisions
2
which contribute a great deal to the survival of the
industry and play a major role in the destiny of the firm
on the long-run and it takes superior entrepreneurship and
competent strategy implementation over a long period of
time.
The future belongs to the aggressive and the ambitious who
can apply strategy as a process of stretching resources and
seeing opportunities for innovation. The chances are
excellent that when an organization has a well-conceived,
well executed strategy, it will be a high performer.
STATEMENT OF THE PROBLEM
The Banking commercial enterprises in Nigeria have needed
to face a ton of improvements lately and have to a vast
degree been affected by government regulation
notwithstanding its always showing signs of change
financial and money related arrangements. The most critical
among these are:
Government Regulation: This constitutes a lot of test to
the managing an account industry as banks end up working in
an environment with a vague and regularly disaffirming
principles and a capricious future. The administration set
models to be met by candidates looking for saving money
permit to detail the scope of items and administrations to
3
be offered, direct the value and premiums to be charged and
as of late the national bank order of least capital base of
twenty-five billion naira by all banks or the withdrawal of
their working permit if the mandate was not met.
Policy Discontinuities: This is attributable to the regular
changes at board levels in the banks which normally realize
changes of the official administration and frequently
arrangement order too.
Competition: Human creatures by nature are focused and this
is likewise valid for the managing an account
establishments striving among each other with each one
needing to be the best.
The mergers and acquisitions arrangement order of the
national bank which shows that banks that don't have the
indicated capital base ought to either consolidate with or
obtain as more diminutive bank or face termination.
Internal and outer elements impinging on their operations.
Basically saw, it can be seen that there are a great deal
of variables influencing the Nigerian managing an account
environment which can be inner or controllable variables
and outside or wild variables. The inside variables are
basically about the authoritative structure of the
association like the client administration, advertising,4
records, staff division and so on. The outside variables
will be variables like the political circumstance of the
country, social and social components, labor and
characteristic asset advancement and so forth.
Previously, numerous banks have neglected to meet the
difficulties postured by the changing ecological
conditions. It is this vital that any serious clarification
of the firm in connection to changes in the nature will
oblige an understanding of the different ecological
conditions which confer on the operations of the business.
The different variables highlighted above have kept on
undermining the uprightness of the keeping money industry
as well as areas' capacity for survival and manageable
quality.
This study is thusly intended to look at how best industry
can misuse the idea of key administration as an instrument
of surmounting the snags and troubles put on its way of
development and survived. It likewise needs to look at how
the keeping money industry has been reacting to the
different changes brought into the Nigerian economy and how
it has possessed the capacity to co-ordinate and deal with
its assets to accomplish this.
The key reactions to this improvement by the Access Bank
5
Plc administration will be uncovered in the productivity
execution and hence there is the need to examine the vital
methodology of the bank given the nature's turf in which it
works and henceforth focus the impact on monetary
execution.
AIM AND OBJECTIVES OF THE STUDY
The aim of this research is to examine the impact of
strategic management in the banking industry. To this end,
the specific objectives of the study are as follows:
To determine the impact of strategic management
in the banking industry
To analyze the benefits of strategic management
on bank’s performance
To examine the role of strategic management in
the financial and human resource planning and
management in the bank
To determine the problems faced by the bank in
the application of strategic management
To proffer solutions to identified problems as to how
strategic management can make meaningful impact on the bank
and in general in the Nigerian economy.
SIGNIFICANCE OF THE STUDY
6
Brinkerhoff (1991 and 1994) characterizes strategic
management as gazing out, looking in, and looking ahead.
"Gazing out" means investigating past the limits of your
association to set attainable targets, recognize key
stakeholders, and fabricate bodies electorate for change.
"Looking in" suggests basically evaluating and reinforcing
your frameworks and structures for overseeing work force,
accounts, and other fundamental assets. At long last,
"looking ahead" involves merging your technique with
structures and assets to achieve your approach objectives,
while observing your advancement and changing your
methodology as required. This study is imperative to
analysts and understudies of key administration as an issue
for further research and comprehension. With the effect of
key administration on managing an account industry as the
central purpose of this study, it will serve as an issue
for corporate governors and arrangement creators in the
saving money industry for predominant entertainers
SCOPE OF THE STUDY
The scope of this study is to examine the impact of
strategic management on the Nigerian banking industry using
Access Bank Plc as a case study. The study will also dwell
on and analyze the bank’s statement of accounts and annual
report between 2003 and 2012 in order to evaluate its
7
profitability, asset base, gross earnings, and total
deposits and compare the result with the strategic
management objectives of the bank over the years in
question.
Efforts will be made also to examine the internal and
external environments of the bank to determine whether its
strategic management programs are fashioned to cope with
challenges imposed by the environment in which it operates.
OVERVIEW OF THE THESIS
This research work will attempt to provide answers to
questions such as:
What is the impact of strategic management in the
banking industry?
What are the benefits of strategic management on
the bank’s performance?
What are the roles of strategic management in the
financial and human resource planning and
management in the bank?
What are the problems faced by the bank in the
application of strategic management?
How can strategic management make meaningful impact on the
bank and in general Nigerian economy?
8
CHAPTER 1
LITERATURE REVIEW
1.1 INTRODUCTION
This chapter will discuss the literature in the field of
strategic management. The literature review will start by
analyzing the history of strategy, and the developing a
conceptual framework. Then the evolution of the field of
strategic management will be discussed. The literature
review will also identify the analysis of external and
internal environmental factors that affect company’s
strategic management practices. External environment will
be discussed under three major categories namely the
general, industry and competitor environments. The major
internal environmental factors that will be discussed in
this chapter include the factors such as structure,
ownership, size, organizational culture, management style,
stakeholder expectations, resources, capabilities and core
competencies of the companies. Then the literature review
will focus on two views of strategic management namely
strategic planning and strategic thinking. Under the
strategic planning approach, vision and mission, objectives9
and goals, and analytical tools and techniques which are
used for strategic planning will be discussed. The concept
of strategic thinking will be discussed under the elements
of Liedtka’s (1998) strategic thinking model.
1.2 THE HISTORY OF STRATEGY
The history of strategy and strategic management goes back
to 500 BC. It is believed that many concepts of strategy
have come from Chinese military history and many concepts
about strategy were written in “The Art of War” which was
originally written in the 6th century BC by Sun Tzu
(Hubbard 2000). He highlights the importance of quick
responses to changing environments and asserts planning
works only in controlled areas but, not properly in
changing battlefields. Although the concept of strategy
goes back to Chinese military history its application to
the business world is relatively recent. According to
Hubbard (2000) as an academic discipline, the first books
in the field are considered to be the 1965 Learned,
Christensen, Andrews and Guth’s book developed for teaching
business policy at the Harvard Business School and Ansoff’s
book on corporate planning published in the same year. The
major objective in the model of strategy in both books was
to match the internal resources and capabilities of the
organization (organization’s strengths and weaknesses) with
10
the demands of the environment (its opportunities and
threats). According to these two books strategy totally
belongs to the chief executive officer (CEO) who had to
assess the company’s position and to decide which strategy
to implement (Hubbard 2000).
1.3 CONCEPTUAL FRAMEWORK
According to Meyer & Wit (1999), the only way of
understanding the philosophy of strategy is to understand
the diversity of the definitions of strategy given by the
many outstanding thinkers in the field of strategy and also
to conclude that there is no simple answer to the question
of what is “strategy”. Whittington (1993) proposes four
basic approaches to strategy namely classical, processual,
systemic and evolutionary. These four approaches differ
fundamentally according to the outcomes of strategy and the
processes by which it is made.
In the classical perspective, strategy is perceived as a
rational process which includes deliberate calculation and
analysis. Classical theorists believe that the environment
can be changed and therefore, rational analysis and
objective decision making determine the organization’s long
term success or failure (Whittington 1993). Their ultimate
goal is to maximize the competitive advantage of the
11
company.
In the evolutionary perspective, rational planning is often
seen as irrelevant. Environment is too unpredictable for
evolutionary theorists and therefore, they expect markets
to secure profit maximization rather than relying on
rational planning methods. All managers can do is make sure
that they fit as efficiently as possible to the
environmental demands of the day (Whittington 1993).
Processual theorists believe rational plans can be changed
over the time due to environmental changes and the
differences of individuals who create and implement those
plans. Therefore, strategies emerge with much confusion and
in small steps. For processual theorists, both the
organization and markets are often sticky messy phenomena
and the best advice is "not to strive after the
unattainable perfect of levelheaded liquid activity,
however to acknowledge and work with the world as it may
be" (Whittington 1993). Systemic strategists accept the
importance of the rational planning to act effectively in
response to environmental changes and they reject the
notion of rational planners as perfect profit maximizes.
According to systemic perspective, strategies can be
changed due to the managers’ cultural and social
backgrounds. As a result different organizational
12
structures and goals can be created and therefore, firms
differ according to the social and economic systems in
which they are embedded (Edinsinghe 2008).
Similarly, Mintzberg et al (1998) proposes five P’s for the
strategy and views strategy as plan, pattern, ploy,
position or perspective. Strategy as “plan” describes
strategy as a direction, a guide or course of action into
the future, a path to get from here to there and therefore,
and strategies are intended and made prior to the actions.
“Pattern” perspective views strategy as consistent behavior
over time and therefore, the pattern view is looking at its
past behavior while the plan view is looking at the future.
Companies can develop strategies for the future and they
also can identify the pattern of their strategies in the
past. Thus, the plan view has the intended strategy and the
pattern view has the realized strategies. Mintzberg’s view
of strategy as a ploy represents a specific plan to outwit
an opponent or competitor. For example a company may
threaten to expand plant capacity to discourage a
competitor from building a new plant and thus, the
company’s strategy was the threat, not the expansion
(Mintzberg & Quinn, 1996). Mintzberg view of strategy as
position believes "Strategy is the production of a special
and profitable position, including an alternate set of
13
exercises" (Mintzberg et al, 1998,) and strategy as
perspective viewers consider the company’s fundamental way
of doing things. The perspective view "looks inside the
affiliation, clearly, inside the pioneers of the
strategists, yet it additionally gazes toward the fantastic
vision of the undertaking" (Mintzberg et al 1998,).
In addition to the above five definitions of strategy,
Mintzberg et al (1998) proposes ten schools of strategy
such as design, planning, positioning, entrepreneurial,
cognitive, learning, power, cultural, environmental and
configuration. Under the conceptual framework, strategy
levels, strategy management process, strategy thinking and
planning, and the environment were discussed in details
1.3.1 Strategy Levels
Johnson & Scholes (1999) identify three levels of strategy
in a large company namely corporate level, business level
and operational level strategy. Similarly, Thompson &
Strickland (2003) divide companies into two categories
namely diversified and single business companies and
propose four strategy levels for diversified companies’
namely corporate, business, functional and operational
levels while proposing three levels of strategies for the
single business companies such as business, functional and
14
operating level strategies. According to Johnson & Scholes
(1999), corporate strategy is "concerned with the general
reason and extent of the association to meet the desires of
managers or real stakeholders and increase the value of the
diverse parts of the undertaking". Business level strategy
is to contend effectively in a specific business (Johnson &
Scholes 1999), and functional level strategies are for each
specific functional unit within a business such as
marketing, finance, and production etc., and operational
level strategies to manage the basic operation units in the
functional areas such as plants and sales (Thompson &
Strickland 2003).
1.3.2 Strategic Management Process
Johnson & Scholes (1999) developed a model for strategic
management which consists of strategic analysis, strategic
choice and strategy implementation. Similarly, Thompson &
Strickland (2003) identified five major tasks of strategic
management that include developing a strategic vision and
business mission, setting targets, making a strategy to
accomplish the destinations, actualizing and executing the
procedure, evaluating performance. According to Johnson &
Scholes (1999) strategic analysis is concerned about the
strategic position of the company in terms of its external
and internal environments and stakeholder expectations.
15
Crosby (1991) identified nine steps similar to that of
Strickland listed above but more encompassing and detailed.
The approach described below is suggested as a guide:
Agreement on and initiation of the strategic
management process.
Recognizable proof and clarification of the
association's mission, goals, and current systems.
Identification of the organization’s internal
strengths and weaknesses.
Assessment of the threats and opportunities from the
external environment.
Identification of key constituents/ stakeholders and
their expectations.
Identification of the key strategic issues confronting
the organization.
Design/analysis/selection of strategy alternatives and
options to manage issues identified in 1.3.2.6.
Implementation of strategy.
Monitoring and review of the strategy’s performance.
There is much similarity in the approach described here and
that of others if one were to stop after 1.3.2.7, the
procedure would be just a key arranging activity.
Oftentimes, this is precisely where the strategy does stop,
especially when management and the strategic planning
16
functions have been de-linked. This occurs when there is no
attempt to develop a strategic mentality among line
management; rather, the association endeavors to set up an
extraordinary department, division, or “guru” for strategic
planning rather than integrate the functions into normal
line management. Without the expressed linkage it is often
difficult for the line manager to see the value of the
strategic plan, and there will therefore be less interest
and incentive in strategically managing. In contrast, in
the event that the key strategy is utilized, or the
association is instilled with a vital attitude, then
strategic planning will be done as part of the course of
normal (strategic) management functions.
1.3.2.1 Agreement on the procedure
The initial phase in the key administration methodology is
to get assentation to do the procedure as well as to get
concession to how and when and by whom it will be done.
Since the vital administration methodology is not an one-
shot activity, duty to the long term is key; without
responsibility, the activity will be sterile and likely
viewed as an issue of time. Who ought to be incorporated in
the vital administration process? No less than three
separate sorts of people ought to be considered for
consideration: the association's top chiefs and those
17
authorities who will have immediate obligation in execution
of arrangement; the individuals who have a significant
stake in the conclusion of the approach, whether from
inside or outside the association, whether steady or
oppositional, customers or asset suppliers; and those with
specific information that can add to the examination of the
strategy to be chosen or executed. As per Jofre (2011),
moderately expansive contribution all the while ought to be
energized; mind must be taken that such gatherings not be
extended to the point of insufficiency to settle on nimble
choices. In what manner ought to the methodology be
launched? In the first place, consent to complete and duty
to the procedure of key administration must be gotten from
one or a greater amount of the association's key leaders.
Once such assentation and duty is expert, then choices
about what ought to be considered and who ought to be
included can be tended to (Farina 2009). In the event that
issues are mind boggling and there is a need to include a
generally wide range of performing artists and
stakeholders, then workshops may be considered. On the off
chance that the issues are less perplexing or less
performers need to be included, then steer conferences or
little gathering game plans may demonstrate more
productive.
18
1.3.2.2 Identification and elucidation of the
association's mission, targets and current techniques
Once an association has consented to take part in a vital
methodology, the first undertaking is to figure out what
and where the association is. What are the needs that the
association endeavors to fulfill, whose needs would they
say they are, and what is the benefit of fulfilling those
needs? Very frequently associations create an
administration or an item and after that neglect to
occasionally look at whether that item really fulfills an
interest or whether fulfillment of that request really
matters (Cummings 2009).
Who are the individuals that create the association, what
are their qualities, and what needs does the association
fulfill for them? (In asset poor situations, offices that
fulfill just minor or fringe requests are powerless against
plan cuts, abolishment, or ingestion by different
associations.) What are the goals of the association and
how well do they work with the needs and requests of
customers, stakeholders and constituents? What methods does
the association utilize to attain the targets it has set
for itself? Is the association being asked to roll out
major improvements in what it does, or in the sorts of
customers it advantages? Assuming this is the case, what
19
are those progressions (Johnson and Scholes 1999)?
Right now, Louise White, whose skeleton is consolidated in
the IPC [implementing Policy Change] task paper, contends
that the strategy being referred to ought to be analyzed
regarding its similarity with the association's mission,
destinations and method. To achieve this it is important to
express the goals of the approach, the way of the
administration or action proposed, the profits to be
created and the recipients, and portray the
unpredictability of the arrangement. (White 1989)
Clarification of the mission, destinations, and methods is
essential to start of the key procedure. It adds up to an
announcement of where the association is, the thing that it
does and how it continues on ahead. It ought to
additionally help elucidate which strategies or requests
can be encouraged by the association and which will be
obstructed.
1.3.2.3 Identification of the association's inner
qualities and shortcomings.
One approach to look at these is to take a gander at the
association's asset base (aptitude base, capital or money
related assets, etc.)(clemens 2007). Does the association
have the fortitude to accomplish its expressed targets or
20
to put into movement its methodologies? What are the levels
of interior assets controlled by the association? How
accessible would they say they are? Investigation of assets
independent from anyone else is not sufficient; the
association should likewise take a gander at its errand
execution (Angkavana 2005). What assignments does it do
well, which does it not? This will give a finer thought of
how the association's assets are composed and how
adequately those assets are put to utilize. An association
may well have great examination aptitudes, yet in the event
that its essential assignments are in administration
conveyance, then such abilities may turn into a shortcoming
than quality. In any case, one ought to not naturally make
the supposition that since unmoving limit exists, it ought
to be shed. Such aptitudes may well be very valuable if the
association ought to need to roll out improvements with a
specific end goal to be more perfect with its surroundings
(Jofre 2011).
Notwithstanding aptitudes and assets, different components
of the inside association need to be inspected: what is the
way of the hierarchical atmosphere (are there cleavages,
would they say they are conflictive?), how versatile are
the members (would they promptly tackle new assignments, to
what extent have they been doing likewise thing?), what is
21
the nature and adaptability of the authoritative structure
(would it say it is unbending, have noteworthy changes been
made previously, and what has been the response?), is there
a casual structure (how can it function and would it say it
is more relevant than the formal structure?), what is the
way of the impetus structure (would it say it is intended
to support inventive conduct, would it be able to enroll
and keep up a sufficiently abnormal state of work force?)?
Which components encourage and which obstruct execution of
the association's assignments and which may encourage or
block authoritative change?
1.3.2.4 Assessment of dangers and opportunities in the
outer environment.
While there is every now and again a propensity from chiefs
to concentrate on the inward measurements of the
association, strategy change and the frequently
unpredictable nature of governmental issues in nations
experiencing significant arrangement changes requires
cognizant investigation of the earth outside the
association (Strickland 2003). Political, financial,
social, and innovative alters will impact the course and
state of an association's approaches and targets. What are
the real patterns that can be discovered in each of these
regions that will have some bearing on the exercises of the
22
association? By what method may macro-monetary measures
being founded influence the budgetary assets of the
association? What is the way of political backing for the
arrangement under attention? How politically steady is the
current administration? Is strategy administration going to
change? Will key authorities inside the bureau be changed
and what will that intend to the improvement and usage of
the proposed arrangement change? Whatever degree have the
legislature's essential political coalitions started to
change? Does this connote approaching changes in approach
needs? How powerful is the political resistance? What part
does universal powers or on-screen characters play in the
determination of arrangement? What exactly degree has the
social creation of the association's essential customer
base gathering changed? Has it outgrown the assets of the
association? Have its needs changed through the years?
A critical variable in the association's outer surroundings
is its bureaucratic and institutional setting (Jofre 2011).
Is the association self-ruling? Then again would it say it
is connected to a service, or must it facilitate its
activities with different substances and what is the way of
those systems? Are different associations included in the
same movement, what are their parts? Are there motivators
for participation?
23
1.3.2.5 Identification of key constituents and
stakeholders, their desires and assets.
The desires and requests of constituents are key elements
for choices about what an association will do and how it
goes about doing its errands (Cummings 2009). Stakeholders
or constituents are the individuals who have an immediate
enthusiasm toward and are equipped for affecting in some
measures the conclusions or activities of the association.
Stakeholders give the essential base of political backing
for the association, and in a critical manner are its
raison d’être (strickland 2003). A somewhat extensive
variety of performing artists may be incorporated:
contenders, recipients, chiefs, representatives, political
gatherings, customers, worldwide contributors, and so on.
What do these specific gatherings need from the
association? Is it accurate to say that they are fulfilled
by the current show of administrations and level of
execution? Are their diversions moving? In which bearing?
What's more provided that this is true, will the
association have the capacity to respond positively? In
looking at the diversions of stakeholders, a preventative
note is in place. There can be an enticement to attempt to
consider each on-screen character who may have some
investment or impact in the association (Casey et al 2010).
24
That enticement should be dodged and the expert ought to
fare thee well to guarantee that just those that can have a
sensible and sensibly critical effect are considered in the
stakeholder investigation.
1.3.2.6 Identification of Key Strategic Issues.
The data produced by the previous steps ought to recognize
a set of key inquiries or key issues in regards to the
attack of the association with its surroundings. These
issues may concern the association's mission, its items or
administrations, its customers, financing systems,
administration, or relationship to specific stakeholders.
Key issues are the important issues that must be managed
successfully or the association can expect undesirable
results. The compelling treatment of vital issues can
connote crucial change in how the association continues on
ahead. Such issues may create clash inside the association
since their determination will deliver champs and washouts
both inside and remotely. The association must be arranged
to manage that clash. In recognizing key issues or issues,
mind must be taken in determining precisely what the issue
or issue is, the reason it is an issue for the association,
and the hierarchical results of inaction. Very frequently
lacking consideration is given to issue ID bringing about
misallocated assets and lost open doors. It is additionally
25
critical to figure out if or not the association can take
care of the issue if not, it is not an issue (French 2009).
Administrators should likewise perceive that it will be
difficult to handle all issues without a moment's delay;
thusly, issues ought to be distinguished as indicated by
short-, medium- or long-run significance and the direness
of activity required. Directors will find that vitality
consumed in issue and issue distinguishing proof and
elucidation will have settlements in the advancement of
systems for their treatment (Jradi 2009)
1.3.2.7 Design, investigation, and choice of system
options and alternatives to oversee issues recognized in
1.3.2.6.
When issues and issues have been distinguished, procedures
to tackle those issues need to be recognized. For the most
part, more than one alternative for managing the issue will
be recognized; then choices must be analyzed for their
relative practicality, possibility, and allure (Cassiman et
al 2006). Can the technique work from a reasonable and in
addition hypothetical stance? Is the association fit for
doing the procedure? Is the methodology worthy to those
completing it and to those to whom it is regulated? Does
the association have the human and material assets, does it
have the expertise essential, and is the fitting
26
hierarchical structure accessible for actualizing the
methodology? Will the method achieve what the administrator
needs and profit those expected? Will the method be
maintained, and would it be able to adjust to the
anticipated changes in the nature? Is adaptability
incorporated with the methodology? Can the essential asset
base be maintained over the life of the method? Attractive
quality needs to do with the attack of hierarchical and
natural qualities and targets with the procedure. Is the
method good with the actualizing foundation's mission or
its essential goals, and/or with the mission and
destinations of working together associations? Is the
procedure focused to the most suitable recipients? Is it
accurate to say that it is perfect with the lawful and
bureaucratic setting? How well will the method acclimate to
figure slants in the medium and in the long haul? In what
capacity will key stakeholders be influenced, how perfect
is the procedure with their qualities and desires?
1.3.2.8 Implementation of the system.
Usage of a methodology is not a programmed procedure;
According to Edinsinghe (2008), there is two noteworthy
parts to the procedure. The principal step is the
advancement of an activity plan, which is an announcement
of what, who, when, and how the activities important to
27
complete the method will be carried out. Execution
objectives and goals will likewise be tagged. A great part
of the data required to create the activity arrangement
will have been created in 1.3.2.7. The second piece of
execution comprises of activities went for marshaling and
applying assets. In the setting of arrangement change these
activities may comprise of (yet are not restricted to),
changes in authoritative structures, movements and renaming
of work force, the foundation of new schedules,
undertakings, and methods; establishment of new motivation
frameworks; retooling creation for new items or
administrations; promoting of new administrations or making
of interest among new recipients or shoppers; improvement
of new financing instruments; arranging coalitions to keep
up political, budgetary, and recipient help; and creating
community components with collaborating associations. It
ought to be noted that the directors' assignment is more
than simply the inner operation of his association; they
should likewise deal with its fit with the nature's turf
(Angkasvana 2005).
1.3.2.9 Monitoring and survey execution.
Key administration accepts constant change (Farina 2009).
Subsequently instruments must be created for checking and
dissecting the execution of the association as for
28
accomplishing the change, decisions happen, or plan go up
or down, needs will likewise change. Asset streams may be
uneven. These components can adjust execution, needs, and
the attractive quality of specific arrangements. In the
event that the association needs to keep up a decent "fit"
with the nature's turf, it should first have the capacity
to track these progressions to alter. The checking
procedure ought to be consistent, customary, and equipped
for sustaining into the choice making strategy. The
director ought to create control components to gage the
effectiveness of assets utilized and effect instruments to
gage the adequacy of its activities. At last, it is
imperative that the observing methodology be auspicious and
usable (Jofre 2011).
1.3.3 The Environment
The success of a business in a company mostly depends on
the match between its operating environment and the company
and therefore, understanding the environment is important
for every company. Viljoen (1996,) asserts that one of the
primary tasks of the strategist is the management of the
interface between the organization and its external
environment. Several studies (eg. Lanyon & Abdalla 1997,
John, Bruce & Fred 1982, Ronald 2003) also highlight the
importance of environmental analysis for strategic
29
planning. According to Johnson & Scholes
(1999) environmental analysis is important for managers
because of three reasons. First, managers face difficulties
when trying to understand the environment because the
environments consist of so many different influences.
Secondly, the uncertainty of the future that is being
created by fast growing technological changes and the speed
of global communication. Finally, managers are human beings
that can make errors and therefore, the need to reduce the
complexity of the environment by the use of environmental
analysis methods.
Kendra (2004,) defines “environmental scanning as internal
communication of external information about issues that may
potentially influence an organization’s decision making
process”. Thus, the entire environment can be divided into
two major categories namely the external and the internal
environments. Analysis of external environment helps
organization to understand their external environment and
Hitt, Ireland & Hoskisson (2005) note that when the firm’s
understanding of the external environment is matched with
knowledge about its internal environment it helps to form
the company’s strategic intent, strategic mission and also
to create strategies.
30
1.3.3.1 External environment
External environmental scanning is to identify and evaluate
trends and events beyond the control of the organization
(Fred 1997). It helps the organization to identify the
opportunities and the threats that exist in the
environment. Several research studies such as Maier, Rainer
& Snyder (1997), Rivers, Fottler & Parker (2005), Haque,
Khatibi & Karim (2006) recognize the importance of
analyzing the external environmental factors that can
affect the organization. Hitt et al (2005) identify the war
on Iraq, the strength of separate economies at different
times, and the emergence of new technologies as three major
examples of external environmental factors that affect most
of the companies in USA. Hitt et al (2005) divide the
external environment into three major categories namely the
general, industry, and competitor environments. The general
environment has a number of dimensions such as
political/legal, technological, socio cultural, global,
demographic which represent the broader society that can
influence an industry and the firms within it. The industry
environment is the set of factors that directly influence
the organization and its competitive actions such as the
threat of new entrants, the power of suppliers, the threat
of product substitutes, and the rivalry among the
31
competitors. Competitor analysis is about the collecting
and interpreting information about the company’s
competitors. Hitt et al (2005) assert that the analysis of
general environment focuses on the future, and the analysis
of the industry environment focuses on the factors and
conditions that influence the company’s profitability
within its industry while analysis on competitor
environment focuses on predicting the dynamics of
competitor’s activities, reactions and aims
1.3.3.2 Internal environment
In this area, the inside natural elements that can
influence the key administration practices of organizations
will be examined and these variables incorporate the
hierarchical structure, organization proprietorship,
organization size, authoritative society, administration
style, stakeholder desire, and the organization assets,
capacities, capabilities and center skills.
1.3.4 Strategic Planning
As examined prior, the greater part of the ideas in key and
corporate arranging were created in the USA. Huge numbers
of these ideas have been widely received by organizations
in distinctive national situations (Capon, Farley & Hubert
1987). The investigation of Capon, Christodoulou, Farley &
32
Hubert (1986) highlights the critical contrasts in the key
arranging practices of the Australian and the USA vast
assembling organizations. It is clear that the ideas in
corporate and vital arranging have been utilized by the
organizations as a part of diverse national situations in
varying approaches to attain their hierarchical objectives.
Toward the end of 1970s and early 1980s vital arranging
endured a downturn in ubiquity (Glaister & Falshaw 1999)
and went under overwhelming assault from administration
researchers (Grant 2003). The real investigate of the key
arranging was its low exhibitions in flimsy environment.
Hence, explore discoveries about the relationship between
key arranging and flimsy situations are vague. Ansoff
(1991) one of the conspicuous researchers in key arranging
condemns the Mintzberg's idea of "key arranging can work
just in steady situations" and attests that vital arranging
by and large delivers preferred arrangements and
exhibitions over does experimentation learning. Besides,
Miller & Cardinal (1994) reason that vital arranging and
execution has a positive relationship and claims that the
aftereffects of Mintzberg (1990) and Greenley (1986) which
shows arranging does not profit execution seem to have been
wrong in light of the methodological mistakes in their
exploration studies. As per Mintzberg outline school,
33
method definition must be a planned conduct of cognizant
thought and obligation of that control and cognizant must
rest with the CEO (Mintzberg et al 1998). In this way, just
the top chiefs of an association were included with vital
arranging. That was the circumstances in vital arranging in
1960's however; a few studies highlight the progressions
that happened in key arranging frameworks amid most recent
two decades. As per Bonn & Christodoulou (1999) the
significant changes in organization's vital arranging
frameworks incorporate expanded adaptability of arranging
frameworks, decentralized key wanting to divisions or
specialties units, moving the arranging obligation from
staff work force to line administrators, and changing the
part of corporate arranging offices. As per Grant (2003)
organizations embraced numerous situations making
arrangements for their key arranging practices to react to
the quick changes in the situations rapidly and to likewise
secure vision and statements of purpose which have a key
expectation. Hence, current vital arranging practices in
associations are preferred prepared over the key arranging
practices in 1960s. Pearce, Freeman & Robbinson (1987a)
characterize vital arranging as the procedure of deciding
the mission, significant targets, methodologies, and
arrangements that oversee the securing and cooperation of
assets to accomplish hierarchical objectives". O'regan &34
Ghobadian (2007) case vital arranging must incorporate
composed arrangements, which cover more than year of
movement, have attention to option key choices, include
shorter plans for major useful ranges, recognize future
asset prerequisites, envelop strategies for progressing
checking and change, and incorporate ecological examining
information. Glaister & Falshaw (1999) distinguish the
essentialness of the connection between long range vital
objectives with both mid extent and operational
arrangements for a powerful key arranging framework.
Steiner (1979,) affirm "there is no single arranging model
for associations and the formal vital arranging frameworks
must be intended to fit the extraordinary attributes of
each one organization". Lorange & Vancil (1977) recognize
three levels of an association that key arranging generally
include being specific corporate, business and useful
levels.
1.3.5 Strategic Thinking; The soft side of Strategic
Management
The idea of procedure making methodology being simply
ponder or absolutely eminent lay in the two finishes of a
flat pivot and where one end implies no learning and flip
side means no control (Mintzberg et al 1998). The
researchers who think method plan as an issue intuition
35
transform normally accept that procedure detailing is
focused around a rising methodology. Minztberg (1994)
declares vital considering "union that includes instinct
and inventiveness that the result is a coordinated
viewpoint of the association, a not very accurately
enunciated vision of heading". Senders (1998) highlight the
criticalness of vital thoroughly considering the key
arranging by guaranteeing:
The business world is not robotic, thus unthinking
methodologies to vital arranging won't succeed
Organizations are consistently affected by surprising
sudden change, regularly determined by occasions
outside the organization's ordinary circle of
investment.
Organizations are a piece of much bigger frameworks,
and need to be mindful of both the presence of this
framework and its communications with it. (French
2009).
Liedtka (1998) caught five vital discrete be that as it
may, entomb related components in key deduction process.
The components of Liedtka's (1998) vital deduction display
in particular frameworks point of view, aim centered,
thinking in time, theory driven, and savvy advantage.
36
A frameworks point of view considers a vital mastermind has
a mental model about how the world functions and this
incorporate understanding of both the outside & inner
setting of the association (Liedtka 1998). The measurements
of the outside connection of the association overwhelmed
the field of system for a long time (e.g. Porter's industry
investigation). In any case, very little center was given
to the inward measurements that involve the association.
Despite the fact that the fit between corporate, business,
and utilitarian level was viewed as more vital, as per
Liedtka (1998) fit with the fourth level (the individual)
may be the most discriminating for an organization. In this
way, vital scholars must ponder the various connections
between corporate, business, and utilitarian techniques
with one another, to the outside setting, and to the
individual decisions he or she makes on consistent schedule
(Liedtka 1998). Liedtka (1998) thinks vital deduction is
expectation driven. Hamel and Prahalad (1989) characterize
key expectation as "making a fixation on winning al all
levels of the association and afterward maintained that
fixation over the 10-20 year mission for worldwide
authority". Hamel and Prahalad (1989) further claim that
key expectation catches the embodiment of winning, sets a
focus on that merits individual exertion and
responsibility, and suggests a sizable stretch for an37
association. Subsequently, key considering molding and
reshaping of expectation (Liedtka 1998).
Notwithstanding the goal driven concentrate there must be
space for shrewd advantage at lower levels to catch the
developing procedures that may better suit the evolving
situations (Liedtka 1998). This will give chance to the
lower level representatives to acclimate to the changing
situations without depending on the top administration
prescience.
Thinking in time considers the imperativeness of
comprehension the association's past and current memory to
make future (Casey et al 2010). This incorporates "picking
and utilizing suitable analogies from it and others
histories, and for perceiving examples in these occasions"
(Liedtka 1998). At long last, key deduction remembers it as
an issue driven process that arranges speculation producing
and testing as focal exercises (French 2009). Theory era
inquiry asks the innovative inquiry imagine a scenario in
which….?. What's more theory testing takes after with the
discriminating inquiry if … then…? (Liedtka 1998) and this
sort of experimentation gives the foundation to the
association to proceed with their learning
1.4 THEORETICAL FRAMEWORK: SCHOOLS OF STRATEGIC
38
MANAGEMENT
Each of the five strategies to system we have said prior
has a particular importance in administration and business
and intimates an unique procedure of technique plan. The
accompanying part will present and quickly examine each of
the ten schools proposed by Mintzberg et al. (1998):
1.4.1 The Design School: Strategy as a process of
conception
The fundamental idea of the school is a brought together
strategic arrangement prepared to albeit basic, searches
for creating and actualizing a whole plan of action and the
general viewpoint for the firm. In the outline school, ―the
thought precedes the activity, thoughts are taken by the
pioneer (cerebrum) and activities actualized by the
adherents (muscles). In this methodology, inner and outside
variables are differentiated so as to recognize
opportunities as per capacities and obliges. A typical
sample of these mainstream ideas is the well-known SWOT
investigation or the ―assessment of Strengths and
Weaknesses of the Organization in light of the
opportunities and Threats in its environment‖, a key
arranging instrument used to assess an undertaking or a
potential business wander. SWOT subsequently, includes
39
pointing out a goal and recognizing the inner and outer
elements that may help or obstruct the accomplishment of
that destination
1.4.2 The Planning School: Strategy formation as a formal
process
The Planning school was conceived together with the Design
school at once in which the rising pattern on system
formalization was pervading organizations, training and
governments. Notwithstanding, toward the starting, the
thought of ―strategic arranging at the center of business
and choice making was not as fruitful as the alluring
straightforwardness of the Design School basis.
Subsequently, the focal message of the Planning School
discovered a finer fit among chiefs and researchers
attached to thorough method, numbers, and responsibility.
In spite of the fact that the hypothetical creation of the
School amid the 70's was significant, productions did
absence of value and profundity. In any case, the thought
that vital arranging was essential was intensely supported,
together with a tremendous measure of models to apply in
all sorts of associations and circumstances. By and by, the
endeavor to study and in the long run comprehend the
procedure of arranging truth be told was weak.
Unexpectedly, the reasonable advancement of this school
40
offered beginning to the term ―strategic management‖, and
later on it opened an opportunity for its formalization as
an issue of hypothesis
1.4.3 The positioning school: Strategy formation as an
analytical process
The Positioning School climbs on 80s catching a portion of
the premises of both the Design and the Planning schools
however including some new points of view and substance.
The developing school did accentuate the part and
significance of procedure itself past the insignificant
methodology of plan. Such another concentrate, on the
substance of systems, empowered a totally new line of
studies among researchers and professionals beginning the
―take off of what we know today as ―strategic
administration. Presumably the most powerful researcher in
this pattern in Michel Porter, the writer of a notorious
book titled Competitive Advantage. Watchman proposed
another hypothetical structure for key administration
segregated from the Design and the Planning schools.
Advantage quickly caught the consideration and support of
professionals and researchers, and made ready to the
situating point of view to turn into the most overwhelming
school in the field
41
1.4.4 The Entrepreneurial School: strategy formation as a
visionary process
As its forerunners, the Entrepreneurial school likewise
perceives the top chief as the characteristic modeler of
techniques. In any case, a central refinement is that this
school incorporates into the system definition transform
the part of mental traits, for example, for instance
instinct, shrewdness, judgment, and experience.
Subsequently, in this School methodology turns into a
viewpoint or a dream in the psyche of the planner. This
vision can be seen as an enthusiasm (a way to take after)
as opposed to an itemized arrangement. Here procedure is
both thought and adaptable since it does set headings that
can change or conform as indicated by the pioneer
experience (and vision).
1.4.5 The Cognitive School strategy formation as a mental
Process
The Cognitive School concentrates on the strategist's
psyche and on the understanding of the inventive procedure
from which systems rise. In this school, the administrator
(the strategist) makes techniques focused around his
experience and impression of life. As information and
experience are gained, the strategist psyche structures it
42
structures for speculation and doing. The school proposes
that experience shapes what the strategist knows, and that
learning impacts what the strategist does. The perpetual
cycle portrayed by learning and experience is at the center
of the school hypothetical establishments. On the other
hand, the Cognitive School does not represent any specific
line of studies in the field, yet for a gathering of
distinctive works in the territory of cognitive brain
research. Eminently, the work of the school has been
exceptionally productive in the investigation of key
gatherings (e.g. business accomplices in the aerial shuttle
industry) and methods of divestment (the contradicted to
―investment that in business implies the decrease/disposal
of an advantage in a firm for moral or budgetary reasons:
e.g. the offer of a business – division – that was not
completely identified with what the association improves).
The generation of the School is consistently developing,
and a few researchers accept that this work will change the
way we now see and practice key admin
1.4.6 The Learning School: strategy formation as an
emergent process
The past schools portrayed a fairly unpredictable vision of
procedure and its process. Regardless of their diverse
perspectives, all these schools have recommended that
43
systems emerge from a direct, intentional procedure. The
Learning School interestingly, sees systems as the
aftereffect of a developing – new – process, determined by
learning. In here, method rises when individuals –
exclusively or by and large – come to gain from a
circumstance and from the specific way the association
utilizes assets to manage it. Inevitably, regular examples
of fruitful conduct will rise and merge, making ready to
normal learning
1.4.7 The Power School: strategy formation as a process of
negotiation
The part of force and legislative issues in method is not
considered at all by the past schools. In the Power School,
notwithstanding, legislative issues and force get all the
consideration, and are utilized to arrange techniques that
are good to specific hobbies. Hence, for this school the
methodology procedure is a clear methodology of impact.
Force is the activity of impact past the singularly
financial ground, bringing it closer to legislative issues.
Be that as it may, as in legislative issues, the
utilization of impact to the unimportant association's
banquet turns into a matter of wrongness. Hence, this
infers the utilization of covert moves to debilitate
contenders (e.g. a-cartel), or open ones to achieve
44
agreeable understandings (e.g. cooperation’s). The
political diversion in associations intimates the
acknowledgement of individual qualities, for example, for
instance feelings, dreams, fears, envy, trusts, and
aspirations. In spite of the fact that the part of such
properties currently shaping and executing methodologies is
self-evident, their hypothesis is a real commitment of the
school.
1.4.8 The Cultural School: strategy formation as a
collective process
Restricting the Power school, method development in the
Culture School does not take a gander at the formal toward
oneself, however to the aggregate one. Methodology
arrangement in here is focused around the social power of
society, a drive that is molded by people and the total of
their particularities. Such energy can impact key strength,
and that some of the time, can effectively restrict key
change. The school proposes that society is all over, yet
in the same time, it is one of a kind. Therefore, society
influences everything and everybody making of every
association something special. Contemporary key
administration recognizes this double nature of society
45
1.4.9 The Environmental School: strategy formation as a
reactive process
In this school, environment is not a simple outside energy,
yet the principle element affecting the technique process.
In this point of view, the association is somewhat
detached, while the nature's domain sets the vital course.
In an amazing position, the school recommends that
strategists are helpless before outer powers and hence,
their capacity of vital decision is restricted (if not
denied whatsoever). In a moderate point of view, the
outside connection of an association presents diverse
measurements in which the strategist can base a
methodology. The hypothesis of the Environmental School
gets from the ―contingency hypothesis – a behavioral
hypothesis recommending that there is no most ideal
approach to arrange an enterprise, to lead an organization,
or to a settle on choice. The hypothesis proposes that
unexpectedly, the ideal key methodology is unforeseen, or
reliant upon the offset of inner and outside circumstances.
In the vision of the school, the more steady an environment
remains, the more formalized the inward structure of the
association gets to be. The firm would ―naturally‖ think
that its position (specialty) in the nature's turf. In this
―natural request if a firm does not discover the right
46
specialty is ―selected off, as would happen in an
environment because of a procedure of character
1.4.10 The Configuration School: strategy formation as
process of Transformation
This school assembles its viewpoint on the premises of
alternate schools. Normally, an association can be depicted
as far as a specific condition of dependability in regards
to its setup. Therefore, in a specific minute the
association embraces a specific structure and conduct that
matches a specific circumstance. In such times, specific
systems will emerge as well. These times of security are
every so often hindered by a procedure of change that in
the long run will move the association to an alternate
condition of design
1.5 EMPIRICAL FRAMEWORK
Since the appearance of vital administration, a great deal
of written works flourish that relates key administration
to authoritative execution. The impact of vital
administration mixed bags of hierarchical development and
area has been analyzed through the years. Some of these
works are checked on in this area. Vital showcasing which
is a branch of key administration was analyzed has its
influence the execution of business bank in Nigeria by
47
Adeyemi (2008). Utilizing clear technique and the
utilization of survey, he discovered that truth be told,
key advertising enhances the banks effectiveness and that
the full seeing by the workers would enhance banks
execution regarding benefit, winning and offer esteem. The
study suggested aggregate corporate arranging and ID of the
clients need to further help advertising effectiveness.
Appetite and Wheelen (2009) as evaluated by Asik Kathwala
created a study on the essentials of key administration.
The study gives a short, succinct clarification of the most
paramount ideas and procedures in vital administration. It
is a thorough clarification of numerous subjects and
concerns in vital administration. The study inspected key
choice making model focused around the hidden procedure of
ecological filtering, system arrangement, method usage and
assessment and control. It further assessed Michael
Porter's methodology to industry investigation and focused
system, useful examination and practical methodologies. R &
D and R & D procedures which accentuate the criticalness of
engineering to procedure and item showcase choices were
examined. Official initiative and progression,
reengineering, aggregate quality administration, MBO and
activity arranging. The study at last portrayed social
obligation as far as its essentialness to vital choice
48
making.
Scribner (2003) set a short however rich prologue to the
investigation of vital administration. She formed key
administration into Five aspects specifically objective
setting, examination, method arrangement, technique usage
and procedure observing. She further assessed vital
administration as one phase of the strategy methodology and
from that point secured a relationship between key
arranging and key administration in accordance with
Benjamin Crosby work in 1991. The investigation of key
administration in the college’s institutional improvement
was of oddity in the works of Tabatoni, Davies and Barblan
(2007). They dove into the utilization of vital
administration standards in the organization of the
varsities. Whilst Tabatoni assessed the utilization of key
administration as an issue of authority (ideas and
oddities), Davies elaborated on the social changes in the
colleges in the light of procedure and quality. The
conclusion was that the incitement of college societies
steady of key quality tries is a long way from simple, yet
is most likely a precondition of compelling quality
operations. Such incitement typically needs a kick-begin
from remotely roused activities, at any rate if a college
wide approach is to be attained. Then again, given the way
49
of the scholastic group, its convictions and qualities
concerning creative and imaginative research, showing and
group benefit, the establishment obliges a quality-related
society that maintains a strategic distance from unbending
nature, and tackles the eagerness and feeling of
responsibility for academe. In this appreciation, the
choice by college pioneers of suitable methodologies to
social change is plainly basic.
Edirisinghe (2008) occupied with the investigation of the
effect of vital administration on the Sri Lanka business
banks. The hypothetical schema for this study is built
predominately with respect to past examination ponders
however was adjusted to the Sri Lankan saving money
industry and as per the significant exploration inquiries
of this exploration study. This study distinguished and
examined the general key administration attributes of Sri
Lankan business banks and their normal changes to their
vital administration hones in the following five years.
This will likewise help corporate level administrators in
Sri Lankan business banks to contrast their vital
administration practices and different banks. The
hypothetical schema created for this study gave the
establishment to other examination studies to conceivably
research the vital administration practices of different
50
businesses in Sri Lanka. Correta et al (2009) occupied with
the investigation of study edges in the saving money
industry in accordance with the adequacy of the board and
its mode of development. They posed the question "Does
Board Composition makes a difference?" the reasoned that
the key part of sheets as indicated by an assortment of
viewpoints and demonstrate that a viable commitment of
board parts to system obliges a fitting board arrangement.
For this situation, the exercises of "corporate
administration boards of trustees", since their paramount
part in the board creation decisions, ought to have
imperative repercussions for improving chiefs' commitment.
Jofre (2011) captivated on the investigation of key
administration regarding the hypothesis and practice of
system in business association. Jradi (2009) occupied with
the investigation of the effect of vital administration on
German saving money industry. They inferred that useful
methods unite and actualize the corporate and business
procedure and they fabricate an opportunity to reduce
overhead and distribution cost.
51
CHAPTER 2
RESEARCH METHODOLOGY
2.1 INTRODUCTION
The purpose of this chapter is to describe all the
activities involved in the conduct of the project. Saunders
et al(2003) defined methodology research as a process that
people undertake in order to find out things in a
systematic way thereby increasing the knowledge, and its
characterized by the way data are collected systematically,
interpreted systematically with a clear purpose to find out
things. This chapter deals with how the data will be sought
for, collected and analysed. It covers the brief
description of Access bank, research hypotheses, data
specification, sampling and sampling frame, method of data
collection and method of data analysis.
2.2 BRIEF HISTORY OF ACCESS BANK PLC
Access Bank Plc is a remarkable story of the transformation
52
of a small obscure Nigerian Bank into an African financial
institution of note; with emerging footprints on the
international banking landscape. Access Bank today is one
of the top 10 largest banks in Nigeria in terms of asset
base. A phenomenal accomplishment considering its
antecedents.
The Beginning (1988 – 2002) December 19, 1988: Access Bank
was issued a banking license February 8, 1989: Access Bank
incorporated as a privately owned commercial bank May 11,
1989: Access Bank commenced operations at its Burma Road,
Apapa Head Office. March 24, 1998: Access Bank became a
Public Limited Liability Company. November 18, 1998: Access
Bank listed on the Nigeria Stock Exchange.
February 5, 2001: Access Bank obtained a Universal Banking
License from the Central Bank of Nigeria
The Rebirth: The Board of Directors appointed Aigboje Aig-
Imoukhuede as MD/CEO and Herbert Wigwe as Deputy Managing
Director. The mandate was clear: “Reposition the bank to
one of Nigeria’s leading financial institutions within a
five - year period (March 2002 – March 2007)” This task was
perceived by many as audacious, given the realities of the
Bank at the time. Also appointed to the Board was Mr.
Gbenga Oyebode who brought commendable board experience
gathered from some of Nigeria’s leading companies, such as
53
MTN Nigeria, Okomu Oil Palm Plc. The new management then
articulated a transformation agenda for Access Bank Plc.
This agenda represented a complete departure from all that
characterized the bank in the past and became the road map
for the transformation of the bank into a world class
financial institution. The focus was to:
Assemble a credible and high caliber management team
Introduce a culture of excellence founded on
professionalism and integrity
Ensure Human Capital Development
Enlarge Shareholder Base
Introduce strong procedures and processes to drive
day-to-day activities of the Bank
Instill a passion for customers in all members of
staff
Establish a low cost liability generation strategy
Expand branch network to cover all clearing zones
within Nigeria
Create a world class Brand Image
The impact of the transformation agenda was reflected in
the first year. The bank grew its balance sheet by 100% and
posted an impressive N1 billion profit before tax. The
profit before tax figure was more than the cumulative
54
profit made by the bank in the previous 12 years. This also
marked the beginning of what would be a 6 year record
triple digit growth trend. Similarly, earnings per share
had rebounded to 21 kobo from a negative 2 kobo position,
leading to a declaration of a 5 kobo dividend to
shareholders for the first time in 3 years. The bank took a
huge leap in early 2012 when it acquired intercontinental
bank both in Nigeria and abroad
2.3 RESEARCH DESIGN
The research design requires the structuring of
investigation aimed at identifying the variables and their
relationship to one another (Asika 1991). This is the
validity of most of the hypothesis and their respective
relationship with one another.
The research design that employed in the course of this
study is referred to as descriptive research design.
Descriptive research design is a variant of the cross
sectional research design involving a one-time observation
of independent and non-manipulated variable (Helmstrader
1970).
This is indeed employed for the purpose of obtaining data
to enable the researcher test the hypothesis.
55
2.4 RESEARCH HYPOTHESES
The following hypotheses are to be tested in this study;
Hypothesis 1 –
H0 – Strategic management has no significant
impact on the performance of Access bank plc.
H1 – Strategic management has significant impact
on the performance of Access bank plc.
Hypothesis 2 –
H0 - Adoption of Strategic management is not
significant factor that distinguishes banks in
terms of superior performance.
H1 - Adoption of Strategic management is a
significant factor that distinguishes banks in
terms of superior performance.
2.5 SAMPLING INCLUDING SAMPLING FRAME
The study adopted a convenience sampling process ‘a non-
probability sampling technique where subjects are selected
because of their convenient accessibility and proximity to
the researcher; the most commonly used techniques in
research today because it is fast, inexpensive, easy and
the subjects are readily available. The total sample frame
consists of all employees of Access bank in the five (5)
branches operating in Ilorin metropolis. The study is
56
making use of one hundred and eighty seven (187)
respondents given that based on the survey carried out; the
total employees in all the three branches are about two
hundred (200) in number. The reservation road branch has 50
people on their staff list; Unity road branch has 50 while
Stadium road branch has 100 people on their staff. It is
however assumed that the sample size is representative. The
samples were selected based on accessibility
2.6 DATA SPECIFICATION/MATERIALS
The data required for the purpose of this study is
basically primary data. This information will be generated
through the use of a structured questionnaire with open
ended question. The Annual financial report of Access bank
is also employed which constitutes a secondary data. The
questionnaire, however, is used to supply answers to
research questions meant to achieve the objectives of the
study
2.7 METHODS OF DATA COLLECTION
The data needed for this study is majorly primary data. As
earlier stated the structured questionnaire will be
employed which is divided into two (2) sections; the first
part covers the bio- data questions ‘factual kinds of
questions about life and work experiences, as well as to
57
items involving opinions, values, beliefs, and attitudes
that reflect a historical perspective ‘ while the second
part covers the research questions. Oral interview is also
used to cover some areas not comprehensively covered in the
questionnaire. The annual financial report of Access bank
plc is also a source of data though secondary used to
compare results with objectives and measure the impact of
strategic management on the banks performance.
The research questions will be rated from “Strongly Agreed
(SA) to Strongly Disagree (SD)”. This method is used
because it is popular and it helps to measure the degree
of agreement or otherwise with a statement of fact.
It should be noted that strongly agreed is rated 5,Agreed
4, Undecided 3, Disagreed 2, and Strongly Disagreed is
rated 1 on the measurement scale.
2.8 METHOD OF DATA ANALYSIS
Simple percentage and frequency table is used to present
the data in both sections of the administered
questionnaire. However, linear regression analysis is used
to test hypotheses earlier stated in the course of the
chapter. The regression will test for the nature of
dependency, direction and extent of dependency between the
variables employed in the analysis. The regression
analysis will be carried out using a computer software
58
package called Statistical Package for Social Science.
This software makes the regression analysis easier,
simpler and accurate. The simple regression line is given
as:
Y= a+bX
Where:
Y is the estimated value of the dependent variable,
given a specific value of the dependent variable.
X is the specific value of independent variable.
a is the Y intercept (point of interception).
b is the slope of the regression line in this
analysis however;
Strategic management is held as Independent variable (X)-
first hypothesis
Bank’s performance is held as Dependent variable (Y) –
first hypothesis
Strategic management adoption is held as independent
variable (X) - second hypothesis
Superior performance is held as dependent variable (Y) –
second hypothesis.
Response from the questionnaire administered will be used
as proxy for strategic management. The study employed the
use of financial ratios method to measure the performance
of the bank over the period of analysis. Information needed59
for this analysis will be secondary in nature sourced from
the annual report of the bank and it is time series in
nature. Comparison is made based on the performances using
figure and facts derived from the profitability analysis
through the years under scope of the study.
(i) DEPENDENT VARIABLE
This is the variable whose outcome or result canbe affected by changing the independent variables.
(ii) INDEPENDENT VARIABLE
This is the input or catalyst variables. Thevariable can be manipulated to get the desired output.
Independent variable DependentVariable
Strategic Management Bank Performance
Independent variable DependentVariable
Strategic Management Superior
60
Performance
Adoption
CHAPTER 3
DATA ANALYSIS AND PRESENTATION
3.1 INTRODUCTION
This chapter deals with the presentation and analysis of
the primary and secondary data collected. The primary data
are collected through the use of the questionnaire. Two
hundred (200) questionnaires were distributed amongst the
employees of Access Bank plc in three branches in Ilorin
metropolis, out of which one hundred and eighty-seven (187)
were duly filled and returned. This represents 93 percent
of total questionnaire distributed.
3.2 PRESENTATION AND ANALYSIS OF DATA
Section A- Presentation and Analysis of Demographic Data
The demographic characteristic of the respondents is
presented in appendix 1. The age distribution shows that 18
61
percent fall between 25 years and below interval while
about 63 percent of the respondents which represents the
highest group fall into the active age of 26 and 40. The
least group are the 56 and above age bracket with 5
percent.
Also, the sex distribution of the respondents shows that
the gap between the male and female in the banking industry
is not as much as it used to be. The male represents 54
percent while the female represents 46 percent of the total
distribution. It furthermore shows the distribution of the
respondents according to their functional role in the bank.
The analysis shows that while 21 percent of the respondents
are in the management administration class, 41 percent
which represent the highest class are in the marketing
department. 27 percent works in operations while 10 percent
are in the information technology department.
The management level of the respondents was analyzed. This
is to confirm the reliability of the data collected in
terms of the awareness about the subject matter. The result
shows that 75 percent of the respondents are in the middle
level management class while 18 percent are in the top
level management class. This simply shows that the
processes and procedures of strategic management in the
bank are at the disposal of majority of the respondents
62
which makes the data collected reliable.
The range of years of experience of the respondents was
also analyzed. The table shows that about 55 percent of the
respondents have between 6 and 10 years of experience while
28 percent have about 5 years of experience and another 18
percent with 10 years of experience. This distribution adds
credence to the data collected.
Lastly, the distribution of the vision of the company as
understood by employees shows that 80 percent understood
the vision as to become a world class Nigerian bank of the
company which is the basis of an effective strategic
management.
Section B: Analysis of the Research Questions
This section deals with presentation and analysis of the
research questions that are needed to achieve the research
objectives earlier stated in the study. The table presented
in appendix 2 shows the frequency of each alternatives i.e.
strongly agreed, agreed, undecided, disagreed, and strongly
disagreed and its corresponding percentage. The questions
are represented by the number they occupy in the
questionnaire.
Appendix 2 addresses the distribution of the research
questions. As stated earlier, the numbers in this table are63
corresponding to the questions they occupy in the
questionnaire. Variable one in the questionnaire deals
with strategic management as the focal point of any
business organization; results show that 32 percent
strongly agreed while 52 percent just agreed to the
statement of fact, 16 percent disagreed with the statement.
The researcher tested whether benefits from strategic
management enhances the banks performance in variable 2.
Results shows that the statement was agreed to by the
respondents considering that over 80 percent fell into the
agreed category while 9 percent each fell into the
undecided and disagreed category. The implementation of
strategy as it affects banks survival was analyzed in the
variable 3. The analysis shows that majority (89 %) of the
respondents agreed that proper implementation can raise
survival rate of banks in the Nigerian banking industry.
Only 11 percent were indifferent in their decisions.
Variable 4 investigates whether banks in Nigeria employ the
tenets of strategic management in all their operations and
in decision making. Although, 27 percent of the respondents
strongly agreed and 36 percent just agreed, one cannot
ignore the 13 percent each that were in disagreed and
strongly disagreed class. It shows that we cannot
categorically claim that Nigerian banks employ strategic
management in all their operations and decisions, although,64
strategy plays huge role in the corporate actions and
procedures. Strategic management aids businesses to
withstand harsh environmental conditions and this was
tested with Nigerian banks in variable 5. The resulting
analysis shows that 9 percent strongly agreed while 34
percent just agreed. Another 34 percent were undecided
while the remaining 23 percent fall into the disagreed
category. One cannot claim out rightly that strategic
management is most potent way to address ever changing
environment. In variable 6, we tested if strategic
management has effect on human resource practices in the
banking industry. The result shows 18 percent strongly
agreed and 61 percent just agreed. This class forms the
majority and we can conclude that strategic management has
roles to play in human resource practices. In variable 7,
34 percent strongly agreed and 45 percent just agreed to
the fact that strategic management has a significant impact
on the performance of the Nigeria banks. 11 percent was
undecided while 5 percent each disagreed and strongly
disagreed.
In variable 8, the researcher tested if banks that employ
strategic management have a superior performance compared
to banks that does not employ strategic management.
Analysis shows that 28 percent strongly agreed with the
65
statement while 47 percent just agreed. 23 percent of the
respondents were undecided while 2 percent disagreed. We
can conclude that strategic management actually accrues
competitive advantage to banks that employ its tactics. The
next variable deals with the long term intent of the
Nigerian banks to create competitive advantage. The
analysis shown in the table shows that above 70 percent of
the respondents fall into the agreed category, 23 percent
was undecided while the remaining 7 percent just disagreed
about the existence of long term intent in the Nigerian
banking industry.
In variable 10, the source of strategic management in the
Nigerian banks was examined. The resulting analysis shows
that 29 percent of the respondents strongly agreed that
negotiations and bargaining amongst the groups in the bank
should be the source. 57 percent also agreed with the
statement while 14 percent just disagreed with the
statement. In variable 11, the researcher examined the
constraint to the effectiveness of strategic management in
terms of unstable environment. The result shows that
75percent certified instability in the business environment
as a major constraint to strategic management. 20 percent
was undecided while 5 percent disagreed with the statement.
In variable 12, the study investigates the existence of
66
corporate communication in Nigerian Banks. 98 percent of
the respondents claim that they are aware of the mission,
vision and strategies of the bank which forms the basis of
effective implementation of strategy by the employees. The
importance of the strong balance sheet was verified in
variable 13. The study found out that about 41 percent
strongly agreed with the statement while 30 percent agreed
with the statement. 18 percent was indifferent and the
remaining 11 percent disagreed about the usefulness of
balance sheet as measure of strength in the banks. In the
variable 14, the impact of strategic management unit in an
organization was verified. The result shows that 55 percent
of the respondents agreed that lack of strategic management
unit could hamper the effectiveness of the strategy, 20
percent was undecided while 25 percent disagreed with the
usefulness of strategic management unit in the processes
and procedures of strategic management
3.3 TEST OF HYPOTHESES
This section deals with the test of hypotheses that will
provide answers to our research questions. Variable 7
addresses hypothesis I while variable 8 provides data for
hypothesis II.
In variable 7, 34 percent strongly agreed and 45 percent
just agreed to the fact that strategic management has a
67
significant impact on the performance of the Nigeria banks.
11 percent was undecided while 5 percent each disagreed and
strongly disagreed
In variable 8, the researcher tested if banks that employ
strategic management have a superior performance compared
to banks that does not employ strategic management.
Analysis shows that 28 percent strongly agreed with the
statement while 47 percent just agreed. 23 percent of the
respondents were undecided while 2 percent disagreed. We
can conclude that strategic management actually accrues
competitive advantage to banks that employ its tactics.
Hypothesis I
QUESTIONNAIRE QUESTION
7 Strategic management has a significant impact on the
performance of Nigerian banks.
H0 – Strategic management has no significant impact on the
performance of Access Bank.
H1 – Strategic management has significant impact on the
performance of Access Bank.
68
Table 3.1 Response on the Strategic Management and
Performance
Options Frequency PercentageStrongly
Agreed
63 33.7
Agreed 84 45
Undecided 20 10.7
Disagreed 10 5.3
Strongly
Disagreed
10 5.3
Total 187 100
Source; Researcher Survey 2013
Summary of the Regression analysis69
In table 3.1, the strategic management is held as the
independent variable while the dependent variable is held
as bank performance. It should be noted that coded values
are imputed into the software for analysis. The summary of
the model is shown in the table value.
Table 3.2 Model Summary 1
Mode
l R
R
Squar
e
Adjusted
R Square
Std.
Error of
the
Estimate
Change Statistics
R Square
Change
F
Change df1 df2
Sig. F
Change
1 .840a .706 .609 6.35610 .706 7.218 1 3 .075
a. Predictors:
(Constant), SM
Table 3.2 shows the regression values and other parameters
of measurement in the analysis carried out. The R –square
value is given as 0.706 or 70. 6 percent which implies that
out of the total variation of banks performance, strategic
management has 70 percent contribution while other
variables not included in this analysis accounts for the
remaining 30 percent variation. This also means that when
banks performance changes either positive or negative, the
major reason can be attributed to strategic management and
70
its tenets.
Table 3.3 ANOVAb 1
Model
Sum of
Squares Df Mean Square F Sig.
Regression291.600 1 291.600 7.218 .075a
Residual 121.200 3 40.400
Total 412.800 4
a. Predictors: (Constant), SM
b. Dependent Variable: PER
The F- stats measures the good fit of the model as a whole
and play significant role in determining which hypothesis
to select. From the analysis, the value of F-statistics at
5 percent significance level is given as 7.218. This is
greater than the table value of the F-statistics and it
implies that the model is a good fit and strategic
management has a significant impact on the bank
performance. Therefore we choose the alternative hypothesis
that states that strategic management has significant
impact on the performance of Access bank plc.
71
Table 3.4 Coefficientsa 1
Model
Unstandardized
Coefficients
Standardized
Coefficients
T Sig.B Std. Error Beta
(Constant
)-5.000 6.666 -.750 .508
SM 5.400 2.010 .840 2.687 .075
a. Dependent Variable: PER
The T-test measures the statistical significance of the
parameters estimated. After comparison of the calculated
value (2.687) and its corresponding probability (.75), we
conclude that the estimate for the beta is statistically
significant at 5 percent significance level. The
coefficient table also shows that values of our regression
line given as:
PER= -5.000 + 0.84SM + Ut where PER= Organizational
Performance
SM = Strategic Management
Ut = Error term.
Hypothesis II
QUESTIONNAIRE QUESTION
8 Banks that adopt strategic management have a superior
72
performance over other banks that doesn’t.
H0 - Adoption of Strategic management is not a significant
factor that distinguishes banks in terms of superior
performance.
H1 - Adoption of Strategic management is a significant
factor that distinguishes banks in terms of superior
performance.
.
Table 3.5 Response to Adoption of Strategic Management and
Superior Performance
Options Frequency PercentageStrongly
Agreed
50 26.7
Agreed 91 48.7
Undecided 33 17.6
Disagreed 13 7
Strongly
Disagreed
- -
Total 187 100
Source: Researcher Survey 2013
73
Summary of Regression Analysis
In table 3.5, the adoption of strategic management is held
as the independent variable while the superior performance
is held as the dependent variable. Coded values are imputed
in the software.
The summary of the analysis is shown below:
Table 3.6 Model Summary 2
Mode
l R
R
Squar
e
Adjusted
R Square
Std.
Error of
the
Estimate
Change Statistics
R Square
Change
F
Change df1 df2
Sig. F
Change
1 .771a .594 .459 8.30060 .594 4.390 1 3 .127
a. Predictors:
(Constant), ASM
Table 3.6 shows the values of estimates and parameters. The
R square is the regression value that measures the extent
of dependency. The R square value is given as .594 or 59
percent. This implies that adoption of strategic management
contributes to superior performance and competitive
advantage to the extent of about 59 percent. This also
means that out of the changes that occur in the independent
variable, the dependent variable contributes about 59
percent. The remaining 41 percent is catered for by the
74
error term and caused by other variables not included in
the study.
Table 3.7 ANOVAb 2
Model
Sum of
Squares Df Mean Square F Sig.
Regression 302.500 1 302.500 4.390 .127a
Residual 206.700 3 68.900
Total 509.200 4
a. Predictors: (Constant),
ASM
b. Dependent Variable: SP
The F-test which is the good fit test value at 4.390 and
its probability at (.127) signifies that the independent
variable is a good determinant of the dependent variable.
Therefore, we choose the alternative hypothesis which
states that adoption strategic management can actually
assist superior performance and grant banks a competitive
edge in their operations.
75
Table 3.8 Coefficientsa 2
Model
Unstandardized
Coefficients
Standardized
Coefficients
T Sig.B Std. Error Beta
(Constant
)-4.900 8.706 -.563 .613
ASM 5.500 2.625 .771 2.095 .127
a. Dependent Variable: SP
The T-test shows that the estimate of the values is
statistically significant at 5 percent significant level
considering the value of the calculated T-value (2.095) and
its corresponding probability (.127). The regression line
estimates are also shown in the table 3.8 as:
SP = -4.900 + 0.771 ASM + Ut . where SP = superior
performance
ASM = Adoption of Strategic management
Ut = Error term.
Reliability Test - In appendix 1, the management level of
the respondents was analyzed. This is to confirm the
reliability of the data collected in terms of the awareness
76
about the subject matter. The result shows that 75 percent
of the respondents are in the middle level management class
while 18 percent are in the top level management class.
This simply shows that the processes and procedures of
strategic management in the bank are at the disposal of
majority of the respondents which makes the data collected
reliable.
SUMMARY, CONCLUSION AND RECOMMENDATIONS
INTRODUCTION
This is the last part of the research work. It encompasses
the summary of major findings, the conclusion reached from
the analysis carried out and finally the suggestions based
on the conclusion reached.
SUMMARY OF FINDINGS
The study found out that majority of the workers fall in
between 26 and 40 age group and a larger percentage were
77
males in the middle level with above 5 years of experience.
The study also found out that larger proportion of the
respondents was marketers. The success of the any strategy
starts with the ability of the employees of the particular
organization to comprehend the visions of the firm. In this
study, the employees overwhelming claim that the bank’s
vision is to be a Nigerian world class bank with
international presence.
The study showed that respondents believed that strategic
management should be a focal point for any business
organization and that benefits accruing from strategic
management enhance organizational performance in terms of
profitability and competitive advantage. In this study,
majority of the respondents believed that the survival of
an organization in the face of unpredictable events is
further boosted when strategic management principles are
employed although they claim that tenets of strategic
management need not be applied in every operations of an
organization. Although, the majority of the respondents
does not out rightly claim that strategic management is
singularly a potent panacea for harsh business environment,
the leadership aspect of the organization is very important
in dealing with unstable environment. Therefore it is
necessary that strategic management should be mixed with
78
prudent and vast business acumen and effective leadership
in order to boost its potency.
For statistical inference, the study engaged in the test of
two hypotheses. Results showed that indeed strategic
management has a significance impact on the performance of
banks in the Nigerian banking industry. The study also
established that strategic management supports the effort
of bank management to offer superior service and enjoy
outstanding performance in relation to other banks in terms
of competitive advantage.
CONCLUSIONS
The knowledge structures used by top decision makers in
formulating firms’ strategic guidelines reflect the breadth
or variety of environmental, strategy, and organizational
concepts. Thus, complex strategic frames accommodate a
diverse set of alternative strategy solutions in strategic
decision making, allowing firms to notice and respond to
more stimuli, which in turn should increase their
adaptability. However, the more diverse a strategy, the
more difficult the level of adaptability as people and
resources respond to changes in different manners.
The study discovered that strategic management should be
the focal point of any organization coupled with the fact
79
all the employees should be familiar with the mission and
vision of the company. This implies that adaptability to
changes in strategy direction in relation to changes in the
environment largely depends on the measurability of
strategy from a unique focus and the familiarization with
the employees. The onus is on the management of banks to
communicate strategy to its employees with measurable goals
with the larger strategic objectives in view.
The benefits accrued from strategic planning or thinking to
the execution and evaluation of the results enhances the
performance of banks. As discussed in the review of
literature, many benefits accrue from strategy whether
through the rigid planning or the more flexible thinking.
All these benefits amount to better performance in terms of
quick adaptability to the dynamics of the business
environment and better predictability. The performance
manifests itself in greater market share, profitability,
better workforce, competitive advantage and so on.
Furthermore, the study found out that strategic management
boosts the chances of the survival of the bank in the ever
changing business environment but should not be used
solely. There should be proper blend of the resources;
available human and non- human with outstanding leadership
methods to make strategies effective. Strategic management
80
involves a holistic approach towards planning with
consideration of the prevailing and future environmental
factors that can distort achievement of organizational
goals and objectives. Strategic management is futuristic in
nature and this characteristic should be exploited in other
to survive the worst of times in business cycles. The
study also confirms that strategic management need not be
used in all banking operations but it is important in the
human resource management aspect. Attraction and retention
of workers is a key function for human resource
practitioners. Manpower planning should be strategic in
nature. There should be a laid out format that will ensure
that at every point in time of the life of a business,
professionals are attracted and retained. This effort is
strategic in nature. The source of all strategy should be
negotiations and bargaining amongst all the units of the
organization. This implies that every stakeholders within
and without the company environment should be considered in
drawing up a strategy. The lower level managers are not
left out and most importantly the customers should be at
the center of the planning. Shareholders are expected to be
represented as well. The best of strategies are formulated
when all stakeholders and shareholders considered and
represented in negotiations and bargaining. Organizations
should establishment a strategic management unit might if81
deemed necessary depending on the size of the corporations.
Large companies and multinationals can create its own
strategic management unit and detach it for top management
for proper handling and planning because of the large scale
production and financial strength. Medium and small scale
businesses might not be able to afford it.
Finally, the study concludes that there is a positive
relationship between strategic management and
organizational performance and the impact is significant.
This relationship is has been tested by previous authors
and researchers as shown in the empirical review.
Edirisinghe (2008) carried out similar study and even used
the result to predict the future changes of strategic
management practices in Sri Lanka. Similar conclusions were
reached about the impact of strategic management on banks
performance. Although Sri Lanka and Nigeria are similar as
they are emerging economies, the relationship was also
established in German banking industry. We can simply
assert that when the tenets of strategic management are
applied to banking operations and properly implemented,
performance is inevitably. Lastly, the study affirms that
strategic management enhances competitive advantage in
terms of superior performance in relation to other banks.
The Nigerian banking industry is characterized with high
82
competition and high-handedness and the manner banks fight
for customers has been intense over the past few years.
Strategic management can be a distinguishing factor amongst
banks and this is the case in many commercial banks in
Nigeria. The level at which each bank engage strategic
management may be different but planning and developing
measurable goals and devising coordinated means of
achieving these goals in a specified period in most cost
effective manner is a common ground where Nigerian banks
meet; Everyone trying to edge out the other.
RECOMMENDATIONS
In light of the conclusions arrived at, the following
suggestions were made to boost the awareness and
effectiveness of strategic management in the Nigerian
banking industry.
Banks should spell out in clear terms the objectives
and goals of the organization. The time frame of
achievement of the goals should also be stated. Roles
and duties of each employee should be well defined and
a full understanding of how efforts of each employee
will lead to attainment of those goals should be
shared.
83
Strategic management in banking is best when the
interest of all the stakeholders is considered in its
evolution and implementation. The stakeholders include
the customers, CBN, shareholders, other banks, labour
unions etc. Timely consultations should be made in
order to protect their interests in the plans and
intent from time to time.
Strategic management should be not be single handedly
employed but should be coupled with other
administrative gimmicks which may include lobbying,
organizational politics etc. These are usually the
trend in an unstable business environment like that of
Nigeria.
The composition of the board of directors should not
be taken for granted as this affects the efficiency
and effectiveness of the strategic management.
The setting up of strategic management unit with sound
strategic managers will further help banks in Nigeria
to provide for long term contingencies and this will
also reduce the direct burden and responsibility of
being the strategy formulation. Therefore, banks in
Nigeria are advised to isolate strategic management
unit for effective strategic formulation,
implementation and evaluation.
84
Finally, the government should ensure that a
relatively stable and robust business environment is
created in order to enhance the growth and development
of the Nigerian banking industry as a whole.
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101
Appendix 1 Demographic characteristics of Respondents
Variables Percentage Frequency
Age Group 25 and below 17.9 33
26-40yrs 62.5 117
41-55 yrs 14.3 27
56 and above 5.3 10
Sex Male 54 101
Female 46 86
Department
of
respondents
Administrati
on
21.4 40
Marketing 41.1 77
Operations 26.8 50
Info. Tech. 10.7 20
Level of Lower level 17.8 33102
management
Middle level 75 140
Top 7.2 14
Years of
experience
Below 5yrs 28.3 53
6-10yrs 54.3 102
10 yrs and
above
17.4 32
Vision of
the company
as
understood
by
employees
Have
internationa
l presence
in the
future
16 30
Dominate
financial
sector
4 7
Provide
exceptional
banking
services
0 0
103
To be
premium
retail
Nigerian
bank
0 0
A world
class
Nigerian
bank
80 150
Source: Researcher’s survey (2013)
Appendix 2 Distribution of the research question
Quest SA % A % U % D % SD % To %
104
ion
Numbe
r
ta
l
1 60 32.2 97 51.
6
- - 30 16.
1
- - 18
7
100
2 53 28.5 10
0
53.
7
17 8.9 17 8.9 - - 18
7
100
3 80 42.8 87 46.
4
20 10.
7
- - - - 18
7
100
4 50 26.8 67 35.
7
24 12.
5
23 12.
5
23 12.
5
18
7
100
5 17 8.9 63 33.
9
63 33.
9
27 14.
3
17 8.9 18
7
100
6 33 17.9 11
4
60.
7
33 17.
9
7 3.6 - - 18
7
100
7 63 33.9 84 45 20 10.
7
10 5.3 10 5.3 18
7
100
8 50 26.8 90 48.
2
34 18 13 7 - - 18
7
100
105
9 50 26.8 63 33.
9
50 26.
8
20 10.
7
4 2.1 18
7
100
10 53 28.6 10
7
57.
1
- - 27 14.
3
- - 18
7
100
11 80 42.9 60 32.
1
37 19.
6
10 5.4 - - 18
7
100
12 80 42.9 10
0
53.
6
- - - - 7 3.6 18
7
100
13 77 41 57 30.
4
33 17.
9
13 7.1 7 3.6 18
7
100
14 63 33.9 40 21.
4
37 19.
6
27 14.
3
20 10.
7
18
7
100
Source; Researchers Survey 2013
106
Appendix 3
QUESTIONNAIRE
I am an MBA student of Cyprus International University,
Turkish Republic of Northern Cyprus carrying out a research
work on the impact of strategic management on the Nigerian
banking industry with Access Bank as a case study. The
purpose of this questionnaire is to solicit information
that is pertinent to the success of this study. All
information given will be treated confidentially.
Yours truly.
Adeleye Kehinde Tyson
20131129
SECTION A; Section A: Personal Data
Please tick the correct box of fill as appropriate
1. Age 25yrs and below ( ) 26 -40 yrs ( )
41- 55yrs ( ) 56 and above ( )
2. Sex Male ( ) Female ( )
3. Department Administration ( ) Marketing ( )
Operation ( ) Information( ) Technology ( )
4. Management level / Rank Top level ( ) Middle level (
) lower level ( )
107
5. Years of Experience: less than 5yrs ( ) 6- 10 years (
) 10 yrs and above
6. What is the vision of your company?
a. To be the best bank of the people
b. Have an international presence in the future
c. Dominate the financial sector
d. Provide exceptional banking services
e. To be the premium retail focused Nigerian bank
f. A world class Nigerian bank
SECTION B: RESEARCH QUESTION
Keys - SA – Strongly Agree
A – Agree
U – Undecided
D – Disagree
SD – Strongly Disagree
No Research Questions SA A U D SD
1 Strategic management is supposed to be
the focal point of any business
organization.
2 Benefits accrue from strategic
management enhances bank’s
performance.
108
3 Proper implementation of strategy
contributes a great deal to the
survival of Nigerian banking industry
and economy at large.
4 Nigerian Banks employ strategic
management in all their banking
operations and decisions.
5 Strategic management is the most
potent way by which Nigerian banks can
withstand the ever changing
environment.
6 Strategic management is useful when
applied to human resources management
in Nigerian banks.
7 Strategic management has a significant
impact on the performance of Nigerian
banks.
8 Banks that adopt strategic management
have a superior performance over other
banks that doesn’t.
9 Nigerian banks have a long term
corporate dream (intent) about the
109
competitive position that they hope to
build over a period of time.
10 Strategic management is best evolved
through bargaining and negotiation
process among the different groups in
Nigerian banks.
11 Instability in the business
environment is the major constraint to
the effectiveness of strategic
management in the Nigerian banking
industry.
12 Nigerian banks communicate their
missions, strategies and goals to
their employees.
13 Strong balance sheet is crucial for
the success for business in the
Nigerian banking industry.
14 Lack of strategic management unit is a
problem to processes and procedures of
strategic management.
s
110
