An Evaluation of the Nature and Impact of Planning on Organisational Performance
CHAPTER ONE
Objectives of the Study
The main purpose of this study is to examine the effect of planning on the success of business enterprises in Akwa Ibom State. Other objectives include the following:
- To examine whether planning aids in actualizing organizational goals
- To investigate the effect of planning on the profitability of business enterprises in Akwa Ibom State
- To ascertain whether planning is responsible for failure or success of small business in Akwa Ibom State
- To ascertain if planning leads to business expansion in small business in Akwa Ibom State
CHAPTER TWO
LITERATURE REVIEW
Introduction
This section reviews literature on the following research objectives: the first section explores how SMEs track and make sense of the changes in order to survive and compete in such turbulence markets using strategic planning. The second section explores how SMEs use strategic planning to manage the transformation required and the third section provides literature on how SMEs grow the organization and ensure its long-term sustainability using strategic planning.
Vision, Mission and Action Plan in Planning
These strategic elements that are crucial for strategic planning are namely Mission statement, vision, Objectives, Strategies and action plans. Mission and vision are crucial elements of strategic management. The difference between vision and mission is in its time component; mission determines what the company does, whereas vision shows what the company will become and do in the future. Visions can be considered sources of energy for achievement of formulated objectives. Vision, Mission and Strategies are interconnected elements of entrepreneurial perspective; together they turn the entrepreneur’s wish for a positive change into a managerial tool for achievement of that change. Ambitious entrepreneurs who manage growth firms form an intensive and strong vision about the value they can create (Ireland, 2012). Even if in a small firm the entrepreneur usually acts as a strategic manager taking all strategic and operative decisions (Hunger and Wheelen, 2012), strategic vision forms a basis for strategy development and strategic planning.
In order for the firm to grow, the entrepreneur needs to formulate an exact, clear Mission and Vision for his or her firm (Wickham, 2008). In addition to the company’s vision, growth will be reinforced by a strategic focus on market, growth and profits. Indeed, planning of corporate or business strategy needs to be centered on the market, product and service (Hunger and Wheelen, 2010). Vision and objectives are the bases of strategies and strategic planning. For an entrepreneur, it is beneficial to have a clear vision, high and growth-oriented objectives, and a belief that he or she can achieve the objectives (Baum et al., 2009). In order to be successful and to grow, the firm needs to formulate high, optimistic, growth oriented objectives (Wickham, 2008). In addition to growth objectives, other objectives (financial or non-financial, personal or non-personal) may play important roles in actual achievement of small firm growth. Action plans on the other are the pathways or avenues that guide the entrepreneur on how to reach the set objectives. Action planning typically includes deciding who is going to do what and by when and in what order for the organization to reach its strategic goals.
Strategic planning is a process that brings to life the mission and vision of the enterprise. A strategic plan, well-crafted and of value, is driven from the top down; considers the internal and external environment around the business; is the work of the managers of the business; and is communicated to all the business stakeholders, both inside and outside of the company. As a company grows and as the business environment becomes more complex the need for strategic planning becomes greater. There is a need for all people in the corporation to understand the direction and mission of the business (Kantabutra and Avery, 2010).
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
In this chapter, we would describe how the study was carried out.
Research design
It is a term used to describe a number of decisions which need to be taken regarding the collection of data before they are collected. (Nwana, 1981). It provides guidelines which direct the researcher towards solving the research problem and may vary depending on the nature of the problem being studied. According to Okaja ( 2003, p. 2),” research design means the structuring of investigation aimed at identifying variables and their relationship, it is used for the purpose of obtaining data to enable the investigator test hypothesis or answer research question by providing procedural outline for conducting research”. It is therefore, an outline or scheme that serves as a useful guide to the researcher in his efforts to generate data for his study.
Sources of Data
The data for this study were generated from two main sources; Primary sources and secondary sources. The primary sources include questionnaire, interviews and observation. The secondary sources include journals, bulletins, textbooks and the internet.
Population of the study
A study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitute of individuals or elements that are homogeneous in description (Prince Udoyen: 2019). In this study the study population constitute of all the SMEs in Uyo.
CHAPTER FOUR
RESULT AND ANALYSIS
General Information
Gender
The researcher sought to determine the gender distribution of the population and the results presented in Figure 4.1 indicate that 76% were male, and 24% were female. These results show that more males run SMEs compared to females, this could as a result of the nature of the industry.
Education
The researcher sought to determine the education level of the population and the results presented in Figure 4.2 indicate that 2% had diplomas, 42% had degrees, 25% had post- graduate diplomas, 23% had masters and 8% had certificates. These results show that SME owners and managers were well educated and thus could understand the study questionnaires.
Age
The researcher sought to determine the age bracket of the population and the results presented in Figure 4.3 indicate that 52% were aged between 26-35 years, 43% were aged between 36-45 years, 2% were 25 years and below and 2% were aged between 46 years and above. These results show that most SME owners and managers were young and mid-aged adults. This could be explained by the country’s demographics.
CHAPTER FIVE
CONCLUSIONS AND RECOMMENDATION
Conclusions
Vision, Mission and Action Plan in Strategic Planning
The study concludes that a company’s mission and vision are crucial elements of strategic management in the organization, and business vision and growth are reinforced by strategic focus on market growth and profits. The study concludes that SME managers/ owners have plans that decide on who is going to do what and by when and in what order. SME owners and managers consistently apply a disciplined approach to strategic planning in order to be ready for any market changes, and at times when the business has gone off track, owners/ managers use strategic planning to redirect their recovery process. The study concludes that strategic planning has helped owners/ managers establish benchmarks or milestones that show them whether or not they are meeting their goals and objectives, and SME owners/ managers include employees in the decision-making plan of their business. SME owners/ managers have developed a decision-making routine that simplifies the process of decision-making for them, and they have improved their level of understanding of competitors strategies through strategic planning. High competition in the market has reinforced owners/ managers’ ability in making effective choices about when to leave marketplaces and about which new ones to move into and being innovative.
Strategic Planning Practices by Small and Medium Enterprises
The study concludes that the nature of SME business requires specific, predetermined behavior by means of formal direction and control to be successful, and strategic planning structures and systems in the business contribute towards building SME organizational capabilities that drive performance. Strategic planning is the foundation that improves SME business processes and ultimately reduces internal costs of operation, and SME owners/ managers find themselves in an environment of constant technological change. The study concludes that SME owners/ managers are keen on monitoring and identifying trends or cycles of some kind in order to find patterns of the market trend, and entrepreneurs monitor their environment by collecting information in all environmental sectors, sort out relevant information and adjust their business to meet future forecasts. Strategic planning is vital for business men to give a dependable direction of assessing the most appropriate methods for enhancing a product/ item, and SME business enterprise concentrates on producing products/ services that meet the desires or needs of various target markets. The study concludes that, the existence of the support programmes that provide SME business with a back-up plan has ensured that SME businesses are strengthened and have realized growth, and SME businesses have an advantage in terms of making quick decisions and the willingness to take risks.
Influence of Strategic Planning Practices on SME’s Performance
The study concludes that setting performance targets and the preceding process of strategic planning is an important aspect of performance management for SMEs since it allows SME owners/ managers to translate organization vision and strategy into strategic objectives that are associated with medium to long-term goals. SME owners/ managers combine human expertise and organizational resources to implement value-creating organizational strategies. Target setting allows SME owners/ managers to reconfigure existing business capabilities and also build new capabilities. The study concludes that SME owners/ managers normally do not grant rewards to employees to influence their behavior, and SME owners/ managers have a feedback systems in place that influences the development of new capabilities and organizational learning. SME business has loyal customers facilitating their ability to work easily and achieve their objectives and outperform set targets, and SME owners/ managers use communication as an essential determinant of customer dedication and satisfaction strategy. The study concludes that feedback given by customers helps SME businesses to reinforce their operational systems and subsequently turns out to be more focused, and the pursuit of personal non-economic goals is something SME owners/ managers are willing to sacrifice the prospect of achieving greater financial rewards.
Recommendations
Vision, Mission and Action Plan in Strategic Planning
The study recommends SME owners and managers to have strategic plans in place that would facilitate the implementation of their vision and mission. Without implementation, SMES’ vision and mission resort to being great ideas on paper than SMEs’ cannot benefit from. Their implementation plans need to be systematic, consistent, and measurable.
Strategic Planning Practices by Small and Medium Enterprises
The study recommends SME owners to effectively and efficiently apply strategy planning in order for them to improve their business processes, reduce the cost of doing business, and to effectively deal with technological and environmental changes. Strategic planning will facilitate the ability of SMEs to be innovative in terms of products and services they offer.
Influence of Strategic Planning Practices on SME’s Performance
The study recommends SME owners/ managers to employ the use of rewards for their employees. Rewards either intrinsic or extrinsic are normally used by large organizations to influence employee behavior with relation to them improving performance. SME’s could also apply the same to facilitate better performance from their employees.
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