INFLUENCE OF STRATEGIC PLANNING ON ORGANISATIONAL EFFECTIVENESS: A STUDY OF NIGERIAN BREWERIES PLC
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CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Strategic planning defines fundamental goals and objectives in specific terms and determines the means to achieve them (Ibrahaim, 2014). Strategic planning could be perceived to have positive influence on the survival, growth and effectiveness of an organisation, most especially in a recessed economy as is in the present year 2018 of Nigerian economy. Strategic planning aims at improving how a company or organisation competes successfully within its turbulent environment based on effective use of manpower development, efficient allocation of resources and choosing appropriate technologies for effective implementation of the strategic plans. This is necessary for the survival and growth of organisations under competitive condition. Considering the numerous challenges faced by business organisations, strategic planning is designed to increase organisational effectiveness.
Though it may seem difficult to accurately actualize the objectives set of strategic planning in this time of turbulent economic situation as in the case of Nigeria, particularly with regards to highly unstable exchange rate regime, high exchange rate averaging at N350 to $1US dollar, decreasing purchasing power parity of the Naira, falling income of consumers among others (Punch Newspaper, 11, February, 2018). But the good thing about strategic planning is that it places the manufacturers in command to cushion the unexpected shocks arising from not having strategic plan. It keeps the manufacturing organisations on, even at turbulent time.
Strategic planning in the context of business organisation refers to major programmes used by organisations to achieve their missions, goals and objectives. Strategic planning is a systematic process which influences the choice of the long term goals that define the corporate strategy of every firms. The corporate strategy, if adequately implemented, through projects, policies and budgets, helps to determine whether an enterprise achieves its objectives even if it survives, (Ibrahaim, 2014; Onwuchekwa, 2000). Since strategic planning is perceived as a mediating force between the organisation and its environment, it has become highly imperative for business organisations to adopt it so as to enhance their productivity.
Organisational effectiveness is the degree to which objectives are achieved and the extent to which targeted problems are solved (Babalola and Taiwo, 2016). In contrast to efficiency, effectiveness is determined without reference to costs and, whereas efficiency means doing the thing right, effectiveness means doing the right thing. Organisational effectiveness can be defined as the efficiency with which an association is able to meet its objectives. This means an organisation that produces a desired effect or an organisation that is productive without waste. Organisational effectiveness is about each individual doing everything they know how to do and doing it well; in other words organisational efficiency is the capacity of an organisation to produce the desired results with a minimum expenditure of energy, time, money, and human and material resources (Babalola and Taiwo, 2016).
The desired effect of strategic planning on organisational effectiveness will depend on the goals of the organisation, which could be, for example, making a profit by producing and selling a product. An organisation, if it operates efficiently, will produce a product without waste. If the organisation has both organisational effectiveness and efficiency, it will achieve its goal of making a profit by producing and selling a product without waste. In economics and the business world, this may be referred to as maximizing profits.
The main measure of organisational effectiveness for a business will generally be expressed in terms of how well its net profitability compares with its target profitability. Additional measures might include growth data and the results of customer satisfaction surveys (Sumanth, 2013). Highly effective organisations exhibit strengths across five areas: leadership, decision making and structure, people, work processes and systems, and culture. For an organisation to achieve and sustain success, it needs to adapt to its dynamic environment. Evaluating and improving organisational effectiveness and efficiency is one strategy used to help insure the continued growth and development of an organisation.
Measuring organisational effectiveness can be an inexact science, since each individual entity will have a different list of criteria and priorities to weight and consider through self-assessment. Understanding a company’s level of organisational effectiveness is important for several reasons: it serves as a check-in to see how well internal procedures are meeting an initial vision, it provides investors, donors, or employees with an idea of the company’s strengths, and it highlights areas of ineffectiveness that can be the focus of improvements.
In many cases, a business’ success or failure cannot be measured by financial performance as well. Even a company that is currently making a profit may be ineffective if it is failing to meet the core values of its mission statement, attract and retain talented workers, and plan for the next generation of projects.
Poor organisation effectiveness in most industries, after the euphoria of the Nigeria Independence, could be seen from the indices of denial of strategic planning, technology and effective use of manpower most basic to an organisation’s productivity process (Sumanth, 2013). The non-systematic strategic planning process, the inability to acquire the necessary technology
due to inadequate fund and the non-effective use of manpower in the strategic planning development can be seen to have serious militating hurdles to contend with. The formulation of the strategic planning of an organisation involves elaborate analysis of technological, environmental and organisational human resources in particular. Therefore, output per unit of a factor of production will require to be planned in such a way that it follows the systematic process, identifies the opportunities and threats in the environment, evaluates the strengths and weaknesses of the organisation, acquires the necessary technologies, hires appropriate people and develops appropriate incentives that will motivate the employees to higher performance.
However, despite the understanding of strategic planning in improving organisational effectiveness, inadequate attention has been made by the manufacturing organisations and government to imbibe the knowledge of strategic planning to enhance their level of effectiveness. Also, there have not been adequate researches in this regard, hence this research is an attempt to examine strategic planning and organisational effectiveness in Nigerian Breweries.
1.2 Statement of the Problem
Organisations, either private or public, are increasingly embracing the practice of strategic management in anticipation that this would translate to improved performance. However, the main problem is ineffective implementation of the strategy plans in the brewery organisations, which is perceived to be due to unpredictable nature of policy agendas, shifting attention of some actors involved in the strategic management, lack of commitment to strategic management, lack of rewards and incentives during and after the implementation of strategic management practices, constraints in funding and partnership management etc. (Ongonge, 2013; Babalola, 2008, 2009; Aremu, 2010 and Danso, 2005). However, the degree of these stated limitations to effective implementation of strategic management practices is of greater concern to any given organisation that desire to achieve an organisational effectiveness.
Many manufacturing organisations especially brewery organisations in Nigeria are today finding it difficult to survive. Some manufacturing organisations have moved away from Nigeria to other countries due to unstable and unhealthy environmental variables such as electricity power, government policies (poor exchange rate and poor inflation management).These environmental, economic and poor governance tend to affect effective strategic planning and implementation in the manufacturing sectors. Also many of the manufacturing organisations seems to lack adequate knowledge and expertise in designing and implementing strategic planning that will stand the test of time to overcome this turbulent time, particularly this present economic recession of Nigeria.
Most strategic plans include incentive plans designed to assist in increasing productivity efficiency in the organisation. However, obtaining employees acceptance of an incentive system may be difficult at the onset. There may be fear that the strategic plan will lead to a speed up layoffs or reduce wage can cause workers resistance. Most employers do different things in strategic planning for instance ranking of people, contest, performance appraisals, production, teams and departments, shifts, commission pay, etc. All these are believed to enhance organisational productivity. Some researchers think it does the opposite instead of trying to use the external motivation (something outside the work itself such as promised rewards or incentives) to get higher levels of performance from people. Employers will be better served by studying the organisation as a system.
Employers demand results. Without good result organisation will find it difficult to survive. Ensuring inclusion of workable incentive policies in the strategic plans tend to pose difficulties as many workers may feel threatened of the expected long term outcome if in the long run despite the expected level of productivity based on the incentive they could not live up to expectation. They are likely to be laid off.
In view of the perceived problem of ineffective strategic planning to overcome turbulent situation facing the manufacturing industry in Nigeria, such as highly unstable and high exchange rate regime, falling income of consumers, poor power supply among others. In order to address this situation this research focuses on examining strategic planning and organisational productivity in Nigerian manufacturing industry while looking at the following variables such as: Ways strategic planning influence organisational effectiveness, quality designing of the of strategic planning and its effect on organisational effectiveness, environmental factors influence strategic planning and organisational effectiveness; and lack of implementation of strategic plans on organisational effectiveness.
- Objectives of the Study
The broad objective of this study is to examine the influence of strategic planning on organisational effectiveness: a study of Nigerian Breweries Plc.
The specific objectives are to:
- appraise the importance of vision, mission and objectives to the realization of organisational effectiveness in Nigerian Breweries Plc.
- determine the influence of inclusion of members of staff in strategic planning on organisational effectiveness in Nigerian Breweries Plc.
- identify the relationship between strategic formulation and organisational effectiveness in Nigerian Breweries Plc.
1.4 Relevant Research Questions
The following research questions were asked in order to elicit relevant information for this study.
- To what extent do vision, mission and objectives of organisation enhance the realization of organisational effectiveness in Nigerian Breweries Plc?
- What is the extent to which inclusion of members of staff in strategic planning influence organisational effectiveness in Nigerian Breweries Plc?
- Is there any relationship between strategic formulation and organisational productivity in Nigerian Breweries Plc?
1.5 Research Hypotheses
The following hypotheses were stated to capture the research objectives and were tested:
- H0: Vision, mission and objectives of organisation have no significant influence on the realization of organisational effectiveness.
H1: Vision, mission and objectives of organisation have significant influence on the realization of organisational effectiveness.
- Ho: Inclusion of members of staff in strategic planning has no significant influence organisational effectiveness.
H1: Inclusion of members of staff in strategic planning has significant influence organisational effectiveness.
- Ho: Strategic formulation has no significant effect on organisational effectiveness.
H1: Strategic formulation has significant effect on organisational effectiveness.
1.6 Significance of the Study
The organisations, especially Nigeria Breweries Plc will benefit from the study as it will enhance their strategic planning which will improve their level of effectiveness through optimum strategic options combination that will give high level of performance of the organisation.
The customers will benefit as the study will lead to cushioning the effect of production cost on the price of the finish products through effective designing and implementation strategic planning. This will reduce the prices for the final products for the customers’ consumption.
The study is useful to Nigerian Breweries Plc, and other related organisations as it appraises the importance of vision, mission and objectives to the realization of organisational productivity in manufacturing companies in Nigeria, hence the knowledge from this study helps the organisations to achieve the set vision, mission and objectives.
The study is useful to all brewery companies in Nigeria as it helps to identify the relationship between strategic formulation and organisational effectiveness in manufacturing companies in Nigeria with a view of improving organisational effectiveness.
It is useful to manufacturing organisations because the study provides additional knowledge on assessment of the effect of environmental factors on strategic planning effectiveness of the manufacturing companies in Nigeria, the knowledge from this study will to understand the need to carry out environmental scanning to enhance strategic planning and hence the level of organisational effectiveness.
The study is useful to brewery organisations in Nigeria as it provides added knowledge on measuring the extent to which inclusion of staff in strategic planning could enhance its implementation and organisational effectiveness.
The Nigerian government will benefit from the study as it will improve revenue generation through increase revenue generation of the taxes from brewery companies as a result of good implementation of strategic planning.
1.7 Scope of the Study
The study will cover an investigation of the influence of strategic planning on organisational effectiveness in Nigerian Breweries Plc. The study will focus on how organisations can improve on their use of strategies to planning to enhance their effectiveness among other competitors in the brewery industry in Nigeria.
1.8 Operational Definition of Terms
Business Strategy: It aims at giving a competitive edge to a firm’s product within the specific industry or market segments, which it has chosen for itself.
Company Productivity: This is the level of productivity achieved by an individual company.
Corporate Strategy: Long term plan of an organisation that ensures the achievement of the mission and vision of the organisation.
Functional Strategy: It focuses on short run how to issues of implementing strategies.
Goals: Open ended statement of what is to be achieved without the details to the qualification and the time frame, which could be in the short run or long run.
Individual Productivity: This is the level of productivity attained by a single individual.
Mission: Actually the broadest and the highest level of an organisation’s purpose. It tells what such a company is offering to the society either a product or service and the market it seeks to serve.
Objectives: Are statements of what is to be achieved. They are usually stated in terms of desired levels of attainment within a specific time frame.
Organisational effectiveness: Doing all possible things within the power and capability of the available resources to achieve the organisational objectives.
Planning: This is a predetermined course of action to achieve a specified aim or goal. It is a statement of objectives to be attained in the future. It is an outline of the steps necessary to arrive at the predetermined destination. In other words, this is the art of choosing a course of action and deciding in advance what to be done, in what sequence, when and how.
Productivity: This is an economic measure of efficiency indicating what is produced relative to resources used to produce it.
Strategic Audit: This is concerned with analyzing and assessing what has been achieved in the past and that the organisation is capable of achieving in the future.
Strategic Gap: The difference in level of performance called for in the firms state objectives and the level of performance that seems likely to result from the continuation of current operation.
Strategic Managers: These are individuals who bear responsibility for the overall performance of the organisation or for one of its major self-contained divisions.
Strategy Formulation: This is the task of analyzing the organisations external and internal environment and then selecting an appropriate strategy.
Strategy Implementation: It is the task of designing appropriate organisational structures and control systems given the organisations choice of strategy.
Strategy: Strategy is a deliberate search for an action plan that will develop a firm’s competitive advantage and help augment it. It is the pattern of decision in a company that determines and reveals its objectives, purposes or goals, produces the principal policies and plans for achieving these goals and defines the range of business the company is to pursue.
Total Factor Productivity: This is an overall indication or how well an organisation uses all of its resources to create all of its products and services.
Vision Statement: A statement of an organisation of what it hope to be in the future or in the long term period.
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