THE EFFECTS OF STRATEGIC PLANNING ON ORGANIZATIONAL PRODUCTIVITY (A STUDY OF EMENITE NIGERIA LIMITED AND INNOSON NIGERIA LIMITED ENUGU)

ABSTRACT

Failures of the corporate business organizations in Nigeria are a trend that is becoming a rule rather than the exception in our national life. This phenomenon that threatens the very fabric of our national economy has created fear in the minds of many potential investors, government and individuals thus discouraging meaningful investment. Many scholars and practitioners blame this on non-application of strategic planning by corporate business entities in their management styles. Some of this executives are either ignorant of the concept of the strategic management or apply them wrongly. This study has, therefore, attempted an up-to-date review of existing literature on strategic planning process, and has also analyzed the extent to which this could be used to enhance organizational productivity. The main objective of the study is to ascertain the impact strategic planning has on the level of productivity of manufacturing industries with particular reference to EMENITE Nigeria Ltd and INNOSON Nigeria Ltd both in Enugu State. Some recommendations on improving and proper implementation of strategic planning to enhance productivity in an organization have been suggested based on my findings.

CHAPTER ONE

1.0  INTRODUCTION

1.1  BACKGROUND OF THE STUDY

Strategic planning is the process of determining the major (bedrock) objectives of an organization and the policies and strategies that will govern the acquisition, use and disposition of  resources  to  achieve  those  objectives.  Steiner,  et  al  in Imaga, E.U.L (2001).

Strategic planning is a process tat involves analyzing opportunities and threats in the market place, while building the strength and correcting the weakness within firms also involves setting goals for specific product market and firm Bernet and Wilsted (1988).

Since it is perceived as a mediating force between organization and its environment, it has become highly imperative for business organizations to adopt  it  so as to be  efficient to survive. High prices due to increasing products costs coupled with severe liquidity squeeze necessitated by the dwindling

external value of our national currency, have had a serious dampening effect on consumer demand.

Having been faced, therefore with a high cost of production, diminishing  market  and  environmental  uncertainties, business organizations have had to compete more aggressively with one another to attain acceptable volumes of production, sales and a good market share. Suffice it to say, therefore that the complexity of today’s business coupled with the turbulence in the economic waters of the nation, makes it very doubtful if any modern business organization of  reasonable   size can survive this competitive environment without adequate strategic   planning.   No   wonder,   therefore   that   strategic planning has become increasingly important to manager in recent years. And since it defines the fundamental goals and objectives in  specific  terms,  and  determines the  means to achieve them, as well as provides basic, long range framework into which other firms of planning can fit, it can, therefore, be said to have a very strong influence on the survival and growth of an organization, most especially in a volatile environment.

Consequence upon that, business organizations make plan to able  to predict unforeseen contingencies, minimize production costs as well as wastages and then be able to grape with competitions in a programmed manner, which is the essence of  strategic planning. All business organizations need to plan ahead whatever the kind of market, competitive, oligopolistic or monopolistic in which they operate. An organization operating in a competitive market needs to plan and design strategies such as will ensure first, its survival, and its continued profitability. A  firm  operating  in  an  oligopolistic market has more critical reasons for planning because of the fierceness of the competition in such markets, and even the monopolistic organization has to continually device new strategies to maintain its position or else it will be faced with competition. A wrong investment decision in today’s business world is likely to entail a huge financial loss.

A fundamental and pertinent question arises as to why some organizations are outstanding successful and while others achieve marginal or moderate success others fail alarmingly. It

has been emphasized that most corporate success are as a result of the ability of their mangers to put critical levers to produce the desired and significant results   in terms of increased productivity which leads to high profitability of their organizations. We may identity these critical levers as organizational strategies. Strategy and strategic planning in the context of business organizations, refers to major actions, programme that are used by organizations to achieve their mission and goals. The focus of all business organizations is viability and profitability. The first requirement –of the spirit of organization is high performance standards for t—-he group as   well   as   for   individual   organization.   A   successful organization is most often an efficient enterprise; one of the major focuses of management by objective is to have managers set high performance standards for themselves. A manager performs his function by allocation and integration of human and economic resources through the process of planning, organizing, directing and controlling for the purpose of producing outputs (goods and services) desired by its customers, so that the organizations objectives are achieved. A

manager work with, and through people and other resources to realize these organizations objective, Akpala Agwu (1990)

As modern business activities widen, environmental scanning and planning become difficult and more relevant. Today’s business conditions have continued to change so fast to emphasize a growing need for continuous business intelligence activities  and  strategic  planning  as  the  only  option  to anticipate future problems and opportunities. Strategic planning   provides   all   employees   with   clear   goals   and directions to the future of the organization. It also provides a standard against which future performance can be compared and all these make it complicated in many highly technical firms that are subjected to the “law of acceleration” which suggest an increasing rate of changes.

Since strategic planning aims at finding how a company competes successfully within its environment, it is therefore said to be based on the principle of “comparative competitive Advantage” necessary for survival and growth under competitive conditions. A firm cannot survive or grow unless it

maintains one or more comparative competitive advantage which provides the basic rationale by which customers will prefer that firm to others. Unfortunately, though, Nigeria presents a strong picture of a turbulent and unpredictable environment for organizations to thrift particularly the manufacturing sector. This is due mainly to constant changes in political and economic conditions in the country. The effect of this on the manufacturing sector is quite stupendous. This is especially so when one considers the fact that majority of our manufacturing industries today provide below capacity. Specifically speaking, for manufacturing industries operating in  today’s  volatile  business  environment,  the  needs  for strategic planning seems too obvious need for strategic planning seems too obvious and imperative to require mentioning. The fortunes of our economy and the manufacturing sector appear inextricably interwoven, and so development within the overall, economy will inevitably have direct impacts on the environment. Similarly the operational efficiency of this sector or other wise in bringing to fruition the

social and economic yearnings of the nation has direct impact on the economy.

It is against this background     that this study intends to access the effects of strategic planning on the productivity of the Emenite Nigeria Limited and Innoson Manufacturing Company Limited.  It is hoped that this study will in the long run afford the rare opportunity of understanding and appreciating the significance of strategic planning in today’s organizational restructuring planning, and improvement.

1.2          STATEEMNT OF THE PROBLEM

After the euphoria of national independence, the task of national development was brought down on Nigerians to pave way for individual growth. Nigerian policy makers then placed the thrust of industrialization on shoulders of the manufacturing sector. Meanwhile, the progress today in this direction leaves more to be desired. The present state of the manufacturing sector has been perennially bedeviled by unsteady and less result oriented production activities.

However, quite number of management ideas and philosophies has been applied, but to our disappointment, they have not achieved their attendant ends.

Many critics have blamed it on the peculiarity of the Nigerian socio-political and economic environment while others, on haphazard application of these management ideas and philosophies.

Planning is one of the most fundamental processes which seek to set in advance purposes and objectives an entity may seek to achieve. Through planning, the when, the why and the how are clearly defined within a time horizon for the achievement of a specified goal or goals. Thus emphasizing a special relationship with productivity.

From the strategic management paradigm, output per unit factor of production should be planned in such a way that it identifies the opportunities and threats in the organization’s environment, evaluate the strengths and weakness of the organization designing structures, defining roles, hiring appropriate people and developing reward to make contribution. Against this background, what is the effect of

strategic  planning  on  productivity  in  the  Emenite  Nigeria

Limited and Innoson Manufacturing Company Limited?

1.3  OBJECTIVE OF THE STUDY

This research study aims at accomplishing the following objectives:

i.      To ascertain the impact strategic planning has on the level  of  productivity  of  manufacturing industries  with particular reference to the Emenite Nigeria Limited and Innoson Manufacturing Company Limited.

ii.     To assess the impact of environmental factors on the strategic  planning of these organizations.

iii.    To   evaluate  the  relationship  between  the   strategic planning and the corporate performance of these organizations.

1.4  RESEARCH QUESTION

1.      To what extent does your business environment present threats that may adversely affect the ability to plan strategically?

2.     So far, to what extent have you been able to successfully adopt challenges of your internal and external business environment?

3.     Often do you match your operating and strategic plans with your intended corporate results?

1.4  RESEARCH HYPOTHESIS

HI: The  internal  and  external  environmental  factor surrounding the organizations significantly affects its strategic planning.

Ho:   The internal and external environmental factors do not significantly effect its strategic planning.

H2:   There   is   a   positive   relationship   between   strategic planning and the corporate performance of the organizations.

Ho:  There  is  no  positive  relationship  between  strategic planning and the corporate performance of the organizations.

1.5  SIGNIFICANCE OF THE STUDY

The study is significant because:

1.     It will be of immense assistance to business students, business practitioners, system designers and indeed all persons who are concerned about the proper informational  input  into  management  planning processes.

2.     It will be beneficial to those who need the information for literature   enrichment   of   the   subject   such   as   the lecturers.

3.     It will reveal the level of the management efficiency and effectiveness to the manufacturing sector, which are very important to the economy of the country.

4.     The  knowledge  will  be  vital  to  both  government  and owners of industries because it will provide a model for efficient and effective strategic planning that will assist managers.

5.     A practical significance is that it will identify factors that are responsible for  the  high failure rate  of  industries particularly  in  a  competitive  industry  like  Emenite Nigeria  Limited  and  Innoson  Manufacturing Company Limited.

6.     Finally, the study will be useful to other students who will carry out related studies in future. It will not only serve as data bank, but as inspiration for further studies on the subject or related matter.

1.6  SCOPE AND LIMITATION OF THE STUDY

This  research  is  concerned mainly  on  “The  effects  of strategic planning on organizational productivity” with special reference to the Emenite Nigeria Limited and Innoson Manufacturing Company Limited.

However, this study is limited by time. Due to limited time for the study, the researcher could not get all the required information needed.

A financial constraint is another limitation to this study because the researcher could not visit various places where information necessary for the study could be obtained.

1.7  DEFINITION OF TERMS 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. Jauch and Gluek (1980)

STRATEGY FORMULATION

This is the task of analyzing the organizations external 0and internal environment and then selecting an appropriate strategy. Porter, Michael, E. (1980)

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. John Barnet and

Williams D. Wilsted, (1988).

STRATEGY IMPLEMENTATION

It   is   the   task   of   designing   appropriate   organizational structures and control systems given the organizations choice of strategy. Markin, (1979)

CORPORATE STRATEGY

This addresses what business an organization will be in and how resource will be allocated among this business. Bowman and Asch (1987).

BUSINESS STRATEGY

J.A. Eze and V.A. Onodugo (2002) Business strategy aim at giving a competitive edge to a firm’s product within the specific industry or market segments, which is has chosen for itself.

STRATEGIC MANAGERS

These are individuals who bear responsibility for the overall performance of the organization or for one of its major self- contained divisions. William F. Glueck (1980).

STRATEGIC AUDIT

This is concerned with analyzing and assessing what has been achieved in the past and that the organization is capable of achieving in the future. Alfred Chandler (1968).

FUNCTIONAL STRATEGY

It focuses on short run “how to” issues of implementing strategies. Thomas L. Wheeler and J. David Hunger (2000).

STRATEGIC GAP

James B. Quinn (1980) this is 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.

SCENARIOS

This is a form of educated guesses made by planners. Markin

(1979).

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. J.A. Ezeh and V.A. Onodugo (2002).

GOALS

Goals are “open ended” statement of what is to be achieved without the details to the qualification and the time frame. J.A. Ezeh and V.A. Onodugo (2002).

MISSION

J.A. Ezeh and V.A. Onodugo (2002).Mission is actually the broadest and the highest level of an organization’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. PRODUCTIVITY

This is an economic measure of efficiency indicating what is

produced relative to resources used to produce it. David R. Hampton (1980).

AGGREGATE PRODUCTIVITY

This   is   the   total   level   of   productivity   achieved   by   a company/firm. Harold Koontz (1990).

INDUSTRY PRODUCTIVITY

This is the total level of productivity achieved by all the firms in a particular industry. Harold Koontz (1990).

COMPANY PRODUCTIVITY

This  is  the  level of  productivity achieved by  an  individual company. Harold Koontz (1990).

INDIVIDUAL PRODUCTIVITY

This is the level of productivity attained by a single individual. Harold Koontz (1990).

TOTAL FACTOR PRODUCTIVITY This is an overall indication or how well an organization uses  all  of  its  resources to  create all  of  its  products and services. John W. Kendrick (1997).

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