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IMPACT OF STRATEGIC PLANNING ON ORGANIZATIONAL PRODUCTIVITY; EASTERN REGION (A CASE STUDY OF THE NIGERIAN BOTTLING COMPANY PLC.)

CHAPTER ONE

1.1       BACKGROUND OF THE STUDY

Strategic planning which is a process that involves analyzing the opportunities and threats in the market place, which building the strengths and correcting the weaknesses within the firm, also involves setting goals for specific product market and for the firm (Bernett and Willsted:1988); and since it is perceived as a mediating force between the organisation and its environment, it has become highly imperative for business organizations to adopt it so as to enhance productivity.  This is sequal to the fact that business enterprises under the prevailing economic environment of today, have to be up-and-doing so as to be efficient to survive. High prices due to increasing production 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 markets 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 to 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 managers in recent years.  And since it defines fundamental goals and objectives, in specific terms, and determines the means to achieve them, as well as provides a basic long-range framework into which other forms 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.

Consequent upon that, business organizations need plans to be able to predict unforeseen contingencies, minimize production costs, as well as wastages and then be able to grapple with competitions in a programmed manners – which is the essence of strategic planning.  All business organizations need to plan ahead whatever the kind of market; competitive, 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 then the continued probability.  A firm operating in a monopolistic market has more critical reasons for planning because of the fierceness of the competition in such market, and even the monopolist organization has to continually devise new strategies to maintain its position or else it will soon 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 outstandingly successful while others achieve marginal or moderate successes and others fail alarmingly.  It is also asked to what it is about organizations that tend to make some winners and some losers.  It has been emphasized that most corporate successes are as a result of the ability of their managers to pull critical levers at important points in the evolutionary development of their companies.  For these managers, the trick is knowing which levers to pull, and when to pull these levers to produce the desired and significant results in terms of increased productivity which leads to high profitability of their organization.  We may identify these critical levers as organizational strategies.  Strategy and strategic planning in the context of business organizations, refer to major action programmes that are used by organizations to achieve their mission and goals.  The focus of all business organization is viability and profitability.  The first requirement of the spirit of organization is high performance standards for the group as well as for individuals in the organization.  A successful organization is most often an efficient enterprise.  One of the major focuses of management by objectives is to have manages set high performance standards for themselves.  A manager performs his functions 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 organization’s objectives are achieved.  A manager works with and through people and other resources to realize these organisation’s objectives, 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 subject to the “law of acceleration” which suggests 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 advantages which provide the basic rationale by which customers will refers that firm to others.

Unfortunately, though, Nigeria presents a strong picture of turbulent and unpredictable environment for organizations to shift-particularly the manufacturing sector.  This is due mainly to constant changes in the 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 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 otherwise in bringing to function the social and economic yearning of the nation has direct impact on the economy.  It is against the background that this study intends to assess the effect of strategic planning on the productivity of the Nigerian Bottling Company.  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        THE STATEMENT OF PROBLEM

After the euphoria of national independence the tast of national development dawn on Nigerians to pave the way for individual growth.  Nigerian policy maker then placed the trust on industrialization on the shoulders of the manufacturing sector.  However, the progress today is 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.

It is a common place tale now to hear our so-called industrialists and economic watchers alleging that low productivity, operating below installed capacity utilization, unfavourable socio-political and economic environments and continued depreciation of national currency against the dollar, are responsible for this ugly situation. But most fundamental to this study is the factor, productivity.

Productivity is the out per unit of a factor of production.  It is dependent on the availability of the production resources in requisite proportions and how much output each unit of resources can be made to yield.  The problem with Nigerian manufacturing sector is how to combine these two factors.

However, quite a number of management ideas and philosophies have 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 the haphazard application of these management ideas and philosophies.

We shall take the view of the letter as the thrust of this study.  Planning is one of their most fundamental management processes which seeks to set in advance purpose and objective an entity may seek to achieve.  Through planning, the when, the who, and the how is 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 of a factor of production should be planned in such a way that it identifies the opportunities and thrents in the organizations environment, evaluate the strengths and weaknesses of the organization, designing structures, definite roles, hiring appropriate people, and developing appropriate reward to make contribution.  Against this background, what is the effect of strategic planning on productivity in the Nigerian Bottling Company plc.?

1.3         OBJECTIVE OF THE PROBLEM

The purpose of this study is to ascertain the strategic planning has on the level of productivity of manufacturing industries with particular reference to the Nigerian Bottling Company Plc. Eastern region.  Specifically, the study is intended to achieve the following objectives.

  1. To assess the impact of environmental factors on the strategic planning of this company, and
  2. To evaluate the relationship between strategic planning and the corporate performance of this company.

 1.4       HYPOTHESES

Following the research purpose and objectives as well as the core problem being investigated by the study, the following hypotheses will be tested.

H1:      The internal and external environmental factors surrounding this company significantly affect its strategic planning.

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

1.5       SIGNIFICANCE OF THE STUDY

In the first place, this study should be of immense assistance to business students, business practitioners, system designers and indeed all persons who are concerned about the proper information input into management planning processes.  By brining into focus the-state-of –the-art in the literature, it is also going to be of assistance to lecturers.

The manufacturing sector as earlier indicated are very important to the economy of this country.  Therefore, since this is assumed to be a thorough study of strategic planning in this sector, it will reveal its level of management efficiency and effectiveness.  And this knowledge will be vital to both the government and owners of industries.

Furthermore, it will provide a model for an efficient and effective strategy planning which will assist managers in this sector.

A practical significance will be identification of the factors responsible for the high failure rate of industries particularly in a competitive industry like soft drink – producing companies of which the Nigerian Bottling Company, plc is one.

The knowledge will help determine the structure of the business environment available to them and be able to forecast future conditions.  Good business is the ability a proper knowledge of strategic planning.

Finally, researcher will find this as a base for continued assessment and further research on the subject.  The value of the investigation to professionals, practitioners and persons or corporate bodies cannot be over emphasized since they are involved in the operations of these establishments.

 1.6              DEFINITION OF TERMS

Strategy:  This outlines the fundamental steps that management plans to undertake in order to reach an objectives or set of objectives.

Planning: This is the art of choosing a course of action and deciding in advance what is to be done in what sequence, when and how.

Strategy formulation: This is the task of analyzing the organizational external and internal environment and then selecting the appropriate strategy.

Strategy implementation: It is the task of designing appropriate organisational structures and control system, given the organisation’s choice of strategy.

Corporate strategies: These address what business an organisation will be in and how resources will be allocated among those business.

Business strategy: This focuses on how to compute in a given business.

Functional strategy: It focuses on the short run, “how to” issues of implementing strategies.

Strategic managers: These are individuals who bear responsibility for the overall performance of the organization or for one of its major self-contained divisions.

Strategic audit: This is concerned with analyzing and assessing what has been achieved in the past and what the organisation is capable of achieving in the future.

Strategic gap: This is the difference in the level of performance called for in the firm’s state objectives and the level of performance that seems likely to resulting from the continuation of current operations.

Scenarios: This is a form of educated guess made by planners.

Objectives: A statement of what is to be achieved.

Goal: This is synonymous with objectives, a statement of what is to be achieve.

Mission: This defines the basic purpose or purposes of the organization, usually includes a description of the organizations basic produce and or services and a definition of its market and or source of revenue.

Productivity: This is an economic measure of efficiency indicating what is produced relative of resource used to produce it.

Aggregate productivity: This is the total level of productivity achieved by all the firms in a particular industry.

Company productivity: This is the level of productivity achieved by an individual company.

Individual productivity: This is the level of productivity attained by a single individual.

Total factor productivity: This is an overall indication of how well an organization uses all of its resources to create all of its products and services.

Partial productivity ratio: This ratio uses only one category of resources.

 REFERENCES

 Akpala. A (1990); Management: An introduction and Nigeria Perspective, Enugu precision printer.

 Barnet, J. and Wilsted, W. D. (1988); Strategic management Boston, concept and cases Pws-tent publishing company.

 Isa, C. S. (1990); Effective utilization of marketing resource in a comparative environment: the segmentation management in Nigeria.

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