Impact of Strategic Management on Growth and Survival of an Organization
Chapter One
OBJECTIVES OF STUDY
This research aims at examining the impact of strategic management on the organizational performance. The specific objectives of the study include;
- To appraise the value of strategic management concepts and techniques as applied to organizations.
- To examine the impact of strategic management in organisation’s success.
- To provide some guidelines with which organisations can apply the strategic management ideas and skills, in a time-saving manner,
- Suggest methods that may prevent major crisis and business failures.
CHAPTER TWO
REVIEWED OF RELATED LITERATURE
The Effect of Strategic Planning on Business Performance
The increasingly dynamic market conditions and commercial competitiveness among organizations encourage business owners, including small and medium-sized enterprises in Indonesia as well as other parts of the world to acknowledge how businesses should be managed strategically (Omsa, Ridwan, & Jayadi, 2017). Business owners need to understand how small and medium-sized enterprises can be run in order to enhance their marketing and financial performance. For these companies to compete effectively, strategic management experts encourage companies including small and medium-sized enterprises to apply various strategic management practices (Anyieni, 2013). Strategic planning is regarded to be a forward looking exercise and all organizational managers should be involved with it regardless the size of their companies. When a strategic plan is present and it is well implemented, the company can have little or even no challenges in taking care of external changes (Aldehayyat, 2015). For the organization to survive in turbulence environment in which it operates, then it should operate successfully in line with environmental forces that are uncontrollable and unstable since they greatly affect the decision making process (Bahr, Pieer, & Sakka, 2017). Companies adapt to the environmental forces as they carry out planning and implementing strategic activities. According to Allison (2013), it is through strategic planning process that the organization is able to predict the changes taking place in the business environment and for them to develop a proactive approach as opposed to reacting towards new threats or unforeseen challenges that have a negative impact on the business. 10 According to Garg and Goyal (2013), there exists a direct correlation between strategic planning and performance of an organization. Companies that are focused and have a strategy in place are more likely to post good results as opposed to similar organizations that have neglected strategic planning initiatives. Kwarteng (2018) argues that planning is crucial to companies as it is for individuals. This is because planning offers a clear and distinctive direction to an organization. Lack of strategy and purpose for the organization may become blurred to the employees, misunderstood by key stakeholders and resources may not be used effectively. In the modern business environment companies need a clear strategy to enable them get into new markets successfully while at the same time maintaining their market share by responding quickly to new market dynamics and technology (Mitton, Dionne, & Schmidt, 2014). According to Anyieni (2013) over the years businesses have approached the aspect of planning in various ways. Planning at all levels is considered to be the calculation of objectives, concepts and resources within the acceptable bounds of risk that will yield more favorable outcomes that could otherwise exist by chance. Furthermore, it is explained that strategic planning can be seen as the art and science that aims at developing and employing instruments of the national power in a synchronized as well as integrated fashion with attempts of achieving the laid down objectives. According to Garg and Goyal (2012) companies widely use strategic planning as an integral part of their strategy that is as a mean to an end. It is a way through which the company positions itself by prioritizing the use of resources in respect to the identified goals while at the same time guiding its direction and development over time. The aspect of strategic planning within the business covers the entire spectrum of issues concerning precise steps for a smooth transition from the organization’s current conditions to the anticipated challenges of the business environment (Donkor & Kwarteng, 2018). However, a caution that strategic planning rarely flows from one step to the next one smoothly since new ideas at one point may change the decisions that were made earlier. O’Regan and Ghobadian (2005), argue that planning is crucial for maintaining the size of the existing business, or provide a framework for enhancing its growth. Strategic planning helps companies to take advantage of future opportunities and how to effectively address threats that are likely to come along with opportunities. Strategic planning takes environmental turbulence into consideration and gathers all the necessary information by altering the company’s strategies and plans as the need arises (Dutot & Bergeron, 2016). 11 Blackburn, Hart and Wainwright (2013) suggest views the process of strategic planning as the process of developing strategies that might contribute to business performance. This can be done by generating all relevant information that brings a better understanding of the environmental factors in order to reduce uncertainty that is strategic awareness which implies as the firm’s ability to assess the total implication of any change. Wang, Redmond and Walker (2011) see the aspect of strategic planning as an involvement of competitive advantage. They emphasize that strategic planning enables companies to gain sustainable planning as efficiently as possible. Osma et al (2017) indicate that those small and medium-sized enterprises that engage in strategic planning are more likely to achieve higher profit margins and a significant market growth as opposed to the ones that have not embraced the aspect of strategic planning in their commercial activities. They further indicate that the performance of small and mediumsized enterprise is driven by strategic planning. Despite the evidence that comes with strategic planning, it can be recognized that is rare existent in many SMEs since it the owners aspirations to whether the company should embrace strategic planning or not (Gledson & Phoenix, 2017). According to Kumar and Antony (2008) concluded that all companies need strategic planning for them to adapt to the external business environment and the dynamic needs of consumers that are driven by various demographic factors. Organizations are also becoming more complex and without having a detailed planning framework their survival might be difficult. Successful organizations will anticipate and address the turbulence in the environment through strategic planning that develops plans that are meant to achieve the competitive goals of the organization in ensuring execution of the firm’s mission (Yusuf & Salad, 2015). According to Rubio and Aragon (2009) strategic planning goes beyond just planning for long term financial planning and involve the assessment of the environment in which the company operates. This planning is done through foresight and in a structured process. Furthermore, they indicated there exists a strong relationship between strategic planning and organizational performance since they found out that strategic planning contributes about 69.2% towards performance of SMEs
The Effect of Strategy Implementation on Business Performance
According to Parnell (2010) implementation refers to the action stage of the strategic management process. It is regarded as the most difficult and complex stage which involves mobilization of managers and employees with the aim of uniting total organization behind the strategy. It also involves all units in the company and the process is initiated by top management and it should succeed when employees are fully engaged. Rinaldo and Solimun (2017) define strategy implementation as a series of sub activities that re primarily administrative with the aim of determining how resources of the organization should be mobilized to accomplish its strategy in a cohesive manner. Anyieni (2013) strategy implementation refers to the process of allocating resources in order to support the chosen strategies. The process consists of various management activities that are necessary to put the strategy in motion, instate strategic controls that can monitor the progress and ultimately achieve organizational goals. Sushil (2018), the implementation process of strategy covers the entire managerial activities such as the aspects of motivation, compensation, control process and managerial activities. Despite formulating consistent strategy being a difficult task for any management team, making the strategy a success and implementing it throughout the entire organization is even more difficult. According to Yoshikuni and Albertin (2018) a myriad of factors that can potentially affect the process by which strategies are turned into organizational action. Strategy implementation unlike strategy formulation process is always seen as something of a craft as opposed to science and its research has previously been described as eclectic and fragmented. An effective strategy implementation process should always achieve the future direction of the organization, design internal action approaches, and make strategic choices and priorities, deal effectively with changes in the organization and uncertainties in external environment, building team spirit and expertise based on resources, people and processes and developing effective strategies to improve organizational performance (Donate & Canales, 2012). Converting strategic plans into actions and the results tests the ability of the manager to direct organizational change, motivating people, building strengthen the company’s competencies and competitive capabilities as well as creating and nurturing strategy. For the strategy to be implemented effectively, the strategy must be institutionalized that it the strategy must permeate a day to day life of the organization (Herath, Bremser, & Birneberg, 2014). 15 Strategies are crucial in the operations of a company, as much most organizations have good drafted strategies, the implementation of strategies still remains a major challenge. Organization have formulated strategies, and strategy implementation could seem like a walk in the park but in the contrary, transforming of strategies into actions is far more complex, difficult and a challenges and therefore not as simple as one could imagine (Mitton, Dionne, & Schmidt, 2014). In order to ensure that a strategy is successfully translated into actions, then it must be translated into well thought out implemented actions. Strategy must be converted into guidelines for the daily actions of the company’s members. There must be synergy between strategy and a firm in implementing the strategy, the leaders must guide, monitor and control necessary actions and outcomes for successful implementation to take place (Bahr, Pieer, & Sakka, 2017). Organizations operate in a very turbulent as well as a competitive environment. For organizations to develop and sustain competitive advantage, companies should practice strategic management practices (Njagi & Kombo, 2014). Strategic management comprises of the analysis, decisions and actions that the organization undertakes in order to create and sustain competitive advantage. Creating a brilliant strategy is nothing compared to executing it successfully since the execution is critical to success and without a well-planned approach to execution, strategic goals cannot be achieved. Thus, in the process of striving to achieve the intended results, good strategies should be properly implemented (Birinci & Eren, 2013). Strategy implementation involves converting the strategic plan into action and then into intended results and this strategic process is geared towards improving the company’s performance. Strategy implementation involves converting the strategic plan into action and then into results. It is considered successful if the firm achieves its strategic objectives and targeted level of financial performance (Njagi & Kombo, 2014). In making decisions on how to implement strategies, managers must be able to determine what internal conditions are needed to execute the strategies plan successfully. It involves creating a series of fits between how things are managed internally and what is required for the first rate strategy execution between strategy and organizational structure, the organization ‘skills and competencies, internal policies, budget allocations, support systems, reward structures, corporate structure and strategy (Anyieni, 2013). The tighter the fits the more likely targeted performance of the organization can actually be achieved. A successful strategy implementation is critical for any organization’s survival. Strategy implementation is 16 critical in connecting the strategy formulation stage and strategy control and evaluation stage in the strategic management process (Waking’a & Ouma, 2017). According to Aldehayyat (2015) about eighty percent of firms have the right strategies and only fourteen percent have managed to implement them well. Strategy implementation is the action that moves the company along its choice of route towards its goals that is the fulfillment of its vision and mission achievement
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), 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 constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine impact of strategic management on growth and survival of an organization. Lawrenzo Cargo and Logistic Ltd, Lagos form the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain impact of strategic management on growth and survival of an organization. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing impact of strategic management on growth and survival of an organization
Summary
This study was on impact of strategic management on growth and survival of an organization. Three objectives were raised which included: To appraise the value of strategic management concepts and techniques as applied to organizations, to examine the impact of strategic management in organisation’s success, to provide some guidelines with which organisations can apply the strategic management ideas and skills, in a time-saving manner and Suggest methods that may prevent major crisis and business failures. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from Lawrenzo Cargo and Logistic Ltd. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
In conclusion, this study has explored the impact of strategic management on the growth and survival of organizations. The findings have highlighted the crucial role that strategic management plays in shaping the long-term success and sustainability of an organization in a dynamic and competitive business environment.
The study has revealed that organizations that effectively implement strategic management practices experience significant benefits in terms of growth, profitability, market positioning, and overall survival. By adopting a proactive and forward-thinking approach to planning, decision-making, and resource allocation, organizations can strategically position themselves to capitalize on emerging opportunities and overcome challenges.
One of the key findings of this study is that strategic management fosters a clear sense of direction and purpose within an organization. Through strategic planning, organizations are able to define their mission, vision, and core values, which serve as guiding principles for all levels of the organization. This shared understanding of purpose enables employees to align their efforts, make informed decisions, and work towards common goals, thus fostering a culture of unity and collaboration.
Strategic management also emphasizes the importance of environmental analysis and scanning. Organizations that engage in continuous monitoring of the external business environment and internal capabilities are better equipped to identify market trends, anticipate industry changes, and adapt their strategies accordingly. This enables them to stay ahead of the competition, identify new growth opportunities, and mitigate potential risks.
Furthermore, effective strategic management facilitates resource allocation and utilization. By conducting thorough assessments of an organization’s strengths, weaknesses, opportunities, and threats, strategic management enables optimal allocation of resources, including financial, human, and technological assets. This ensures that resources are deployed in areas that align with the organization’s strategic objectives, enhancing efficiency, productivity, and overall performance.
Moreover, the study has highlighted the importance of strategic implementation and execution. It is not enough to develop a well-crafted strategic plan; organizations must also have the capabilities to translate strategies into action. This involves effective communication, stakeholder engagement, performance measurement, and the establishment of accountability mechanisms. Organizations that excel in strategic implementation are more likely to achieve their desired outcomes and sustain their competitive advantage over time.
In conclusion, the findings of this study underscore the critical role of strategic management in the growth and survival of organizations. Strategic management provides a framework for organizations to navigate the complexities of the business landscape, make informed decisions, and allocate resources effectively. By embracing strategic management practices, organizations can enhance their competitive position, adapt to changing circumstances, and achieve sustainable growth and long-term success. It is recommended that organizations prioritize strategic management as a fundamental aspect of their operations, invest in strategic planning capabilities, and foster a culture of strategic thinking and execution
Recommendation
Based on the findings and conclusions of this study on the impact of strategic management on the growth and survival of an organization, the following recommendations are put forth:
- Develop a Comprehensive Strategic Plan: Organizations should invest time and effort in developing a well-defined strategic plan that aligns with the organization’s mission, vision, and core values. The plan should outline clear objectives, strategies, and action plans for achieving growth and ensuring long-term survival. Regularly review and update the strategic plan to adapt to evolving market conditions and organizational needs.
- Foster a Strategic Mindset: Cultivate a culture of strategic thinking and decision-making throughout the organization. Encourage employees at all levels to actively participate in the strategic planning process and contribute their insights and ideas. Provide training and development opportunities to enhance employees’ strategic management skills and understanding.
- Conduct Regular Environmental Scanning: Establish a systematic process for monitoring and analyzing the external business environment, including market trends, customer preferences, competitor activities, and technological advancements. This will enable the organization to identify emerging opportunities and potential threats, and adjust its strategies accordingly.
- Embrace Innovation and Adaptability: Encourage innovation and creativity within the organization to foster agility and adaptability. Create channels for employees to share ideas, experiment with new approaches, and embrace change. Develop a structure that supports innovation, such as cross-functional teams or innovation labs, to drive continuous improvement and growth.
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