Home / ACCOUNTING PROJECT TOPIC AND MATERIALS / Impact of strategic planning on organizational performance
Studies that have analysed the relationship between strategic planningi and financial performance proved that the intensity with which firms engage in the strategic planningi process intervene-that is cause an indirectness and lack of one-to-one correspondence- between factors such as strategic planningi expertise and beliefs about planning performance relationships (managerial factors), environmental complexity and change(environmental factors), firm size and structural complexity (organizational factors) andfirm’s financial performance. As suggested by the inconsistent research findings, paststudies have lost focus on the relationship between strategic planning and financial
Thus, what seems to be a problem of semantics masks a fundamental question aboutthe inclusion or exclusion of goal definition from the strategic planning process.According to Berry (1997) Strategic planning is a tool for finding the best future for your organization and the best path to reach that destination. Quite often, an organization’sstrategic planners already know much of what will go into a strategic plan. However,development of the strategic plan greatly helps to clarify the organization’s plans andensure that key leaders are all on the same script but far more important than the strategic plan document is the strategic planning process itself. The strategic planning process begins with an assessment of the current economic situation. First, examining factorsoutside of the company that can affect the company’s performance.In most cases, it makes sense to focus on the national, local or regional and industryeconomic forecasts. This part of the analysis should begin early, at least a quarter or so before the formal planning process begins. Hence, it’s been concluded that, strategic planning positively affects organizations’ performance, or more specifically, the amountof strategic planningi an organization conducts positively affects it’s financial performance. Since the case study used for this research study is a bank, there is a need tounderstand strategic planning and financial performance relationships in banks.The intensity with which managers engage in strategic planning depends on Managerial(e.g., strategic planning expertise and beliefs about planning-performance relationships),Environmental (e.g., complexity and change) and Organizational (e.g., size and structuralcomplexity) factors. The effects of these factors on strategic planning intensity have beensuggested by several studies (Kallman and Shapiro, 1990; Unni, 1990; Robinson andPearce, 1998; Robinson
4 performance in organizations. Misspecification of this relationship might be attributed to past studies’ lack of attention to the relationship among these managerial, environmental,organizational factors and their potential impact on planning intensity and performance(Hopkins and Hopkins, 1997).Subsequently, the consideration of such factors in the present study is viewed as asignificant issue that holds implications for future research as well as for planning practices.
1.2 Statement of Research Problem
Past and recent research studies have made it clear that there is an increased internal andexternal uncertainty due to emerging opportunities and threats, lack of the awareness of needs and of the facilities related issues and environment and lack of direction.Many organizations spend most of their time realizing and reacting to unexpectedchanges and problems instead of anticipating and preparing for them. This is called crisismanagement. Organizations caught off guard may spend a great deal of time and energy playing catch up. They use up their energy coping with immediate problems with littleenergy left to anticipate and prepare for the next challenges. This vicious cycle locksmany organizations into a reactive posture.This research study is to assess the impact of strategic planning on organizational performance, which at the long run enhances organizational survival.
The general objective of this research is to investigate the impact of strategic performance on organizational performance and survival.
To establish the need for strategic planning in the organization.ii.
To establish performance of firms that use strategic planning as compared to thosethat do not use.
To identify the challenges faced by the organization who practice strategic planning.iv.
To establish the significant factors essential for effective strategic planning practice and how they affect the overall organizational performance.
The major research question was ‘what is the effect of strategic planning onorganizational performance and survival?i.
What is the need for strategic planning in an organization?ii.
What is the performance of firms that use strategic planning as opposed to thosethat do not use in the industry?iii.
What are the challenges faced by the firms which practise strategic planning?iv.
What factors are essential for effective strategic planning and how do they affectthe overall organizational performance?
1.5 Significance of the study
The findings of the study are expected to be of help to several groups of people:
a) To the researcher
The research will enable the researcher to achieve a Diploma in Business Management. Itis a requirement for partial fulfillment of Diploma in Business management.The researcher will be able to understand how strategic planning can impact onorganizational performance and survival.
b) To participating companies
If the findings of the study can be considered by the management of participatingcompanies, it will act as a resource material to refer to when formulating strategic plans.As a result of these findings they can learn and improve in areas where weaknesses wererevealed.