1.1 Background to the Study
Planning has both been an organizational necessity and a managerial responsibility. Since no organization is free from change, all must plan effectively for survival and growth. We may define planning as the activity by which managers analyze present conditions in order to determine ways of reaching a desire future state. It is a process, rather than behavioural of a given point. Strategic planning is a systematic objective and comprehensive process of long-range planning, taking into consideration the organization’s resources capabilities and environment in totality (Eyre, 1982).
In recognition of the unstable macro-economic policy experiencing in the Nigerian business environment and the increase level of risk among entrepreneurs, strategic planning will be imperative for corporate organizational performance. Since, it is a top management function which covers a long time span, generally one to five years and usually focuses on a very broad range of information. Steiner 1994 refers to strategic planning as the process of determining the major objectives of an organization, policies and strategies that will govern the acquisition, use and disposition of resources to achieve those objectives. Objectives in the strategic planning process includes mission or purposes.
Thompson and Strickland (1997) defined strategic planning as the formal process adopted in determining long run objectives and how to achieve them. Since organization are regularly facing challenges on how business managers must be capable of competing under rapidly shifting conditions with turbulent environment, and to stay in the business, they need sharp tools or a proven management techniques to forecast the major changes which could affect their business, choose the future direction and dimension of the business and plan the deployment of resources needed to attain selected goals (see Oyedijo, 1995; Oshionebo, 2002; Johnson et al, 1999; 2006; Ekpenyong and Dada; 2007). Especially in a turbulent and an ever changing business environment like Nigeria.
Strategic plans are plans which set out the long-term objective of the company and the means or strategy by which the company intend to attain those objectives. It emphasizes the intended fundamental character, direction and strategy of the company. It decides the area of business and new directions to enter to determine the market to be served. It is therefore almost a general view among theorist and practitioners of management and strategic analyst that meeting these requirements of being able to compete under a rapidly changing condition required a proven management tool like strategic planning system. Various empirical evidences (as it will be extensively discuss in the latter part of this work and in the literature review) have shown that a number of organizations do not have an organized planning system and so tend to carry out their planning and control decisions in a disorganized and haphazard manner and yet some still survive and prospect.
Oshionebo (2006) emphasizes that some organizations outrageously succeed, some marginally succeed and some do not succeed because of the environmental flux and the kaleidoscopic nature of such environment. It is the above conflicting state of affairs that has sparked off a plethora arguments and controversy as to the impact and non-impact of strategic planning on organizational performance with a case study of First Bank Nigeria PLC. It is therefore the thrust of the research work to review the impact of strategic planning on organizational performance; special focus on First Bank Nigeria PLC, assessing the barriers towards implementing a successful strategic planning and prescribing policy recommendation for quantifiable realization.
1.2 Statement of the Problem
The process of formulating and implementing a strategic plan is unquestionably and a very tactful exercise. The development of functional strategies and policies, as well as plans, programmes and procedures to flesh out the bare bones of the chosen strategy is an impact phase in the implementation of strategy in every organization. The favourable policy stances of strategic plan in every organization have been informed by the obviously positive relationship between strategic plan and organizational development: hence, the need for every organization to strategize. In so far, as Nigerian companies are concerned, the informal organization dominates the Nigerian business environment showed that the practice of long-range planning in Nigeria is informal.
The economic and political uncertainties in the country have been affecting management practices relating to corporate planning and as a result leaving most companies to succumb easily to the turbulence in the economy (Fubara, 1986). Against this background achieving competitive advantage over competitors presupposes that an organization understands its environment very well. However, most organizations fail to do this as a result of their inability to match their strength and weaknesses with the opportunities and threats in the market. As a result of this, they are unable to leverage on their resources and core competencies in order to improve the value of shareholders. Consequently, quite a number of companies have been extinct in respect of this, which invariably calls for “why”, “how” and therefore remain stunt or die immaturely.
1.3 Objectives of the Study
The broad objective of this study is to examine the impact of strategic planning on organizational performance. To achieve this broad objective the following aims were highlighted: Examining the impact of environmental changes in decision making on organizational performance within the structure of First Bank Nigeria PLC. Studying the value and expectation of stakeholders.
To highlight and justify the efficacy of the role of strategic planning in organizational performance. To evaluate the contribution of strategic planning to organizational performance. To make recommendations based on the research findings on how the use of strategic plan can be more effective in achieving an upward organizational performance in Nigeria.
1.4 Justification of the Study
The Nigerian business environment is undergoing fundamental. political, social and economic reforms as a result of political and socio-economic problems. These problems, apart from the natural changes envisaged in all environmental settings, has occasioned a great deal of instability and uncertainties in Nigerian economic dimension to the extent that it would be easy to pass Nigeria as a very dangerous zone for any meaningful conduct of business and civil life. Despite this fact, a lot of organizations exist, investing funds in one form or the other in the Nigerian business community and environment. Regardless of any formal planning process, some of these organizations are surviving and are doing well.
This state of affairs has led to certain people hastily concluding that if some organizations are surviving and are doing well without a formal planning process talk of strategic planning. Inspite of the rapidly changing environment conditions, then strategic planning or any other sophisticated planning technique is not required in the business environment. But a very large majority view that a rapidly changing environment like Nigeria, best requires a proven management techniques to be able to cope effectively with the environmental complexities and vagaries. They are therefore in support of a formal planning process like strategic planning. To what extent do strategic planning enhanced organizational performance in Nigeria? This is a major question that needs to be responded to. Answering this question is the broad concern of this study.
1.5 Research Questions
Basically, the following research questions will be answered within the context of the research. 1. What impact would environmental changes have on decision making and organizational performance of First Bank Nigeria PLC? 2. Does strategic planning of First Bank Nigeria PLC make the organization to cope and survive in the turbulent business environment? 3. To what extent would unstable environment influence the value and expectation of stakeholders of First Bank Nigeria PLC? 4. How would the use of strategic plan be effective in achieving an upward organizational performance in First Bank Nigeria PLC? 5. Does strategic planning influence organization performance of First Bank Nigeria PLC?
1.6 Research Hypothesis
The following hypothesis will be tested:- 1.Ho: There is no significant relationship between strategic planning and organizational performance in First Bank Nigeria PLC. 2.H1:There is significant relationship between strategic planning and organizational performance in First Bank Nigeria PLC.
1.7 Scope of the Study
The study will cover the effect of strategic planning on organizational performance in First Bank Nigeria PLC. Intensive and concerted efforts will be made to cover the top echelon (top managers) and all the departments heads in the above named organization. The impact of strategic planning on organizational performance as well as the relationship between the two variables shall be thoroughly undertaken.
1.8 Plan of the Study
The study will be divided into five chapters for ease of presentation and these are:- Chapter one deals with the Introduction and this covers background to the study, statement of the problem, objectives of the study, justification of the study, research questions, research hypothesis, scope of the study, plan of the study, definition of terms and brief history of the First Bank Nigeria PLC (company under study). Chapter two of the study basically provides the literature review and theoretical framework which include concepts and definitions, approaches to strategic planning, levels of planning, strategic planning model, importance of strategic planning and barriers to successful implementation of strategic planning. Chapter three deals with the research methodology. Under this we consider the research design, methods of data analysis and criteria for decision. Chapter four is the presentation and analysis of result.
Chapter five will be the last chapter provides the summary, recommendation and conclusion.
1.9 Definition of Terms (a)Strategic Planning – Is a management term to describe an organization’s future planning, usually over a two to five years time frame. It is a process that helps organization identify what they want to achieve in the future and the path they can take to get there.
A strategic plan creates a vision for the future; provides specific goals, strategies and activities to achieve the vision; helps focus on outcome and how they can be achieved. (b)Strategies – Are rules, guidelines and methods the organization may use to achieve what it aims to do and ultimately its vision. (c)Planning – Is one of the most important project management and time management techniques. Planning is preparing a sequence of action steps to achieve some specific goal. If you do it effectively, you can reduce much of the necessary time and effort of achieving the goal.
Planning is also crucial for meeting your needs during each action step with your time, money or other resources. With careful planning you often can see if at some point you are likely to face a problem. It is a much easier to adjust your plan to avoid or smoothen a coming crisis, rather than to deal with the crisis when it comes unexpected. (d)Impact – Is to make known, to communicate measures of tangible and intangible effects (consequences) of one thing or entity action or influence upon others. (e)Organizational Development – A long range effect to improve organization’s problem. Solving and renewal processes, particularly through more effective and collaboration management of organization culture – with specific emphasis on the culture of formal work team with the assistance of a change agent or catalyst and the use of the theory and technology of applied behavioural science including action research.
It is also the process through which an organization develops the internal capacity to meet efficiently and effectively provide its mission work and to sustain itself over the long-term. (f)Competitive Advantage – Condition which enables a company to operate in a more efficient or otherwise higher quality manner than the companies it competes with, and which results in benefits accruing to that company.
1.10 Brief History of First Bank Nigeria PLC
First Bank Nigeria PLC is a leading banking industry in Nigeria with over a hundred years of banking experience industry and resilience behind it. Founded in 1894 by a shipping magnate from Liverpool, Sir Alfred Jones, the Bank commences as a small bank in the office of Elder Dempster & Company in Lagos. Today, First Bank Nigeria PLC has diversified into a wide range of banking activities and services including commercial, merchant and international banking and has become a potent factor in the development of the country.
The Bank was incorporated as a limited liability company in London on March 31, 1894 with Head Office in Liverpool, under the corporate name of the Bank of British West Africa. With a paid-up capital of 12,000 pounds sterling, it started business after it had absorbed its predecessor, the African Banking Corporation, which was established earlier in 1892. The Bank in its early years grew rapidly, working in close co-operation with the colonial Government in performing the traditional rules of a Central Bank, such as issue of specie, in the West African Sub-region.
In pursuance of its objective, the Bank has had to continually adjust its organizational structure and corporate entity. Beginning with a change of its name to the Bank of West African in 1957, reflecting the movement towards independence by West African Countries, the Bank was incorporated locally in 1969 to become Standard Bank of Nigeria Limited. This was in response to the dictates of the Companies Decree 1968. Thereafter, the active participation of Nigerian in the management of the Bank was a corporate policy. Further changes in the name of the Bank were made in 1979 and 1991 to First Bank of Nigeria Limited and First Bank Nigeria PLC respectively.
The enhances level of operations and the need to respond to increased competition have necessitated a considerable re-organization of the Bank. This really began in 1985 when a new de-centralized structure was introduced after a detailed analysis of the previous operational and reporting structures. In addition, computerization and efficient information management system have been introduced into the Bank’s operation in order to facilitate rapid response to customer services.
The Bank has maintained its leadership in financing long-term development of the economy. Today, the bank boasts of a diversified loan portfolio to various sectors of the economy. The Bank rural banking record is unmatched by any other bank while its agricultural credit facilities through community farming loan scheme has given peasant farmers tremendous access to the much needed bank credit.
The Bank has won, several times, the covered Stock Exchange President’s Merit Award as the bank with the best financial reporting in the banking sector. Similarly, the Bank has come first at the Central Bank Nigeria (CBN’s) Farmers Merit Award, a total of five times.
The Bank has improved substantially on its operational performance in the last years with a record performance. The Bank performance shows that it has not rested on its oars; thereby ensuring a good beginning for meeting the challenges.
In meeting these challenges, it is the Bank’s commitment “to put a smile on the face of every customer.