Project – Effect of strategic management on Business Growth
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The term “strategic management” refers to the process through which a company plans, monitors, analyzes, and evaluates all of the factors that influence its ability to achieve its objectives. As conditions in the business world evolve, it will be necessary for companies to periodically review their strategies. Fundamental goals and objectives are defined in concrete terms, and the methods to attain them are determined, via strategic management. In a sluggish economy like Nigeria’s in the current year, strategic management may seem to have a more beneficial effect on an organization’s chances of success. Strategic management seeks to improve a company’s or organization’s ability to compete successfully within its volatile environment through the development of its human capital, the efficient allocation of resources, and the selection of appropriate technologies for the effective implementation of strategic plans. Organizations can’t thrive and expand in today’s market without doing this. Strategic management is aimed at fostering expansion of businesses in light of the many threats they confront (Ezeokonkwo, 2010).
Though it may seem difficult to accurately actualize the objectives set of strategic management in this time of turbulent economic situation as in the case of Nigeria, especially with regards to highly unstable exchange rate regime, high exchange rate averaging at N350 to $1US dollar, diminishing purchasing power parity of the Naira, falling income of consumers, and so on (Punch Newspaper, 11, February, 2018). The good news is that strategic management puts manufacturers in charge, where they belong, so they can better prepare for and respond to any unforeseen shocks that may arise from a lack of a strategic plan. It ensures that production facilities can continue operating, especially during unsteady times.
When talking about businesses, “strategic management” refers to the overarching plans that help businesses accomplish their objectives. Corporate strategies are determined in large part by the long-term objectives that are shaped by strategic management. If the corporate strategy is properly executed through initiatives, policies, and budgets, it may affect whether or not a business succeeds in meeting its goals regardless of whether or not it survives (Fayol, 2007).. Business organizations must employ strategic management in order to increase their productivity, since it is seen as a mediating factor between the organization and its environment.
The success of an organization depends on how well its goals are met and how well its specific difficulties are resolved (Kazmi, 2010). In contrast to efficiency, which is measured in terms of how much something costs, performance is evaluated only on the basis of how well it achieves its goals. Gains in productivity in achieving goals are one definition of organizational development. Essentially, this describes a company that achieves its goals in a sustainable manner. Organizational efficiency is the ability of an organization to achieve its goals with the fewest possible resources (including time, money, and people) being used. When everyone does their part, the organization grows (Badeian, 2007).
To what extent strategic management contributes to an organization’s expansion depends on the organization’s objectives, which may include, for instance, maximizing profits via product sales. If a business is running well, it will turn out an item with no extraneous materials. Without waste in production or sales, a company can only make a profit if it is able to expand its operations and streamline its procedures. Making the most money is a common goal in economics and business (Agbonifoh, et al., 2008).
The ratio of a company’s net profitability to its goal profitability is a common proxy for its growth as an organization. Data on expansion and survey findings on consumer satisfaction might be two more indicators (Agbonifoh, et al 2008). Powerful businesses excel in five areas: management and strategy, organizational structure, human resources, operational excellence, and company culture. As conditions change, so must an organization if it is to thrive. One tactic utilized to ensure a company’s long-term success is to regularly assess and enhance its methods of expansion and productivity.
Due to the fact that each organization will have its own unique set of criteria and goals to evaluate and examine via self-assessment, measuring organizational development may be something of an inexact science. As a check to see how well internal procedures are meeting an initial vision, to give investors, donors, or employees an idea of the company’s strengths, and to highlight areas of inperformance that can be the focus of improvements, knowing where a company stands in terms of its organizational growth is crucial (Badeian, 2007).
The success or failure of an enterprise cannot always be gauged by its financial results alone. A company that is profitable today may be irrelevant tomorrow if it fails to fulfill its mission, reward its employees, and prepare for the next generation of projects.
The indicators of denial of strategic management, technology, and impactful utilization of people most fundamental to an organization’s productivity process (such as stock prices) show that most sectors have underperformed since the euphoria of Nigeria’s independence (Badeian, 2007).
Strategic management development faces formidable challenges, such as a lack of a systematic approach, insufficient resources for acquiring the required technologies, and ineffective utilization of human capital. Extensive examination of a company’s technical, environmental, and human resources in particular is required for the design of the company’s strategic management. Therefore, in order to maximize output per unit of a factor of production, it is necessary to plan for it in such a way that it follows the systematic process, identifies opportunities and threats in the environment, evaluates the strengths and weaknesses of the organization, acquires the necessary technologies, hires the appropriate people, and develops appropriate incentives to motivate the employees to higher performance.
Despite the importance of strategic management to any organization’s success, manufacturing companies and the government have not put in nearly enough effort to internalize this information in order to boost their performance. The purpose of this study is to investigate the relationship between strategic management and the development of businesses in Nigeria.
1.2 Statement of the Problem
Organisations, either commercial or public, are increasingly adopting the discipline of strategic management in expectation that this will result to increased performance. The main issue, however, is the ineffective implementation of the strategy plans in the brewery organizations. This is thought to be due to the unpredictable nature of policy agendas, the shifting attention of some actors involved in the strategic management, a lack of commitment to strategic management, a lack of rewards and incentives during and after the implementation of strategic management practices, constraints in funding and partnership management, etc (Utulu, 2001). However, the degree of these mentioned constraints to impactive adoption of strategic management methods is of higher significance to every given business that wish to accomplish an organisational development.
Throughout Nigeria, many factories are struggling to make ends meet, and breweries in particular. Some industrial groups have migrated out from Nigeria to other nations owing to unpredictable and harmful environmental factors such as energy power, government policies (bad exchange rate and poor inflation control) (poor exchange rate and poor inflation management). Strategic management and effective execution in the industrial sectors are sometimes hampered by environmental, economic, and weak governance issues. Additionally, many industrial organizations seem to lack sufficient knowledge and skill in planning and executing strategic management that would stand the test of time and allow them to weather the storm, in this case the current economic slump in Nigeria.
Incentive plans are a standard component of most strategic plans, and they’re created to aid in the organization’s efforts to improve its productivity and efficiency. However, securing staff approval of an incentive scheme may be challenging from the outset. There may be worry that the strategy plan may lead to a speed up layoffs or cut salary might trigger employees opposition (Abbah, 2013). (Abbah, 2013). Most employers do various things in strategic management for instance rating of individuals, contest, performance reviews, production, teams and departments, shifts, commission compensation, etc. All of these are thought to increase efficiency inside businesses. Instead of attempting to employ external motivation (something else from the activity itself, such promised prizes or incentives) to elicit greater levels of performance from workers, some studies believe it accomplishes the reverse. Employers would do well to look at the company as a whole system.
Employers want results. There is little hope for the organization’s continued existence if excellent results are not produced. Difficulties arise when trying to incorporate effective incentive programs into long-term strategic plans because many employees may feel intimidated by the projected long-term consequence if, despite the incentive’s basis in reality, they fail to achieve the desired level of productivity. It’s probable that they’ll be fired.
With a very unpredictable and expensive exchange rate regime, dwindling consumer income, and insufficient power supply, Nigeria’s industrial economy is struggling. This study aims to address this issue by investigating the relationship between strategic management and organizational productivity in the Nigerian manufacturing sector. Specific variables of interest include: the impact of strategic management on organizational growth; the quality of the design of strategic management; the effect of environmental factors on strategic management and organizational growth; and the lack of implementation of strategic plans (Saunders, Lewis & Thornhill, 2007).
- Objectives of the Study
The broad objective of this study is to examine the effect of strategic management on Business Growth: a study of Nigerian Breweries Plc.
The specific objectives are to:
- appraise the importance of vision, mission and objectives to the realization of business growth in Nigerian Breweries Plc.
- determine the impact of inclusion of members of staff in strategic management on business growth in Nigerian Breweries Plc.
- identify the relationship between strategic formulation and business growth in Nigerian Breweries Plc.
1.4 Relevant Research Questions
The following research questions were asked in order to elicit relevant information for this study.
- To what extent do vision, mission and objectives of organisation enhance the realization of business growth in Nigerian Breweries Plc?
- What is the extent to which inclusion of members of staff in strategic management impact business growth in Nigerian Breweries Plc?
- Is there any relationship between strategic formulation and organisational productivity in Nigerian Breweries Plc?
1.5 Research Hypotheses
The following hypotheses were stated to capture the research objectives and were tested:
- H0: Vision, mission and objectives of organisation have no significant impact on the realization of business growth.
H1: Vision, mission and objectives of organisation have significant impact on the realization of business growth.
- Ho: Inclusion of members of staff in strategic management has no significant impact business growth.
H1: Inclusion of members of staff in strategic management has significant impact business growth.
- Ho: Strategic formulation has no significant impact on business growth.
H1: Strategic formulation has significant impact on business growth.
1.6 Significance of the Study
The organisations, especially Nigeria Breweries Plc will benefit from the study as it will enhance their strategic management which will improve their level of performance through optimum strategic options combination that will give high level of performance of the organisation.
The customers will benefit as the study will lead to cushioning the impact of production cost on the price of the finish products through impactive designing and implementation strategic management. This will reduce the prices for the final products for the customers’ consumption.
The study is useful to Nigerian Breweries Plc, and other related organisations as it appraises the importance of vision, mission and objectives to the realization of organisational productivity in manufacturing companies in Nigeria, hence the knowledge from this study helps the organisations to achieve the set vision, mission and objectives.
The study is useful to all brewery companies in Nigeria as it helps to identify the relationship between strategic formulation and business growth in manufacturing companies in Nigeria with a view of improving business growth.
It is useful to manufacturing organisations because the study provides additional knowledge on assessment of the impact of environmental factors on strategic management performance of the manufacturing companies in Nigeria, the knowledge from this study will to understand the need to carry out environmental scanning to enhance strategic management and hence the level of business growth.
The study is useful to brewery organisations in Nigeria as it provides added knowledge on measuring the extent to which inclusion of staff in strategic management could enhance its implementation and business growth.
The Nigerian government will benefit from the study as it will improve revenue generation through increase revenue generation of the taxes from brewery companies as a result of good implementation of strategic management.
1.7 Scope of the Study
The study will cover an investigation of the Effect of strategic management on Business Growth in Nigerian Breweries Plc. The study will focus on how organisations can improve on their use of strategies to planning to enhance their performance among other competitors in the brewery industry in Nigeria.
1.8 Operational Definition of Terms
Business growth: Organizational growth is a stage a company reaches when it can consider expansion and may look for additional options to generate more revenue. Organizational growth is often a function of industry growth trends, business lifecycle and the owners’ desire for equity value creation.
Business Strategy: It aims at giving a competitive edge to a firm’s product within the specific industry or market segments, which it has chosen for itself.
Productivity: This is the level of productivity achieved by an individual company.
Strategy: Long term plan of an organisation that ensures the achievement of the mission and vision of the organisation.
Project – Effect of strategic management on Business Growth