CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Strategic planning is the process of determining the major (bedrock) objectives of an organization and the policies and strategies that will govern the acquisition, use and disposition of resources to achieve those objectives. Steiner, et al in Imaga, E.U.L (2001).
Strategic planning is a process tat involves analyzing opportunities and threats in the market place, while building the strength and correcting the weakness within firms also involves setting goals for specific product market and firm Bernet and Wilsted (1988).
Since it is perceived as a mediating force between organization and its environment, it has become highly imperative for business organizations to adopt it so as to be efficient to survive. High prices due to increasing products 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 market 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 of 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 manager in recent years. And since it defines the fundamental goals and objectives in specific terms, and determines the means to achieve them, as well as provides basic, long range framework into which other firms 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.
Consequence upon that, business organizations make plan to able to predict unforeseen contingencies, minimize production costs as well as wastages and then be able to grape with competitions in a programmed manner, which is the essence of strategic planning. All business organizations need to plan ahead whatever the kind of market, competitive, oligopolistic or 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 its continued profitability. A firm operating in an oligopolistic market has more critical reasons for planning because of the fierceness of the competition in such markets, and even the monopolistic organization has to continually device new strategies to maintain its position or else it will 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 outstanding successful and while others achieve marginal or moderate success others fail alarmingly. It has been emphasized that most corporate success are as a result of the ability of their mangers to put critical levers to produce the desired and significant results in terms of increased productivity which leads to high profitability of their organizations. We may identity these critical levers as organizational strategies. Strategy and strategic planning in the context of business organizations, refers to major actions, programme that are used by organizations to achieve their mission and goals. The focus of all business organizations is viability and profitability. The first requirement –of the spirit of organization is high performance standards for t—-he group as well as for individual organization. A successful organization is most often an efficient enterprise; one of the major focuses of management by objective is to have managers set high performance standards for themselves. A manager performs his function 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 the organizations objectives are achieved. A manager work with, and through people and other resources to realize these organizations objective, 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 subjected to the “law of acceleration” which suggest 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 advantage which provides the basic rationale by which customers will prefer that firm to others. Unfortunately, though, Nigeria presents a strong picture of a turbulent and unpredictable environment for organizations to thrift particularly the manufacturing sector. This is due mainly to constant changes in 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 needs for strategic planning seems too obvious 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 other wise in bringing to fruition the social and economic yearnings of the nation has direct impact on the economy.
It is against this background that this study intends to access the effects of strategic planning on the productivity of the Emenite Nigeria Limited and Innoson Manufacturing Company Limited. 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 STATEMENT OF THE PROBLEM
After the euphoria of national independence, the task of national development was brought down on Nigerians to pave way for individual growth