THE EFFECT OF STRATEGIC PLANNING ON ORGANISATION PRODUCTIVITY

(A CASE STUDY OF THE NIGERIA BOTTLING COMPANY PLC ENUGU)

By

ANIH CHARITY C.

Presented To

Department of Business Administration and Management

ABSTRACT

Failures of the corporate business organization in Nigerian a trend that is now becoming a rule rather than the exception in our national life. It has assumed such a phenomenal dimension that now threatens the fabric of national economy. This traffic development has induced fear into the minds of many potential investors (government and individuals) thus discouraging meaningful investments eminent business scholars and practitioners have blamed this ugly development on non-application of strategic planning by these corporate business entities in their management styles. They believe that it was either because the present crop of corporate executives are ignorant of the concept of strategic management or that they lack the required skills to meet with the expectation of strategic planning. This study has, therefore, attempted an up-to-date review of existing literature on strategic planning process, and has also analysed the extent to which this could be used to enhance organizational productivity excerpts from previous work done in this area, questionnaires, interview and personal observations formed the primary sources of data. While periodical from this Nigerian Bottling Company Plc newspapers, journals constituted other sources. Two hypotheses were formulated and put to test using chi-square distribution for analysis one, while analysis two was put to test using product moment co-efficient of correlation and the T-test distribution to prove that the internal and external environment factors surrounding the company have significant influence on its strategic planning and the corporate performance of the company too. This revealing that in real life situations strategic planning and its application have the potential of reviewing that in real life situations strategic planning and its application have the potentials of reviewing and sustaining corporate entities through increased productivity. Therefore top company management should engage only skilled personnel's who would adopt scientific techniques to plan strategically.

TABLE OF CONTENT

COVER PAGE

TITLE PAGE

CERTIFICATION

DEDICATION

ACKNOWLEDGEMENT

ABSTRACT

TABLE OF CONTENT

CHAPTER ONE

11 INTRODUCTION

11 BACKGROUND OF THE STUDY

12 THE STATEMENT OF THE PROBLEM

13 OBJECTIVES OF THE STUDY

14 TEST OF HYPOTHESIS

15 SIGNIFICANCE OF THE STUDY

16 SCOPE AND LIMITATIONS OF THE STUDY

17 DEFINITION OF TERMS

REFERENCE

CHAPTER TWO

20 LITERATURE REVIEW

21 WHAT IS PLANNING?

22 REASONS FOR PLANNING

23 PROCESSES OF PLANNING

24 DURATION OF PLAN

25 STRATEGIC PLANNING CONCEPT

26 WHAT IS STRATEGY?

27 STRATEGIC MANAGEMENT DEFINED

28 THE TERM 'STRATEGIC PLANNING'

29 PRODUCTIVITY PROBLEMS

REFERENCE

CHAPTER THREE

30 RESEARCH METHODOLOGY

31 SOURCES OF DATA

32 PRIMARY DATA SURCES

33 SECONDARY DATA SOURCES

34 POPULATION OF THE STUDY

35 QUESTIONNAIRE

36 DETERMINATION OF THE SAMPLE SIZE

37 TECHNIQUES OF DATA ANALYSIS

REFERENCES

CHAPTER FOUR

40 PRESENTATION AND ANALYSIS OF DATA

41 PRESENTATION OF RESULTS

42 TEST OF HYPOTHESIS

REFERENCES

CHAPTER FIVE

50 SUMMARY OF FINDINGS

51 RECOMMENDATIONS

52 FINDINGS

53 CONCLUSIONS

REFERENCES

BIBLIOGRAPHY

CHAPTER ONE

10 INTRODUCTION

11 BACKGROUND OF THE STUDY

Strategic planning which is process chart involves analyzing the opportunities and threats in the market place, while building the strengths and correcting the weaknesses within the firm, also involves setting goals for specific product marker and for the firm (Bernett and Wilsted (1988) and since it is perceived as a mediating force between the organisation and its environment it has become highly imperative for business organisation to adopt it so as to enhance productivity

This is sequel to that fact chart business enterprises under the prevailing economic environment of today, have to be up and doing so as to be efficient to survive High price due to increasing production 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 costs of production, diminishing markets and environmental uncertainties, business organization have had to compete move aggressively with one another to attain acceptable volumes of production, sales and a good marker share² 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 turbulence in the economic waters of the nation, makes it very doubtful if any modern business organisation of reasonable size can survive this competitive environment without adequate strategic planning No wonder, therefore, that strategic planning has become increasing important to managers in recent years And since it defines fundamental goals and objective in specific terms, and determines the means to achieve them as well as provides a basic, long-range framework into which other forms of planning can fit, it can, therefore, be said to have a very strong influence on the survival and growth of an organizational most especially in a volatile environment

Consequent upon that, business organizations needs plans to be able to predict unforeseen contingencies, minimize production costs, as well as wastage and then be able to grapple 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 marker needs to plan and design strategies such as will ensure first, its survival and when its continued profitability A firm operating in an oligopolistic market has move critical reason for planning because of the fierceness of the competition in such marker and even the monpolist organization has to continually develop new strategies to maintain its position or else it will soon be faced with competition A wrong investment decision in today's business would is likely to entail a huge financial loss A fundamental and pertinent question arises as to why some organizations are outstandingly successful while others achieve marginal or moderate successes and others fail alarmingly It is also asked as to what it is about organizations that tend to make some ability of their managers to pull critical levers at important points in the evolutionary development of their companies

For these managers, the trick is knowing which levers to pull, and when to pull these levers to pull, and when to pull these levers to produce the desire and significant results in term of increased productivity which leads to high profitability of their organizations We may identify these critical levers as organizational strategies Strategy and strategic planning in the context of business organizations, refer the major action programmes that are used by organizations to achieve their mission and goals The focus of all business organisation is viability and profitability The first requirement of the spirit of organisation is high performance standards for the group as well as for individuals in the organisation A successful organisation is most often in efficient enterprise one of the major focuses of management by objectives is to have managers set high performance standards for themselves A manager performs his functions 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 organization's objectives are achieved A manager works with and through people and other resources to realize these organisation objectives, Akpala Agwu (1990)

As modern business activities widen, environmental scanning and planning become difficult and more relevant today's business conditions have continuous to change so fast to emphasize a growing need for continuous business intelligence activities and strategic planning as the only option to anticipate failure 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 this makes it complicated in many highly technical firms that are subject to the "law of acceleration" which suggests an increasing rate of change Since strategic planning arms at finding how a company competes successful within it environment, it is therefore said to be based on the principles 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 advantages, which provide 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 the political and economic conditions in the country The effect of this on the manufacturing sector is quite stupendous This is especially so when once 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 need for the 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 otherwise 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 assess the effect of strategic planning on the productivity of the Nigerian Bottling Company 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

12 THE STATEMENT OF THE PROBLEM

After the euphoria of national independent that task of national development dawn on Nigerians to pave the way for individual growth Nigerian policy-makers then placed the thrust on industrialization on the shoulders of the manufacturing sector However, the progress today in this direction leaves more to be desired The present stale of the manufacturing sector has been perennially bedeviled by unsteady and less result oriented production activities

It is a commonplace tap now to hear out so-called industrialists and economic watchers alleging that low productivity, operating below installed capacity utilization, unfavourable socio-political and economic environments and continued depreciation of national currency against the dollar, are responsible for this ugly situation But must fundamental to this study is the factor, productivity Productivity is the output per unit of a factor of production It is dependent on the availability of the productive resources in requisite proportions and how much output each unit of resources can be made to yield The problem with Nigerian manufacturing sector is how to combine these two factors However, quite a number of management ideas and philosophies have been applied, but to our disappointment, they have not achieved their attendant ends Many critics have blamed it on the peculiarity of the Nigerian socio-political and economic environment, while others on the haphazard application of these management ideas and philosophies

We shall take the view of the letter as the almost of this study Planning is one of their most fundamental management processes which seeks to set in advance purposes and objectives an entity may seek to achieve through planning, the when, the who, and the how is clearly defined within a time horizon for the achievement of a specified goal or goals thus emphasizing a special relationship with productivity From the strategic management paradigm, output per unit of a factor of production should be planned in such a way that it identifies the opportunities and threats in the organization's environment, evaluate the strengths and weaknesses of the organization, designing structures, defining roles, luring appropriate people, and developing appropriate reward to make contribution Against this background, what is the effect of strategic planning on productivity in the Nigeria Bottling Company Plc

13 OBJECTIVES OF THE STUDY

The purpose of this study is to ascertain the impact of strategic planning has on

the level of productivity of manufacturing industries with particular references

to the Nigeria Bottling Company Plc Eastern region specifically, the study is

intended to achieve the following objectives:

(a) To assess the impact of environment factors on the strategic planning of this company and

(b) To evaluate the relationship between strategic planning and corporate performance of this company

14 HYPOTHESIS

Following the research purpose and objectives, as well as the core problem being investigated by the study, the following hypotheses will be tested

HO Hi: The internal and external environment factors surrounding this company significantly effect its strategic planning

Hi H2: There is positive relationship between strategic planning and the corporate performance of the company

15 SIGNIFICANCE OF THE STUDY

In the first place, this study should be of immense assistance to business students, business practitioners, systems designers and indeed all persons who are concerned about the proper informational input into management planning processes By bringing into focus the state of the art in the literature, it is also going to be of assistance to lectures

The manufacturing sector, as earlier indicated are very important to the company of this country, therefore, since this is assumed to be a thorough study of strategic planning in this sector, it will reveal its level of managerial efficiency and effectiveness And this knowledge will be vital to both the government and owners of industries Furthermore, it will provide a model for an efficient and effective strategy planning, which will, assists managers in this sector

A practical significance will be the identification of the factors responsible for the high failure rate of industries particularly in a competitive industry like soft drink - producing companies of which the Nigeria Bottling Company Plc is one

The knowledge will help determine the structure of the business environment available to them and be able to forecast future conditions Good business is the ability to make profit and sustain the life of the company This can only be achieved through a proper knowledge of strategic planning

Finally, researcher will find this as a base for continued assessment and further research on the subject The value of the investigation to professionals, practitioners and persons or corporate bodies cannot be over emphasized since they are involved in the operations of these establishments

16 SCOPE AND LIMITATIONS OF THE STUDY`

As the title of this research work depicts, its main objective is to highlight the potentials of strategic planning It also attempts to establish a positive and direct relationship between strategic planning productivity of an organization with particular reference to the Nigerian Bottling Company Plc Eastern Region The study therefore is centred only on strategic planning as management machinery There is no intention to delve into the evaluation of traditional management concepts and principles as applied in practice Rather occasional references will be made to them when necessary in elucidation of relevant issues The out of the research may not be freely applied to all food drink producing companies in Nigeria

However, following the effects of environmental peculiarity, the result of this study may be more validly applied to those operating in the Eastern region

On the other hand, every research is bound to embrace some impediments in attempting to realize its basic objectives In the course of this study, the researcher encountered some constraints in the form of administrative bureaucracy especially at the regional head office in Enugu where the research was not attended was not attended to except there was a written note from the regional General Manager instructing that they go ahead managers had been given

Infact, they bluntly refused to accept to inquire and request for information They were of the opinion that company policies and facts are purely for internal consumption only, especially more so, in a highly competitive industry like their when every policy should be regarded as a top secret

The major constrain to this study was money The financial demand in respect of transportation was enormous especially in this prevailing economy down turn The situation was even compounded with the scarcity in petroleum products which in turn sky-rocketed the cost of traveling from one plant location to another or even to the corporate headquarter of the Nigerian Bottling Company Plc in Lagos

17 DEFINITION OF IMPORTANT TERMS

Strategy:

This outline the fundamental steps that management plans to undertake in order to reach an objective or set of objective

Planning:

This is the act of choosing a course of action and deciding in advance what is to be done in what sequence, when and how

Strategy formulation:

This is the task of analyzing the organization's external and internal environment and then selecting an appropriate strategy

Strategy implementation:

It is the task of designing appropriate organizational structures and control systems given the organization's choice of strategy

Corporate strategies:

This address what business an organization will be in and how resources will be allocated among those businesses

Business strategy:

This focuses on how to compete in a given business

Functional strategy:

It focuses on the short run, "how to" issues of implementing strategies

Strategic managers:

These are individuals who bear responsibility for the overall performance of the organization or for one of its major self-contained divisions

Strategic adult:

This is concerned with analyzing and assessing what has been achieved in the past and what the organization is capable of achieving in the future

Strategic gap:

This is the difference in the level of performance called for in the firm's state objective and the level of performance that seems likely to result from the continuation of current operations

Scenarios:

This is a form of educated guesses made by planners Objective: a statement of what is to be achieved

Goal:

This is synonymous with objective; a statement of what is to be achieved

Mission:

This defines the basic purpose or purposes of the organization; usually includes a description of the organization's basic products and/or services and a definition of its market and/or sources of revenue

Productivity:

This is an economic measure of efficiency indicating what is produced relative to resources used to produce it

Aggregate productivity:

This is the total level of productivity achieved by a country

Industry productivity:

This is the total level of productivity achieved by the firms in a particular industry

Company productivity:

This is the level of productivity achieved by an individual company

Individual productivity:

This is the level of productivity attained by a single individual

Total factor productivity:

This is an overall indication of how well an organization uses all of its resources to create all of its products and services

Partial productivity ratio:

This ratio uses only one category of resources

REFERENCES

John H Barnet and William D Wilsted (1988), Strategic Management:

Concept and Cases Boston: PwsKent Publishing Company, 98

Isa CS (1990) Effective Utilization of Marketing Research in a

Comparative Environment: The Segmentation Approach: Management in Nigeria, Vol 26 N0 2, Pp 23-30

Akapal A (1990) Management: An Introduction and the Nigeria Perspective

Enugu Precision Printers, P3