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Strategic Management and Productivity

September 10, 2019

Strategic Management and Firm Performance: A Study of
Selected Manufacturing Companies in Nigeria

Strategic Management and Firm Performance: 

Selected Manufacturing Companies in Nigeria

European Journal of Business and Management  
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol.7, No.2, 2015 (the information collected from  article of Monday James Unam uploaded to public on Jun 25, 2016.)

                     The  study  of  strategic  management  has  drawn so  much attention  among  business  practitioners  and  academic researchers. In (2014-2015) decades as globalization came fully into limelight. However, in Nigeria, there are few empirical studied conducted to investigate the relationship between strategic management and firm performance. Here are the  main  objective of  the  study was to  provide  further  evidence  on  the effects  of  strategic  management (SM)  on  the  performance  of  manufacturing  industries  in  Nigeria.  Five  large-scale  quoted  manufacturing  firms located  in  Lagos  metropolis  were  selected.  The  study  relied  on  primary  data  which  were  obtained  using structured  questionnaire  administered  to  50  purposely  selected  respondents  of  the  selected  firms.  The  data collected  were  analysed using  Analysis of Variance  (ANOVA)  and  correlation analysis  as  well  as  descriptive analysis in pursuance of the stated specific objectives of the study. The result showed that strategic management had  significant  effects  on  the  profitability  and  operational  performance  of  the  selected  manufacturing  firms. Also,  strategic  management  had  positive  relationship  with  the  level  of  competition  of  the  firms.  The  study concluded  that  the  practice  of  strategic  management  is  sine  qua  non  in  boosting  firm  performance  in  the manufacturing industries in Nigeria.  The Keywords of the study are: Strategic Management, Profitability, Operational Performance, and Level of Competition.
1.      Introduction
                  We all are agreed, In today’s world, there is a rapid change in the business environment such that the product-market competition is ever increasing among industries, information technology improving in various industries as the day goes by in a way that  firms  use internet facilities and social network  to  advertise  and market their products and  services. To compete  successfully  in  this present  competitive  business  environment,  firms  continually need  to  make  some strategies  and  take  some  actions  by  improving  product  quality  and  productivity,  reducing  product  cost, promoting  product  and  process  innovations,  and  improving  product  speed  to  the  market  and  customers’ goodwill.  Firms  therefore  need  to strive  to be  at  par  with  the  global  change,  achieving  competitive  advantage position and enhancing performance relative to their competitors .Strategy is a detailed plan for a business in achieving success. Since business is a high-stakes game, a poorly planned and executed strategic move could result in loss of millions of dollars, thousands of jobs, or even bankruptcy of business. This calls for strategic management in order to develop an effective strategy. Thus, strategic management comprises the set of decisions and actions that result in the formulation and implementation of plans designed to achieve a firm’s objectives.  Strategic  management  is  the  process  of  making  decision,  planning,  coordinating  and  taking  some actions by the top managers of a company in order to achieve set goals and objectives. Decisions are of little use unless they are acted upon. Firms must take the necessary actions to implement their strategies. This requires top managers  to  allocate  the necessary  resources and  to  design the organization  to bring  the  intended  strategies  to reality. Because it involves long-term, future-oriented, complex decision making and requires considerable resources, top-management participation is crucial.

Image result for strategic management process
Figure 1. relationship between strategic management process and firm performance.

Data Analysis and Discussion in the study
 5.1 Socio-Demographic Characteristics of Respondents Fifty copies of the questionnaire were administered in the study, and the all the copies were thoroughly filled and returned. The  data  analysis in the study began  with  the  socio-demographic  characteristics  of  the respondents  which  include academic qualification,  professional qualification, designation, and working experience. The analysis in Table 1 showed that all the respondents had at least a first degree or its equivalent with management-related professional qualifications  such  as  Chartered  Financial  Analyst  (CFA),  Associate  of  Certified  Chartered  Accountants (ACCA), Associate of Chartered  Institute  of  Tax (ACIT), Associate of Charted  Accountants  (ACA),  Associate of Chartered Institute of Bankers (ACIB), Member of Chartered  Institute of Personnel  Management  (MCIPM), Member  of  Certified  Quality  Process  Analyst  (MCQPA),  Member  of  Nigerian  Institute  of  Management (MNIM),  Associate  of  Chartered  Management  Accountants  (ACMA)  and  Member  of  Institute  of  Chartered Chemist  of  Nigeria  (MICCON).  The study said they  have  a  good  knowledge  of  strategic  management  and  therefore  the information provided could be seen as adequate to a very large extent.
From the research study they are In  addition  to  their  academic  and  professional  qualifications,  the  respondents  occupied  top management  positions  with  good  years  of  service  in  the  firms.  The  positions  include  Production  Manager, Supply  Chain  Manager,  Human  Resource  Manager, Branch  Manager, Procurement  Manager,  Chief Executive Officer,  Senior  Engineering  Office  Manager,  Store  Manager,  Quality  Assurance Manager,  Finance  Manager, Marketing  Manager,  Facility  Manager,  Internal  Auditor,  Administrative  Manager,  Chief  Accountant,  and Managing Director. The results showed that the respondents are conversant  with strategic  management  process which  is  usually  associated  with  top/senior  management.  Therefore, the data obtained from the study caliber of respondents could be adjudged reliable.

The  analysis  in research  above Table  2  showed  that  92% of  the  respondents  indicated  that  the  firms  conduct  environmental scanning,  84%  of  them agreed  that the  strategies  were  formulated  in  line  with  the  firms’  vision  and  mission statement, and 76%  agreed  that  the  measures  which include  programs,  budgets  and  procedures adopted  for  the implementation of strategies and policies had been effective. Furthermore, 76% of the respondents indicated that the  firms  regularly engaged  the  tool  of  evaluation  and control of  corporate  activities  and  performance  results. These  results  showed  that  the manufacturing  firms  adequately employed  the  tools  of  environmental scanning, strategy formulation, strategy implementation, and evaluation and control to keep themselves market champions.

The  analysis  in the research Table  3  also revealed  that the  firms  practiced strategic  management  to  a very  large extent  as indicated by about 80% of the respondents. The results of the study is quite contrary to the findings of Muogbo (2013) who asserted  that  strategic  management was not yet a common  business  practice  among manufacturing firms in  Anambra State, in particular and Nigeria in general. The study showed that large-scale manufacturing firms in Nigeria adequately engage the tools of strategic management to gain competitive advantages.

The researcher analysis in Table 4 showed the effect of strategic management process on the operational performance of the manufacturing firms.  The table showed Over  80%  of  the  respondents  indicated  that  strategic  management  boosts  their  firms’ efficiency (reduces costs and increases productivity). It  was confirmed by a high mean value of 4.30, out of possible maximum value of 5.00.  Ninety  percent  of  the  respondents  agreed  that  strategic  management  aids timely delivery of the  products  of  the  firms, which  was  attested  to  by  a  very high mean  value of  4.36.  Also, a high proportion of the respondents (90.0%) agreed that strategic management aids the utilization of human and material resources, and it was confirmed by a high mean value of 4.26. The researcher analysis further revealed that 88.0% of  the  respondents  agreed  that  strategic  management  brings  about  the  innovation  of  products,  and  it  was confirmed by a high mean value of 4.30. Also, a very high mean of 4.46 depicted that almost all the respondents indicated that strategic management improves the product quality of the companies.

The Hypothesis  One  of  the  study in the researcher include in this research, the researcher said:  “Strategic  management  has  no  significant  effect  on firm  operational performance”, the level  of practice of strategic Management was regressed  with operational  performance of the selected manufacturing companies. From the  analysis on research Table 5, although the strategic management process of the selected  firms could barely explain about  25% of the change  in operational performance as indicated by the R2 value,  there  was  a  positive  relationship  between  strategic  management  process  and  the  firms’  operational performance  (R  =  0.508).  it  indicates  that  as  the  level  of practice  of strategic  management  increased,  the operational performance of the  firms also increased. Furthermore, the analysis of variance (ANOVA) in Table 6 showed that strategic management practice had significant effect on firm operational performance (F = 16.729, p <  0.05).  These results were consistent with previous similar studies by Covin and Slevin (1989), Meier et al. (2006) and Muogbo (2013) which revealed that strategic management enhanced operational performance as well as the structural development of organisations.

The  researcher analysis  in  Table  7  showed  the  effect  of  strategic  management  practice  on  the  profitability  of  the manufacturing  firms.  Out  of 50  respondents,  88.0%  agreed  that the  profit  margin of  the  firms  improved as  a result of strategic management practice, and this was confirmed by a high mean value of 4.30 in a 5 point scale. Besides, a  high proportion (84.0%) of the respondents agreed that strategic  management brought about increase in  the  companies’  sales  turnover,  the researcher said which  was  confirmed  by  a  high  mean  value  of  4.12.  The analysis further revealed that 90.0% of the respondents agreed that strategic management increased the returns on investment of the companies, and the researcher said  it was confirmed by a high mean value of 4.26.
The  test  the  Hypothesis  two  of  the  study of this research, the researcher said :  “Strategic  management  has  no  significant  effect  on  organisational profitability”,  the  level  of  practice  of  strategic  Management  was  regressed  against  the  profit  margin  of  the selected  manufacturing  firms.  From  the  analysis  in  Table  8,  although  strategic  management  practice  in  the selected firms could  explain  about  32%  of  the  change  in  profitability as  indicated by the  R2 value, there was a positive relationship  between  strategic  management and  firm  profitability (R = 0.562).  This  implies  that  as  the level  of  strategic  management  practice  increases,  organisational  profitability  also  increases.  Moreover,  the analysis of variance (ANOVA)  in  Table  9  showed that  strategic management practice  had  significant  effect  on the  organisational  profitability  (F  = 22.131,  p  <  0.05). the researcher said these results of his study are  consistent  with  the  past studies of Gichunge  (2007) and Dauda et al. (2010) that  strategic  management process enhances organizational profitability.
The researcher analysis in the Table 10 showed the effect of strategic management on the firms’ ability to compete favorably in manufacturing industries  in  Nigeria.  The analysis showed that majority (90%)  of the respondents agreed that their firms gained market leadership (increase in market share) due to strategic management practice. It  was confirmed  by  a high  mean value  of 4.30.  It  also  showed  that 82.0%  agreed  that  strategic  management makes their  products  to  be  readily  available in  the market,  and  it  was  confirmed  by  a  mean  value  of 4.26.  Besides increasing market share and promoting product availability, strategic  management process in the  manufacturing firms  was  found  to  have  been a  viable  tool  to  enhance  marketing  strategies  and  firm’s flexibility  to respond quickly  to  changes in  the  business environments.  It   was  attested to  by  high mean  values  of 4.22  and  4.30 respectively.
The test of   Hypothesis three of the study the researcher mention: “There is  no positive relationship between strategic management and firm’s competition”, Pearson correlation analysis was run (see Table 11) and the results showed that there was a significant and positive relationship between strategic management and the level of competition of the firms (r = 0.623,  p  <  0.01).  This  implies  that  strategic  management  is directly  related to  firm’s  competition;  that  is,  as strategic  management  practice  increases,  the  level  of  competition  also  increases.  As noted by Dauda et al. (2010), the research says strategic management process enhances firm’s market share.

Strategic management is  the management of the process of  making and implementing strategic decisions  which gives an organisation the competitive advantage. This  study revealed that strategic management was practiced to a large extent in the  large-scale manufacturing firms in Nigeria. Also, strategic management  was  founded  to  be  a veritable tool for improving firm’s profitability, operational performance, and competition. From the information on  the  analysis  obtained  from  the  respondents  and  the  interpretation  of  the  tested  hypotheses,  the researcher concluded his study, there was a  significant relationship between strategic management and corporate performance of the selected manufacturing firms.  Based on the findings in his study, he recommended that firms (whether small, medium or large-scale organisations)  in  Nigeria  should  make  it  a  matter of  policy  to  give  strategic  management  process the  topmost priority  as  it  is  a  critical  success  factor  in  organisations.  In  addition,  entrepreneurial  institutes  and  business. schools in Nigeria should intensify their efforts to promote the learning of strategic management.
Also, the researcher highlighted  for  future  research  direction  his  study  should  be  replicated  in  the  Nigerian  service  industry which constitutes a significant proportion of businesses in the country and also he said This will provide further evidence on the relationship  between  strategic  management  and  firm  performance  in  Nigeria  in  particular,  and  developing countries in general. i also want to say Research improves services and treatments also too. not just for you but also for future generations. It helps develop new tests for diagnosis, treatments and processes that could eventually help your children, or even your grandchildren. You may gain access to treatments that are not yet readily available to the public. make a  research effectively before you go to start a new things.

European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.7, No.2, 2015
European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol.7, No.2, 2015
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