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.
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.
conclusion
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
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
