1.1 Background Of The Study
Most organizations’ operational environment in the contemporary world as observed by Godwin(2011), have been tense as new competitors enter the market on a regular basis. Because of the changing environment, management procedures have become more complicated. Specifically, Governments’ roles as regulators and competitors in the free enterprise system as claimed by Anyanwa(2005), alongside increasing scarce resources, customer dynamic preferences, political priorities, and technological developments have all contributed to the complexity of managerial roles in organizations. These internal and remote external environments in the opinion of Daft(2008), have an impact on a firm’s growth and profitability. Hence, As a result, strategic planning is necessary for business organizations to thrive in such a competitive market (Owolabi, 2012).
Strategic planning as defined by Armstrong(2006), is the set of decisions and actions that result in the formation and execution of plans aimed at fulfilling the objectives of a company. It is one of the most significant techniques for improving organizational performance. Strategic planning, on the other hand, was described by Obasan, & Oginkoya(2013), as a tool for managers to attain better success since it aids in successful planning and decision-making in organizations. It is a strategy that assists organizations in developing a bold vision for the future, strengthening new collaborations, and forging creative and inventive connections among stakeholders.
Additionally, in a dynamic business environment, strategic planning in the opinion of Makinde(2012), becomes a component of contemporary management tool kits and a game plan for coping with the foreseeable uncertainties, improving the organization’s position, retaining consumers, and encouraging organizational performance. In support of this, Alaka, & Tojiani, (2011) confirmed that strategic planning assists in the identification of future organizational opportunities and risks, hence fostering a favorable attitude toward change among different courses of action and financial advantages in business performance. However, most organizations as note by Pearce, & Robinson,(2003) are more concerned with developing strategic plans than putting them into action. According to Thompson and Strickland (2005) and Draft (2008), strategic planning without efficient and quantifiable execution is a waste of time. As a result, in order to achieve strong performance, organizations must combine effective strategy formulation with good strategy implementation.
1.2 Statement Of The Problem
Commercial banks in Nigeria face dynamic and numerous challenges, as postulated by Smriti(2003), such challenges include; increased competition, harsh economic conditions, and, most of the time, failure and distress in their profitability and performance, most likely due to a failure to keep pace with accelerating industrial change and organizations’ strategic policies. Additionally, certain commercial banks according to Adegbie and Fakile (2013), continue to struggle to maintain sustainable performance and development, and have either been discreetly merged or purchased. Thus, majority insolvent commercial banks in Nigeria were liquidated owing to a variety of causes, including ineffective strategic planning.
Strategic planning according to Alaka et al (2011), is critical for the survival of banks in today’s complex business environment. particularly for commercial banks seeking excellence through continuous work to improve performance by increasing profitability, improving customer relations, or developing new services. These components may be attained through strategic planning, which is a key factor in the success of organizations (Piffs, 2015; Adegbie et al 2013). In view of the above, this study is focused on the evaluation of strategic planning and its influence in enhancing the performance of commercial banks in Nigeria.
1.3 Objective Of The Study
The major focus of this study is to evaluate strategic planning and its influence on enhancing the performance of commercial banks. Specifically, the study will be channeled to:
- Determining whether there is a relationship between strategic planning and the organizational performance of commercial banks
- Determining whether strategic planning significantly influences the competitive advantage of commercial banks.
- Ascertaining whether strategic planning positive increase the profitability of commercial banks.
- Ascertaining whether strategic planning aids the growth of commercial banks
1.4 Research Hypotheses
The following statements will be validated in the course of this study:
H01: There is no relationship between strategic planning and the organizational performance of commercial banks.
H02: Strategic planning does not significantly influence the competitive advantage of commercial banks.
H03: Strategic planning does not positively increase the profitability of commercial banks.
Strategic planning does not aid the growth of commercial banks.
1.5 Significance Of The Study
The place of strategic planning has been undermined in most business organizations, which has led to the downfall of many. Most organizations have also lost their place in the competitive market as a result of poor strategic planning. Hence, this study will emphasize more on the relevance and need for strategic planning and its effective implementation. Hence, the management and stakeholders of the organizations will find this study useful.
Additionally, subsequent researchers will use it as a literature review. This means that other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regard to strategic planning and its influence in enhancing the performance of commercial banks.
1.6 Scope Of The Study
Generally, this study is channeled towards evaluating strategic planning and its influence in enhancing the performance of commercial banks. The study, however, will specifically focus on determining whether there is a relationship between strategic planning and the organizational performance of commercial banks; determining whether strategic planning significantly influences the competitive advantage of commercial banks; ascertaining whether strategic planning positively enhances the profitability of commercial banks; and ascertaining whether strategic planning aids the growth of commercial banks. Thus, respondents for this study will be obtained from the top management staff of selected GT Bank branches in Asaba, Delta State.
1.7. The Study’s Limitations
In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents.
In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed.
Moreover, the findings of this study are limited to the sample population in the study area, so they may not be suitable for use in comparison to other commercial banks and business organizations.
1.8 Definition Of The Study
Planning: This is the process of outlining the steps needed to achieve the goal, including hurdles to anticipate, and how to utilize human resources and opportunities to achieve the expected outcome.
Strategic Planning: This is a process in which organizational leaders determine their vision for the future as well as identify their goals and objectives for the organization. The process also includes establishing the sequence in which those goals should fall so that the organization is enabled to achieve its stated vision.
Organizational Performance: This indicates how well a company or institution has met its goals and objectives.
Adegbie, F.R., & Fakile, S.A. (2013), Strategic planning and performance: Catalysts for sustainability and stability in the Nigerian financial sector. European Scientific Journal,9 (25).
Alaka, N.S., Abass, O.A. &Tojiani, Adideen, A. (2011). Impact of strategic planning on the performance of insurance companies in Nigeria.European Journal of Humanities and Social sciences, 5(1), special Issue.
Anyanwa Okoro, S. (2005). Methods and process of bank management. Revised and Enlarged. Enugu. Johnkens and Wotly Nig. Ltd.
Armstrong, G. (2006).Principles of marketing.
Daft, R. (2008). New era of management.
Godwin, C.O. (2011). Bank reforms and performance of Nigeria banking sector: An empirical analysis retrieved 18Nov. 2014.
Obasan, K.A., &Oginkoya, A.O. (2013). Strategic planning and bank management in Nigeria: Issues for consideration. Journal of Research and Development; vol.1(2).
Owolabi, S.A., &Makinde, OG. (2012). The effects of strategic planning on corporate performance in university education.
Pearce, J.A., & Robinson, R.B (2003). Strategic management, formulation, implementation and control.International Education, Boston McGrawHill Inc.
Piffs, R.A. (2015).Strategic management: Building and sustaining competitive advantage.
Smriti, C. (2014). Importance of commercial banks in economics: Functions and aims. www.yourarticlelibrary.com/—/10989/. Retreived,20/11/14.
Thompson, A,A., & Strickland, A.J. (2005). Strategic management concepts and CASES.12th edition. London. Richard Irwin Incorporation.