Description
Abstract about strategy management and business success damiebi denni fiberesima.
26
Strategy Management and Business Success
Damiebi Denni Fiberesima
Central Engineering
Shell Petroleum Development Company
Nigeria
Nazatul Shima Abdul Rani
School of Management
Asiae University
Kuala Lumpur, Malaysia
Abstract
This paper examines the practice of strategic management in indigenous firms and to ascertain the impact of
strategic management on business success in Nigeria. Forty firms were chosen from small, medium and large scale
industries using stratified sampling. The major findings of the study showed that 17 percent of the firms engaged in
deliberate and systematic strategic management, 57 percent were disorganised in their practice of strategic
management and 25 percent made no attempt. The economic and the industry/competitive factors were found to be
the most favourable factors for the firms. Strategic management was found to be positively related to corporate
success. The study concluded that most SME firms are involved in some level of strategic management and that
strategic management improves business success, and thus recommends that entrepreneurs need to be more
organised in their practice of strategic management in order to facilitate the growth and success of their firms.
Keywords
Business, success, growth, entrepreneurship, capability, indigenous technology, strategic management
1. Introduction
Entrepreneurship globally and in Nigeria dates back to when people found the need to create wealth to take care of
their families and consequently, attain a higher social status in the community. Traditional African economics were
usually called subsistence economics. Various communities produced surpluses of given commodities, which could
be exchanged for items which they are lacking (Rodney, 1976). Occupational activities such as farming, fishing,
weaving, sculptor, carving, trading, bead making, glass making, leather making etc. were the sources of income, and
later developed into enterprises but in a smaller scale. Agriculture products contributed 84% of Nigeria total exports
and 12% of total foreign exchange earnings (Bailey, 1976).
Government through the enactment of Development Plans, the indigenisation policy of April 1974, provision of
subsidies, tax relief and other incentives has played a role in trying to redirect industrial development. A report in
the New Nigeria Newspaper March 1992 quoting the UNDP/UNIDO, declared that the economic development,
industrialization and indigenous technology development of a nation is dependent on its indigenous enterprises. The
Fourth National Council on Industries, which met in Owerri in 1991, presented classification of enterprises
according to volume of capital invested (but excluding land) as follows:
Table 1: Industry and capital investment categories in Nigeria
Industry Capital Investment
Cottage industry Below N500, 000
Small scale industry N 500,000 – N 5,million
Medium Scale industry N5million – N20 million
Large Scale industry above N20 million
Proceedings of the 2012 International Conference on Industrial Engineering and Operations Management
Istanbul, Turkey, July 3 – 6, 2012
27
1.1 Problem Statement
Indigenous enterprises in Nigeria reveal that the entrepreneur finds himself in a harsh environment, with respect to
the unstable political situation. The lacking of growth from small to medium and to large-scale enterprise status and
the failure of indigenous enterprises has caused economy to decline (Bailey, 1976; Chandler, 1962; Ottih, 1998).
The question is, how indigenous entrepreneur achieve business success despite the odds. The thrust of this study
lies in identifying the strategic management processes employed in the management of Nigerian business firms and
the levels of success.
1.2 Objectives of the Study
The specific objectives are as follows:
• To investigate whether indigenous entrepreneurs are using strategic management, and to what extent it is used.
• To ascertain why many indigenous enterprises are stagnant in growth, why some even fail, and why some others
succeed despite the fact that they are all operating in the same environment.
• To highlight the influence of the general environment and industrial factors in the use of strategy management by
indigenous entrepreneurs.
• To identify and make recommendations on the roles of government in helping indigenous entrepreneurs to
achieve success.
1.3 Research Question
The research questions are as follows: -
1) Do indigenous entrepreneurs in Nigeria engage in strategic management?
2) What is the impact of environmental factors on the various types of indigenous firms?
3) Does the business environment in Nigeria affect the use of strategic management by indigenous entrepreneurs?
4) Do indigenous entrepreneurs in Nigeria who are engage in strategic management achieve success?
1.4 Significance of the Study
This study discusses the usefulness of strategic management and charts a path for the indigenous entrepreneur to
achieve success despite the rapid changes in environment. Indigenous entrepreneurs in Nigeria and those wishing to
become entrepreneurs will benefit greatly from this study.
2. Literature Review
2.1 Business Success
Hay Report 2001, stated that business success can be attained by being competitive in the market, the people, and
adopting new technology. Without people the business strategy cannot be implemented, and no strategy, no matter
how good can succeed. People are a resource that cannot be neglected not even partially, if goals are to be achieved
(J auch and Gleuck, 1980).
2.2 Strategic Management Process
The strategic management process is a combination of strategy formulation, strategy analysis and strategy
implementation (Mintzberg, 1989). Strategic management is geared towards achieving corporate objectives. It
provides a guiding force that integrates the efforts of all levels of staff in an organisation. Payne (1985) identified
strategic management as one approach to the ‘big picture’; they believed, it stresses the importance of focusing on
overall company goals, rather than on individual products or division within the company.
2.3 Strategy Formulation
This activity is entrepreneurial in nature, it entails setting a direction for the organization by identifying new
business opportunities, and also ensuring that the business is not overcome by occurrences in the environment.
Strategy formulation arms the entrepreneur so that he is not taken by surprise but makes him alert and responsive to
the rapidly changing environment. Strategy formulation includes vision, mission, objectives, environment analysis
and a choice of strategy based on the outcome of analysis and diagnosis (Drucker, 1988; Frederickson, 1988;
Hambric, 1986).
28
2.4 Purpose and Mission of Enterprises
A vision is a picture of the future of the environment within which the future of the organisation will operate along
its competitors. A vision indicates to the entrepreneur the future position of the firm. This is quite different from a
mission; however the vision influences and determines the mission and even the objectives (Dess and Miller, 1993).
A mission of a business provides a statement to insiders and outsiders of what the company stands for – its purpose,
image and character. The mission can be seen as a link between performing some social function and more specific
targets or objectives of the organisation.
2.5 Objectives of Business Enterprises
Objectives are goals, which the entrepreneur wants to attain. There are the ends or goals, which the organisation
seeks to achieve through its activities and operations. Whatever size of the business, the following key areas ought
to be considered of what objectives should be (Redden, 1971). The type of objectives is dependent on the expected
time to achieve the objective or its orientation. Short- range objectives (months-5 years) and long range objectives
(5- more than 10 years), and internally oriented objectives (wants to achieve for itself such as market share, growth,
profitability and productivity) and externally oriented objectives (to satisfy external interests such as customers,
suppliers, creditors etc) (Ottih, 2002).
2.6 Environment Analysis
Environmental analysis involves identifying opportunities and threats in the general environment and determining
strengths and weaknesses in the firm or internal environment. There are a large number of factors, which affect the
firm in each sector of the environment, and these factors interact with one another (Barnard, 1992). Strategic
analysis is used as the foundation for the strategic management process for most businesses (Dess and Miller, 1993;
Koter, 1990; Lenz and Engledow, 1986; Rachman and Mescom, 1978).
2.7 Strategy
Two types of strategies have been identified (Mintzberg, 1989) as intended strategies (strategies managers propose,
design and expect) and realised strategies (strategies that materialise in time). Strategy is the catalyst, main thread
and thrust of a business, whereby it is the dynamic element for managing a company to achieve its results in the
competitive market place over a long run. It is dependent on how to use resources of the firm effectively in an ever
changing environment that integrates with the operation of the business (Bebault, 1982; Karatsu, 1985).
2.8 Alternatives Strategy
After analysing and diagnosing the environment; assessing the enterprise strengths and weaknesses; and preparing
the environmental threat and opportunity profile (ETOP) and the Strategic advantage profile (SAP); the entrepreneur
should be in a position to consider the underlying potential for a gap between expected and ideal performance
outcomes. The need to make choices between strategic alternatives that will fill the gaps matching the ETOP and
SAP, and making a choice of a strategy to reduce the gaps. J auch and Gleuck (1988) suggested that by comparing
the ETOP and SAP, the entrepreneur can acquire clues about the nature of strategic alternatives to close any gaps.
2.9 Decision making
Decision-making is an important aspect of strategic management whereby it determine whether the enterprise
successful or fail. The entrepreneur has a responsibility to decide which alternative strategy is best to choose that
will bring about success. Strategic decisions are defined as a means to achieve ends. The decisions encompass the
definition of the business, products, markets, functions, and major policies needed for the organization to execute
these decisions to achieve objectives (Barnard, 1992; Mingle, 1981; Quinn, 1980).
2.10 Strategy Implementation
Strategy implementation is clearly associated with control and evaluation processes. These processes help the
entrepreneur to monitor the progress of a plan. Implementation of a new strategy involves, doing things right, which
involves the development of the organizations structure and administrative mechanisms for efficient implementation
of the chosen strategy option (Ottih, 2002).
2.11 Strategic Control
Mintzberg (1989) defined control as setting total organizational objectives and subsequent standards of performance;
establishing the means of getting feedback about performance; and ensuring that predetermined objectives are
29
achieved. Redden (1971) advocated that managers are responsible to control and adjusts operations to predetermined
standard according to whatever current information available. This is quite, true, for the entrepreneur to see desired
results accomplished, there ought to be a means of controlling all aspects of the enterprise.
2.12 Evaluation
This is the phase of the strategic management process where business owners try to ensure that the strategic choice
is properly implemented and is meeting the objectives of the enterprise. The evaluation process is divided into four
interrelated activities which are establishing performance targets, standards, and tolerance limits for the objective;
measuring the actual position in relation to the targets at a given time (J auch and Gleuck, 1988).
3. Research Methodology
3.1 Research Design
The survey research approach is based on a sample of the entire population so as to generalize for the whole
population. The survey research design is chosen for this study of indigenous entrepreneurships, as the objective is
to examine strategy management and corporate success of the entire population of indigenous entrepreneurships.
3.2 Research Hypothesis
The following hypothesis will be tested.
H
1
: There is no relationship between strategy management and corporate performance.
3.3 Population and Sampling
The population of this study constitutes of all indigenous entrepreneurships in Port Harcourt, Rivers State, that have
existed for three years and above. As a result of such large population, random sampling was inconvenient. The
research simply employed stratified sampling in selecting ten (10) firms from each size bracket. A total of forty (40)
firms were therefore used for the study. The respondents of the study were the business founder and also immediate
deputies of the founders of the forty companies of the study.
3.4 Research Instrument
The questionnaire was selected for this study. This choice was informed by the fact that the questionnaire has a
faster reach and can be completed (filled) in the absence of the researcher. The questionnaire contains a total of
seventeen (17) questions, some of which are structured and some Unstructured. It sought information on the profile
of the firms, the strategic management activities of the firms and finally, the performance of the firms.
3.5 Instrument Administration
The questionnaire was administered personally on the top managers or their deputies by the researcher. Prior phone
calls were made to secure permission for questionnaire administration. This early appointment facilitated access to
the companies. While some difficulties were experienced in a few companies, the entire process consumed about
two weeks. Responses were secured from all the forty (40) companies.
3.6 Data Analysis
The copies of the questionnaire were edited upon retrieval to ensure correctness of completion. After this, collation
and tabulation followed. The descriptive tools of tables, percentages, frequencies and Likert-scales were freely used.
SPSS version was used for hypothesis testing.
4. Data Analysis and Discussion
4.1 Data Analysis
4.1.1 Engagement in Strategy Management by Nigeria Indigenous Enterprises
This subsection sought to find out if indigenous entrepreneurs in Nigeria engage in strategy management and the
extent to which they do. Table 2 shows the engagement in strategic management by enterprises.
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Table 2: Engagement in Strategic Management by Enterprises
No. Dimensions of Engagement Number
Engaging
% Engaging
1. Enterprises that engage in strategic management in a disorganized
manner.
12 30
2. Enterprise that adopted some aspects of strategic management practices. 11 27.5
3. Enterprises that do not engage in strategic management. 10 25
4. Enterprises that engage in strategies systematically. 7 17.5
According to the above Table 2, 7 firms (17.5%) engage in deliberate and systematic strategic management, 12
(30%) are haphazard about its adoption, 11 (27.5%) employ some aspects of strategic management and 10 (25%) do
not engage in strategic management at all. This shows a rather poor exercise of strategic management, as only 17.5
percent of the firms are deliberate about it.
4.1.2 Environment Impacts
The general environment is characterized by the economic, political, government, technological, industry,
internationally and other conditions. To get specific data needed for study, the environment was described by nine
factors, which include Political Instability, Strikes/Unemployment, Level of Security, Government Tax/Economic
Policies, Level of Infrastructure, Lack of Raw Materials, Lack of Technological Development, Industry
Environment and Competition and Socio-Cultural Factor. Table 3 below presents the relevant data according to
cottage, small, medium and large-scale enterprises.
Table 3: Impact of Environmental Factors on Types of Firms
Environment
Factors
Cottage Small Medium Large
+ve N -ve +ve N -ve +ve N -ve +ve N -ve
Political 15 10 12.5 12.5 5 20 7.5 17.5
Unions 7.5 17.5 10 15 5 20 205 22.5
Security 2.5 2.5 2.5 2.5
Economic 7.5 2.5 15 7.5 2.5 15 2.5 2.5 20 7.5 5 12.5
Infrastructure 2.5 22.5 2.5 22.5 25 2.5 7.5 15
Raw Materials/
Supplies
2.5 22.5 7.5 17.5 2.5 2.5 20 7.5 17.5
Technology 2.5 22.5 12.5 12.5 2.5 22.5 5 20
Industry/
Competition
5 10 10 17.5 7.5 10 10 5 15 2.5 7.5
Socio/Cultural 15 10 5 15 5 10 10 5 10 7.5 7.5
Total 12.5 57.5 132.5 30 62.5 107.5 30 37.5 137.5 35 45 122.5
Key: +ve =Positive; N =Neutral; -ve=Negative. Weights: Positive =2, Zero =0, Negative =-2
Table 3 shows that the economic factor is the most positive (or favourable) for all the sectors. This is followed by
the industry/competition factor. The most neutral factors are the political/legal, socio/cultural, unions and
supplier/Raw material factors. The most negative are infrastructure, raw materials, and technology. The table also
shows that environmental factors were most positive for the small scale firms, followed by the large scale, the
medium scale and lastly the cottage.
4.1.3 Environment/Enterprise Profile and Strategic Success
This subsection sought to understand the impact of environmental and enterprise factors on strategic success. This
was achieved by using the questionnaire to gather information from respondents on the impact of each factor. Table
4 presents the relevant data.
31
Table 4: Impact of Environmental/Enterprise Factors on Strategic Success
ENVIRONMENT/ENTERPRISE FACTORS IMPACT IN RANK ORDER
FIRMS ADOPTING NOT ADOPTING
Economic 1
st
3
rd
Government/Legal 2
nd
2
nd
Marketing/Distribution 3
rd
6
th
Finance 3
rd
1
st
Customers/Competition 4
th
6
th
Corporate Resources 5
th
5
th
Production/Operations 6
th
4
th
Geographic 8
th
9
th
Socio/Cultural 9
th
8
th
As shown in Table 4, firms undertaking strategic management (this includes those firms adopting it systematically
and those not so rigid about its adoption) ranked the economic factor as having the greatest impact on strategic
success and the government/legal factor as second. Other factors and their ranks in firms adopting strategic
management are market/distribution (3rd), finance (3rd), customers/competition (4th) and so on. For firms not
adopting strategic management, the factor of finance was ranked 1st. Others for firms not adopting are
government/legal (2nd), economic (3rd), production operators (4th) and so on.
Some discrepancies can be identified in these rankings. There is a lack of agreement between firms adopting
strategic management and those not adopting on this matter of impact of the factors. While the economic factor led
the pack for those adopting, financial resources came first for those not adopting and while government/legal was
2nd for those adopting, it was also 2nd for those not adopting. Other disharmonies can be seen in the table. On the
whole, managers of firms adopting strategic management saw the external factors as having a greater impact on
strategic success.
4.1.4 Engagement in Strategic Management and Corporate Performance
This subsection shows the extent of engagement in strategy management and corporate performance levels. The
performance criteria have been classified as ‘good’ and ‘poor’. This is done for clarity and simplicity. Table 5
presents the relevant data.
Table 5: Engagement in Strategic Management and Corporate Performance Levels
Enterprise
Characteristics
Response
rate
%
Profitability Market Share Growth Customer
Satisfaction
Total
Good Poor Good Poor Good Poor Good Poor Score
Enterprise that
adopt strategy
management
deliberately &
systematically
7 (17.5%)
(n=70)
50
(71%)
20
(29%)
40
(57%)
30
(43%)
55
(79%)
25
(21%)
58
(83%)
12
(17%)
73%
Enterprise that
adopt strategy
management but not
deliberately &
systematically
12 (30%)
(n=120)
65
(54%)
55
(46%)
64
(53%)
56
(47%)
82
(68%)
38
(32%)
82
(68%)
38
(32%)
61%
Enterprise that
adopt only some
aspects
11
(27.5%)
(n=110)
40
(36%)
70
(64%)
62
(56%)
48
(44%)
72
(65%)
38
(35%)
62
(56%)
48
(44%)
53%
Enterprise that do
not adopt
management
strategy at all
10 (25%)
(n=100)
50
(50%)
50
(50%)
51
(51%)
49
(49%)
70
(70%)
30
(30%)
52
(52%)
48
(48%)
56%
32
4.2 Discussion
Only 7 of the 40 firms studied (17.5%) deliberately and systematically engaged in strategic management, 23 of the
firms (57.5%) make some efforts at adoption and 10 firms (25%) do not make any efforts at strategic management at
all. This is indeed an improved profile of adoption of strategic management in Nigerian firm. A study by Ottih
(1998) found a slightly improved picture of the practice. The finding of this study should be seen as an improved
picture particularly given the fact that only indigenous companies were involved in this study.
Companies engaging in deliberate and systematic strategic management achieve greater corporate success than
companies that do not (Chandler, 1962; Gleuck, 1980; Igoma, 2003; Ottih, 1998). Companies that engage in
strategic management would normally have a clearer awareness of environmental states and would engage in
strategic planning to enable them take advantage of environmental opportunities and obviate environmental threats
(Ottih, 2002).
5. Summary, Recommendation and Conclusion
5.1 Summary
This study sought to ascertain the relationship between strategic management and corporate performance. Samples
of forty (40) indigenous firms were employed for the study and the questionnaire constituted the major instrument
for data collection. Correlation analysis was employed for hypothesis testing. The major findings of the study are as
follows, only 7 of the 40 firms studied (i.e. 17%) were found to engage in deliberate and systematic strategic
management. 23 of the 40 firms (i.e. 57.5%) were disorganized or engaged in some fragments of strategic
management activities while 25% did not at all. The economic factor was the most favourable for the firms followed
by industry/competitive factor. The environment was most positive for small-scale firms. Strategic management was
found to be positively related to corporate success.
5.2 Recommendation
5.2.1 Entrepreneur
Strictly adhere to strategic management processes in its entirety in the course of the business activities. For those
who are about to start, have an original idea i.e. an idea that is feasible and realistic. Carry out thorough and frequent
analysis and diagnosis of the environment to know the opportunities, threats, strengths and weaknesses. If the
entrepreneurs are unable to get an overview do not hesitate to seek for help (Huang, 2009). Also be abreast with the
laws that guide the particular business the entrepreneurs are involved in or intend to venture into.
5.2.2 Government
Develop basic infrastructures necessary for industrial development such as good road network system, steady
electricity supply, and reliable telecommunication network and so on. Ensure the provision of security of lives and
property. Provide grants and subsidies to encourage young fledgling entrepreneurs. This could reduce the rate of
unemployment as these will also be employers of labour, be a dependable source of revenue from taxes accruable
from these enterprises and strengthen the base of the private sector that determines the state of the economy.
Adequate legislation should be pursued to encourage and protect indigenous entrepreneurs such as tax laws, tariffs
on imports and exports and so on. Transfer of technology by foreign firms operating in Nigeria to Nigerians should
be made a policy and vigorously pursued.
5.3 Conclusion
The conclusions drawn from the findings of this study are that most Nigerian firms are involved in some forms of
strategic management, but many are not systematic and deliberate about it. Firms adopting strategic management are
most concerned with the external environment factors while firms not engaging in strategic management are
concerned with the internal factors (Cruz, Pedrozo, and Estivalete, 2006). Specifically, the economic and
government/legal factors were seen to have the greatest impact among firms adopting strategic management. For
those not adopting, it was finance and govern by legal factor. While deliberate and systematic strategic management
promotes corporate performance, haphazard approach to it may not have much advantage over those firms not
practicing it at all (O’Reagan, Sims, and Ghobadian, 2005).
33
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doc_200847292.pdf
Abstract about strategy management and business success damiebi denni fiberesima.
26
Strategy Management and Business Success
Damiebi Denni Fiberesima
Central Engineering
Shell Petroleum Development Company
Nigeria
Nazatul Shima Abdul Rani
School of Management
Asiae University
Kuala Lumpur, Malaysia
Abstract
This paper examines the practice of strategic management in indigenous firms and to ascertain the impact of
strategic management on business success in Nigeria. Forty firms were chosen from small, medium and large scale
industries using stratified sampling. The major findings of the study showed that 17 percent of the firms engaged in
deliberate and systematic strategic management, 57 percent were disorganised in their practice of strategic
management and 25 percent made no attempt. The economic and the industry/competitive factors were found to be
the most favourable factors for the firms. Strategic management was found to be positively related to corporate
success. The study concluded that most SME firms are involved in some level of strategic management and that
strategic management improves business success, and thus recommends that entrepreneurs need to be more
organised in their practice of strategic management in order to facilitate the growth and success of their firms.
Keywords
Business, success, growth, entrepreneurship, capability, indigenous technology, strategic management
1. Introduction
Entrepreneurship globally and in Nigeria dates back to when people found the need to create wealth to take care of
their families and consequently, attain a higher social status in the community. Traditional African economics were
usually called subsistence economics. Various communities produced surpluses of given commodities, which could
be exchanged for items which they are lacking (Rodney, 1976). Occupational activities such as farming, fishing,
weaving, sculptor, carving, trading, bead making, glass making, leather making etc. were the sources of income, and
later developed into enterprises but in a smaller scale. Agriculture products contributed 84% of Nigeria total exports
and 12% of total foreign exchange earnings (Bailey, 1976).
Government through the enactment of Development Plans, the indigenisation policy of April 1974, provision of
subsidies, tax relief and other incentives has played a role in trying to redirect industrial development. A report in
the New Nigeria Newspaper March 1992 quoting the UNDP/UNIDO, declared that the economic development,
industrialization and indigenous technology development of a nation is dependent on its indigenous enterprises. The
Fourth National Council on Industries, which met in Owerri in 1991, presented classification of enterprises
according to volume of capital invested (but excluding land) as follows:
Table 1: Industry and capital investment categories in Nigeria
Industry Capital Investment
Cottage industry Below N500, 000
Small scale industry N 500,000 – N 5,million
Medium Scale industry N5million – N20 million
Large Scale industry above N20 million
Proceedings of the 2012 International Conference on Industrial Engineering and Operations Management
Istanbul, Turkey, July 3 – 6, 2012
27
1.1 Problem Statement
Indigenous enterprises in Nigeria reveal that the entrepreneur finds himself in a harsh environment, with respect to
the unstable political situation. The lacking of growth from small to medium and to large-scale enterprise status and
the failure of indigenous enterprises has caused economy to decline (Bailey, 1976; Chandler, 1962; Ottih, 1998).
The question is, how indigenous entrepreneur achieve business success despite the odds. The thrust of this study
lies in identifying the strategic management processes employed in the management of Nigerian business firms and
the levels of success.
1.2 Objectives of the Study
The specific objectives are as follows:
• To investigate whether indigenous entrepreneurs are using strategic management, and to what extent it is used.
• To ascertain why many indigenous enterprises are stagnant in growth, why some even fail, and why some others
succeed despite the fact that they are all operating in the same environment.
• To highlight the influence of the general environment and industrial factors in the use of strategy management by
indigenous entrepreneurs.
• To identify and make recommendations on the roles of government in helping indigenous entrepreneurs to
achieve success.
1.3 Research Question
The research questions are as follows: -
1) Do indigenous entrepreneurs in Nigeria engage in strategic management?
2) What is the impact of environmental factors on the various types of indigenous firms?
3) Does the business environment in Nigeria affect the use of strategic management by indigenous entrepreneurs?
4) Do indigenous entrepreneurs in Nigeria who are engage in strategic management achieve success?
1.4 Significance of the Study
This study discusses the usefulness of strategic management and charts a path for the indigenous entrepreneur to
achieve success despite the rapid changes in environment. Indigenous entrepreneurs in Nigeria and those wishing to
become entrepreneurs will benefit greatly from this study.
2. Literature Review
2.1 Business Success
Hay Report 2001, stated that business success can be attained by being competitive in the market, the people, and
adopting new technology. Without people the business strategy cannot be implemented, and no strategy, no matter
how good can succeed. People are a resource that cannot be neglected not even partially, if goals are to be achieved
(J auch and Gleuck, 1980).
2.2 Strategic Management Process
The strategic management process is a combination of strategy formulation, strategy analysis and strategy
implementation (Mintzberg, 1989). Strategic management is geared towards achieving corporate objectives. It
provides a guiding force that integrates the efforts of all levels of staff in an organisation. Payne (1985) identified
strategic management as one approach to the ‘big picture’; they believed, it stresses the importance of focusing on
overall company goals, rather than on individual products or division within the company.
2.3 Strategy Formulation
This activity is entrepreneurial in nature, it entails setting a direction for the organization by identifying new
business opportunities, and also ensuring that the business is not overcome by occurrences in the environment.
Strategy formulation arms the entrepreneur so that he is not taken by surprise but makes him alert and responsive to
the rapidly changing environment. Strategy formulation includes vision, mission, objectives, environment analysis
and a choice of strategy based on the outcome of analysis and diagnosis (Drucker, 1988; Frederickson, 1988;
Hambric, 1986).
28
2.4 Purpose and Mission of Enterprises
A vision is a picture of the future of the environment within which the future of the organisation will operate along
its competitors. A vision indicates to the entrepreneur the future position of the firm. This is quite different from a
mission; however the vision influences and determines the mission and even the objectives (Dess and Miller, 1993).
A mission of a business provides a statement to insiders and outsiders of what the company stands for – its purpose,
image and character. The mission can be seen as a link between performing some social function and more specific
targets or objectives of the organisation.
2.5 Objectives of Business Enterprises
Objectives are goals, which the entrepreneur wants to attain. There are the ends or goals, which the organisation
seeks to achieve through its activities and operations. Whatever size of the business, the following key areas ought
to be considered of what objectives should be (Redden, 1971). The type of objectives is dependent on the expected
time to achieve the objective or its orientation. Short- range objectives (months-5 years) and long range objectives
(5- more than 10 years), and internally oriented objectives (wants to achieve for itself such as market share, growth,
profitability and productivity) and externally oriented objectives (to satisfy external interests such as customers,
suppliers, creditors etc) (Ottih, 2002).
2.6 Environment Analysis
Environmental analysis involves identifying opportunities and threats in the general environment and determining
strengths and weaknesses in the firm or internal environment. There are a large number of factors, which affect the
firm in each sector of the environment, and these factors interact with one another (Barnard, 1992). Strategic
analysis is used as the foundation for the strategic management process for most businesses (Dess and Miller, 1993;
Koter, 1990; Lenz and Engledow, 1986; Rachman and Mescom, 1978).
2.7 Strategy
Two types of strategies have been identified (Mintzberg, 1989) as intended strategies (strategies managers propose,
design and expect) and realised strategies (strategies that materialise in time). Strategy is the catalyst, main thread
and thrust of a business, whereby it is the dynamic element for managing a company to achieve its results in the
competitive market place over a long run. It is dependent on how to use resources of the firm effectively in an ever
changing environment that integrates with the operation of the business (Bebault, 1982; Karatsu, 1985).
2.8 Alternatives Strategy
After analysing and diagnosing the environment; assessing the enterprise strengths and weaknesses; and preparing
the environmental threat and opportunity profile (ETOP) and the Strategic advantage profile (SAP); the entrepreneur
should be in a position to consider the underlying potential for a gap between expected and ideal performance
outcomes. The need to make choices between strategic alternatives that will fill the gaps matching the ETOP and
SAP, and making a choice of a strategy to reduce the gaps. J auch and Gleuck (1988) suggested that by comparing
the ETOP and SAP, the entrepreneur can acquire clues about the nature of strategic alternatives to close any gaps.
2.9 Decision making
Decision-making is an important aspect of strategic management whereby it determine whether the enterprise
successful or fail. The entrepreneur has a responsibility to decide which alternative strategy is best to choose that
will bring about success. Strategic decisions are defined as a means to achieve ends. The decisions encompass the
definition of the business, products, markets, functions, and major policies needed for the organization to execute
these decisions to achieve objectives (Barnard, 1992; Mingle, 1981; Quinn, 1980).
2.10 Strategy Implementation
Strategy implementation is clearly associated with control and evaluation processes. These processes help the
entrepreneur to monitor the progress of a plan. Implementation of a new strategy involves, doing things right, which
involves the development of the organizations structure and administrative mechanisms for efficient implementation
of the chosen strategy option (Ottih, 2002).
2.11 Strategic Control
Mintzberg (1989) defined control as setting total organizational objectives and subsequent standards of performance;
establishing the means of getting feedback about performance; and ensuring that predetermined objectives are
29
achieved. Redden (1971) advocated that managers are responsible to control and adjusts operations to predetermined
standard according to whatever current information available. This is quite, true, for the entrepreneur to see desired
results accomplished, there ought to be a means of controlling all aspects of the enterprise.
2.12 Evaluation
This is the phase of the strategic management process where business owners try to ensure that the strategic choice
is properly implemented and is meeting the objectives of the enterprise. The evaluation process is divided into four
interrelated activities which are establishing performance targets, standards, and tolerance limits for the objective;
measuring the actual position in relation to the targets at a given time (J auch and Gleuck, 1988).
3. Research Methodology
3.1 Research Design
The survey research approach is based on a sample of the entire population so as to generalize for the whole
population. The survey research design is chosen for this study of indigenous entrepreneurships, as the objective is
to examine strategy management and corporate success of the entire population of indigenous entrepreneurships.
3.2 Research Hypothesis
The following hypothesis will be tested.
H
1
: There is no relationship between strategy management and corporate performance.
3.3 Population and Sampling
The population of this study constitutes of all indigenous entrepreneurships in Port Harcourt, Rivers State, that have
existed for three years and above. As a result of such large population, random sampling was inconvenient. The
research simply employed stratified sampling in selecting ten (10) firms from each size bracket. A total of forty (40)
firms were therefore used for the study. The respondents of the study were the business founder and also immediate
deputies of the founders of the forty companies of the study.
3.4 Research Instrument
The questionnaire was selected for this study. This choice was informed by the fact that the questionnaire has a
faster reach and can be completed (filled) in the absence of the researcher. The questionnaire contains a total of
seventeen (17) questions, some of which are structured and some Unstructured. It sought information on the profile
of the firms, the strategic management activities of the firms and finally, the performance of the firms.
3.5 Instrument Administration
The questionnaire was administered personally on the top managers or their deputies by the researcher. Prior phone
calls were made to secure permission for questionnaire administration. This early appointment facilitated access to
the companies. While some difficulties were experienced in a few companies, the entire process consumed about
two weeks. Responses were secured from all the forty (40) companies.
3.6 Data Analysis
The copies of the questionnaire were edited upon retrieval to ensure correctness of completion. After this, collation
and tabulation followed. The descriptive tools of tables, percentages, frequencies and Likert-scales were freely used.
SPSS version was used for hypothesis testing.
4. Data Analysis and Discussion
4.1 Data Analysis
4.1.1 Engagement in Strategy Management by Nigeria Indigenous Enterprises
This subsection sought to find out if indigenous entrepreneurs in Nigeria engage in strategy management and the
extent to which they do. Table 2 shows the engagement in strategic management by enterprises.
30
Table 2: Engagement in Strategic Management by Enterprises
No. Dimensions of Engagement Number
Engaging
% Engaging
1. Enterprises that engage in strategic management in a disorganized
manner.
12 30
2. Enterprise that adopted some aspects of strategic management practices. 11 27.5
3. Enterprises that do not engage in strategic management. 10 25
4. Enterprises that engage in strategies systematically. 7 17.5
According to the above Table 2, 7 firms (17.5%) engage in deliberate and systematic strategic management, 12
(30%) are haphazard about its adoption, 11 (27.5%) employ some aspects of strategic management and 10 (25%) do
not engage in strategic management at all. This shows a rather poor exercise of strategic management, as only 17.5
percent of the firms are deliberate about it.
4.1.2 Environment Impacts
The general environment is characterized by the economic, political, government, technological, industry,
internationally and other conditions. To get specific data needed for study, the environment was described by nine
factors, which include Political Instability, Strikes/Unemployment, Level of Security, Government Tax/Economic
Policies, Level of Infrastructure, Lack of Raw Materials, Lack of Technological Development, Industry
Environment and Competition and Socio-Cultural Factor. Table 3 below presents the relevant data according to
cottage, small, medium and large-scale enterprises.
Table 3: Impact of Environmental Factors on Types of Firms
Environment
Factors
Cottage Small Medium Large
+ve N -ve +ve N -ve +ve N -ve +ve N -ve
Political 15 10 12.5 12.5 5 20 7.5 17.5
Unions 7.5 17.5 10 15 5 20 205 22.5
Security 2.5 2.5 2.5 2.5
Economic 7.5 2.5 15 7.5 2.5 15 2.5 2.5 20 7.5 5 12.5
Infrastructure 2.5 22.5 2.5 22.5 25 2.5 7.5 15
Raw Materials/
Supplies
2.5 22.5 7.5 17.5 2.5 2.5 20 7.5 17.5
Technology 2.5 22.5 12.5 12.5 2.5 22.5 5 20
Industry/
Competition
5 10 10 17.5 7.5 10 10 5 15 2.5 7.5
Socio/Cultural 15 10 5 15 5 10 10 5 10 7.5 7.5
Total 12.5 57.5 132.5 30 62.5 107.5 30 37.5 137.5 35 45 122.5
Key: +ve =Positive; N =Neutral; -ve=Negative. Weights: Positive =2, Zero =0, Negative =-2
Table 3 shows that the economic factor is the most positive (or favourable) for all the sectors. This is followed by
the industry/competition factor. The most neutral factors are the political/legal, socio/cultural, unions and
supplier/Raw material factors. The most negative are infrastructure, raw materials, and technology. The table also
shows that environmental factors were most positive for the small scale firms, followed by the large scale, the
medium scale and lastly the cottage.
4.1.3 Environment/Enterprise Profile and Strategic Success
This subsection sought to understand the impact of environmental and enterprise factors on strategic success. This
was achieved by using the questionnaire to gather information from respondents on the impact of each factor. Table
4 presents the relevant data.
31
Table 4: Impact of Environmental/Enterprise Factors on Strategic Success
ENVIRONMENT/ENTERPRISE FACTORS IMPACT IN RANK ORDER
FIRMS ADOPTING NOT ADOPTING
Economic 1
st
3
rd
Government/Legal 2
nd
2
nd
Marketing/Distribution 3
rd
6
th
Finance 3
rd
1
st
Customers/Competition 4
th
6
th
Corporate Resources 5
th
5
th
Production/Operations 6
th
4
th
Geographic 8
th
9
th
Socio/Cultural 9
th
8
th
As shown in Table 4, firms undertaking strategic management (this includes those firms adopting it systematically
and those not so rigid about its adoption) ranked the economic factor as having the greatest impact on strategic
success and the government/legal factor as second. Other factors and their ranks in firms adopting strategic
management are market/distribution (3rd), finance (3rd), customers/competition (4th) and so on. For firms not
adopting strategic management, the factor of finance was ranked 1st. Others for firms not adopting are
government/legal (2nd), economic (3rd), production operators (4th) and so on.
Some discrepancies can be identified in these rankings. There is a lack of agreement between firms adopting
strategic management and those not adopting on this matter of impact of the factors. While the economic factor led
the pack for those adopting, financial resources came first for those not adopting and while government/legal was
2nd for those adopting, it was also 2nd for those not adopting. Other disharmonies can be seen in the table. On the
whole, managers of firms adopting strategic management saw the external factors as having a greater impact on
strategic success.
4.1.4 Engagement in Strategic Management and Corporate Performance
This subsection shows the extent of engagement in strategy management and corporate performance levels. The
performance criteria have been classified as ‘good’ and ‘poor’. This is done for clarity and simplicity. Table 5
presents the relevant data.
Table 5: Engagement in Strategic Management and Corporate Performance Levels
Enterprise
Characteristics
Response
rate
%
Profitability Market Share Growth Customer
Satisfaction
Total
Good Poor Good Poor Good Poor Good Poor Score
Enterprise that
adopt strategy
management
deliberately &
systematically
7 (17.5%)
(n=70)
50
(71%)
20
(29%)
40
(57%)
30
(43%)
55
(79%)
25
(21%)
58
(83%)
12
(17%)
73%
Enterprise that
adopt strategy
management but not
deliberately &
systematically
12 (30%)
(n=120)
65
(54%)
55
(46%)
64
(53%)
56
(47%)
82
(68%)
38
(32%)
82
(68%)
38
(32%)
61%
Enterprise that
adopt only some
aspects
11
(27.5%)
(n=110)
40
(36%)
70
(64%)
62
(56%)
48
(44%)
72
(65%)
38
(35%)
62
(56%)
48
(44%)
53%
Enterprise that do
not adopt
management
strategy at all
10 (25%)
(n=100)
50
(50%)
50
(50%)
51
(51%)
49
(49%)
70
(70%)
30
(30%)
52
(52%)
48
(48%)
56%
32
4.2 Discussion
Only 7 of the 40 firms studied (17.5%) deliberately and systematically engaged in strategic management, 23 of the
firms (57.5%) make some efforts at adoption and 10 firms (25%) do not make any efforts at strategic management at
all. This is indeed an improved profile of adoption of strategic management in Nigerian firm. A study by Ottih
(1998) found a slightly improved picture of the practice. The finding of this study should be seen as an improved
picture particularly given the fact that only indigenous companies were involved in this study.
Companies engaging in deliberate and systematic strategic management achieve greater corporate success than
companies that do not (Chandler, 1962; Gleuck, 1980; Igoma, 2003; Ottih, 1998). Companies that engage in
strategic management would normally have a clearer awareness of environmental states and would engage in
strategic planning to enable them take advantage of environmental opportunities and obviate environmental threats
(Ottih, 2002).
5. Summary, Recommendation and Conclusion
5.1 Summary
This study sought to ascertain the relationship between strategic management and corporate performance. Samples
of forty (40) indigenous firms were employed for the study and the questionnaire constituted the major instrument
for data collection. Correlation analysis was employed for hypothesis testing. The major findings of the study are as
follows, only 7 of the 40 firms studied (i.e. 17%) were found to engage in deliberate and systematic strategic
management. 23 of the 40 firms (i.e. 57.5%) were disorganized or engaged in some fragments of strategic
management activities while 25% did not at all. The economic factor was the most favourable for the firms followed
by industry/competitive factor. The environment was most positive for small-scale firms. Strategic management was
found to be positively related to corporate success.
5.2 Recommendation
5.2.1 Entrepreneur
Strictly adhere to strategic management processes in its entirety in the course of the business activities. For those
who are about to start, have an original idea i.e. an idea that is feasible and realistic. Carry out thorough and frequent
analysis and diagnosis of the environment to know the opportunities, threats, strengths and weaknesses. If the
entrepreneurs are unable to get an overview do not hesitate to seek for help (Huang, 2009). Also be abreast with the
laws that guide the particular business the entrepreneurs are involved in or intend to venture into.
5.2.2 Government
Develop basic infrastructures necessary for industrial development such as good road network system, steady
electricity supply, and reliable telecommunication network and so on. Ensure the provision of security of lives and
property. Provide grants and subsidies to encourage young fledgling entrepreneurs. This could reduce the rate of
unemployment as these will also be employers of labour, be a dependable source of revenue from taxes accruable
from these enterprises and strengthen the base of the private sector that determines the state of the economy.
Adequate legislation should be pursued to encourage and protect indigenous entrepreneurs such as tax laws, tariffs
on imports and exports and so on. Transfer of technology by foreign firms operating in Nigeria to Nigerians should
be made a policy and vigorously pursued.
5.3 Conclusion
The conclusions drawn from the findings of this study are that most Nigerian firms are involved in some forms of
strategic management, but many are not systematic and deliberate about it. Firms adopting strategic management are
most concerned with the external environment factors while firms not engaging in strategic management are
concerned with the internal factors (Cruz, Pedrozo, and Estivalete, 2006). Specifically, the economic and
government/legal factors were seen to have the greatest impact among firms adopting strategic management. For
those not adopting, it was finance and govern by legal factor. While deliberate and systematic strategic management
promotes corporate performance, haphazard approach to it may not have much advantage over those firms not
practicing it at all (O’Reagan, Sims, and Ghobadian, 2005).
33
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