CHAPTER TWO LITERATURE REVIEW
2.0 INTRODUCTION
In this chapter, the researcher reviews works that are related to the strategic planning. Such as an in-dept definition of the concept of strategic planning , the processes associated with strategic planning, its mode s, the advantages and disadvantages, strategic formulation . Its role in the achievement of o rganizational goals will be reviewed.
2.1 Strategic Planning
Stoner (2007) defines strategy as the broad program for defining and achieving an organization’s objectives, the organization response to its environment over time. That is to say that due to changes in the environment which is constant, organizations sets out ways to combating environmental changes in respect to achievement of its goals. A strategic plan as it is, embodies and revolves around the statement of a strategy for an organization.
Strategic planning he also states is a process for producing the strategy and updating it as necessary for o rganizational growth and goals.
Then in his own idea Onwuchekwa C.I (2000) defines strategic planning an elaborate systematic analysis which influences the choice of the long-term goals that define the corporate strategy of a firm and also the components of corporate strategy which implement the corporate strategy through programmes/projects policies, budgets and strategic control measures to accomplish the objectives of an organization. That is to say that he sees strategic planning as programs, policies or methods that are definite and tailored towards the achievement of the organizational goals. When programmes are set and all are made to move towards it in achievement of objectives its strategy, then creating the ways to achieve that strategy is strateg ic planning.
In his own contribution, Bedeia n (1987) says that strategic planning focuses on an enterprises long -term relationship to its environment primarily developed by top management of an enterprise. He further states that strategic plan or strategy serves to define it overall character, mission and direction by focusing on an enterprise as a total system, strategic planning recognizes that all enterprises may face uncontrollable elements within their environment. These factors may however help to de termine whether an enterprise achieves its objectives or even whether its survives. To this effects, it implies that strategic planning is concerned with shaping an enterprise in the accomplishment of its goals.
2.2 Scope of Activities in Strategic Planning
A strategic plan may attempt to answer the following questions:
1. What is our business and what is it expected?
2. What should it be in the next ten years?
3. Who are our customers?
4. Are we doing what we are expected to be doing?
5. Where are we head ing toward?
6. What are our strengths and weaknesses?
2.3 Expected Goal from a Strategic Plan
According to Bederian strategic plan is expected to accomplish three goals for an organization. These include:
1. It should determine which specific market segment s that will be served.
2. The plan should define key capabilities required to serve the market.
3. A strategic plan should outline a realistic programme for developing and maintaining key capabilities of a firm.
2.4 Importance of Strategic Planning by (Stoner 1987) Strategic planning is considered relevant because of the following reason:
1. It helps managers to provide their organizations direction and purpose.
2. It helps organization to improve their function in order to achieve the corporate objectives.
3. It helps managers to be responsive to a changing en vironment.
1. Direction and Purpose
Through strategic planning, an organization is able to understand its major role in the society and this is its legitimacy to exist in the society with ultimate recognition by the tas k environment. This is what Thompson call “Domain Consensus†when an organization understands its role and business (mission), its natural extension through the components of strategy and its overall concept clearly. Such an organization can develop a sens e of direction and purpose . It has reduced the level of uncertainty to certainty. This situation can improve organizational effectiveness.
2. Improved Organizational Functioning
When an organization is in a situation of “Domain Consensusâ€, with other rel evant organization in its business areas, such an organization can improve its functioning because of the enormous support it gets from the task environment. Strategic planning helps an organization to precise in formulating its purpose, mission and object ives. This situation improves the functioning of an organization. Organizations that formulate ambiguous objectives may be wasting enormous resources in implementing growth and broadly based business strategies that lack common thread in strategy formulati on.
3. Managers Responsiveness to Changing Environment
Strategic planning helps managers to be responsive to changing environment. Today’s environment is dynamic and full of surprises.
Managers must be responsive. Historically, managers used long-range planning (extrapolation) when the environment was stable. They only had reasonable information about the past and on the basis of such information they could extrapolate the future. Today, the environment is dynamic and mangers can no longer rely on past experiences.
The require guidance in selecting new strategies to respond to new events in the business environment. This is why strategic planning is relevant.
2.5 Characteristics of Strategic Planning (Stoner 1982)
There are certain characteristics of strategic planning which distinguish it from other forms of planning. Stonner has mentioned five important attributes of strategic planning.
1. It deals on fundamental or basic questions. It provides answer to such questions as “what business are we in and w hat business ought we be in? Who are our customers and who should they be?
2. It provides the framework for more detailed planning and for day to day managerial decisions. Faced with such decision a
