THE IMPACT OF STRATEGIC MANAGEMENT ON ORGANISATIONAL PERFORMANCE. (A CASE STUDY OF NIGERIAN BREWERIES PLC)

CHAPTER ONE

INTRODUCTION

1.0    BACKGROUND OF THE STUDY

The performance of organization is the focus of intensive research efforts; how well an organization performs its mission and accomplishes is its goals of programs delivery is to paramount concern.

The success of failure of a strategy is significantly determined by the quality of leadership displayed by the strategy leader normally the CEO, during the strategy implementation process.

In today's increasingly chaotic world and an ever changing environment, it is not enough to just keep the organization afloat it is far more essential to make steady progress toward some well- defined objectives.
Modem knowledge based organization are ideal setting for the application of strategic management practices strategy, in effect it's management's game plans for strengthening the organization's position, pleasing customers and achieving performance targets. Managers devise strategies to guide how the organizations business win be conducted and to help the make reasoned and make cohesive choices among alternative causes of action. The strategic managers decides and indicates e path and action the y could choose, they decide to tallow particular rate d conduct their business in that particular manner without a strategy, a manage has no roadmap to follow, to manage and no unified action programme to produce the intended results.

Strategic management is defined by thompson and Strickland (2001) as “the process whereby managers establish an organization's ng-term direction, set specific performance objectives, develop strategies to achieve these objectives in the light of all the relevant internal and external circumstances and undertake to execute the choose action plan”.

Strategic management has five critical and interrelated managerial tasks explained thus.

·         Deciding (what business organization will engage in) and forming a            strategic vision of an organization wants to go) and human resources development of    those who are to get it there). It in effect enhances productivity, providing long-term direction and establishing a clear mission to be accomplished. 

·        Crafting a strategy to achieve e desired results.

·        Implementing and executing the chosen strategy efficiently and effectively.

·        Evaluating performance, reviewing developments and initiating corrective adjustments in 10 g-term directions, objectives, strategy or implementation in light of actual experience, changing condition new ideas and opportunities.

·        It involves a rational analysis and planning which provides the "road map" for fulfilling that future.

Furthermore, the task of evaluation organization performance would entails a   greater degree use of strategic management practice and to initiate any corrective adjustment lies both the end and the beginning of strategy  management cycle.

In addition, strategic management practices are hypothesized, and have an impact in the organizational process and enhances coordination of work for a well-designed productivity, therefore strategy managers must stay close enough to the situation to detect when changing conditions requires a strategic response and when they don’t. It is their job to sense the winds of change, recognize significant changes and initiate adjustments.

1.1    STATEMENT OF THE PROBLEMS

Those engaged in strategic management practices need to be aware of certain often, organization’s external environment poses. externally imposed threats may stem from cheaper technologies, the advent of new substitute products, adverse economic trends restrictive government action, changing consumer va1ves and lifestyles, projection of natural resources depletion, unfavorable demographic shifts, n w sources of strong competition and the likes; such threat can be a major factor in shaping organizational strategy.

As it occurs with all management techniques, individual will need extensive training and refresher training to answer unforeseen questions that arise in response to implementation, conflict, confusion and chaos will prevail initially and for sometimes therefore, only individual learn how to do it and see its valve will the benefit of strategic management be realized.

In an empirical study noting e impact of strategic management on organizational performance, the m [or problems that are associated with bad performance and lack of strategic management can be highlighted below.

·        Lack of internal career leader: A career system is necessary to focus individual attention on the strategic issues facing an organization over the long term. A long-term perspective induces organizational commitment and loyalty. It enables individuals and organizations to invest training and productivity improvements knowing that they will reap the benefits from that enhanced knowledge and technique.

·        Lack of formal training system: the importance of training has been a Neglected area and too much of what goes on in today's organization requires specific adaptation. Therefore managers' functions is the development the people for future advancement.

·        Lack of employee voice/participation: A theory of individual self- interest, which not only operates in terms of the economic market but with respect to socio-political values is primary an attempt to explain an organization survival.

·                   Lack of broadly defined jobs: problems arise when individuals are designed to jobs officially having lower grades, and a lower grade assignment might be seen psychological as a career setback.

·                   Lack of performance-based compensation: strategic pay requires that all decisions relation to compensation and benefit are designed to attracts, retain or motivate employees as such the entire organization rewards structure is designed to fully serve its mission or purpose.

In addition, strategic management remains undeniable considering the fact that resources are inadequate in scope, volume and composition to meet the varying wants of individuals. Organizations and society couple with the present rapid realization that the environment is increasingly becoming unpredictable where nothing has an air of certainty.

1.2     ORGANIZATIONAL PERFORMANCE AS RELATED TO STRATEGIC MANAGEMENT

The desired organization performance and financial result has achieved through the following:

·        Growth in revenues and earnings

·        Return on investment (ROI)

·        Financial strength (capital base)

·        Earning power and stability

·        Technological and improvement. 

·        Strategic objectives convert the strategic mission into specific targets, specific market standing and competitive position, and specific committed to action thus ensuring that the intentions of the intentions of the mission are achieved.

·        The market share position has be seen and recognized as the leader.

·        The organization has high degree of reputation with customers and the public.

·        The overall Size and degree of diversification has become a highly diversified enterprise.

1.3     OBJECTIVES OF THE STUDY

The objectives of any research study is to find a solution to the problem or to

find relationship that exist between the problem and other problems or breaking the problem into its components parts through an exploration or analysis so that the superior and readers alike will understand the problem more clearly with the hope that it will eventually be solved through the present study.

The main objective or purpose of I the study is to conduct a research on the impact of strategic management on organizational effectiveness and performance.

1.4   RESEARCH QUESTIONS

A research question serves as a guide to the researcher in his guess for answer to the problem being investigated. Research question should therefore focus on the problem and should be general enough to give rise to other minor research questions. In case, the research question in which answer will be provided at the end of the study are as follows:  

·        Is there any significant relationship between strategic management and organization effectiveness?

·        How strategic management could be effectively used.

·        To what extent does competitive advantage enhances superior profitability and long-term performance.

·        To what extent doses management devise strategic to effectively guide how the company business will be conducted and to help them make reasoned, cohesive choices among alternative courses of action?

1.5    RESEARCH HYPOTHESES

A hypothesis is the statement of relationship between variables. To understand better what aspect of the relationship between the variable that the researcher is interested in she makes a conjectural statement or tentative statement about this relationship. This conjecture or tentative statement is the hypothesis in this case, the research hypothesis under study area as follow:

1.        Ho: There is no significant relationship between strategic management

and organizational effectiveness and performance.

Hi:     There is significant relationship between strategic management and organizational effectiveness and performance.

2.                    Ho:   Competitive advantage does not effectively enhance superior                   

profitability and long-term performance.

Hi:     Competitive advantage effectively enhances superior profitability and Long-term performance.

 3.               Ho:    strategic management device cannot effectively guide how the

company business will be conducted and help make choice among alternative courses of action.

Hi:      strategic management device cannot effectively guide how the company business will be conducted and help make choice among alternative course of action.

1.6     RESEARCH METHODOLOGY

The: method of data collection that would be employed in the study would be through primary source of data collection. The primary source would be survey through administration of questionnaire, the data that would be gathered through the questionnaire would be analyzed and in analyzing it the following statistical techniques would be used:

1.                              Simple percentage: It would be used to analyze the bio-data statistics and section B to the questionnaire,

2.                              Chi-square statistical techniques: It would be used to test the hypothesis, the formular is]

X²=∑ (O-E)²

  E

Where X² =chi-square

          O= observed frequency

 E = Expected frequency

 ∑ = Summation

The study would be conducted at 5% level of significance and the model for the degree of freedom would be (r-l) (c-l) 'r' and 'c' indicate row and column respectively.

1.7    LIMITATION OF THE STUDY

This study hopes to focus on strategic management practices and external environmental threats of companies and how they affect their performance and effectiveness. However, there is no study without areas of limitating factors, the major limitation of the study is financial inadequacy as well as inadequacy of personnel carryout the research, other are time constraint and inadequately of data on the subject matter.

Despite all these limitations, the study will provides the basic foundation required for future research.

1.8    DEFINITION OF TERMS

Organizational performance means ~hat an organization is able to establish and disseminate a clear sense of purpose and direction, establish an appropriate structure with effective legislative and administrative frameworks, Organizational strengthening and capacity building means building an effective organization capable of identifying, choosing and implementing activities that will enhance its long-term performance.

Strategic management enhances productivity and the effectiveness of organizations.

Strategy is management's game plan for strengthening the organization's position, pleasing customers and achieving performance targets.

1.9     HISTORICAL BACKGROUND OF THE STUDY.

Nigerian breweries plc, the pioneer and largest brewing company in Nigeria was incorporated in the 1946 and recorded a landmark when the first bottle of STAR larger beer rolled off the bottling lines in its Lagos brewery in June 1949.

This was followed by Aba brewery which was commissioned in 1957, Kaduna brewery in 1963 and Ibadan brewery in 1982.

In September 1993, the company acquired its fifth brewery in Enugu while in October 2003, a sixth brewery sited at Ama in Enugu state was commission Ama brewery is the biggest brewery in Nigeria and the most modern in the world.

Operations in Enugu brewery was discontinued in 2004. Thus from its humble beginning in 1946, the company now has five operational breweries from which its high quality products are disturbed to all parts of  this great country.             Nigerian breweries plc has a rich portfolio of high quality brands: star larger beer (1992); Amstel Malta (1994); Heineken larger (1976) legend extra strut (1992); Amstel Malta (1994); Heineken larger (1998); fayrouz (2006); Nigerian breweries plc has an increasing export business that dates back to 1986 currently, the company export to the U.k, Europe and the West African sub-region.

Nigerian breweries plc keeps pace with key international developments, thus ensuring that its systems, processes and operational procedures are always in conformity with world class standards. It is in line with this policy that the company established a research and development center in 1987 to enhance its research activities in all aspect of brewing operations. As a major brewing concern, the company encourages establishment of auxiliary businesses.

Many of these organizations and individuals depends largely on the company for their means of livelihood these include manufacture of bottles, crown corks, labels, cartons, plastic crates and such services as hotels clubs and our key distributors. Nigerian breweries plc is a socially responsible corporate citizen with a very good record of corporate philanthropy in the areas of education, the environment and sports, among others. The company in 1994 established an education trust fund of N100 million and research facilities in higher institutions all in an effort to provide and encourage academic excellence in Nigeria.

This is in addition to its secondary and university scholarship programme for children of its employees Nigerian breweries plc is the foremost sponsor of sports by variety in the country with sponsorship covering football, athletics, table tennis, long tennis, cycling, chess, golf, badminton, dash and boat racing.

The aims is to develop Nigerian sportsmen and women to participate in national and international sports and boost the sports profile of the country. The company is also involved in the development of musical talents through various programmes.

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