STRATEGIC PLANNING AS A TOOL FOR ORGANIZATIONAL GROWTH (A CASE OF UBA PLC AND ZENITH BANK PLC)
Every organization has its objectives and goals laid out. Specification of these objectives and goals is a major aspect of planning. Strategic planning is necessary to guide the decision making process in an organization with a view to acquiring superior performance. For companies to succeed, strategies adopted must fit into circumstances they face, their skills, resources as well as environment in which they operate. This research was designed to determine the impact of strategic planning as a tool for change in the dynamic business environment, a study of UBA group Nigeria Plc and Zenith Bank Nigeria Plc. The objectives were to ascertain that strategic planning affects business operations, to identify the common purpose of strategic planning process as well as to identify the dynamism of business environment and how managers swiftly respond to this considering the ever demanding and changing nature of the industry. The Headquarters and branches of UBA group Nigeria Plc as well as Zenith Bank Plc within Lagos, was the scope of study. Branches with four (4) years of existence with at least fifteen (15) staff were specifically considered for the study. In all about one thousand two hundred (1200) staff from both banks served as the research population. Sources of data included questionnaires and personal interviews administered on the participants directly by the researcher. The results were consistent with the hypotheses. Thus, strategic management planning has impact on effectiveness of the bank, other categories of staff apart from management staff should be involved in strategic planning process in an organization; inefficient strategic planning and implementation leads to failure of an organization. In conclusion strategic planning in an organization is very high and this has impacted well on the organization’s competitiveness in the dynamic environment, especially in the post consolidation era of the banking industry.
1.1 BACKGROUND OF THE STUDY
Strategy is about winning. The purpose of strategic planning is to guide management decisions towards superior performances in an establishment. Competitive advantage strategy acts as a vehicle for communication and coordination within an organization. Strategic planning and management has become more of a business word in the 21st century and in the new millennium than it ever was. Organizations have turned on to the strategic planning processes. For some, it meets stakeholders’ demands, for others, it was used to justify down-sizing and for an even smaller number, it was done because the organization truly understood the need for a strategic blueprint to guide the decision-making process towards superior performance in order to establish competitive edge.
All these are because of the way each of these organizations view and manage their strategic plans. Strategic planning is the key element to organizational success and effectiveness. This is because it is the pattern or theme that gives coherence to the decision of an organization. It helps to achieve consistency in decision-making. Nowadays, managers are faced with challenges posed by the competitive environment as a result of efficient and effective decision-making which demand a thorough and intelligent understanding of the various dimensions that impinges on corporate performance and success of the organization. These various dimensions concern question on how, what, where, when, who, whom, and why of those cognate issues, which if successfully managed, help in organizational success, growth and development. In addition to the relevant questions being asked, decisions have to be made in organizational units and functional units; since efficient integration of organizational and unit decisions ultimately determines corporate success, growth and development. Also important, are those variable which are not under the control of organizational executives, but, which substantially affect or determine organizational efficiency and effectiveness. Therefore there is need for corporate organization and executive to have adequate understanding of these relevant functions determined, applied, and monitored for organizational survival growth and development.
Finally, according to Stath and Grigshy (1997:8), strategic planning refers to managerial decisions that relate the organization to its environment, guide internal activities, and determine organizational long-term performance. The principal responsibility of the practising manager is to ensure that the organization keeps in touch with the external environment; it must also see the essence of management in terms of service to customers.
David (1991: 1) therefore defined strategic planning as the art and science of formulating, implementing and evaluating cross-section business decisions that enable an organization to achieve its objectives.
Armstrong (1982:10) suggests that the specification of objectives and goals is regarded as a major aspect of formal planning. Strategy is not only being efficient, it is critically concerned with enabling the organization to be effective.
According to Drucker (1974:55), the prime task of strategic management is mediating through the overall mission of a business, i.e. asking the question “what is our business?”. This leads to setting objectives, development of strategies and making of today’s decision for tomorrow’s result. This should be carried out by balancing the present objectives and needs against those of the future in the light of available resources of men and materials.
Thompson (1995:101), states that if companies are to succeed they must adopt strategies appropriate for the circumstance they face, feasible in their resources, skills, and capabilities that are desirable to their stakeholders.
The bank can only be effective if it has awareness of and is responsive to the environment in which it operates. However, it is worthwhile emphasizing that the concepts of strategy has a dynamic component. It implies effectiveness and efficiency and it also implies responsiveness, developing awareness of environmental changes and identifying appropriate and effective reaction to the changes.
1.2 STATEMENT OF THE PROBLEM
In Nigeria, the banking environment of which UBA Plc plays active roles, has been facing stiff competition of increasing magnitude, brought about by the changes in government policies of deregulation, privatization, re-capitalization and globalization that cut across all corners of the globe. This has brought down profit margin and justified labour turnover. In order to redress the situation that has also affected effectiveness and service delivery, the bank has adopted effective strategic planning culture.
1.3 RATIONALE FOR THE STUDY
The main objective of the research is to determine the impact of strategic planning as a tool for change in a dynamic business environment. Other objectives of the research work include:
- Ascertaining that strategic planning affects business operations.
- Identification of dynamism of business environment and how managers swiftly respond to this considering the ever demanding and changing nature of the industry.
- Identifying the common purpose of the strategic planning process.
- RESEARCH QUESTIONS
The following questions will be answered in the course of the study:
- Does the success of the organization depend on the effectiveness of strategic planning?
- Who is responsible for leading the strategic planning process in the organisation.
- Will the efficiency or inefficiency of strategic planning and implementation lead to the success or failure of an organization?
- How well is information technology explored in implementation of strategies?
- How does the management react to environmental challenges?
1.5 RESEARCH HYPOTHESES
The research hypothesis below will be tested in this study:
H0: Strategic management planning does not have impact on effectiveness of the bank.
H1: Strategic management planning has impact on effectiveness of the bank.
HO: Other categories of staff apart from management staff should not be involved in strategic planning process in an organization.
H1: Other categories of staff apart from management staff should be involved in strategic planning process in an organization.
1.6 SCOPE AND LIMITATION OF STUDY
The scope of this study will be UBA Group Nigeria Plc. and Zenith bank Plc. The study will be carried out in the bank’s headquarter and some of its branches within Lagos. Thelimitations envisaged in this study includes that of time, finances and unwillingness of some respondents to complete questionnaire.
1.7 SIGNIFICANCE OF THE STUDY
Tilles (1960:63), has suggested that without an explicit statement of strategic planning, it becomes more difficult for expanding organizations to reconcile coordinated action without entrepreneurial effort. Thus, this study will be significant in the following areas:
- This study will enable the bank to maximize its effectiveness by improving its position in the competitive environment.
- This study will enable the bank to clarify its goal, improve allocations of resources and examine problems of decisions making.
- This study will enable the management of the bank to define the scheme of strategy for their business, based on the bank’s strength, weakness and external environment.
- It will ascertain that changing strategies with situation factors is also a form of strategic planning.
- It will help in establishing whether wrong application of strategies leads to the non-performance of a business or not.
- BRIEF HISTORY OF ORGANIZATION UNDER STUDY; UBA PLC AND ZENITH BANK PLC
History of UBA
United Bank for Africa Plc (UBA) is one of the leading financial services institution listed on the Nigerian Stock Exchange which offers a complete range of over 200 banking, bank assurance and wealth management products and services.
Its vision is to be the undisputed leading and dominant financial services institution in Africa.
UBA’s history dates back to 1948 when the British and French Bank Limited (“BFB”) commenced business in Nigeria. Following Nigeria’s independence from Britain, UBA was incorporated in 1961 to take over the business of BFB. Today UBA is the product of the 2005 merger between UBA and Standard Trust Bank; shortly after Continental Trust Bank, was acquired. The consolidated UBA is here on a mission to be a role model for African business, by creating superior value for all their stake holders, abiding by the utmost professional and ethical standards and by building an enduring institution
History of Zenith Bank
Zenith Bank was established in May, 1990 and started operation in July 1990. It became a Plc in June 17, 2004 and today has over 300 branches, including branches in Ghana, Sierra Leone, UK and South Africa. As one of the biggest and most capitalized bank, Zenith Bank desires to become the leading Nigerian, technology drive, global financial institution providing distinctively a unique range of financial services.
Zenith Bank’s core values are customer satisfaction, sustainable stakeholder value creation, professionalism and good corporate governance; little wonder, in November 2007 it was named the African Bank of the year.
1.9 STRATEGIC PLANNING IN UBA PLC. AND ZENITH BANK PLC.
Strategic Planning in Uba Plc.
The strategy for the take-off of the new board and management of UBA involved merging the CBN accounts of both banks, commencement of a unified reporting system and alignment of the products being offered to customers of the pre-merger banks
The first phase of the integration of the IT networks of the two banks and in tune with global best practices has been completed. This has led to the change of each of the two organisation’s software from Flexicube to Finnacle. Several other strategic steps followed suit which includes; roll out of I. T. backed up products that would demystify banking.
The bank has also recruited more young and vibrant staff. Lastly, it has aggressive marketing department in place aside from each member of staff been trained as a potential marketer of the bank’s products. The bank now enjoys reduced overheads which enhance shareholders’ value through the exploitation of various operational synergies. This has led to improved revenues, significant cost savings and improved efficiency. (The Punch Newspaper, August 1st, 2005, pg. 17).
Ever since the re-branding of the bank, the new management has not relented in new financial product development and marketing. For instance, in June 2006, the organization released into the financial market four mutual fund products namely; UBA balanced fund, UBA hedge fund, UBA bond fund and UBA money market fund. Different investors have different motives for investing so these products were targeted at meeting diverse needs of investors namely: UBA balanced fund for spreading risk; UBA hedge fund for investors who intends to hedge against inflation: UBA bond fund for investors who are interested in long term yield; and UBA money market fund for low risk investment.
An important feature of this is the strategic market entry. During the consolidating period, the bank did not release any initial public offer but now after some banks have made several offers, the bank now deems it fit to release not the usual public offers but a strategic market entry through these mutual funds. All of these among other strategic implementation yet to be unraveled by the organization attests to the strategic planning approach of UBA GROUP plc (Sunday Punch, June 11, 2006, pp 1 and 6).
Strategic Planning in Zenith Bank Plc
From inception, Zenith Bank clearly set out to differentiate itself in the banking industry through its service quality, drive for a unique customer experience and the calibre of its client base. Today, the bank is easily associated with the following attributes in the Nigerian banking industry:
- Best risk assets portfolio
- Consistent superior financial performance
- High quality personnel
- Leadership in the use of Information and Communication Technology (ICT)
- Consistent in raising the bar of competition, and
- Formidable marketing team
Strategic planning in the organization is always hinged on overall vision of the bank which is to make the Zenith brand a reputable international financial services network recognised for innovation, superior customer service and performance while creating premium value for all stakeholders.
The key strategies management of the organization depends on include:
- Delivering superior and tailor-made service experience to all our customers at all times.
- Developing deeper and broader relationship with all clients and strive to understand their individual and industry peculiarities with a view to developing specific solutions for each segment of our customer base.
- Significantly expanding its operations by adding various distribution channels and entering into new markets.
- Maintaining its position as a leading service provider in Nigeria while expanding its operations internationally in West Africa and the financial capitals of the world.
- Striving to be a leading service provider in Nigeria by continuing to build on longstanding relationships, capabilities and the strength of our brand and reputation.
- Expanding its business through the establishment of key subsidiaries for the provision of non-bank financial services to accentuate the service offerings and experience of our customers.
- Continually enhancing its processes and systems platforms to deliver new capabilities and improve operational efficiencies and achieve economies of scale.
- Having a strong information network that allows the management to take a well informed decision ahead of peers.
- Commitment to being a leading light in the deployment and utilization of Information and Communications Technology (ICT) for financial services delivery, with its service offering covering, but not limited to: Corporate and Commercial Banking Services, e-business Solutions including local and international card business, treasury and cash Management Services, foreign exchange and trade finance services funds assets management private banking and investment banking and financial advisory services among others.
- Assemblage of seasoned world-renowned group of financial experts, legal and technology experts to deliver pioneering solutions to both businesses and individuals while shareholders get real value for their hard investment (Zenithbank.com, 2008).
1.10 DEFINITION OF TERMS
The following terms are defined as used in the report:
- Corporate Strategy: These are plans to carry out value and performance objectives of a company Ansoff (1984:83).
- Dynamism: This implies constantly changing nature of something, in this case of the business environment Ansoff (1984:88).
- Effectiveness: This is the degree to which the bank accomplishes specified goals and objectives of the organization Tilles (1969:80).
- Environmental Complexity:- This is the heterogeneity and concentration of elements in a firm’s external environment Anao (1980:500).
- Goal: It is an objective expressed in terms of one or more specific dimension Tilles (1969:58).
- Strategies: These are the approaches by which long-term objectives are attained with a view to making profit Tilles (1969:52).
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