NATIONAL COLLEGE

NATIONAL COLLEGE

POST GRADUATE PROGRAM

THE EFFECT OF STRATEGIC PLANNING ON ORGANIZATIONAL

PERFORMANCE: THE CASE OF ETHIOPIAN MANAGEMENT
INSTITUTE

BY

GENET DEBEBE HAILE

MBAK- 0119/15B

A REASERCH PROPOSAL SUBMITTED TO THE GRADUATE

SCHOOL OF NATIONAL COLLEGE IN PARITIAL FULLFILMENT
OF THE REQUIREMENTS FOR THE DEGREE OF MASTERS OF
BUSINESS ADMINISTRATION (MBA)

ADVISOR:- YIBELTAN N. (ASST. PROF.)

NOVEMBER, 2024

ADDIS ABABA, ETHIOPIA

 NATIONAL COLLEGE

NATIONAL COLLEGE

POST GRADUATE PROGRAM

MASTERS OF BUSINESS ADMINISTRATION

THE EFFECT OF STRATEGIC PLANNING ON ORGANIZATIONAL

PERFORMANCE: THE CASE OF ETHIOPIAN MANAGEMENT
INSTITUTE

BY

GENET DEBEBE HAILE

MBAK- 0119/15B

A REASERCH PROPOSAL SUBMITTED TO THE GRADUATE

SCHOOL OF NATIONAL COLLEGE IN PARITIAL FULLFILMENT
OF THE REQUIREMENTS FOR THE DEGREE OF MASTERS OF
BUSINESS ADMINISTRATION (MBA)

ADVISOR:- YIBELTAN N. (ASST. PROF.)

 NATIONAL COLLEGE

DECLARATION

This is to declare that the Thesis Proposal is entitled “The Effect of Strategic Planning on
Organizational Performance: The Case of Ethiopian Management Institute” is prepared
by Genet Debebe. And I hereby affirm that the thesis proposal is my original work conducted
in partial fulfillment of the requirements for the Masters of Arts in Business Administration.
Literatures used in the proposal were appropriately cited and the authors are acknowledged.

Genet Debebe _______________________

Name Signature and Date

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APPROVAL SHEET

This is to certify that the thesis proposal prepared by Genet Debebe, entitled “The Effect of
Strategic Planning on Organizational Performance: The Case of Ethiopian
Management Institute” and submitted in partial fulfilment of the requirements for the
Degree of Masters of Business Administration (MBA) complies with the regulations of the
College and meets the accepted standards with respect to originality and quality.

_____________________ _____________________

Advisor Name Signature and Date

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ABBREVIATIONS AND ACRONYMS

BPR Business Process Re-engineering

BSC Balanced Scorecard
CS Civil Service
CSRP Civil Service Reform Program
EMI Ethiopian Management Institute
EPRDF Ethiopia People’s Revolution Democracy Front
GTP Growth and Transformation Plan
SWTO Strength, Weakness, Opportunity and Threats
TG Transitional Government

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TABLE OF CONTENTS

DECLARATION......................................................................................................................................i
APPROVAL SHEET...............................................................................................................................ii
ABBREVIATIONS AND ACRONYMS...............................................................................................iii
TABLE OF CONTENTS........................................................................................................................iv
LIST OF FIGURES...............................................................................................................................vii
ABSTRACT.........................................................................................................................................viii
CHAPTER ONE......................................................................................................................................1
1. INTRODUCTION...............................................................................................................................1
1.1. Background of the Study............................................................................................................1
1.2. Profile of the Study Organization...............................................................................................3
1.3. Statement of the Problem............................................................................................................4
1.4. Objective of the Study................................................................................................................6
1.4.1. General Objective of the Study................................................................................................6
1.4.2. Specific Objectives of the Study..............................................................................................6
1.5. Research Questions.....................................................................................................................7
1.5.1 General research questions....................................................................................................7
1.5.2. Specific research questions..................................................................................................7
1.6. Research Hypothesis...................................................................................................................7
1.7. Significance of the Study............................................................................................................8
1.8. Scope of the Study......................................................................................................................8
1.9. Organization of the Study...........................................................................................................9
CHAPTER TWO...................................................................................................................................10
2. REVIEW OF RELATED LITERATURE.........................................................................................10
2.0. Introduction..............................................................................................................................10
2.1. Theoretical Framework.............................................................................................................10
2.1.1. Definition of basic terms....................................................................................................10
2.1.2. Basic concepts of strategic planning..................................................................................10
2.1.2.1. Organizational performance........................................................................................11
2.1.2.2. Organizational performance measurement..................................................................12
2.1.2.3. Relationship between strategic planning and organizational performance..................13
2.1.3. Types of planning..............................................................................................................16
2.1.4. Overview of Past Study.....................................................................................................17
2.1.5. Components of strategic planning......................................................................................20

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2.1.5.1. Environmental Scan....................................................................................................20

2.1.5.2. Mission and Vision.....................................................................................................22
2.1.5.3 Goals and Objectives Setting.......................................................................................24
2.1.5.4. Resource Allocation....................................................................................................26
2.1.5.5. Employee Participation...............................................................................................27
2.1.6. Levels of strategy...............................................................................................................28
2.1.7. Theories of strategic planning............................................................................................29
2.1.8. Strategic planning model...................................................................................................33
2.2. Empirical Literature Review.....................................................................................................34
2.3. Conceptual Framework.............................................................................................................37
CHAPTER THREE...............................................................................................................................39
3. RESEARCH DESIGN AND METHODOLOGY.............................................................................39
3.1. Introduction..............................................................................................................................39
3.2. Research Approach...................................................................................................................39
3.3. Research Design.......................................................................................................................39
3.3. Target population, Sampling Technique and Sampling Size.....................................................40
3.3.2. Sampling technique............................................................................................................40
3.3.3. Sampling size.....................................................................................................................41
3.4. Data Type and Source...............................................................................................................41
3.5. Data Collection Methods..........................................................................................................41
3.6. Methods of Data Analysis and Presentation..............................................................................42
3.7. Reliability and Validity of Data................................................................................................42
3.7.1. Reliability of Data..............................................................................................................42
3.7.2. Validity of Data.................................................................................................................42
3.8. Model Specification..................................................................................................................43
3.9. Ethical Consideration................................................................................................................43
CHAPTER FOUR..................................................................................................................................44
4. RESEARCH SCHEDULE AND BUDGET PLAN..........................................................................44
4.1. Research Work Schedule..........................................................................................................44
4.2. Research Budget Plan Schedule................................................................................................44
REFERENCE.........................................................................................................................................45
APPENDICES.......................................................................................................................................49
APPENDEX A.......................................................................................................................................49
APPENDEX B.......................................................................................................................................54

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LIST OF TABLES
Table 4. 1: Work Breakdown Schedule...................................................................................44
Table 4. 2: Research Budget Plan Schedule.............................................................................44

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LIST OF FIGURES

Figure 2. 1: Conceptual Framework.........................................................................................38

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ABSTRACT
This research proposal examines the effects of strategic planning on organizational
performance at the Ethiopian Management Institute (EMI), a public enterprise that has
operated as a leading management development service provider in Ethiopia since 1958. The
study argues that strategic planning is crucial for enhancing an organization's efficacy and
efficiency by supporting both current and future operations. The proposal aims to investigate
the influence of specific components of strategic planning on EMI's organizational
performance, including environmental scanning, mission and vision, objective setting,
resource allocation, and employee participation. The research will employ a descriptive and
inferential research design, utilizing both qualitative and quantitative research approaches.
Data will be gathered from a target population of 58 individuals involved in strategic
planning at EMI's Addis Ababa head office, using questionnaires and semi-structured
interviews. Quantitative data will be analyzed using SPSS, while qualitative data will be
analyzed through a process of summarization and combination. The study's findings are
anticipated to provide insights for policymakers and encourage further exploration of the
correlation between strategic planning and organizational performance. It is expected that
this research will contribute valuable knowledge regarding the impact of strategic planning
on organizational performance within the specific context of the Ethiopian Management
Institute.

Key words: Ethiopian management institute, strategic planning, organizational performance,

environmental scanning, mission and vision, objective setting, resource allocation and
employee participation

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CHAPTER ONE

1. INTRODUCTION

This chapter introduces the background part of this research, statement of the problem, research
objectives, research questions, purpose and scope of the research and structure of the study.

1.1. Background of the Study

The issue of strategic management is fundamental across all types of organizations. By adopting
effective strategic management practices, organizations can determine their future direction,
outline the steps needed to reach their goals, and establish metrics to assess their progress. In
today's competitive and economically volatile landscape, many companies leverage strategic
management as a tool to navigate and manage their business environments more effectively
(Hunger, 2008). While external factors can significantly impact an organization, its internal
situation is equally important. Strategic management is crucial for optimizing financial and
material resources, as a lack of quality in these areas can adversely affect an organization's
status. Additionally, the contribution of employees plays a vital role in the overall success of the
organization (Dzemyda, 2014).

Strategic management as the concept and practice, facilitate transmission of the institution
functions from the administrative practices based on the mood of the individual, the random,
routine, obviousness, intuition and tradition to the administrative practices that depend on
participated (the team) and the planned change and innovation, initiative and invested in new
technology and using renewable information in addition to the adoption of scientific research and
experimentation as a stepping stones that essential for the development. And also it transforms
from the perspective that management is a science that has its theories and principles and be
exercised only by those who have prepared a special setting and received a professional license
to practice. (A1-Khatib, 2001).

Strategic management formulation is a continuous process in organizations since it involves a

framework for actions that lead to anticipated results. Strategic management comprises of both

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corporate strategy in which companies decide which line or lines of business to engage in and
business strategy, which sets the framework for achieving success in a particular business.
(Wernham, 2014), articulate the importance of strategy management formulation can increases
profitability of a firm in case of inefficient markets; need to deal with high degrees of
uncertainty, and major environmental changes. There are three categories of factors that affects
strategy management formulation process, environmental factors, organizational factors and,
employee involvement. Formulation of new strategy is fretful with adjustments in the structure,
employees, system, and styles of doing things to accommodate the perceived needs of strategy.

Strategic planning as a practice and concept was first originated in the military sector and
lucratively adopted to the business sectors as important management tool in response to the
unpredictable, turbulent, and chaotic world. Strategic planning is the process of determining
what an organization intends to be in the future and how it will get there. It is also a tool that
helps a firm to define the best future for the organization and the best path to reach the
predetermined destination. The importance of strategic planning has been developed from time
to time and its application in business sector has become significant in all corners. (Tsehay,
2014).

The foremost purpose of strategic planning is to support decision making with the formulation of
alternative courses of actions that will have long term, desirable consequences. It involves an
examination of alternative courses of actions and the impacts and consequences that are likely to
result from their implementation. A clear provision should be made for dealing with the
uncertainties of probabilistic futures. Strategic planning is the part of a continuous process that
includes the allocation and management of resources, as well as performance evaluation and
feedback (Alemayehu, 2018).

Strategic planning regulates the processes of goal/objectives setting, situation analysis,

alternative consideration, implementation and evaluation that enable an organization to attain its
goals and objectives (Tapinos et.al, 2005). (Tergarden, 2003), (2003) concluded that as there is a
positive correlation between strategic planning and performance achievements which is a very
advantageous for organizations. Dyson, (2000); McAdam and Bailie, (2002) wrote as any firm to
sustain in a competitive environment should need to align their strategies with their performance
measurement systems in a well coordinated way.

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Performance measurement has a significant effect in supporting the achievement of an

organization’s goals and the effectiveness and efficiency of its strategic planning process. Thus,
in order to assess the level of success of a corporate body, its established strategic plans in
connection with the performance of the organization in all fronts of activities had to be
established (Debrah Kwame, 2012).

In today’s’ world public and private sectors had taken the practice of strategic planning critically
as a tool that can be employed to fast track their performance. Strategic planning is the most
important ingredient in the conduct of strategic management. In this regard, (Robert, 2012) noted
that the framework for formulating and implementing strategies is the formal strategic planning
system.

Strategic planning has potential advantages and intrinsic values that eventually translate into
improved organizational performance. Therefore, strategic planning is a vehicle that facilitates
improved organizational performance. The grand promise of strategic planning has been to
increase the efficiency and effectiveness of organizations by improving both current and future
operations. Strategic planning provides a framework for management’s vision of the future. The
strategic planning establishes objectives, set goals, and schedules activities for achieving those
goals and includes a method for measuring progress. The process strategic planning determines
how the organization will change to take advantage of new opportunities that help meet the
needs of customers and clients (Bekele 2015).

This study will therefore want to establish the relationship between strategic planning and
organizational performance in Ethiopian management Institute.

1.2. Profile of the Study Organization

The Ethiopian Management Institute (EMI) is a public enterprise that has been operating in
Ethiopia as a service provider since 1958. It is the leading management development service
provider in the country. The Ethiopian Management Institute has organized learning facilities
both at the Head Office and Debrezeit Management Training Center (DMTC) that can also be
used for your own training, conference, workshops and other forums. The Ethiopian
Management Institute has organized learning facilities both at the Head Office (H.O.) and
Debrezeit Management Training Center (DMTC) that can also be used for your own training,

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conference, workshops and other forums. The institute was organized to enable public, private
and other organizations provide efficient, effective and quality services by rendering modern
competency based training, consultancy, research and competency assessments as well as facility
services for organizations, leaders and employees. The institution provides extensive training on
different area of knowledge’s, research and publication service, consultancy service as well as
certification service (http://www.emi.gov.et).

1.3. Statement of the Problem

In today’s world every organization operates not only in uncertain environment but also more
securely interconnected through different perspectives. Thus, changes anywhere in the system
reverberate unpredictably and often chaotically and dangerously throughout the society. These in
turn increase uncertainty and interconnectedness of every organization around the world.
Strategic planning can help leaders and managers to think, learn, and act strategically as well as
assist to sustain in a volatile business environment (John, 2004).

Effective strategic planning is very important to support and strength on organizational

performance. An excellent strategic planning would reduce wastage of time, cost minimization
and to use less human resource and the right person to the right position. Most of the time
organization prepares strategic planning to improve the performance of their departments and
sector but fail to implement according to the time set, the planned human resource and within the
budget framework (Rantakyro, 2000).

Findings from past researches show that there is a relation between strategic planning and
organization performance. Between the 1970s and the beginning of the 1990s, a large number of
studies examined the relationship between strategic planning and organizational performance.
These studies came to the conclusion that organizational performance and strategic planning are
directly related. Additionally, research done in the African context by Woodburn (1986),
Adebgite (1986), and Fubarua (1986) found that institutions that engaged in strategic planning
outperformed those that did not in terms of performance metrics.

Kalkidan Kebede, (2020) conducted a research with title “The effect of strategic planning on
organizational performance in the case of Nib insurance share company”. The study was
conducted through questionnaire survey and she has investigated communication, dissemination,

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performance measure, process element, integration and techniques used to avoid challenges of
Nib insurance share company and the response of the respondents analyzed accordingly.

The result shows that the majority of the employees were dissatisfied with communication,
dissemination, process element and techniques used to avoid challenges of their company but
satisfied in performance measure and integration of the company.

Another researcher, Abinet Tefera, (2020) conducted with title “Strategic planning practices and
its effect on organizational performance, in case of commercial bank of Ethiopia in Debre
Berhan town”. The study was conducted through questionnaire survey and he has investigated
the effect of strategic formulation, strategic implementation, strategic evaluation and control and
strategic planning formality on organizational performance.

The result indicates that the respondents from CBE were agreed that their organization carried
out its successful strategic formulation, strategic implementation, strategic evaluation and control
and strategic planning formality by applying all their respective key dimensions required for
them.

A research conducted by Senamawit Fekadu, (2023) with titled Effect of strategic planning
practice on organizational performance in the case of cooperative bank of Oromia. The research
was conducted through questionnaire survey and interviews and she has addressed process
element, dissemination, techniques, integration and communication processes of Bank of
Oromia.

The result show that process element, integration and process management system were fall
under agreed level and well practiced by the bank where as dissemination and communication
fall under neutral or undecided level and less practiced by the bank.

In context of Ethiopian Management Institute, the effectiveness of strategic planning remains a

crucial concern that significantly impacts organizational performance. Despite the growing
demand for quality education and skilled management professionals in Ethiopia, many institutes
struggle to establish coherent strategic frameworks that align with their long term goals. This
misalignment often results in unclear institutional vision, suboptimal resource allocations and
ineffective decision making process.

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The absence of structural approach to strategic planning exacerbates challenges such as

inadequate stakeholder’s engagement, limited adaptability to market changes and insufficient
performance measurements. Consequently, management institutes may fail to leverage their
unique strengths and hindering their competitiveness. Furthermore, the lack of a strong
organizational culture rooted in strategic objectives can lead to low employee morale and
retention rates among faculty and staff.

This problem necessitates a comprehensive examination of how strategic planning components

(environmental scan, vision and mission, objective setting, resource allocation and employee
participation) affect the overall performance of Ethiopian Management Institute.

Research gap

While previous studies by Kalkidan Kebede and Senamawit Fekadu have addressed various
aspects of strategic planning, and Abinet Tefera focused on effect of strategic formulation,
strategic implementation, strategic evaluation and control and strategic planning formality on
organizational performance during his research work. None of them specifically examined the
components of strategic planning (environmental scan, vision and mission, objective setting,
resource allocation, and employee participation) in depth. This research seeks to fill this gap by
analyzing these components and their effect on organizational performance in the Ethiopian
Management Institute.

1.4. Objective of the Study

1.4.1. General Objective of the Study

 The general objectives of this study will to investigate the effects of strategic planning
practice on organizational performance in Ethiopian Management Institute.

1.4.2. Specific Objectives of the Study

The specific objectives of this research study are:

1. To identify the influence of the environmental scan on the organizational performance of
Ethiopian Management Institute
2. To identify the influence of organization vision and mission on performance of Ethiopian
Management Institute

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3. To examine the influence of setting objective on organizational performance of Ethiopian

Management Institute
4. To identify the effects of resources allocation on the organizational performance of Ethiopian
Management Institute
5. To examine the influence of employee participation on organizational performance in
Ethiopian Management Institute.

1.5. Research Questions

1.5.1 General research questions

The general research question this research answer will be:
 What will be the effects of strategic planning on organizational performance in Ethiopian
Management Institute?

1.5.2. Specific research questions

The specific research questions this study will addresses are:

1. To what extent environmental scan influence organizational performance of Ethiopian

Management Institute?
2. What is the effect of organization vision and mission on performance of Ethiopian
Management Institute?
3. What is the influence of objective setting on organizational performance of Ethiopian
Management Institute?
4. What is the effect of resources allocation on the organizational performance of Ethiopian
Management Institute?
5. What is the effect of participation on organizational performance in Ethiopian Management
Institute?

1.6. Research Hypothesis

Based on the above reviewed theoretical and empirical literatures, the study develops the
following five research hypotheses:
H1: Environmental scan has a positive significant effect on organizational performance

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H2: Organizational vision and mission has a positive significant effect on organizational
performance
H3: Objective setting has a positive significant effect on organizational performance
H4: Resource allocation has a positive significant effect on organizational performance
H5: Employee participation has a positive significant effect on organizational performance.

1.7. Significance of the Study

Studying the effect of strategic planning on organizational performance at the Ethiopian

Management Institute holds both practical and theoretical significance.

Practical significance: This research can provide valuable insights into how structured strategic
planning processes can enhance the institute's efficiency and effectiveness, leading to improved
outcomes in service delivery and stakeholder satisfaction. By identifying the specific elements of
strategic planning that correlate with better performance, the institute can adopt best practices,
allocate resources more effectively, and align its activities with its long-term goals.

Theoretical significance: This study contributes to the existing literature on strategic

management by examining the unique context of Ethiopian organizations, which may face
distinct challenges and opportunities compared to those in more developed countries. It can help
refine existing models of strategic planning and organizational performance by incorporating
local variables and cultural factors that influence decision-making processes. Additionally, the
findings may prompt further research into the interplay between strategic planning and various
performance metrics, enriching the theoretical framework surrounding strategic management.

1.8. Scope of the Study

The scope of study will be delimited on investigating effect of strategic planning on

organizational performance in Ethiopian Management Institute at Addis Ababa head office only.

Even though there are a number of important determinant variables which have significant
influence on the performance of any company like political, social and economical affairs,
management philosophy etc, they will not considered in this study. Hence, the study will be
limited to those strategic planning components independent variables (environmental scan,

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mission and vision, objective setting, resource allocation and employee participation) in their
relation to the overall performance of the Ethiopian Management Institute.

Descriptive and inferential research design with both qualitative and quantitative research
approach will be used by the researcher while conducting this study. The target population of the
study will be all individuals who participate in the process of strategic planning in EMI.
Purposive sampling techniques will be applied on this research. The target population and
sampling size will be 58 individuals. Questionnaires (numerical data) will be analyzed by using
IBM Statistical Package for Social Scientists (SPSS) Statistics version 27 statistical computer
software application and the data obtain by using semi structured interview will be analyzed by
combining and summarizing the results. The study will take place between October, 2024 and
February, 2025.

1.9. Organization of the Study

This study will be organized in to five chapters. Chapter one will encompass of the background
of the study, research problem, objectives of the study, research questions, significance of the
study and scope of the study. Chapter two will comprise of the theoretical review, empirical
review, conceptual framework and knowledge gaps. Chapter three contains the details of the
research methodology and the steps used to gather and analyze data from which findings are
drawn and chapter four contains research work schedule and budget plan schedule.

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CHAPTER TWO

2. REVIEW OF RELATED LITERATURE

2.0. Introduction
This chapter is presents the theoretical literature review concept of strategic planning and how it
has been used to effects on performance, an empirical literature review, a conceptual framework
of strategic planning and the research gaps. The reviews of literature led to draw a significant
conclusion and served as a guide for the study.

2.1. Theoretical Framework

2.1.1. Definition of basic terms

Organization: A consciously coordinated social unit, composed of two or more people, which
functions on a relatively continuous basis to achieve a common goal or set of goals (Stephen P.
Robbins and Timothy A. Judge, 2013)

Performance: The action of performing a specific task or set of tasks and it’s measured on how
successfully an individual or organized group performs such tasks (htt://www.hirebook.com).

Strategic: Relates to the identification of long-term or overall aims and interests and the means
of achieving them (Bryson, 2014).

Planning: This is a time management technique. It is an orderly step by step conception for
accomplishing an objective (Ilesanmi, 2011).

2.1.2. Basic concepts of strategic planning

Strategic planning is the improvement of the long range strategies and plans for compelling
management of condition openings and dangers, in light of corporate qualities and shortcomings
(Johnson et al., 2011)

Strategic planning has additionally been conceptualized as the assurance of how the
organization's central goal, vision, objectives and targets, will be met (Kuria, 2014). It can be
characterized as the system of making and maintaining consistency between the institution's
objectives and assets and its moving prospects (Grant, 2014).

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Strategic planning in expansive part, is a basic leadership movement. Despite the fact that these
choices are regularly upheld by a lot of quantifiable information, strategic choices are in a
general sense judgmental. Since strategic choices can't generally be evaluated, managers must
depend on "informed judgment" in settling for this kind of choice (Mugadza, 2012).

In this unique situation, Mbogo (2013) contends that strategic planning choices submit an
organization to explicit items, markets, assets, and innovations over an all-inclusive time frame
and the recognized techniques are gone for deciding long term objectives. Porter (2008) also says
strategic planning is making choices amongst alternative actions and finding the best options that
suits and enhances a firm’s efficiency and productivity to be executed through the efforts of the
people, therefore making it competitive. Strategic planning improves the process of people
working together. It brings everyone together to pursue opportunities for better meeting of
stakeholder needs.

Although strategic planning is important, what is more important is how it is practiced in

different organizations. Many organizations keep on redefining their mission and vision
statement, organize seminars and include consultants to formulate strategies (Kamau,
2008).According to John Yabs (2010) Strategic thinking and decision making are the essence of
strategic management and should be directed towards three fundamental things. First,
determining strategic direction and long –term performance of the firm. Secondly, providing a
set of managerial decisions and finally guiding the priority use of resources and internal
managerial decisions.

2.1.2.1. Organizational performance

Organizational performance is the measure of standard or prescribed indicators of effectiveness,
efficiency, and environmental responsibility such as, cycle time, productivity, waste reduction,
and regulatory compliance. Performance also refers to the metrics relating to how a particular
request is handled, or the act of performing; of doing something successfully; using knowledge
as distinguished from merely possessing it. It is the outcome of all of the organization’s
operations and strategies, Aaltone and ilkavalko, (cited in Haimanot 2017, p.25)

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2.1.2.2. Organizational performance measurement

In order to measure the performance of the organization we will use the Balanced Score Card
(BSC) as a strategic tool for applying the strategic planning and measuring the performance.
“The balance scorecards is not only a management system, it enables companies to clarify their
strategies, translate them into action, and provide meaningful feedback around both the internal
business processes and external outcomes in order to continuously improve strategic
performance and results”. (Pearce 11 & Robinson, 2011, 363).

The best know of the multi-dimensional performance measurement frameworks is the “balanced
scorecard” Kaplan and Norton (1996) identified four components of the balanced scorecard, each
of equal importance, and each having associated goals and measures. The four components are:-
 Financial perspective- it focuses on financial performance of an organization. It normally
covers the revenue and profit target of commercial companies as well as the budget and cost-
saving targets of not profit organizations. The financial health of an organization is a critical
perspective for manager to track.
 Customer perspective-the customer perspective addresses the question of how the customer
viewed by its customers and how well the firm is serving its targeted customer in order to
meet the financial objectives. Generally, customers view the firms in terms of time, quality,
performance and cost. Most customer objectives fall into one of those four categories.
 Internal business perspective-internal business process objective address the question of
which processes are most critical for satisfying customers and shareholders. These are the
processes are most critical for satisfying customers and shareholders. These are the processes
in which the firm must concentrate its efforts to excel.
 Innovation and learning perspective-innovation and learning in address the question how the
firm must learn, improve, and innovative in order to merits objectives. Much of this
perspective is employee-cantered.
It is also a management system that enables organizations to clarify their vision and strategy and
translate them in action. As a performance management system it enables an organization to
translate its vision and strategy into objectives and measurements (Lawson, et.al., 2008).
Generally speaking, BSC is a communication tool, measurement system and strategic
management system.

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According to Niven (2006) BSC provides the framework for an organization to move from
deciding to live its strategy to doing it since it is crucial in translating mission into concrete
objectives that align all employees. BSC as strategic management tool helps to measure, monitor,
and communicate strategic plans and goals throughout the organization in a way that is
understood by everyone (Lawson, et.al, 2008).
BSC is ideally created through a shared understanding and translation of the organization’s
strategy into objectives, measures, targets, and initiatives in each of the four scorecard
perspectives. Under customer perspective the focal points is identifying target customers and
their expectations. It includes measures with direct impact on customers. In the internal process
perspective of the scorecard, key processes the firm must excel at are identified to continue
adding value for customers and shareholders. It includes measures reflecting the key business
processes. Learning and growth perspective refers to the foundation upon which BSC is built.
Employee skills, employee satisfaction, availability of information, and alignment could all have
a place in this perspective. (Kaplan and Norton, 1996).

2.1.2.3. Relationship between strategic planning and organizational performance

The strategic planning-performance relationship has attracted more attention and study than any
other topic in strategic planning (Brews and Hunt, 1999). Michael porter (1980) argues that the
aim of strategy is “choosing to perform activities differently than rivals do”. In the years 1980 to
1990 the planning-performance relationship was the focus of attention for most researchers
(Whittinton and Cailluet, 2008). These studies varied from examining the direct relationship
between strategic planning and performance to those assessing performance in light of
contingencies in the external environment and internal environment of the firm. In general, the
impact of planning on performance points to a positive impact of formal strategic plans, but the
results leaves much for doubts and several unrelated interpretations (C.Miller and Cardinal,
1994). A major source of inconsistent results and controversy was in the area of methodological
differences (Boyd, 1991).

Strategic planning as a process of management involves formulation of long-term organizational

goals, allocation of resources for realizing the set goals, and their development and
implementation. Strategic planning seeks to create competitive advantage by enabling the
organization to achieve its goals and gain growth and profitability as efficiently as possible

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compared to its competitors. Strategy is the major business plan or action undertaken by
management to realize performance and profitability for an organization (Seedee R. 2012).
Corporate strategy is, therefore, made up of the product-market choices of firm managers in
outlining the fundamental steps to follow in realizing set organizational objectives (Wang,
Walker &Redmond 2011). A strategic plan is also important for management in guiding
achievement of long-range goals including sales and profitability, workforce efficiency and
motivation, and corporate responsibility.

Hofer and Schendel (1987) and David (1997) argue that organizations record improved
performance once they effectively embrace strategic planning. Carrying out the various steps in
the strategic planning process is expected to facilitate the realization of organization
effectiveness. Strategic planning provides direction to the organization and control of
organization activities. McCarthy and Minichiello (1996), note that an organization’s strategy
provides a central purpose and direction to the activities of the organization and to the people
who work in it. Furthermore, Howe (1986) and Kotter (1996) argue that the primary goal of
strategic planning is to guide the organization in setting out its strategic intent and priorities and
refocus itself towards realizing the same.

Porter (1980) and Miller and Cardinal (1994) argue that an objective analysis of external and
internal environment facilitates the establishment of the organization-environment fit and
improved decision-making.

Porter (1980) and kotter (1996) note that the identification of strategic issues and, strategy
analysis and selection facilitates the achievement of efficient allocation of resources, sustainable
competitive advantage, and improve innovation. It is also perceived that the development of
implementation programme, evaluation and control systems facilitates smooth execution and
implementation of the planned tasks. Bryson (1989) and and Viljoen (1995) argue that strategic
planning assists in providing direction so organization members know where the organization is
heading and where to expend their major efforts. It guides in defining the business the
organization is in, the ends it seeks and the means it will use to accomplish those ends. McCarthy
and Minichiello (1996), note that an organization’s strategy provides a central purpose and
direction to the activities of the organization and how to the people who work in it.

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Kotter (1996) contends that the primary goal of strategic planning is to guide the organization in
setting out its strategic intent and priorities and refocus itself towards realizing the same. David
(1997) argues that strategic planning allows an organization to be more proactive than reactive in
shaping its own future, initiate and influence activities, and thus to exert control over its destiny.
It assists in highlighting areas requiring attention or innovation.

The process of strategic planning shapes an organization’s strategy choice. It reveals and clarifies
future opportunities and threats and provides a framework for decision making throughout an
organization. It helps organizations to make better strategies through the use of more systematic,
logical and rational approach to strategic choice. Steiner (1979) noted that strategic planning
stimulates the future on paper and it encourages and permits a manager to see, evaluate and
accept or discard a far greater number of alternative courses of action than he/she might
otherwise consider.

Various empirical studies have been done to establish the relationship between strategic planning
and firm performance with varied conclusions.

Greenley (1986) examining empirical data from nine surveys (8 in USA and 1 UK within the
manufacturing business) on the relationship between strategic planning and company overall
performance noted mixed conclusions with five studies concluding the existence of the
relationship while the rest conclude that higher levels of performance did not necessarily related
to the utilization of strategic planning.

Miller and Cardinal (1994) employed a meta-analytic approach using data from 26 previously
published studies and concluded that strategic planning positively influences organization
performance. Caeldries and VanDierdonck (1988) surveyed 82 Belgian Business Organizations
and reported a link between strategy and performance. They noted that strategy enables an
organization to strengthen its competitive position, and facilitates integration and coordination of
members’ behavior. Pealtie (1993) observed that the aim reason for the introduction of
formalized strategic planning is to improve organization performance through the development
and implementation of better strategies. Pealtie noted that managing a large business without a
plan is like trying to organize a car rally without a map, not impossible, but difficult.

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Published research from Africa also indicates that strategic planning is an effective tool in
improving organization performance. Imoisili (1978), studying indigenous and multinational
companies in Nigeria, concluded that the more effective companies are found among
organizations which maintain consistency between environmental perception and management
practices, do long-term planning, use more flexible control systems and have smaller spans of
control. Fubara (1986) did a survey in Nigeria and observed that companies that engage in
formal planning experienced growth in profits.

It has been argued that although there is a general perception and belief that strategic planning
improves organization effectiveness, if wrongly pursued the anticipated value may not be tapped.
Steiner (1979) points out that a wrong strategy or a wrongly formulated strategy may not
translate into the anticipated value for the organization. Johson, Scholes and Whittington (2005),
note that strategic drift occurs when the organization’s strategy gradually moves away from
relevance to the forces at work in its environment. Tourangeau (1987) shares these sentiments
but cautions that strategic business planning cannot be expected to cure all that ails an
organization i.e. address other shortcoming of the management process, but can best be seen as a
partial solution to management problems. Strategic planning or any other management technique
is of limited value by itself, only a partnership with all parts of the management particularly
execution, controls and rewards can result in synergy and lead to substantial advancement.

In their survey to see how successful companies translates their strategies into performance,
Mankins and Steele (2005) observed that companies typically realize only about 60 percent of
their strategies potential value because of defects and breakdowns in planning and execution.
Hofer and Schendel (1978) argue that strategy is important and therefore its formulation should
be managed and not left to chance. Therefore, each of the stages in the strategic planning process
cannot be taken for granted.

2.1.3. Types of planning

Long-range planning- involves identifying those activities to be performed over an extended
period of time. Long range plan may extend for several decades. Long range planning is different
from strategic planning, which is primarily concerned with how the organization will position
itself among competing firms in a market. Long-range planning identifies the activities to be
performed that will lead to the accomplishment of official goals. One important feature of a long-

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range plan is necessarily different from short planning horizons in a plan covering 20 years
(Oyedijo, 2004).

Intermediate planning- identifies activities to be carried out over a period of five years at the
middle levels of the organization. Intermediate planning is critical in most cases to the success.
Intermediate planning is focused more on the activities that have to be carried out with a
planning horizon that contains fewer uncertainties (Oyedijo, 2004).

Short-range planning- developing plans for implementation within a planning horizon of less
than one year is often referred to as short-range planning. Short-range plans may specify
activities to be carried out that will achieve certain production/services level each week. While
short range plans are necessary for most organizations, they can have set backs. Often managers
become so focused on short-range plans. Ultimately, this can lead to failure in the
accomplishment of organizational goals (Oyedijo, 2004).

2.1.4. Overview of Past Study

According to Kaplan & Norton, (2009) strategic planning is the process of developing and
maintaining consistency between the organization’s objectives and resources and its changing
opportunities. Wendy further argues that strategic planning aims at defining and documenting an
approach to doing business that will lead to satisfactory profits and growth. Hofer and Schendel
(2008) defined strategic planning as an evolution of managerial response to environmental
change in a focus moving from internal structure and production innovation, multinational
expansion and diversification.

Hax and Majluf (2006) explains that strategic planning process comprises of three main elements
which helps turn an organization’s vision or mission into concrete achievable choice and
strategic implementation. The strategic analysis encompasses setting the organization’s direction
in term of vision, mission and goals. Therefore, this entails articulating the company’s strategic
intent and directing efforts towards understanding the business environment. Strategic choice
stage involves generating, evaluating and selecting the most appropriate strategy. Strategy
implementation stages consist of putting in place the relevant policies and formulating
frameworks that will aid in translating chosen strategies into actionable forms.

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The concept of planning emerged out of the development effort and experiences of third world
countries when they adopted planning as the major instrument in pursuit of their economic and
social development. Strategic planning is viewed as zeroing in on decision making, information,
and the future. Drucker (1993) defines strategic planning as the continuous process of making
entrepreneurial decisions systematically and with the greatest knowledge of their futurity,
organizing systematically the efforts to carry out these decisions and measuring the results
against the plans.

There are many factors listed in the literature that influence strategic planning process.
Environmental uncertainties hamper the development of long range plans; scarce resources-
strategic planning should be aligned to use scarce resources effectively; legal forces legislative
changes introduce new dynamics in an industry thus affecting strategic planning; size and
complexity of an organization; as size and complexity of an organization increases, so does the
degree of formulating of planning activities; the extent of involvement in operating issues
compromises the attention paid to management functions; the implementation gap; this is the
inability of the top management and the planners to effectively communicate with the planners;
the lifecycle of the organization; as organizations move through different phases, the competitive
environment changes and influence the way the plan and execute strategy (Thompson, et al,
2007). Organizations need to plan for a number of reasons. These are; to reorient the
organization or institution to the needs of the community; another serious consideration is that
when people plan for expansion, a certain level of minimum standard must be observed. This
will guarantee a certain level of minimum quality performance. Effective strategic planning
initiatives make organizations more responsive and viable instrument for socio-economic
development (Robinson and Pearce, 1983).

The relationship between the formal strategic planning system and the firm’s decision-making
process is particularly important to businesses, where there may be little separation between the
strategic thinking/decision making of the entrepreneur and the formal planning system. However,
Robinson and Pearce (1983) found that in firms the formality of the planning process and the
strategic decision process used were not congruent. The concerns include; assessing risk through
environmental scanning; formulating goals and targets to be achieved in the competitive
environment; selecting distinctive competences in order to gain a competitive advantage;

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determining authority relationships among the firm’s departments; deploying financial physical
resources to carry out firm strategies; and monitoring and controlling implementation.

Many books and articles explain how most excellent to do strategic planning, but our purpose
here is to present the basic steps that must be taken in the strategic planning process. Below is a
short explanation of the five steps in the process. These steps are a suggestion, but not the only
guidelines for creating a strategic plan; other sources may advocate completely different steps or
variations of these steps. However, the steps outlined below describe the basic work that needs to
be done and the typical products of the process.

Although every strategic planning process is uniquely designed to fit the specific needs of
particular organization, every successful “model” includes most of these steps. The organization
starts on by recognize its vision and mission. Once these are clearly defined, it moves on to a
series of analyses, including external, internal, gap, and benchmarking, which afford a
framework for developing organization’s strategic issues. Strategic programming follows and the
organization develops specific strategies including strategic goals, action plans, and tactics.
Growing strategies develop, challenging the future tactics, and altering the realized strategy.
Occasionally, the organization evaluates its strategies and assessment its strategic plan,
considering emergent strategies and evolving changes. It usually takes several years before
strategic planning becomes institutionalized and organizations learn to think strategically the
strategic planning process graph at the end of this section provides a graphical representation of
the steps (Ansoff, 1994).

Setting Vision and Mission

Set of the organization’s vision and mission is the primer steps of any strategic planning process,
the organization’s vision sets out the reasons for its existence and the “ideal” state that the
organization aims to achieve; the mission identifies major goals and performance objectives.
Both are defined within the framework of the organization’s philosophy and are used as a
context for development and evaluation of intended and emergent strategies. One cannot
overemphasize the importance of a clear vision and mission; none of the subsequent steps will
matter if the organization is not certain where it is headed ( Mintzberg, 1996).

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Environmental Scanning

Once the vision and mission are clearly identified, the organization must analyze its external and
internal environment (Lynch, 2000). The environmental scan, performed within the frameworks
of the five force model and SWOT, analyzes information about organization’s external
environment (economic, social, demographic, political, legal, technological, and international
factors), the industry, and internal organizational factors, (managementhelp.org, 2015).

2.1.5. Components of strategic planning

Typically, strategic planning includes the following components: setting a vision for the
organization, scanning the external environment, assessing internal capabilities; and establishing
goals, performance measures, and implementation plans. Implementation addresses specifics
about how the organization’s financial resources, human resources, information, and reward
systems, along with structure and culture, will be changed in the near term to achieve long-term,
strategic goals.

2.1.5.1. Environmental Scan

Today’s business environment is engulfed with high levels of competition; uncertainty and
turbulence such that businesses are required to scan and analyze their environment to enable
them detect the market volatilities in an effective manner that enhances competitiveness
(Karami, 2008). This depicts that scanning of the business environment is essentially changing
markets. It is necessary to scan the environment so that businesses may better deals with the
changes in the environment in which they operate.
Strategic planning, among other things, involves the analysis of the internal and external
business environment with the intention of discovering organizational strengths, weaknesses,
opportunities and threats. Firms rely on analyzing the business environment in establishing their
goals and in determining the strategies to employ in order to achieve the set objectives. Strategic
planning is a process that requires an organization to stay alert of its capacity and operating
environment in order to realize competitiveness. Strategic planning nurtures in management the
habit of periodically appraising the competitive position of their organizations.
The environmental scan includes internal analysis of the firm, analysis of the firm’s industry
(task environment) and external macro-environment (political, environmental, social and
technological factors). According to Smit et al (2007), the business environment consists of three

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different environments, namely the micro-environment, market environment and the macro
environment.
The micro-environment consists of the business itself and other aspects in which it has complete
control, such as the mission and goals, departments in organization, the culture of the
organization and organizational resources that include human, expertise and financial resources.
The market or task environment includes the environment surrounding the business, which
consists of consumers, suppliers, intermediaries, competitors, substitute products, possible new
entrants and labor unions. The macro-environment consists of variables, which the business does
not control, but instead these forces influence the way the business operates. These variables
include the political, economic, social, technological, ecological and international factors (Smit
et al, 2007).
In conducting an environmental assessment, a business needs to review, evaluate and
disseminate information from both the external and internal environments. Hunger and Wheelen
(2007) suggest that to gather all the information about factors that affect the business, there is a
need to assess both the internal and external environments. The internal and external
environment can be profile as strengths, weaknesses, opportunities, and threats (SWOT) (Chris
& Pierre, 2009). Strategic planning will enable an organization to identify the prevailing
opportunities and threats, and also to bring out or quantify the organization’s resource
capabilities taking into account the strengths and weaknesses of its resources so as to align itself
accordingly to cope with the environmental challenges (Karami, 2008). Given the information
gathered from scanning the environment, the firm should match its identified strengths to the
opportunities, while addressing its weaknesses and external threats. Mori, Kazungu &Mchopa
(2014), opine that effective strategic planning can yield a good strategy that neutralizes threats,
exploits opportunities, capitalizes on strengths and /or fixes weaknesses. An industry analysis
can also be performed using a framework of Porter’s five forces: entry barriers, bargaining
power of suppliers, bargaining power of customers, threat of substitute products and industry
rivalry (Howard, 2007). Some empirical study suggest that environmental scanning leads higher
growth rate, enhances firms’ knowledge base and their effective planning horizon and provides a
company with more accurate market and industry insights, and hence more likely to satisfy
current customers.

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2.1.5.2. Mission and Vision

The organization's vision and mission is the first step of any strategic planning process. The
organization's vision sets out the reasons for its existence and the "ideal" state that the
organization aims to achieve; the mission classifies major goals and objectives. Mission
statement and the vision statement are well defined in the framework of the organization's
philosophy. They are used as a context for development and evaluation of planned and emergent
strategies (Lynch, 2000). It is broadly believed that mission and vision statements influence on
strategy and most features of organizational performance. Bart et al. (2001) posited that mission
statements had consistently been shown to be the top-rated management tool deployed by senior
managers during each of the ten years prior to his study.

Mullane (2002) argued that mission and vision statements are useful for practical day-today
operations, taking a contrary view to those who assert they are archaic documents that are
typically exhibited as wall hangings. Several works (Campbell, 1997; Mullane 2002; Rigby,
1994; Matejka et al., 1993; Campbell and Yeung, 1991) have outlined how vision statements can
be used to build a common and shared sense of purpose and also serve to as conduit through
which employees’ focus are shaped. Vision statements motivate, shape behaviours, cultivate high
levels of commitment and ultimately influence positively on employee performance. Vision
statements are widely believed to be antecedents to any strategy formulation effort (Mullane,
2002).

According to Hugh and Michael (2002), the one or two sentences vision statements most
companies make available to the company provide only a glimpse of what executives are really
thinking and the strategic course they have chartered. Company personnel really have much
better understanding where the company is headed and why is revealed in the in the official
vision. But the real purpose of strategic vision is to serve as management for giving the
organization a sense of direction. Vision statements should to be ambitious and challenging yet
attainable enough to evoke employee’s ingenuity and creativity as far as its realization is
concerned. Core values are enduring principles, ideologies and worldviews that the founding
fathers of organization hold in high esteem; these are sometimes referred to organizational vision
(Sufi and Lyons, 2003).

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Thompson (2004) stated that a company’s strategic plan typically lays out its mission, vision and
future direction, performance targets (objectives) and strategy. For it to effective therefore,
(Drucker, 1999) emphasizes that strategic plan must be designed to support corporate mission,
vision and objectives. Both Thompson (2004) and Drucker (1999) agreed that mission, vision
and objectives are vital for any organization to have coordinated and purposeful business
direction.
According to (Pitts, 2003) a firm’s mission describes the organization in terms of the business it
is in, the customers it serves and the skills it intends to develop to fulfill its vision. Daft (1991)
agrees it is the firm’s reason for existence and (Ritson, 2008) affirms its linkage with vision.

Vision describes the firm’s aspirations of what it really wants to be. Pitts (2003) notes that vision
statements are designed to capture the imagination of the public and as well galvanize the efforts
of employees at all levels such that its emotional appeal challenges them to commit their full
energies and minds to believe it is the best.

The conceptual distinction between mission and vision is that a mission statement describes the
present scope of an organization’s business and purpose (what we do, why we exist and where
we are now). The vision on the other hand portrays a company’s future business scope; where we
are going or want to be (Thompson et al, 2004).

According to Forbes and Seena (2006) as cited by Sandada, Pooe and Dhurup (2014), mission
statement is crucial in a business as it establishes a common purpose, guides decision making,
and inspire employees. Ungerer et al. (2007), state that the business mission ensures employee
commitment through creating an understanding of the business domain in which the business
would want to operate. David (2003) opines that while a mission statement states the business of
the organization, a vision statement clarifies what it wants to become. Finkelstein et al (2008),
mention that vision encapsulates the ideology or guiding philosophy of a business and it
expresses the values, purpose and direction through the mission and business objectives.
Kantabutra and Avery (2010) point out that vision is needed by business to guide, remind of
history of the company, inspire, and to control the business.
Previous studies have confirmed the importance of business mission and vision as they impact
positively on business performance (Mazzarol et al, 2009; Kantabutra, 2010) French et al (2004)
conducted a study which analyzed the role of strategic planning in the performance of small

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service businesses and their study confirmed that business mission and vision statement is an
important factor of strategic planning. A vision and mission is crucial in enhancing business
performance because it reminds employees of the key organizational values which are also key
guidelines for diagnosing and finding solutions to problems. The business mission and vision
statement will further ensure that an organization maintains its vision and, that customers and
other stakeholders are regarded as the primary concern when conducting its business operations
(Bart & Hupfer 2004). Some empirical evidence suggests that vision-driven businesses improve
on their performance (Kantabutra 2010). A study of the power of vision in apparel stores by
Kantabutra (2010), found that vision characteristics and content have positive and direct effects
on both customer and staff satisfaction, and hence business performance.

2.1.5.3 Goals and Objectives Setting

Goals are the broad, long-term accomplishments that an organization wants to attain, achieve or
where it wants to be. It provides the overall context for what the vision tries to achieve (Nickels
et al 2000). They are powerful tools that break the vision statement into specific tasks and
actions to attain desired results across the organization. They function as the yardstick for
tracking an organization’s performance or progress (Thompson et al, 2004).

They must be measurable and time specific as against having vague objectives like “maximize
profit”, “reduce cost”, become more efficient or “increase sales”. These specify neither how
much (figures) nor when (time) an objective is to be achieved. They thus do not challenge
employees to work hard to meet performance targets. Objectives must be realistic and
achievable.

Weinrich, (2007) defines objectives are goals or aims which the management wishes the
organization achieve. These are the end points or pole-star towards which all business activities
like organizing, staffing, directing and controlling are decided. Only after having defined those
points can the manager determine the kind of organization, the kind of personnel and their
qualification, the kind of motivation, supervision and direction and the kind of control techniques
which he must employ to reach those points. Weinrich further states that objectives should be
distinguished from three other words ‘vision’ and ‘mission’. The ‘vision’ is the dream that an
entrepreneur creates in his dream that a entrepreneur creates in his working hours of his preferred
future. In fact it is the root of all objectives. The purpose of an organization its primary role

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defined by the society in which it operates. Purpose is therefore a broad aim that applies not only
to a given organization but to all organizations of its type. Objectives are the specific targets to
be reached by organization. They are translation of an organization mission into concrete terms
against results can be measured.

Bernard (2004) identifies the benefits of setting objectives as follows; it provides a basis for
planning and developing other types of plans such as policies, budget and procedures. It acts as
motivators for individuals and departments of an enterprise mobilizing their activities with a
sense of purpose, it helps in development of effective control that measure results and lead to
corrective actions, it facilitates coordination behavior of various groups which otherwise may
pull in different directions, they function as a basis for managerial control by serving as
standards against which actual performance can be measured, provides legitimacy to
organization activities and finally it facilitate better management of organization by providing a
basis for leading, guiding, directing and controlling the activities of various departments.

Hugh and Michael (2002) argues that the one or two sentences vision statements most companies
make available to the company of course provide only a glimpse of what executives are really
thinking and the strategic course they have chartered. Company personnel really have much
better understanding where the company is headed and why is revealed in the in the official
vision. But the real purpose of strategic vision is to serve as management for giving the
organization a sense of direction.

Like any tool, it can be used properly or improperly, either clearly conveying a company’s
strategic course or not. Hugh and Michael further raise shortcomings in company vision
statements which include: being vague or incomplete sometimes since is short on specifics about
where company is headed or what the company is doing to prepare for future. Being not forward
looking because it does not indicate whether or how management intends to alter the company’s
focus. Being too broad since it is umbrella-like and all inclusive that the company could head in
most any direction by pursuing or enter most business. Being uninspiring since it lacks the power
to motivate company personnel or inspire shareholder confidence about company’s direction or
future prospects.

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2.1.5.4. Resource Allocation

In strategic planning, resource allocation is a plan for using available resources, for example
human resources, especially in the near term, to achieve goals for the future, it is the process of
allocating scarce resources among the various projects or business units.

Some of empirical evidence suggests that resource allocation positive contribution to

organizational performance. Sitzmann and Bell (2017) researched on the dynamic effects of
subconscious goal pursuit on resource allocation, task performance, and goal abandonment. The
study results showed that the subconscious achievement of goals contributes to promoting task
performance while subconscious under-attainment goals cause abandonment of goals and
difficult conscious goals mitigate those effects depending on the level of resources allocation and
timing of the target execution. The study also revealed that resources are considered to be the
assets that can be applied with the main aim of managing productivity and performance and that
resource allocation is majored on ensuring that the available resources are assigned in a more
effective and efficient way to ensure that the organizational goals and objectives are achieved
accordingly. The findings of this study further indicated that in most organizations, production
requires limited specific resources of the firm and their allocation to different uses is one of the
managers’ most important responsibilities hence equity should be considered in all areas of the
organization (Sitzmann & Bell, 2017).

Lemarlei, Ochieng, Gakobo and Mwaura (2017) researched on how resource allocation affects
strategy implementation at Kenya police service in Nairobi country. Findings suggest both
positive and substantial associations exist between the predictor and dependent variables,
strongest and most favorable associations were observed between organizational culture and
implementation of the strategy followed by implementation of the financial resources and
strategy. Resources allocation has continued to play an important role in organizational
performance hence creating need for having clearly formulated strategic plans and ways that will
ensure that the allocation is achieved as expected. Effective resource allocation is believed to
come up with some organizational developments that are geared towards the improved
performance of the organization (Lemarleni et al., 2017).

Kogan, Papanikolaou, Seru and Stoffman (2017) investigated on technological innovation,

resource allocation and growth. The study established that how well resources are defined and

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allocated will contribute to the effective running of the organization. This allocation needs
careful planning since the process can sometimes be hard. It was also established that when the
resources are not allocated as expected it will become very hard to implement the strategy of an
organization. The study revealed that the way one allocates the resources will automatically have
a direct or indirect effect on the level of productivity and performance. It was concluded that
effective resource allocation plays a key role in letting the managers understand how the
employees work, hence making it much easier to assign tasks to the resources according to the
skills of the employees.

Chi and Bump (2018) investigated on the processes of resource allocation at multilateral
organizations working in global health. The study findings revealed that recipient countries
themselves have little influence on allocation processes, although they have some influence in
relatively narrow areas within these processes. Proper resource allocation can help managers
identify the presence of employees in a certain task and even assign them specific tasks
according to their availability. Proper resources allocation is also believed to help managers in
managing the workload of their employees. This implies that the manager will be able to check
the task list of the employees and know who is having more than adequate tasks and those who
have been under assigned. This will help in giving the employees the morale they need in
improving their performance because they will not feel overworked (Chi & Bump, 2018).

2.1.5.5. Employee Participation

It is commonly referred to in management literature, as employee involvement (Lussier and
Achua, 2007). Strategic planning allows several members of the enterprise to participate in the
planning process and hence plays an important role in determining the direction of an
organization. Different authors and scholars assert that employee involvement allows
organization members to actively question, experiment and create dialogue that enables
managers to be in control of organizational outcomes. Most researchers generally agree that
employee participation in the strategic planning process is critical in the successful
implementation of a strategy. According to Speculand (2009), a participative strategic planning
process is encouraged because it leads to a unity of purpose, cooperation, and employee
motivation.

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From the available literature, it is suggested that if organizations apply strategic planning more
purposefully the organizational goals will be clearer and better pursued by individual employees.
The employees or members of the organization must be involved to make sound tactical and
operational decisions that are aligned with the desired strategic direction. Raps (2005) reiterate
that employee participation is crucial because it increase the general awareness of the strategy it
builds a consensus in the business about the implementation of the strategy and it boosts
employees morale and, hence, provides them with a strong drive to implement the strategies.
Organizations that engage in a participative strategic planning process should set up temporary
committees that encompass employees of diverse ranks for consultation purposes and for the
smooth running of the strategic planning process (Elbana, 2008). In a qualitative study of
implementing strategies successfully, Aaltonen and Ikavalko (2002) confirm the view that
middle managers and supervisors play a key role in implementing strategies.

2.1.6. Levels of strategy

The scope and complexity of strategic planning, formulation and decision vary from
organization to organization. This depends primarily on the levels within the organization at
which strategic planning takes place. These levels of strategy are suggested by Kazmi (2008):
I.Corporate level strategy is an overarching plan of action covering the various functions that
are performed by different Strategic Business Units (SBUs) which are involved in a single
line of business. The plan deals with the objectives of the company, allocation of resources
and coordination of the SBUs for optional performance. There are five common corporate
level growth strategies. According to Hellriegel (1990), they are forward integration,
backward integration, horizontal integration, concentric diversification and conglomerate
diversification. Hellriegel states that forward integration occurs when a company enters the
businesses of its customers, moving it closer to the ultimate consumers while backward
integration occurs when a company enters the businesses of its suppliers, usually to control
component quality and ensure on-time delivery or stabilize prices. Nwuchekwa (2000),
states that horizontal integration occurs when a company acquires one or more competitors
to consolidate and extend its market share. While concentric diversification occurs when a
firm acquires a business related to the organization’s existing business in terms of
technology, markets or products. Generally, a related business enterprise acquires another
company or start a new venture. According to Nnabuko (1998), conglomerate diversification

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occurs when a firms adds unrelated goods and services to its line of business. One company
generally acquires another company and starts a venture in a totally new field.
II.The second level of strategy according to Hellriegel (1990), is the business level strategy
which directs the operations and performance of a Strategic Business Unit (SBUs). Business
level strategy is the interconnected set of commitment and actions intended to provide value
to customers and gain a competitive advantage by using the company’s core competencies
in specific market. Kazmi (2008) states that the business level provides objectives for SBUs,
allocates resources among functional areas and coordinates between the functional areas for
making optimal contribution to the achievement of the corporate level objectives.
III.According to Kazmi (2008), the functional level of strategy deals with a relatively restricted
plan, providing objectives for a specific function, allocating of resources among different
operations within that functional area and coordinating between the functional areas for
optimal contribution to the achievement of the SBU and corporate level objectives.
Hellriegel (1990) stated that functional level strategy addresses the following issues;
capacity requirement, facility location and size, technology, quality and environmental
standards.

2.1.7. Theories of strategic planning

Strategic planning and performance concepts are based on several theoretical backgrounds. i.e.,
goal setting theory, the resource-based view theory, organizational theory, contingency theory,
balanced scorecard theory, stakeholder theory.

A. Goal Setting Theory

Since it was first research five decades ago, goal-setting theory has been the most researched,
utilized, and established theory of work motivation in the field of industrial and organizational
psychology. The theory began with the early work on levels of aspiration developed by Kurt
Lewin and has since been primarily developed by Dr. Edwin Locke, who began goal setting
search in the 1960’s. The research revealed an inductive relationship between goal setting and
improved production performance. A goal is the aim of an action or task that a person
consciously desire to achieve or obtain (Locke & Latham, 2002; Locke & Latham, 2006). Goal
setting involves the conscious process of establishing levels of performance in order to obtain
desirable outcomes. If individuals or teams find that their current performance is not achieving

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desired goals, they typically become motivated to increase effort or change their strategy. Locke
and Latham stated that the goal setting theory was based on the premise that much human action
is purposeful, in that it is directed by conscious goals.

The decision to set a goal results from dissatisfaction with current performance levels. Setting a
goal should include setting a structure that directs actions and behaviors which improve the
unsatisfactory performance. There is a direct linear relationship between goal difficulty, level of
performance, and effort involved. This relationship will stay positive, as long as the person is
committed to the goal, has the requisite ability to attain it, and doesn’t have conflicting goals.
Locke and Latham’s goal setting theory states that several conditions are particularly important
in successful goal achievement. These include goal acceptance and commitment, goal specificity,
goal difficulty, and feedback. These conditions have been extended and edited by other
researchers, such as Kenneth Blanchard and Spencer Johnson’s SMART goals, which are
conditions that are necessary to make goals effective.

B. The Resource-Based View Theory

This theory originates from earlier researches. With consideration of past studies, characteristics
of the research can be traced in the studies by Chandler (1972) and Williamson (1975), which
emphasizes on the essence of firm resources and the impact on organizational performance. RBV
of organizations holds that companies are capable of outdoing their competitors only if they are
in a position of developing essential resources which can’t be copied by its opponents (Donna,
2018). This theory is very useful in explaining the procedure which firms can use to come up
with the unique resources and the way these resources can be adopted in new management of an
organization and structures. Muchira (2013) argues that allocation of organizational resources
should be done in an efficient and effective manner since they are the key drivers of a firm.
Resource allocation can be an ambiguous process but through careful allocation practice an
organization is capable of getting the required resources. Firm resources comprise of fiscal
structures, technological resources, human resource and financial resource. The success of any
firm relies on these essential resources.

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Wernerfelt (1989) argued that RBV puts into consideration the internal capabilities of a company
when ensuring formulation of strategies with an aim of ensuring sustainable advantages in its
markets and industries. If firms are considered to be made of resources and capabilities which
can be put together with an aim of ensuring competitive advantage to the firm; the its dimension
cannot be copied by the competitors. In short, the firm’s internal unique resources choose the
strategies to implement in order to compete with other firms. Resources are both tangible and
intangible assets that are resource allocation in a company determine the organization’s realized
strategies. Through the knowledge of resource allocation, one is in a position of knowing the
process of strategy making. RBV holds that a well sustainable competitive advantage of a firm is
attained when the unique resources are not tradable, valuable, and specific to a certain firm and
cannot be imitated.

RBV will be adopted in this research since allocation of human resource, physical resource,
technological resource and financial resources influences strategy implementation in government
sector. In addition proper training and development of human resource creates a competitive
advantage for the public sector in hence improving strategy implementation in the public sectors
which in turn improves performance. Furthermore all of these resources are essential to the
performance of public sector in terms of service delivery, etc.

C. Organizational Theory

The formality of strategic planning processes is drawn largely from organizational theory. Since
Burns and Stalker (1961) there has been a wide agreement that more formal, written, procedures
as part of a strategy for control are more appropriate in stable than in turbulent environments (as
cited by Grinyer et al., 1986). Accordingly they stated that positive correlations were found
between variables measuring the formality of the strategic planning process and those indicating
a need for corporate co-ordination and control.

D. Contingency Theory

Contingency theory claims that there is no best way to organize and lead a firm as the optimal
course of action is contingent upon the internal and external factors. Hence, it articulates that
relationship between strategic planning and performance is moderated by environmental and
other factors. Schendel and Hofer (1979) and Jauch and Osbon (1981) have called for

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contingency-theory research that identifies variables affecting the planning-performance

relationship in specific situations (Shrader, Taylor and Dalton, 1984). Further Shrader et al.
(1984) concluded that there was no clear systematic relationship between formal strategic
planning and firm performance. They mentioned that there are many moderating variables
affecting the relationship between formal strategic planning and organizational performance.

E. Balanced score card theory

The balanced scorecard theory was developed by Kaplan and Norton (1992). Kaplan and Norton
(1992) led a research study of a lot of companies with the purpose of exploring the new methods
of performance measurement. The importance of the study was a growing belief that financial
measures of performance were ineffective for the modern business enterprise. Representatives of
the study companies, along with Kaplan and Norton, were convinced that reliance on financial
measures of performance had an effect on their ability to create value (Dumisa, 2014). The group
discussed a number of possible alternatives but settled on the idea of a scorecard, featuring
performance measures capturing activities from throughout the organization-customer issues,
internal business processes, employee activities, and of course shareholder concerns.

Performance measurement is the process of quantifying the efficiency and effectiveness of

organizational processes. Assessing corporate performance refers to customer satisfaction, in
relation the efficiency measures of the economical utilization of resources (Chiando, 2017).
Organizations should endeavor to make use of both financial and non-financial indicators to
measure their organizational performance. According to Kaplan and Norton (1992) financial
indicators do not take into consideration non-financial measures such as efficiency, customer
perspective, new business processes and do not focus on the future.

The balanced scorecard has been translated and effectively implemented in both the nonprofit
and public sectors. This study will use balanced scorecard theory to explain the measure of
performance of public institutions. The first measure of performance of in the balanced scorecard
is financial perspective, which in performance of government sector can be measured to by cost.
An internal process is the second measure of performance in the balanced scorecard, which in
government sector can be measured by use of quality and efficiency (time). The third measure of
performance in the balanced scorecard is learning and growth. In fourth measure of performance
in the balanced scorecard is customer satisfaction. Customers are the ultimate recipients of

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products, services and outputs delivered through lad administration of government sector sub
processes and activities.

F. Stakeholder Theory

The Stakeholder Theory was observed to have gained prominence in the 1970’s as a
management practice reference and gradually developed and adopted by Freeman in 1984
through the incorporation of corporate accountability to a diverse range of stakeholders.

According to Wheeler, Colbert and Freeman (2003) the stakeholder theory is derived from a mix
of social and organizational disciples. The theory takes a lesser formal unified approach instead
of adopting a broadened research tradition, incorporating philosophy, psychology, ethics,
economics, political theory, law and organizational management science.

Donaldson and Preston (1995) observed that this theory focuses on management level decision
making in which every stakeholder’s interest is valuable, in addition no particular set of interest
is superior to other. As a suggestion of the theory, an organization’s management must have a
relationship network to serve employees, dealers, suppliers, shareholders and all other business
partners. It argues that these stakeholders are important (Wheeler, et.al’ 2003). The theory is thus
significant in that be taking care of all the stakeholder’s interests the performance of the public
service sector in Oromia is enhanced.

2.1.8. Strategic planning model

A. SWOT Analysis Model
SWOT analysis is one of the strategic planning models that identify factors that may affect
desired future outcomes of the organization. The SWOT model is by its nature analysis the
organization’s internal (strengths and weaknesses), and external (threats and opportunities) of the
environment, and consequentially identifying the company’s characteristics competencies and
input success factors. These, in company with reflection of societal and organizations values,
lead to creation, evaluation, and choice of strategy. SWOT’s objective is to recommend
strategies that ensure the best alignment between the external environment and internal situation
(Andrews, 1980, Christensen et al. 1982 in Mintzberg, p. 36-37; Hax & Majluf, 1996, p.27;
CSUN strategic planning leadership retreat, April, 1997; Hill & Jones, 1992, p. 14).

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B. ANSOFF
ANSOFF is the other strategic planning models. In Igor Ansoff’s model, “strategy is designed to
transform the organizational from the present position described by the objectives, subject to the
constraints of the capabilities and the potential” of the organization. This model specifically
stresses two concepts. Gap analysis is designed to evaluate the “difference (gap) between the
current position of the organizational and its objective.” The organization chooses the strategy
that “substantially closes the gap.” Synergy refers to the idea that organizational must seek
“product-market posture with a combined performance that is greater than the sum of its parts,”
more commonly known as 2+2=5 formula, (Ansoff, 1965, in Mintzberg, p43-45).
C. Porter’s Five Force Model
The five forces model developed by Michael E. Porter guides the analysis of organization’s
environment and the attractiveness of the industry. The five forces include the risk of new
competitors entering the industry, threat of potential substitutes, the bargaining power of buyers,
the bargaining power of suppliers, and degree of rivalry between the existing competitors
(Porter, 1985). Environmental scan identifies external opportunities and threats, evaluates
industry’s overall attractiveness, (Hax & Majluf, 1996:27). Through organization’s choice of
strategy it can alter the impact of these forces to its advantage. This is graphical interpretation of
Porter’s five forces model (Porter, 1985:5).

2.2. Empirical Literature Review

This study will underscores the relationship between strategic planning and organizational
performance as discussed in the empirical literature review.

Aguilera and Jackson(2003) conducted a study in thirty-eight firms in six different industries
include manufacturing firms, the bank industry, multinational firms, the public sector, and
insurance companies. During the study investigators established a positive link between strategic
planning and financial performance of organization.

Suklev and Debarliev (2012) in a comparative study on the effectiveness of strategic planning in
the republic of Macedonia confirmed that strategic planning practice and its effective execution
was an area of significant interest to industry players as well as academicians in Western
Countries. During the study, a wide range of measures was used pertaining the various strategic

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planning dimensions in both emerging as well as developing countries. For a data analysis,
regression and factor analysis were the statistical tools employed. Data collection was through
questioners that was administered both top and middle level management. The results obtained
concluded upon analysis that strategic planning contributed positively to organizational
performance.

In study by DebrahKwamePoku (2012); the effect of strategic planning on the performance and
operations of the agricultural development bank (ADB), Ghana, results showed; ADB as a
corporate body has clear strategic plan which is articulated to all of its employees at various
levels and departments within the bank. It reveals that, the strong agreement of factors of various
dimensions of strategic planning indicate the effectiveness and efficiency of such of such
planning adopted by employees of the bank and hence affects the bank’s performance positively.

In another study on the link between strategic planning and performance of insurance companies
in Kenya by Arasa and K’Obonyo (2012) using a descriptive study research design, a strong
positive relationship between strategic planning practices and organizational performance was
established. The study utilized both primary and secondary sources of data.

As study by Owolabi and Makinde (2012) investigated the effects of strategic planning on
corporate performance using Babcock University in Nigeria. Management efficiency and
effectiveness were used to measure performance. Primary data was collected with the help of
questionnaires that were administered to the employees in Babcock University. Data analysis
was done using descriptive statistical tools and the hypothesis of the study was tested using
Pearson Product Moment Correlation Statistics. The study found a significant and positive
relationship between strategic planning and performance. It was suggested that strategic planning
was an essential component in driving the organization towards achieving organizational goals
and objectives especially in educational matters.

In study by Onserio Kerubo Donna (2018) strategy implementation and organizational

performance among institutions of Higher Learning in Kiambu County, the specific objectives
were; to examine the influence of resource allocation, strategic leadership, strategy
communication and monitoring and control on the performance of the institutions. The theories
that guide the study were; resources and capabilities, agency, institutional and the balance
scorecard. A descriptive study design of cross section in nature was used because it allowed

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effective data collection to test hypotheses concerning the variables under study. The target
populations were heads of both academic and non-academic departments. Primary data was
collected through semi-structured questionnaire through drop and pick method of administration.
The findings established the existence of a significant influence of strategic resource allocation,
monitoring and control of strategies, strategic leadership and strategic communication on the
performance of institutions of higher learning. The study concluded that organizational
performance was significantly influenced by monitoring, control of strategies resource allocation
and strategy communication.
Ogalo Zipporah Kerupo (2019) investigation the relationship between strategy implementation
and performance of faith based organization a case of the catholic archdiocese of Kisumu,
Kenya. Corresponding null hypotheses were developed for each objective. The study was guided
by Okumu’s key variables framework and the Higgin’s aligned 8Ss model of strategy
implementation. The study adopted a descriptive case study research design. A census survey
was conducted by administering questionnaires to the administrators of the faith based
institutions in the Archdiocese. The data was analyzed using means and standard deviations for
the descriptive statistics. A multiple regression was calculated to predict performance of faith-
based organizations based on the strategy implementations: resource allocation; organization
structure; and operating procedures. The study concluded that there is a significant and positive
relationship between strategy implementation and performance of faith-based organizations. The
strategy implementations must provide the requisite strategic resources, design effective
structures and develop operating procedure to guide implementation and realize performance of
organizations.
In study by Bekele Ketema (2015); the contribution of strategic planning to organizational
performance; the case of Sululta Town Administration; both primary and secondary sources of
data were accessed using questionnaire, interviews and observations. results showed, in Sululta
Town Administration there is gap in terms of getting support from the stakeholders prior to the
formulation of the plan, the planning process has been top-down approach, there has been a gap
in terms of participating stakeholders and other concerned bodies in the course of designing the
plan, the budget allocated for the purpose of designing the plan was not adequate, there has been
a gap in scanning the long-term implications of the plan and devolving multiple alternatives
during planning, there is gap in putting the right persons at the right place, there is a gap in terms

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of breaking the plan into short-term and medium-term of time scope, the organizations do not
have a culture of rewarding a good performing individuals and units, there are gaps to be filled,
particularly in terms of participating a wider level of management and stakeholders in the course
of designing, implementing and monitoring and evaluating the plan.

In study by Haimanot Solomon (2017); assessment of strategy implementation and

organizational performance: the case of Bank of Abyssinia; results showed, the strong agreement
on various factors of strategy implementation indicates the effectiveness and efficiency of such
implementation adopted by employees of the bank and hence affects the bank’s performance
positively.
From the studies, it is conclude that strategic planning practices play a significant role in crafting
strategy and allocating responsibility of execution. These practices provide a blue print on the
chosen direction organization adopts towards achieving its specific goals and objectives. The
most common strategic planning practices undertaken by organizations are; the uses of strategic
planning tools & techniques, formality, management and employee participation. Although
empirical findings and theories have led to the conclusion that strategic planning had a positive
impact on performance, and since Ethiopian management Institute is a pioneer training center in
Ethiopia this study intends to know whether the institute can apply what it gives for others.

2.3. Conceptual Framework

A conceptual framework represents the researcher’s synthesis of literature on how to explain a

phenomenon. It maps out the actions required in the course of the study. According to Miles and
Huberman, (1994) a sited in vaughan (2008) conceptual frame work is a written or visual
presentation that : “explains either graphically, or in narrative from, the main things to be
studied, the key factors, concepts the researcher’s understanding of how the particular variables
in the study connect with each other. Every study has a set to variables that are independent and
dependent of each other. An independent variable is that variable that a researcher has control
over, it can be chosen and manipulated. It’s usually what researcher thinks will affect dependent
variable. Dependent variable is what a researcher measure in an experiment or study and what
are affected during the study. In this study, environmental scanning, mission and vision, essential
objective setting and resources allocation are as independent variables were ones that impact on
organizational performance of Ethiopian management Institute.

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Independent Variables Dependent Variable

 Environmental scanning Organizational performance

 Mission and vision  Speed of service
 Objective setting  Cost
 Resources allocation  Quality of Service
 Employee participation

Figure2. 1: Conceptual Framework

Source: The researcher, 2024

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CHAPTER THREE

3. RESEARCH DESIGN AND METHODOLOGY

3.1. Introduction

This chapter describes the methodologies that will be used in this study, the choice of particular
research designs, data type and source of data, research approach, data gathering technique and
instruments, sampling and sampling techniques and data analysis techniques along with an
appropriate justification associated with each approach.

3.2. Research Approach

There are three types of research approaches, namely: quantitative, qualitative, and mixed
research. Quantitative study is a study where purely quantitative data and analysis techniques are
adopted while qualitative approach makes use of purely qualitative data and analysis. The mixed
approach on the other hand adopts the combination of both quantitative and qualitative
approaches. Researchers decide which type of research approach to follow depends on the type
of study they studied and availability of the information which is required for the study (Naoum,
1998).

According to Leedy and Ormrod, (2010), qualitative strategies can help the researcher to gain
new insights about the phenomenon, develop new theories about the phenomenon and discover
the challenges within the phenomenon under investigation.

Yin, (2011) points out that qualitative research represents the views and perspectives of people,
while offering an attractive and fruitful means of conducting a research.

According to C.R. Kothari (2004), quantitative approach involves the generation of data in
quantitative form which can be subjected to rigorous quantitative analysis in a formal and rigid
fashion. Consequently, the researcher will use mixed research approach for this study.

3.3. Research Design

Design is an activity- and time-based plan, a plan always based on the research question, a guide
for selecting sources and types of information, a framework for specifying the relationships
among the study’s variables, and a procedural outline for every research activity. Leedy, (1997)

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defines research design as a plan for a study, providing the overall framework for collecting data.
Cruswell, (2009), explained research design as a procedure for collecting, analyzing, interpreting
and responding data in research studies.

The descriptive and inferential research design will be used for this study. This research design
facilitates a better understanding of the effect of strategic planning on organizational
performance. Both qualitative and quantitative methods will be applied in data collection and
analysis. The data will be collected through questionnaire and interview. Accordingly, the
collected data will be presented in to two parts; in the first part the study described the
relationship between the dependent and independent variables using frequency and percentage.
And in the second part the study will triangulate the interdependence between the dependent and
independent variables using explanatory research approaches such as, using multiple regression
and correlation. The research design will be a deductive research approach because the research
will begins with a theory, developing hypotheses from that theory and then collecting and
analyzing data to test those hypotheses.

3.3. Target population, Sampling Technique and Sampling Size

3.3.1. Target population
According to (Hair J.F. et al., 2010) target population is said to be a specified group of people or
object for which questions can be asked or observation are made to develop the required data
structures and information. The target population of the study will be all individuals who
participate in the process of strategic planning. Based on the collected information from the
Ethiopian management Institute there are 58 individuals who directly take part in strategic
planning. Therefore, for this study, the target populations will be 58 individuals who take part in
strategic planning process in the institute.

3.3.2. Sampling technique

The sampling design employs for this study will be a non-probability sampling. A non
probability sampling provides with an information-rich case study in which it enables to explore
the research question and gain theoretical insight (Saunders M et al., 2009). From non
probability sampling technique, the researcher will apply purposive sampling method for his
study. According to (Creswell, 2009), while using purposive sampling: respondents choose based
on purpose but not randomly. Since purposive sampling technique allows the researcher to select

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highly representative sample of the characteristics or attributes they are interested in the study
and particularly useful when the population of interest is small. It also allows the researcher to
gather in-depth data on specific topics or issue.

3.3.3. Sampling size

There are several approaches to determining the sample size of a given study. These includes
using census for small populations, imitating a sample size of similar studies, using published
tables and applying formulas to calculate a sample size. For the purpose of this study; the target
populations is small in size, the researcher will adopt census survey approach to use the entire
target population as the sample size and also census survey eliminates sampling error and
provides data all the individuals in the population to achieve a desirable level of precision.
Therefore, the sampling size of the study will be 58 individuals.

3.4. Data Type and Source

The study will employ both primary and secondary sources of data in order to get appropriate
data. Semi- structured interview and both close ended and open-ended questionnaire will be used
as a primary source of data which are helpful in answering questions related to the study
objectives. Secondary data sources the researcher will be used are online information, reports,
articles, journals and relevant books.

3.5. Data Collection Methods

In order to gather firsthand information, semi structured interview and questionnaire will be
prepared and administered based on the review of related literature important to the subject of
the study. The reviewed literatures make to develop an insight on the effect of strategic planning
on organizational performance within the institute. The researcher will conduct a pilot test to
check the clarity of questionnaires developed for the respondents. The correction will be made
based on the feedback obtained from the pilot test session. The amended questionnaires will be
delivered by hand to the respondents at their duty stations and collected through the research
assistant. Interview sessions will be conducted with the management staff of EMI and then the
information obtained will be recorded accordingly. Therefore, interviews and questionnaires are
the main tools to collect data and thus, interview and questionnaires will be designed focusing on
the effect of strategic planning on organizational performance in EMI.

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3.6. Methods of Data Analysis and Presentation

The data that collect through questionnaire (numerical data) will coded, entered and analyzed by
utilizing descriptive and inferential statistical analysis techniques, which is helped by IBM
Statistical Package for Social Scientists (SPSS) Statistics version 27 statistical computer software
application and the data obtained by using semi structured interview will be analyzed by
combining and summarizing the results. With regards to the descriptive analysis, frequency
tables with varying rates and percentages will be utilized to introduce the findings and tables of
mean and standard deviation, which are acquired from SPSS so as to speak to the discoveries.
Likert-five point scale type going from strongly disagree =1, disagree=2, neutral=3, agree=4 and
strongly agree=5 will be utilized. On the other hand, inferential statistics techniques, specifically
correlation will be use to examine the relationship between independent and dependent variable
and multiple regression analyses will be applied to tests the combined effect of independent
variable (Environmental scan, mission and vision, objective setting, resources allocation and
employee participation) the variables on the dependent variable(organizational performance).

3.7. Reliability and Validity of Data

3.7.1. Reliability of Data

Reliability refers to the consistency and dependability of a measuring instrument. One of the
internal consistency methods of assessing reliability, Cronbach alpha coefficient, will apply to
check if it is proper to rely on the outcome of the questionnaires. This coefficient measures the
extent to which an instrument yields consistent results. It measures how well items in a set are
related to one another.

3.7.2. Validity of Data

Using Partial Least Squares (PLS) the composite reliability and convergent validity of the
measures will be assessed. The discriminant validity of the measures will also assesses using
PLS. If the measures have both convergent validity and discriminant validity, it implies that
these measures have construct validity.

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3.8. Model Specification

Model specification is the process of determining which independent variables to include and
exclude from a regression equation. Multiple regression models will be use. Therefore, the study
will use the following formula to check the above conditions.

OP = β0 + β1ES+ β2 MV + β3OS + β4RA+ β5EP+ε.

Where

OP = Organizational Performance

ES = Environmental Scan

MV = Mission and Vision

OS = Objectives Setting

RA= Resources Allocation and

EP= Employee Participation

β0 is constant, β1, β2, β3, β4 and β5 are the coefficient of ES, MV, OS, RA and EP respectively
and ε is the error term of the model.

3.9. Ethical Consideration

Ethics refers to the appropriateness of the researcher's behavior in relation to the rights of those
who become the subject of the research work or are affected by it. Research ethics therefore
relates to questions about how we formulate and clarify our research topic, design our research
and gain access, collect data, process and store our data, analyze data and write up our research
findings in a moral and responsible way (Saunders M et al., 2009). Ethical considerations are
expected to be involved in any kind of research study. This paper therefore will take into
consideration of those ethical issues on access and use of data, analysis and report of the findings
in a moral and responsible way. Confidentiality and anonymity of the voluntary respondents will
also guarantee.

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CHAPTER FOUR

4. RESEARCH SCHEDULE AND BUDGET PLAN

4.1. Research Work Schedule

Table4. 1: Work Breakdown Schedule

Activities Months
Augus September October November December January February
t
1 Thesis title submission
2 Collecting thesis title and
screening eligible students
3 Approval of thesis title
4 Assigning of thesis advisor
5 Preparation, Submission of
draft proposal and
questionnaire and collecting
feedback
6 Submission of final draft
proposal
7 Submission of final thesis

Source: National College Research Schedule, 2024

4.2. Research Budget Plan Schedule

Table4. 2: Research Budget Plan Schedule

No Major Activities Budget Required in ETB

1 Data Collection
1.1 Per diem for data collection 3 individuals 17,500.00
1.2 Orientation for data collection half of a day 6,500.00
1.3 Transport service for data collection 10,500.00
2 Clerical work
2.1 Secretarial service / printing and binding 14,500.00
2.2 Stationary materials 9,500.00
Total in ETB 58,500.00

Source: Own Compilation, 2024

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APPENDICES

APPENDEX A

Questionnaire

Dear Respondents
My name is Genet Debebe. I am a post graduate student at National College. Currently, I am
conducting a study on The Effect of Strategic Planning on Organizational Performance: The
Case of Ethiopian Management Institute for the partial fulfillment of Master’s Degree in
Masters of Art Degree in Business Administration. I request your cooperation to fill and respond
truthfully for the asked Questions.
Your genuine response is highly valuable for the study and there are no identified risks from
participation in the survey. The survey is anonymous. Participation is completely voluntarily.
Dear respondents, the quality of this research is very much dependent on the data you may
provide. Indeed, the researcher would like to assure that the data collected will be used only for
academic purpose and will be kept confidential.

Thank you in advance

Genet Debebe

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Part I: General questions on demographic characteristics of respondents

Please tick (✓) or provide your own answers where applicable.

No Demographic Characteristics
1 Gender Male Female

2 Age (Yrs) 20-30 31-40 41-50 51- 60 Above 60

3 Level of Diploma Degree Masters PhD Others

Education
4 Work experience Below 5 6-10 11-15 16-20 Above 20
(Yrs)
5 Marital status Unmarried Married widowed

6 Number of years Below 1 1-5 6-10 above 10

you have been in
your Current Job
7 Position in the Organization/ Bureaus? ______________________________

Part Two: Factors Related to Subject Matter

The following statements indicate the views about Effect of strategic planning on organizational
performance, environmental scan influence organizational performance, effect of organization
vision and mission on performance, the influence of objective setting on organizational
performance, effect of resources allocation on the organizational performance and the influence
of employee participation on organizational performance in Ethiopian Management Institute.
Accordingly, please tick (√) on the following question by considering the score below

Strongly Disagree (SD) = 1, Disagree (DA) = 2, Neutral (N) = 3, Agree (A) = 4 and strongly
agree (SA) = 5

No Description Response rate

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SD DA N A SA

A Effect of strategic planning On Organizational Performance

1 As a result of strategic plan, operational procedures

and services delivery processes are simplified and
have become accessible

2 As a result of strategic planning, number of customer

complaints is constantly decreasing

3 As a result of strategic planning, periodic customer

feedback indicates a high degree of satisfaction

4 As a result of strategic planning, there is a clear

reduction in process time including response time for
customer services

5 As a result of strategic plan implementation the

organization is able to significantly reduce
operational costs

B Environmental Scan(Internal and External)

1 In strategic planning the organization conduct

effective environmental scanning activities so as to
cope up with threats and grasp opportunities and
hence obtain sustainable advantage

2 In strategic planning environmental scanning reduces

environmental uncertainty and assist in organization’s
risk management

3 In strategic planning organization ensure that the

strategies take advantage of existing strengths and

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minimize the existing weaknesses

4 In strategic planning environmental scanning

enhances a firm’s knowledge base and effective
planning horizon

C Vision and Mission

1 In strategy planning mission was formulated and used

as benchmark against which managers evaluate
organizational performance

2 In strategy planning mission was formulated and

helps to provide unique insight into an organization’s
values and future direction for external groups

3 In strategy planning there was shared values and

beliefs that guide the organization and its staff

4 In strategy planning there was a clear and agreed

upon vision of what the organization is trying to
accomplish and what it will take to make the vision
happen

D Objective Setting

1 In strategy planning, the organization determines

objectives that provide a clear review of what a firm
is trying to accomplish for its customers.

2 In strategy planning the organization updates its

objectives continuously

3 In strategy planning the organizational objectives are

SMART (Specific, Measurable, Attainable and
Timely Bounded)

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4 In strategy planning both short-term and long-term

objectives were spelt out

E Resources Allocation

1 Strategic planning creates a rational basis for optimal

resource allocation among stakeholders of the
organization

2 Strategic planning ensures the most effective use of

organizational resources by focusing the resources on
key priorities

3 Strategic planning making it much easier to assign

tasks to the resources according to the skills of the
employees

4 Strategic planning believed to help managers in

managing the workload of their employees

F Employee Participation

1 Employees from the Department were recruited to

participate in the strategic planning process

2 Lower-level employees were centrally involved in the

development of our strategic plan

3 Your department utilized the information we gathered

from employees to make decisions during the
strategic planning process.

4 Employees have the authority, responsibility, and

tools necessary to impact relevant measures in
Strategic Planning.

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APPENDEX B

Guiding Questions for Selected Leaders Interview

1. What is strategic planning to you? What is its effect on your organizational performance?
2. Would you briefly explain the effect of environmental scanning/internal and external/ on
your organizational performance?
3. Would you explain the effect of mission and vision on your organizational performance?
4. How you explain your organization objective setting and its effect on organizational
performance?
5. How you explain your organization resources allocation and its effect on organizational
performance?
6. Can employees participate in strategic planning in the institute? How explain it?
7. Which of the organizational performance outputs does your organization attain at most? E.g.
Service delivery, customer satisfaction, operational cost etc

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