Strategic Planning
Strategic Planning
Strategic Planning
ABSTRACT
The main purpose of the study was to identify the effect of strategic plan on organizational performance of remittances in
Somalia in Mogadishu. The study had three objectives. The first objective of the study was to determine the effect setting
objectives on organizational performance of remittance companies in Mogadishu, Somalia. The second objective of this study
was to assess the effect of budgetary allocations on organizational performance of remittance companies in Mogadishu,
Somalia. The third objective of this study was to find out the effect of organization structure on organizational performance of
remittance companies in Mogadishu, Somalia. The target population was 100 and the sample size was 40 respondents. The
study used descriptive design. And 20 questionnaires were distributed .Descriptive and regression analysis was used. The study
found that setting objectives, budgetary allocations and organization structure have significant positive relationships on
organizational performance of remittance companies in Mogadishu-Somalia. Finally, the researcher found that the
competitive strategy has significant positive relationships on organizational performance of remittance companies in
Mogadishu-Somalia.
the Gulf countries. This was equal to 13 times the Performance measurement has significant
Somali-based national wages bill and partially explains influence in supporting the achievement of an
how households at the time were able to survive on organization's goals and the effectiveness and
basic government salaries that covered only 8% of efficiency of its strategic planning process. Thus, in
household expenditure. As a result of the civil war the order to assess the level of success or otherwise of a
size of the Diaspora has grown and along with it the corporate body, its established strategic plans in
volume of remittances. The source has also changed as connection with the performance of the company in all
the Somali Diaspora in Europe, USA, Canada, and fronts of operations had to be established (Strickland,
Australia has increased. According to, (Adams, R.H. A. J., 2004).
Jr., 2003) noted that although remittances have become Strategic planning is a management function
the critical source of hard currency for the country, the that focuses on the growth and future sustained well
precise value of remittance to elements of Social being of an organization. Ansoff, (2003) affirms that
Development is still in doubt. the interest in strategy grew out of the realization that a
Business environment is volatile and ever firm needed a well defined scope and growth direction
changing; and organizations need to look for fresh not just extrapolations of past performances which
ways to keep growing profit. (Heppelman, J. E., 2014) were being used to project into the future. Hart and
found Consumer preferences and demands are also Banbury, (1994), made an observation of firms‟
continuously evolving and increasing respectively to recognition for the need to do strategic thinking and
remain dynamic environment like U S A, firms planning.
continually innovate to stay ahead strategic In Africa similar research had developed , in
management practices and this enable them to gain Kenya study investigated strategic plan on
higher profit because of using their unique resources. organizational performance (Benjamin, M. N., 2017).
(Charles, 2008) Indicated that to maximize shareholder In Somalia, since the collapse of central
value and increase performance managers must government in (1991), many businesses started to boom
formulate and implement strategies that enable their up fast especially service industry. These businesses
companies to outperform its rivals—that give it a were facing an environment which is dynamic,
strategic plan. A company is said to have a good changeable, and essential, as well as an intensive
strategic plan over its rivals when its performance is competition. These circumstances and many others
greater than the average performance and profit growth compel the organizations to adopt certain business
of other companies competing for the same set of concepts, policies, and practices in order to attain their
customers. According to, (Tapinos, E; Dyson, R. G., goals and to get prominent results. Among those
2005)Strategic Plan provides the basic direction and business concepts is strategic planning ( Ali Yassin
rationale for determining the focus of an organization; Sheikh Ali (2016) In Somalia, after the collapse of the
and also provides the specification against which any Somali state all financial institutions in the country
organization may best decide what to do and how to do were destroyed by the fighting factions. Although the
it. Simply put, it is a process for creating and describing last two decades the country has no effective
a better future in measurable terms and the selection of government that monitor the quality of bank
the best means to achieve the results desired. It is institutions on the other hand fortnightly there was
important to note that not all planning is actually increasing number of private remitences since 1990,
strategic even though they may be termed so. It is said according to our best knowledge there is no study that
that failure to plan leads to planning to fail. (Dyson, focus the impact of service quality provided by these
R.G., 2000). In order to assess the level of success or institutions on customers`s satisfaction. Thus, this is the
otherwise of a corporate body, its established strategic main purpose of this study. (husein & Abdullah, 2007).
plans relative to the performance of the organization in
all fronts of operations have to be ascertained. LITERATURE REVIEW
Formulating, implementing and the evaluation of a Strategic planning was about success and
Strategic Plan indisputably become a major activity in failure, about the ability to plan wars and win them; big
both profit and not-for-profit organizations, especially, mergers perhaps the most visible sign of strategic
the banking sector (Tegarden, F. (2003)., 2003). planning can transform the performance of an
Strategic planning standardizes the processes of organization, make fortunes for shareholders or change
goal/objective setting, situation analysis, alternative the structure of an industry (Scholes, K and Johnson, G.
consideration, implementation and evaluation that , 2002). Ineffective strategic planning can bankrupt
enable an organization to attain its goals and objectives companies and win careers of chief executives thus
(Tapinos, E; Dyson, R.G., 2005). hindering organization growth. Appleby (1994) defines
a strategic plan as deciding on major organizational their activities with a sense of purpose, it helps in
goals and guidelines or policies used in achieving those development of effective control that measure results
goals. This planning relies on an unpredicted long term and lead to corrective actions, it facilitates coordination
forecast from senior levels of the organization. behavior of various groups which otherwise may pull in
According to (Campbell B,, 1999) and (Thompson different directions, they function as a basis for
A. A and Strickland A. I , 2007), a strategic plan is a managerial control by serving as standards against
process that involves assessment of treats and which actual performance can be measured, provides
opportunities of an organization, determining weakness legitimacy to organization activities and finally it
and strengths in changing environment. facilitate better management of organization by
They continue saying that a strategy is laid providing a basis for leading, guiding, directing and
down to cope with the problem at hand, considering the controlling the activities of various departments.
goals, objectives of the organization. They further (Hugh, D.; Michael, 2002) argues that the one or
defines strategic planning as management tool that two sentences vision statements most companies make
continually and systematically evaluate a business, available to the company of course provide only a
identify its long-term goals and quantifiable objectives, glimpse of what executives are really thinking and the
develops a plan to implement, monitor performance, strategic course they have chartered. Company
allocated resources, redefine the plan where need be, to personnel really have much better understanding where
ensure the organizational members work towards the the company is headed and why is revealed in the in the
defined goals in changing environment and observes official vision. But the real purpose of strategic vision
that strategic plan should ask the questions; Why do is to serve as management for giving the organization a
organizations exists, what it does, where it should go sense of direction. Like any tool, it can be used
and how it is going to get there. Strategic plan should properly or improperly, either clearly conveying a
encompass, a vision, mission and organizational values. company’s strategic course or not.
A vision is an insight into the long-term future, which (Tosi H. , 1975), identified some of characteristics of
should be short, understood by everyone, describes a efficient budgetary system which include budget
static stage. A mission is the route followed to achieve oriented towards results, budgetary system should be
a vision. more effective if the duties and responsibilities for all
(Bennett R., 1996), summarizes the benefit of operations are well defined and rightly assigned budget
having strategic plan as follows:- It formulates strategy should be simple and understandable, fair and
for the future action and criteria for the future actions. objective. Budget should be based on documentable
It makes it easier the coordination of divisions, information and not simple guesswork and judgment. A
subsidiaries and other component parts of the quick and two-way communication should be adopted
organization hence act as the focal point for all so that the managers get timely information on
operations in the organization, the organization can deviations. Lastly, budget should be viewed as positive
analysis its position through strategy formulation hence and be conducive to self control.
know its internal weaknesses and hence how to get a However this (Arthur S, Mondy R.W & Shane R.P,
remedy. It makes decision in response to predictable 1990), argue that despite its benefits, budgeting has
changes, identification of external treats and become crucial to the planning process because budgets
opportunities. The organization through speculation of are often too rigid and restrictive because HR
future events may lead to influencing the future for the supervisors are given little free hand in managing their
benefit of the organization growth and after considering resources, budget may be changed too often or not at
all facts important decisions can be made hence all making it difficult for employees to meet
avoiding crisis situations. performance levels, furthermore, funds are allocated for
The mission of an organization the unique aim that sets various activities may not be transferable from one
the organization apart from others of its type. account to another. Budgets are used to evaluate the
Objectives are the specific targets to be reached by performance and result but the causes of failures and
organization. They are translation of an organization success are not thoroughly investigated, budgets may
mission into concrete terms against results can be used punitively whereby employees regards budgets
measured. simply as rating tool for catching their mistakes which
(Bernard, 2004), identifies the benefits of setting lower their morale and dilute their sense of dedication,
objectives as follows; it provides a basis for planning budgets make some managers believe that all funds
and developing other types of plans such as policies, allocated in a budget for a given activity must be spent
budget and procedures. It acts as motivators for on that activity which may be detrimental to the
individuals and departments of an enterprise mobilizing organization’s effectiveness. Budgeted goals may be
perceived as too high often misused particularly during positions to execute the strategies established by the
the evaluation of action with the plans and strategies in organization hence organizational structure is actually
the light of the latest information. (Otley D.T., 1998). integral of strategic planning. However empirical
(Nnabuife, E., 2009) ,defines organizational evidence by Williams (1997) confirms a positive
performance as setting up a structure or mending an relationship between organizational structure and
already existing one to suit the organizational strategic planning while (Weir, C., 1995) in his effort to
environment and the demands of technology. establish the relationship between organizational
Organizational structure also referred to as structure and corporate performance concludes that
organizational design provides a solid foundation for firms that adoptedappropriate structure yield higher
company operations by laying out the physical profits than those that do not (Weir, C., 1995).
grouping of employees and the managerial hierarchies
within an organization. Organizational design METHODOLOGY
essentially provides a guide for the way in which work The research design that was used in this study
is to be completed within the organization by was descriptive cross sectional survey method aimed at
determining how task, decision and information flow establishing the strategic planning on organizational
into the company. Organizational design translates the performance of remittances in Mogadishu, Somalia.
goals and desires of business leaders into actual, The method was preferred because it allows for prudent
tangible plans. Organizational design can serve as an comparison of the research findings. A cross sectional
element of a strategic plan to accomplish specific and descriptive survey attempts to describe or define a
objectives since organizational structure influences the subject often by creating a profile of a group of
way in which work flows in a company. Therefore, problems, people or events through the collection of
different design can help or hinder different strategic data and tabulation of the frequencies on research
objectives and also can aid or hinder employees in their variables or their interaction as indicated.
role. The questionnaire was used as an instrument for
Structure can dictate the means by which data collection. The questionnaire consists of three
strategies are formed, for instance, Companies with sections. The first section contained demographic
good structure, on the other hand, often involve a range profile which included gender, age, marital status, ,
of employees in strategy sessions. For organization to experience and type of wor. Second section is strategic
deliver its plan, the strategy and the structure must be plan consists of three dimensions setting
woven together seamlessly. They involve combing objectives,(budgetary allocations and organization
flexible decision making, and sharing the best ideas structure) and third section is organizational
across the organization, with appropriate levels of performance.
management and control from the centre. A company’s The data on complete mixed questionnaire will
organizational structure must support its strategy. For categorize or code and will enter into a computer for
instance, in a case where downsizing is the strategy, the Statistical Package for Social Scientists (SPSS) to
organizational design involves figuring out which summarize the data using simple and complex
positions or department to trim. When introducing a frequency tables. The same package used to analyze by
new line of business, organizational design means computing relative frequencies, means, and standard
figuring out who is responsible for the new business, deviations. In the questionnaire each selected one to
how many positions should be opened and where in the four scale for where, 1=strongly disagree, 2=disagree;
reporting structure in the new line belongs. Normally 3= agree; 4= strongly agree.
businesses draft these changes into a formal
organizational chart so that everyone involved can FINDING OF THE STUDY
clearly understand the changes and how the business The findings of the study obtained from the
should operate. Employees at all levels of company target respondents that were involved in this study.
must be empowered to effectively complete the task This chapter highlights general information of the
necessary to achieve organizational objectives respondents, followed by the findings on the effect of
(Nnabuife, E., 2009) strategic plan on organizational performance of
There is hardly any organization that does not have remittance companies in Mogadishu-Somalia, the effect
profit and growth as its main objectives. of setting objectives , budgetary allocations ,and
The growth of a firm is principally measured on the organization structure on Organizational performance.
percentage of market share captured and client served. Gender in majority of the respondents of this
By deciding how to approach the markets and study which 30 respondents or (75.0%) were male
Customers, employees are place into different strategic while the remaining 10 respondents or (25.0%) were
3. The researcher recommend to keep the 16. Dyson, R.G. (2000). Strategic Development and
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4. Researcher has also recommend government (631-640).
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and other institutions to utilize their
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