The Impact of Strategic Planning on Growth of Small Businesses in Nigeria.

  • Babandi Ibrahim Gumel
      Global Humanistic University - Curacao, and LIGS University.

    Abstract

    Purpose- There is a need to develop a framework that will improve the understandings of business planning and performance and its effects on growth particularly during the stages of small business development. The study attempted to fill in the gap stated. 

    Design - The single case qualitative study relates small business growth with strategic planning where financial performance, market share, sales, and profits or instead return on investment is used to measure the growth. Existing literature fails to establish a concrete relationship between strategic planning and growth of small businesses which indicates a gap in the literature that will help understand the steps of managing the organizational transition of small business growth. 

    Findings - The study fails to establish a significant relationship between formal planning and transitional growth, but instead found the influence of the planning process in communication the owner’s goals, vision, mission, and intentions to both internal and external stakeholders of small businesses. The study influence of the shared vision with customers on making them loyal and advertisers through word of mouth. The study revealed how customers’ word of mouth increased the customer base of small businesses thereby increasing the product demand and eventual expansion of capacity leading to the growth of small businesses. The growth of small businesses will result in an increased reduction in the unemployment rate which will reduce the poverty rate in the Nigerian economy. 

    Practical Implications- Answering the primary and supporting questions will help small business owners to understand how strategic planning is essential in the transitional growth of their businesses.

    Keywords:
    Strategic Planning Small Business Strategic Planning Small Business Growth Customer Loyalty

    Metrics

    Metrics Loading ...

    References

    Achtenhagen, L., Naldi, L., & Melin, L. (2010). "Business growth"-Do practitioners and scholars really talk about the same thing? Entrepreneurship: Theory & Practice, 34(2), 289-316. doi:10.1111/j.1540-6520.2010.00376.x

    Ackoff, R. L. (1966). The meaning of strategic planning. Management Review, 55(10), 20.

    Adebisi, J. F., & Gbegi, D. O. (2013). Effects of multiple taxations on the performance of small and medium scale business enterprises (A study of West Africa Ceramics Ajeokuta, Kogi State). Mediterranean Journal of Social Sciences, 4(6), 324-334. doi:10.5901/mjss. 2013.v4n6p323

    Alden, J., Albrechts, L., & da Rosa Pires, A. (2017). In search of new approaches to planning. In The Changing Institutional Landscape of Planning (pp. 13-19)). Routledge.

    Ansoff, H. I., & Brandenburg, R. C., (1967). A program of research in business planning. Management Science, 13(6), B-219-B-239. DOI: https://doi.org/10.1287/mnsc.13.6.B219

    Armstrong, J. S. (1982). The value of formal planning for strategic decisions: Review of empirical research. Strategic Management Journal, 3: 197-211. DOI: https://doi.org/10.1002/smj.4250030303

    Ayanda, A. M., & Laraba, A. S. (2011). Small and medium scale enterprises as a survival strategy for employment generation in Nigeria. Journal of Sustainable Development, 4(1), 200.

    Ayyagari, M., DemirgucKunt, A., & Maksimovic, V. (2014). Who creates jobs in developing countries? Small Business Economics, 43(1), 75-99.

    Barbosa, F., & Romero, F. (2016). The Links between Innovation, Strategy and Internationalization Processes: A Comprehensive Literature Review. Academic Conferences (pp. 904-912). Jyväskylä, Finland: Publishing International Limited.

    Bhide, A. V. (2000). The origin and evolution of new business. New York, NY: Oxford University Press.

    Brews, P. J., & Hunt, M. R. (1999). Learning to plan and planning to learn: Resolving the planning school/learning school debate. Strategic Management Journal, 20(10), DOI: https://doi.org/10.1002/(SICI)1097-0266(199910)20:10<889::AID-SMJ60>3.0.CO;2-F

    Brinckmann, J., Grichnik, D., & Kapsa, D. (2010). Should entrepreneurs plan or just storm the castle? A meta-analysis on contextual factors impacting the business planning-performance relationship in small firms. Journal of Business Venturing, 25(1), 24-40. doi: 10.1016/j.jbusvent.2008.10.007

    Burns, P. (2016). Entrepreneurship and small business. Palgrave: Macmillan Limited. DOI: https://doi.org/10.1007/978-1-137-43034-2

    Chandler, A. D. (1990). Strategy and structure: Chapters in the history of the American industrial enterprise. Cambridge, MA: The MIT Press.

    Cokins, G. (2017). Strategic business management: From planning to performance. New York, NY: John Wiley & Sons. DOI: https://doi.org/10.1002/9781119449492

    Creswell, J. W. (2014). Research design: Qualitative, quantitative, and mixed methods approaches Thousand Oaks CA: Sage Publications Inc.

    Cull, R., Davis, L. E., Lamoreaux, N. E., & Rosenthal, J. L. (2006). Historical financing of small and medium-sized enterprises. Journal of Banking and Finance, 30(11), 3017-3042. DOI: https://doi.org/10.1016/j.jbankfin.2006.05.005

    Davila, A., & Foster, G. (2007). Management control systems in early-stage startup companies. Accounting Review, 82(4), 907-937. DOI: https://doi.org/10.2308/accr.2007.82.4.907

    De Geus, A. P. (1988). Planning as learning. Harvard Business Review, 66(2), 70-74. Delmar, F., & Shane, S. (2003). Does business planning facilitate the development of new ventures? Strategic Management Journal, 24(12), 1165-1185. doi:10.1002/smj.349 DOI: https://doi.org/10.1002/smj.349

    Dibrella, C., & Neubaum, D. (2014). Linking the formal strategic planning process, planning flexibility, and innovativeness to firm performance. Journal of Business Research, 67(9), 2000-2007. doi: https://doi.org/10.1016/j.jbusres.2013.10.011

    Du, J., & Banwo, A. (2015). Promoting SME competitiveness: Lessons from China and Nigeria. American Advanced Research in Management, 1(1), 1-12. Retrieved from http://s3.amazonaws.com/academia.edu.

    Eriksson, P., & Kovalainen, A. (2011). Qualitative methods in business research. Thousand Oaks CA: Sage.

    Flamholtz, E. (1986). How to make the transition from an entrepreneurship to a professionally managed firm. San Francisco, CA: Jossey-Bass.

    Gaskill, L. R., Van Auken, H. R., & Manning, R. A. (1993). A factor analytic study of the perceived causes of small business failure. Journal of Small Business Management, 31(4), 18-31.

    Ghobadian, H., O'Regan, N., Thomas, J. &. Liu, A. (2008). Formal strategic planning, operating environment, size, sector, and performance: Evidence from the UK's manufacturing SMEs. Journal of General Management, 34(2), 1-19. DOI: https://doi.org/10.1177/030630700803400201

    Headd, B. (2010). An analysis of small business and jobs. Retrieved from Small Business Administration: http://archive.sba.gov

    Honig, B., & Karlsson, T. (2004). Institutional forces and the written business plan. Journal of Management, 30(1), 29. doi:10.1016/j.jm.2002.11.002

    Kotter, J. P. (1995). Leading change: Why transformation efforts fail. Harvard Business Review, 73(2), 59-67.

    Kotter, J. P. (2012). Accelerate. Harvard Business Review, 90(11), 43-58.

    Langley, A. (1988). The roles of formal strategic planning. Long Range Planning, 21(3), 40-50. DOI: https://doi.org/10.1016/0024-6301(88)90032-5

    Lechner, C., & Leyronas, C. (2009). Small-business group formation as an entrepreneurial development model. Entrepreneurship: Theory & Practice, 33(3) 645-667. doi:10.1111/j.1540-6520.2009.00320

    Lester, D. L., Parnell, J. A., & Carraher, S. (2003). Organizational life cycle: A five-stage empirical scale. International Journal of Organizational Analysis, 11(4), 339-354. DOI: https://doi.org/10.1108/eb028979

    Lew, C., Meyerowitz, D., & Svensson, G. (2018). Formal and informal scenario-planning in strategic decision-making: an assessment of corporate reasoning. Journal of Business & Industrial Marketing, 1(2), 1. doi: https://doi.org/10.1108/JBIM-03-2018-0096

    Liao, J., & Gartner, W. (2007). The influence of pre-venture planning on new venture creation. Journal of Small Business Strategy, 18(2), 1.

    Lucchetti, R., & Sterlacchini, A. (2004). The adoption of ICT among SMEs: evidence from an Italian survey. Small Business Economics, 23(2), 151-168. DOI: https://doi.org/10.1023/B:SBEJ.0000027667.55821.53

    Mazzarol, T., Reboud, S., & Soutar, G. N. (2009). Strategic planning in growth-oriented small firms. International Journal of Entrepreneurial Behavior & Research, 15(4), 320-320-345. doi:10.1108/13552550910967912 DOI: https://doi.org/10.1108/13552550910967912

    Miles, M., Huberman, B., & Saldaña, A. (2014). Qualitative data analysis: A methods sourcebook. Thousand Oaks, CA: Sage.

    Mintzberg, H. (1987). The strategy concept I: Five Ps for strategy. California Management Review, 30(1), 11-24. DOI: https://doi.org/10.2307/41165263

    Mintzberg, H. (1994a). The fall and rise of strategic planning. Harvard Business Review, 72(1), 107-114.

    Mintzberg, H. (1994b). The rise and fall of strategic planning. New York, NY: The Free Press.

    Mintzberg, H., Ahlstrand, B., & Lampel, J. (2005). Strategy safari: A guided tour through the wilds of strategic management. New York, NY: Free Press.

    Mintzberg, H., & Waters, J. A. (1985). Of strategies, deliberate and emergent. Strategic Management Journal, 6(3), 257-272. DOI: https://doi.org/10.1002/smj.4250060306

    National Population Commission of Nigeria. (2011). News Release. NPC News, p. 20. Penrose, E. T. (1959). The theory of the growth of the firm (3rd ed.). New York, NY: Oxford University Press.

    Phelps, R., Adams, R., & Bessant, J. (2007). Life cycles of growing organizations: A review with implications for knowledge and learning. International Journal of Management Reviews, 9(1), 1-30. doi:10.1111/j.1468-2370.2007.00200.x

    Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard Business Review, 86(1), 78-93.

    Porter, M. E. (1996). What is the strategy? Harvard Business Review, 74(6), 61-78.

    Quinn, R., & Cameron, E. (1983). Organizational life cycles and shifting criteria of effectiveness: Some preliminary evidence — Management Science, 29(1), 33. DOI: https://doi.org/10.1287/mnsc.29.1.33

    Robinson, R., & Pearce, B. (1983). The impact of formalized strategic planning on financial performance in small organizations. Strategic Management Journal, 4(3), 197-207. DOI: https://doi.org/10.1002/smj.4250040302

    Rothaermel, F. T. (2015). Strategic management. New York, NY: McGraw-Hill Education. Rowley, J. (2002). Using case studies in research. Management Research News, 25(1), 16-27.

    Rue, L. W., & Ibrahim, N. A. (1998). The relationship between planning sophistication and performance in small businesses. Journal of Small Business Management, 36(4), 24.

    Sandberg, W. R., Robinson, J. R. B., & Pearce, J. A. (2001). Why small businesses need a strategic plan. Business & Economic Review, 48(1), 12.

    Sarason, Y., & Tegarden, L. F. (2003). The erosion of the competitive advantage of strategic planning: A configuration theory and resource-based view. Journal of Business & Management, 9(1), 1.

    Shehu, A., Ibrahim, M. A., Mat, N., Nasiru, A., Popoola, O., Muhammad, M., & Kura, K. M. (2013). The mediating effect between some determinants of SME performance in Nigeria. Management, 3(4), 237-242. doi:10.5923/j.mm.20130304.07.

    SMEDAN (2013). SMEDAN and national bureau of statistics collaborative survey: Selected findings 2013. Abuja: National Bureau of Statistics. Retrieved from Small and Medium Enterprises Development Agency of Nigeria: http://nigerianstat.gov.ng

    Snyder, N. H. (1982). Research notes and communications. Strategic Management Journal, 3(3), 265 267. DOI: https://doi.org/10.1002/smj.4250030307

    Spee, A. P., & Jarzabkowski, P. (2011). Strategic planning as communicative process. Organization Studies, 32(9), 1217-1245. Doi: 10.1177/0170840611411387 DOI: https://doi.org/10.1177/0170840611411387

    Storey, D. J. (2016). Understanding the small business sector. London: Routledge. DOI: https://doi.org/10.4324/9781315544335

    Teeter, R., & Whelan-Berry, A. (2008). My firm versus our firm: The challenge of change in growing the small professional service firm. Journal of Business Inquiry: Research, Education & Application, 7(1), 41-52.

    Thompson, A. A., & Strickland, A. J. (2003). Strategic management concepts and cases (13 ed.). New York, NY: Mcgraw-Hill/Irwin.

    Welsh, J. A., & White, J. F. (1981). A small business is not a little big business. Harvard Business Review, 59(4), 18-27.

    Wolf, C., & Floyd, S. W. (2013). Strategic planning research: Toward a theory-driven agenda. Journal of Management, XX(X), 1-35. Doi: 10.1177/0149206313478185 DOI: https://doi.org/10.1177/0149206313478185

    Yin, R. K. (2014). Design and methods. Thousand Oaks, CA: Sage Publications.

    Article History
    Received: 2018-12-31
    Published: 2019-01-06
    How to Cite
    Gumel, B. I. (2019). The Impact of Strategic Planning on Growth of Small Businesses in Nigeria. SEISENSE Journal of Management, 2(1), 69-84. https://doi.org/10.33215/sjom.v2i1.85