Review of Article on Strategic Planning
REVIEW OF AN EMPIRICAL STUDY OF STRATEGIC PLANNING AND PERFORMANCE
Introduction
The purpose of the review is to critically analyse the article ‘Formal strategic planning, operating environment, size, sector and performance: Evidence from the UK 's manufacturing SMEs’ by Ghobadian, A., O’Regan, N., Thomas, H. and Liu, J. published in Journal of General Management in 2008. The review would be based on the following questions: 1. What does the text suggest is the relationship between formal strategic planning and performance? 2. Do the contingency factors of environment, size and sector impact upon the aforementioned relationship and to what extent?
Purpose and Design
The authors seek to determine the relationship between the formality of strategic planning process and performance while testing the effect of size, sector and the environment as factors that may impact upon this relationship. The propositions were founded on the constructs of formality, operating environment and performance. In defining formality, the presence or absence of a written strategic plan was used to divide firms into planners and non-planners. Firms were also divided into low, medium or high formality planners depending on whether they met certain characteristics of a formal strategic process informed by the literature. Operating environment was assessed using the dimensions of turbulence, dynamism and munificence with munificence was studied as a measure of growth/decline and level of competition. Performance was measured using financial performance, market performance, effectiveness which is ability of an organisation to meet its objectives and satisfy its stakeholders; and manufacturing learning and innovation.
The authors were informed by research and theoretical literature on strategic planning, including his study of SMEs in UK 's fabrication and electronics sectors. The final sample for their study comprised of 702 randomly selected SMEs from which 194 firms gave
Introduction
The purpose of the review is to critically analyse the article ‘Formal strategic planning, operating environment, size, sector and performance: Evidence from the UK 's manufacturing SMEs’ by Ghobadian, A., O’Regan, N., Thomas, H. and Liu, J. published in Journal of General Management in 2008. The review would be based on the following questions: 1. What does the text suggest is the relationship between formal strategic planning and performance? 2. Do the contingency factors of environment, size and sector impact upon the aforementioned relationship and to what extent?
Purpose and Design
The authors seek to determine the relationship between the formality of strategic planning process and performance while testing the effect of size, sector and the environment as factors that may impact upon this relationship. The propositions were founded on the constructs of formality, operating environment and performance. In defining formality, the presence or absence of a written strategic plan was used to divide firms into planners and non-planners. Firms were also divided into low, medium or high formality planners depending on whether they met certain characteristics of a formal strategic process informed by the literature. Operating environment was assessed using the dimensions of turbulence, dynamism and munificence with munificence was studied as a measure of growth/decline and level of competition. Performance was measured using financial performance, market performance, effectiveness which is ability of an organisation to meet its objectives and satisfy its stakeholders; and manufacturing learning and innovation.
The authors were informed by research and theoretical literature on strategic planning, including his study of SMEs in UK 's fabrication and electronics sectors. The final sample for their study comprised of 702 randomly selected SMEs from which 194 firms gave
References: Armstrong, J.S. (1982) "The Value of Formal Planning for Strategic Decisions: Review of Empirical Research", Strategic Management Journal, vol. 3, no. 3, pp. 197-211. Capon, N., Farley, J.U. and Hurlbert, J.M. (1994) "Strategic Planning and Financial Performance: More Evidence", Journal of Management Studies, vol. 31, no. 1, pp. 105-110. Ghobadian, A., O 'Regan, N., Thomas, H. and Liu, J. (2008) "Formal strategic planning, operating environment, size, sector and performance: Evidence from the UK 's manufacturing SMEs", Journal of General Management, vol. 34, no. 2, pp. 1-19. Gibbons, P.T. and O 'Connor, T. (2005) "Influences on Strategic Planning Processes among Irish SMEs", Journal of Small Business Management, vol. 43, no. 2, pp. 170-186.