ABSTRACT
Strategic
management has received a lot of attention from both the academia and
professionals over the years. Many literature on strategic management have
relayed information on matters that contribute to the poor and unsteady levels
of company’s performance. However, the debate on strategic management as a
medium for effective performance of operation has been on-going. Therefore,
this study examines the effect of strategic management on performance of
selected stone mining companies in south-west, Nigeria.
Survey
research design was adopted for the study. The population of this study consist
of the primary and secondary whereby the primary population is the total number
of staff (1098) in the selected twenty-five companies in South-West, Nigeria
and the secondary population is the total number of top and middle level
management staff (179) in the selected companies.The study focused on the
secondary population (Top and middle management staff) of the twenty-five
selected companies in south-west, Nigeria. Total enumeration was used to arrive
at a sample size of 179 because of the small population. A structured questionnaire
was administered. The instrument were validated and data gathered was analyzed
through descriptive and linear regression analysis.
The
result of the analysis shows that environmental scanning has significant effect
on market size as indicated by the significant value (R2 = .212 and
P = .000< 0.05). Similarly, significant relationship exists between strategy
formulation and profitability (R = .520 and P = .000<0.05). The result on
the effect of strategy implementation on sales volume shows a significance
although low as depicted (R2 = .004 and P = .000> 0.05). Strategy
evaluation likewise, indicated a significant effect with customer satisfaction
at the value of (R2 = .046 and P = .000<.005).
This
study concluded that strategic management plays a significant role in
determining the performance of stone mining companies. This study then
recommends that stone mining companies and manufacturing industry in general
should regularly engage in strategic management and also make sure
implementation of strategies are carried out. Furthermore, they should try as
much as possible to train their staff well in order to improve performance.
CHAPTER
ONE
INTRODUCTION
1.1
Background
to the Study
Over
time, the perception and practice of strategic management has been adopted
across all- nations due to its effective contribution to the performance of
organisations. Strategic
management is an ongoing process that evaluates and controls the business and
the industries in which the company is involved: It assesses its competitors
and set goals and strategies to meet all existing and potential competitors,
and then reassess each strategy annually or quarterly (i.e. regularly) to
determine how it has been implemented and whether it has succeeded or needs
replacement by a new strategy to meet charged circumstances, new technology,
new competitors, a new economic environment, or a new social, financial or
political environment (Lamb, 1984).
Achieving a competitive advantage position and
enhancing firm’s performance relative to their competitors are the main
objectives that business organizations in particular should strive to attain
(Raduan, Jegak, Haslinda & Alimin, 2009).
Sharabati and Fuqaha (2014) opined that in the globalization era, the strategic
management has been considered as the most important practice which
distinguishes organizations from one another. Strategic management is a field
that deals with the major intended and emergent initiatives taken by general
managers on behalf of owners, involving utilization of resources, to enhance
the performance of firms in their external environments. (Nag, Hambrick &
Chen, 2007). Veskaisri, Chan and Pollard (2007) suggested that without a
clearly defined strategy, a business will have no supportable basis for
creating and upholding a competitive advantage in the industry where it
operates.
For
the better part of a decade, strategy has been a business buzzword. Top
executives ponder on strategic objectives and missions. Managers down the line
rough out market strategies. Functional chiefs lay out strategies for
everything from research and development to raw materials sourcing and
distributor relations. Mere management has lost its glamor in the global economy
in which planners have all turned into strategists (Kaufman, 2013). All this
may have blurred the concept of strategy, but has also helped to shift the
attention of managers from the technicalities of the planning process to
substantive issues affecting the long-term well-being of their enterprises
(Walleck, 2011). The challenge of management for the needs of hundreds of
different and rapidly evolving businesses, serving thousands of markets in
dozen of distinct national environments, has pushed them to generate
sophisticated, uniquely effective management technique that sets these
organizations apart, but rather the thoroughness with which management links
strategic planning to operational decision making (Gluck, 2014).
The business of the twenty first century
irrespective of its size in Nigeria is going to be part of the global business
community affecting and being affected by strategic management in organizations
within the country. This is so, because the business environment is changing,
dynamic, turbulent, discontinuous and highly competitive. Key drivers of this
change have been globalization of trade, increased population and influence of
corporate organizations, the repositioning of government and the rise in the
strategic importance of stakeholder’s relationships, knowledge, and product
reputation (Olanipekun, 2014).The competitive business environment has resulted
into complexity and sophistication of business decision-making which requires
strategic management. Managing various and multi-faceted internal activities is
only part of the modern executive’s responsibilities. The firm’s immediate
external environment poses a second set of challenging factors (Umar, 2005).To
deal effectively with all that affects the ability of a company to grow profitably,
executives design strategic management processes they feel will facilitate the
optimal positioning of the firm in its competitive environment. Strategic
processes allow more accurate anticipation of environmental changes and
improved preparedness for reacting to unexpected internal and competitive
demands(Muogbo, 2013).
Stone
crushing and rock quarrying is a global practice, that has been occurring in
the world, both emerging and developed countries. Quarrying activity is a
necessity that provides much of the materials used in traditional hard
flooring, such as granite, marble, sandstone, limestone, slate and even just
clay to make ceramic tiles (Okafor, 2006). Many of the biggest disappointments
have resulted from the failure of mineral processing and related downstream
manufacturing to develop at or near the site of extraction. It is these
activities which create the largest number of jobs and frequently the greatest
profit. They are therefore, highly desirable from a policy perspective. It is
not only governments in developing countries which have been frustrated by the
minimal extent of downstream processing; state authorities within developed
economies have had similar experiences. The contribution on people and culture
within close proximity to the mining operation (host communities) by the
industry should create an environment that will accept and encourage
development (McDivitt & Jeffery, 1992).
Investigations
carried out by Humann (2004) revealed the Luka community (South Africa)
representatives staunchly opposed the proposed Impala open cast mine on the
grounds that the community has not benefited from the company’s historical
activities in the area and has not been adequately compensated for negative
impacts caused by the company activities in the area. The research also
revealed that the company efforts to communicate directly with community
representatives in the local government ward committee, including constructing
a small office building to facilitate community meetings and interaction with
the company yielded little or no result due to tribal faction.
According
to Laurence (2001) minerals exploitation has an essential role in global
development, by raising and maintaining living standards. Also, extracting
minerals is one of the oldest and essential human endeavours because it
provides the raw ingredients for the world and, like agriculture and helps
civilization (Eagles, 1984). Furthermore, mining affects our regular items
because of the ingredient that are used in homes, offices, transportation,
communication, as well as for national defence (Bureau of Mines, 2002).
Indigenous and organized mining operations have been ongoing in Nigeria since
the 20th century, shortly before the 1st World War (Ajakpo, 1986). However, the
interest in the exploitation of these resources is on the increase and has the
widespread and increasing numbers of abundant mines of minerals (Limestone,
Gemstones, Iron Ore & Gemstones). The cumulative effect of these reduction
of performance in mining activities, as they gained prominence, has been
abandonment of the mine sites (Ashawa, 2007).
In
setting up a successful stone mining business, the need for strategic
management must be put forward which consists of basic competences like
Operations competence, Commercial competence, Marketing competence and
Administrative competence (Anaekwe, 2012). With regard to this, running a
quarry involves total commitment, responsibilities and courage to take risk, as
well as putting up required machines for operations and keeping up with
maintenance and recruiting the right people for the right service (Nnamdi,
2010). Furthermore, mining industry is a global industry with many countries
competing for funds. The fierce international competition suggests that mining
companies and their investment funds would go to those countries where the
enabling environment would allow the private sector to flourish without
hindrance (Obiora, 2007). It is the realization of this fact that is driving
the recent efforts of the Federal Government of Nigeria towards the creation of
an orderly sustainable development of Minerals Resources. At present, quarry
industries in south-west states are not performing up to expectation because of
improper strategic management in the system (Ishola, 2007).
1.2
Statement
of the Problem
The need for manufacturing companies to properly
coordinate its environment in order to know its actual market size has been a
problem in stone mining companies. According to Babatunde and Adebisi (2012), stone mining companies in
Nigeria are facing the problem of customer shortage as a result of lack of
proper environmental scanning, this inadequacy of not getting reliable
information for production constantly denied these organization to produce
inaccurate number which reduces the market size. Popoola (2000) notes that,
environmental scanning has assumed a serious dimension lately, due to the
increase in rash environmental changes which has become so frequent and necessitated
the demand and needs for recent information to make accurate decisions. Stone
mining companies depend on
their environment for operations and survival. However, environmental scanning
is now more volatile and challenging than those of centuries before it and has
increased complexity of business surroundings on Market size exposing
organization to hyper competition (D’Aveni, 2010; Brown & Eisenhardt,
2007).
Organizations
in Nigeria today are being shut down as a result of non-performance, necessitated
by sudden environmental changes and poor formulation of strategy. Manufacturing
organizations in Nigeria just like the stone mining companies encounter several
problems as a result to slow response to strategic changes in the organizations
(Thompson, 2003). Despite the fact that strategy formulation has brought
tremendously transformed in most business landscape, it is still plagued with
some constraints in the Nigerian mining industry. Some of these constraints
include wrong application of strategy formulation by Nigerian mining companies,
bad implementation of strategy, poor organizational structure in the Nigerian
mining industry and non-conformity of laid down plans by the workers of the
mining company towards actualization of profitability of the firm. (Onwuchekwa,
2000). Furthermore stone mining companies formulate strategies to meet up with
certain lacuna but fail as a result of failure to inform this workers on what
ought to be done. This causes reduction in performance and lack of machine maintenance
where the organization structure of the company does not go in line with
strategy being formulated (Onwuchekwa, 2000).
Organizations
like the stone mining industry have been very dependent on their implementation
strategy based on several techniques to
analyze and formulate strategies such as strengths, weaknesses, opportunities,
and threats (SWOT) and Porter's competitive strategies (Okumus, 2003). The reduction in sales level of some stone
mining companies is being caused by absence of strategy implementation where
workers are not trained for the
new strategy initiated
to the system as
well as machine to be
used which leads to a fall
in performance (Urom, Antai & Osim, 2004). Miller (2002) reveals that organizations have
failed as a result of stoppage to implement over 70% of their strategic
initiative. Discussion on the problems and difficulties of strategy
implementation in the recent years has been highly fascinated by the strategic
management discourse since the implementation of strategic plans and decisions
have not been as successful as their designers expected. Most times in these industries, there are
shortcomings in the organizational structure which affects the performance of production
because employees tend to be very slow at changing to new strategy ready to be
implemented, which reduces the productivity and not all quarries have the
ability to train workers to the sudden changes based on skill system,
flexibilities, mentalities (Porter & Kramer, 2006).
The
manufacturing sector, just like other sectors in Nigeria has been ineffective
(Akinmulegun, 2013) There has been a reduction in the number of stone mining
industries as a result of inadequate evaluation of customers satisfaction
hindering the organizations from knowing the level of satisfaction the customer
derives from consuming their product reducing the productivity (Brown &
Iverson, 2004). Customers are deemed to be reliable and important measure of
success in stone mining companies (Chakrabarty, 2006). Some of the measures for this quality of
service as one of the indicator of customer satisfaction, provision of quality
services after which ensures retention and survival of companies. These
organizations fail to do proper evaluation and control causing them to lose
customers as a result of not being able to meet customer’s demand which in turn
reduces sales of production. Furthermore, dissatisfied customers make
complaints which frequently tends to chase other customers (Kitapci &
Dortyol, 2009).
1.3
Objective
of the Study
The main objective of this research
is to determine the effect of strategic management on performance of selected
Stone mining companies in South-west, Nigeria. The specific objectives are to:
1. evaluate
the effect of environmental scanning on firm’s market size;
2.
investigate the
relationship between the company’s strategy formulation and profitability;
3. ascertain
the influence of strategy implementation on company’s sales volume and
4. determine
the effect of company’s strategy evaluation on customer satisfaction.
1.4
Research
Questions
The research question based on the
variables to be considered in this study are as follows:
1.
How does environmental scanning affect firm’s market size?
2.
What is the relationship between the company’s strategy formulation and
profitability?
3.
How does strategy implementation influence sales volume?
4.
What effect does strategy evaluation have on customer satisfaction?
1.5
Hypotheses
The hypotheses were tested at 0.05
level of significance
The research hypotheses for this
research are as follows:
H01:
Environmental Scanning has no significant effect on market size.
H02:
There is no significant relationship between strategy formulation and
profitability.
H03:
Strategy Implementation has no significant influence on sales volume.
H04: Strategy evaluation has no significant effect on
customer satisfaction.
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