Strategic Planning And Control: Tool For The Growth And Survival Of Small And Medium Scale Enterprises (A Case Study Of Star Paper Mill, Aba, Abia State)

Strategic Planning And Control: Tool For The Growth And Survival Of Small And Medium Scale Enterprises (A Case Study Of Star Paper Mill, Aba, Abia State)

Abstract

This research work is on strategic planning and control: tool for the growth and survival of small and medium scale enterprise (SMES). A case study of star paper mil, Aba, Abia state. The emphasis is on SMEs, because, growth in SMES is a sin quo non for vibrant economic growth of country. More importantly, most multinational business in the world today started as a small scale business.

Thus, strategic planning ensures that the goals and objectives of SMES in enhancing the growth of the Nigerian economy is achieved. This study x-rays the need for strategic planning and control in actualizing the intended objectives of SMES in the country.

To ensure that this study covered its intended area, the work was divided into five chapters. Chapter one is on the introductory aspect of the research, where an insight was given on how the work would be carried out. Chapter two layed emphases on the contributions of other scholars on the study Area.

Chapter three gave the methods used by the research in collecting relevant data and information needed in the research. Chapter four and five dealt on the presentation and analysis of the data collected and the summary of the findings, conclusion and recommendation respectively on the study.

Table Of Content

Preliminary Page(s)

• Title page
• Approval page
• Dedication
• Acknowledgment
• Abstract
• Table of content

Chapter One

1.0 Introduction

• 1.1 Background of the study
• 1.2 Statement of the study
• 1.3 Objective of the study
• 1.4 Research questions
• 1.5 Significance of the study
• 1.6 Scope of the study
• 1.7 Limitation of the study
• 1.8 Definition of terms

Chapter Two

2.0 Literature Review

• 2.1 Introduction
• 2.2 Definition of strategic planning
• 2.3 Strategic planning process
• 2.4 Importance of strategic planning
• 2.5 Controlling
• 2.6 Need for control in an organization
• 2.7 Types of control
• 2.8 Summary

Chapter Three

3.0 Research Design and Methodology

• 3.1 Introduction
• 3.2 Research design
• 3.3 Sources/methods of data collection
• 3.4 Population and sample size
• 3.5 Sample technique
• 3.6 Validity and reliability of measuring instrument
• 3.7 Method of data analysis

Chapter Four

4.0 Presentation and Analysis Of Data

• 4.1 Introduction
• 4.2 Presentation of data
• 4.3 Analysis of data
• 4.4 Interpretation of result

Chapter Five

5.0 Summary, Conclusion and Recommendations

• 5.1 Introduction
• 5.2 Summary of findings
• 5.3 Conclusion
• 5.4 Recommendations
• References
• Appendix

Chapter One

1.0 Introduction

1.1 Background Of The Study

Historical facts show that prior to the late 19th century, cottage industries controlled the economy of Europe. The industrial revolution changed the status quo and introduced mass production model, which triggered an unexpected reappraisal of the role and importance of small and medium sized enterprise in the global economy. Findings by economics over the years showed that small firms and entrepreneurships play a much more important role in economic growth and development.

Many economics developed and developing here come to realize the value of small business. They are seen to be characterized by dynamism, within innovations, efficiency, and their small size allow for faster decision making process.

Governments all over the world have realized the importance of this category of companies and have formulated comprehensive public policies to encourage, support and fund the establishment of SMES. Developments in small and medium enterprises are sin quo non for employment generation, solid entrepreneurial base and encouragement for the use of local raw materials and technology.

Nigeria’s SMEs (general an umbrella term for firms with less than 250 employees), at present experienced a lot of problems and hardship and this is not just as a result of the economic downfall. There are a number of bottlenecks, including serious under capitalization with difficulty in gaining access to bank credits and other financial markets, corruption and a lack of transparency but most damagingly, a seemingly lack of government interest in and support for the roles that SMEs play in national economic development and competitiveness.

Looking back, there has never been any real attempt on the part of government to formulate any tangible and lasting policies or programmes to support small business sector what is more damaging, however, is that this lack of support for small businesses have been negatively complemented by misplaced government intervention in what is seen as the commanding heights of the economy.

The woeful failure of such capital projects like the Iwopin paper mill, the Ajaokuta steel complex, the Bachita sugar factory and Leyland Daf, all come to mind here.

But why is it important that the new Nigerian government puts small firms policy at the top of its agenda? A study done by the federal office of statistics shows that 97% all business in Nigeria employs less than 100% employees. Looking at the earlier definition of SMEs, it therefore means that 97% of all business in Nigeria are to use the umbrella term “small business”. The SMEs provides on average, 50% of Nigeria employment and 50% of its industrial output.

The proportion of Nigerian SMEs and their impact on the economy is pretty much similar to those in another countries of the world especially in the advanced economics. In the UK and US, SMEs are seen as largely essential for European employment.

In European countries for instance, SMEs not only form the bedrock of their economy, but they are widely accepted as the main hope of their economic activities. They are seen not just as job creators, but also as creditors of wealth.

The key principles underlying the UK government’s approach include fostering an enterprise culture that encourages innovators and risks takers; providing and maintaining of supportive economic environment, identifying and removing barriers to growth and providing high quality business support for firms at all stages of their development.

This is where the problem resides. While the UK government and indeed the government of other advanced economics see SMEs sector as crucial to their continued growth and development, the Nigerian government, to put it mildly, does not have any concrete idea of what hidden potential lies within its SMEs, and even if it does, has no idea how to harness it.

Having said that, however, there is nothing wrong in Nigeria learning from those courtiers and adopting some of their policies and programmes, that best suit our needs.

However, in order for us to be able to do that, there has to be some acceptance that things are not going in the right direction. It means that the government has to concede that up fill now, its policies towards SMEs have been seriously flowed, and that if any progress has to be made, there has to be a change of direction.

This is what strategic planning and control come in place. Government has to efficiently plan its policies and formulate programmes that enhance the growth and sustenance of SMEs in the country.

Thus, the role of planning and control as they affects the growth and development of SMEs shall be the key focus of this research work.

Historical Background Of Star Paper Mill

Star paper mill limited (RC 22622) was incorporated as a paper converting company in 1977. The company has four major divisions. Star paper mill Limited also has offices in Lagos, Ibadan, Kaduna, Kano and Suleja.

The premier plants located at Aba, produces school exercise books of different types and a wide rang of stationary. It has an installed capacity of 25,000 metric tones per annum which translated into 38 million exercise books per annum in addition to 152 million envelopes of various sizes. Other products include typing sheets, duplicating paper and foolscap fly. The current percentage utilization is about 75 percent.

The second factor was commissioned in 1984 as a waste paper recycling plants, with an installed capacity of 10 metric tones of tissue paper in jumbo reels per day.

By 1992, a new paper machine was installed with the capacity of 60metic tones per day. Presently, the owerrinta plant has a total capital of 60 metric tones per day. This plant utilizes waste paper and paper off- cuts as its main sources of raw material and that constitute 90% both in volume and in naira value of the plant requirement locally sourced.

Just recently, a new product line sanitary towards for ladies with the brand name of “every woman” became a new addition to the stable.

1.2 Statement Of The Problem

This study has observed a problem facing small and medium scale business as a result of the economic downfall, there are a number of bottlenecks, including services under capitalization with difficulty in gaining access to bank credits and other financial markets.

Looking back, there has never bean any real attempt on the part of government to formulate any tangible and lasting policies or programmes to support small business sectors. This is where strategic planning and control come in place, government has to effectively plan its policies and formulate programmes that will enhance the growth and sustenance of SMEs in the country.

With the benefit derived from SMEs:

1. What roles do strategic planning and control have to play in the growth and survival of small and medium enterprises in the country?
2. What are the problems militating against the survival of SMEs in the country and how can these problems be solved?
3. What are the contributions of strategic planning and control to the attainment of cooperate objective?
4. What steps are taken in implementing strategic planning and control in an organization?

1.3 Objectives Of The Study

The study will address the following objectives;

1. To ascertain the role of strategic planning and control in the growth and survival of SMEs in the country.
2. To measure the contribution of strategy planning and control in the enhancement of productivity and workers performance.
3. To identify the steps and processes that should be taken in implementing strategic planning and control in an organization.
4. To identify the problems militating against the survival of SMEs in the country and make recommendations on how to solve these problems.

1.4 Research Questions

The following are the research questions of the study:

1. What roles do strategic planning and control play in the survival of small and medium scale enterprises?
2. Have strategic planning and lead to the achievement of corporate objectives?
3. Have strategic planning ad control enhances the productivity of small scale businesses?
4. What steps and process should be taken in implementing strategic planning and control in an organization?
5. What are the problems facing SMEs in the country and how can these problems be solved?

1.5 Significance Of The Study

The findings of this study (when completed) will be of importance to managers, employees and future researchers.

The manager, this study will help him realize that strategic planning and control are tool for achieving of organization goals.

In the area of employees, they will be able to concentrate their energy on important issues this way, they will be able to bring out their best.

The future researchers who may wish to undertake related topics in this stud may find out that this work will be valuable guide to their endeavor.

This study will also be of immense benefit to small and medium scale business operators in particular and other business (large) organizations in general to determine the effective of strategic planning and control. The study will determine the factors or problems limiting the effectiveness of strategic planning and control in an organization. Also, the study looks into the problems or factors militating against the survival of small and medium scale enterprise and tends to make recommendations and suggestions on how to solve these problems

1.6 Scope Of The Study

The study is concerned with strategic planning and control as a tool for the survival of small and medium scale enterprises but because of tome and cost the study was limited to Abia state with star paper mil limited Aba, as a case study.

The researcher was of the view that since the industries and firms are located in the same geographical and socio-economic conditions, the constraints and challenges affecting one, affects others.

1.7 Limitation Of The Study

The study covered areas like technical and managerial competence, capital, work force, production capacity and strategies involved in the business activities within the area of study.

Many constraints such as time, finance and materials were encountered in collecting data for the research work.

Despite all these constraint, the research was successfully carried out.

1.8 Definition Of Terms

To ensure that the research work is easily understood, some technical terms used will be explained.

Objectives:

These are the future expectations of an individuals cooperate body or organization. They are the targets which an organization hopes to achieve.
Objectives are usually on a long term basis.

Organization:

This is an organized body of persons or cooperate bodies aiming towards a particular objective.

Small Scale Business:

These are firms organizations with less than 250 employees and whose asset base is below N200m.

Business:

This is an economic activity oriented towards producing goods and services at a profit of satisfaction to mankind.

Effectiveness:

It is ability to bring about the intended result. It has to do with the attainment and achievement of set goals and objectives.

Goals:

This is same thing with objectives, but while objectives are long term basis, goals are at short term basis.

Strategic Planning:

This is a process of defining organization strategic, decision and making decisions on allocation its resources, to measure this strategy, includes its capital and people.

Chapter Five

5.0 Summary, Conclusion And Recommendations

5.1 Introduction

In this chapter, the researcher intends to summarize her findings of the study which includes the summary, conclusion and recommendations which she made through her sources and responses from questionnaire administered to the respondents of star paper mill Aba, Abia state.

5.2 Summary Of Findings

The study was designed to evaluate the role of strategic planning and control as tool for the growth and survival of small and medium scale enterprises SMEs

The researcher made it clear to understand that Nigeria SMEs (generally, an umbrella term for firms with less than 250 employees) play significant impact in the growth of the economy. SMEs are seen as bed rock to the sustainable development of Nigeria economy. This is because, according to the federal office of statistics 2001, 97% of all business in the country is small business. This is however, aside the fact that SMEs businesses are very easy to open or start with very little capital outlay. Having said this, an improvement in SMEs operations will serve as a veritable means in enhancing the recent efforts by the federal government in improving the Nigeria ailing economy. Those who own or operate SMEs should enlighten on the strategic importance such as venture plays in our national economy.

This is where strategic planning and control come into play. Thus, strategic planning; an organization process of defining its strategic or direction and making decision not determines the overall organizational purpose and objectives. It must be pointed out that whatsoever decision or action taken at the top generally affected the whole organization, thus, the importance of strategic planning and control in the overall well being of an organization cannot be over emphasized.

The study revealed that:

1. Strategic planning and control play a significant role in the survival of SMEs.
2. Strategic planning an control guarantees significantly the achievement of corporate objectives.
3. There is significant relationship between strategic planning and control and the productivity of SMEs.

5.3 Conclusions

It could be concluded that strategic planning and control play an immense role in the growth and survival of SMEs.
Thus, strategic planning and control should be applied in every business organization that hopes to achieve it set goals and objectives. SMEs play significant role in enhancing the Nigeria’s’ ailing economy. The right policy should be made to enhance their existence. There is no gain saying that the most multinational businesses in outside the country today started as a small scale business.

5.4 Recommendations

Based on the research findings, the following recommendations should be made for the attainment of set goals and objectives in the organization, particularly, star paper mills Aba, Abia state.

1. The enterprise should involve more of its workers in the planning and control system to facilitate productivity.
2. Workers interests and welfare should be adequately taken car of. this would go a long way in enhancing organizational productivity level.
3. Regular or routine programmes such as workshop, seminars etc, should be organized for the top and middle management. This would help in enhancing their managerial skills and productivity.
4. Favourable policy should be made by the federal government to suite the corporate existence of SMEs. The dependency rate in the country would be reduced drastically if this is done as unemployment would be drastically reduced.
5. Government should support and encourage the activities of SMEs in the country through free tax or tax holiday on SMEs for at least first two years of their existence, reduce export quota or its immediate removal and increase import quota and tariff on foreign goods coming into the country.

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Frequently Asked Questions

Is there a role for Strategic Planning in small and medium sized enterprises?

… While strategic planning research in large organizations has been studied extensively, little attention has been paid to strategic planning of small and medium sized enterprises (O’Regan & Ghobadian 2002).

Is strategic management necessary for small enterprises?

Implementing strategic management in the current activity of the small enterprises has become a stringent necessity.

What is this strategic Small Business Management paper about?

This paper is a theoretical one, whose aim is to synthesize and systemize the most important ideas outlined in some of the papers and articles published in the field of strategic small business management.

How important is the explicitness of strategic strategies to firm performance?

The explicitness of strategies is therefore likely to be more important in large than in small organizations. performance. Successful small firms have mo re explicit strategies to coordinate, unify hazards of major commitments. Toulouse, 1986). Proactiveness and risk taking minimize the chances of strategic

How do small and medium-sized enterprises plan strategically?

SMEs seem to plan strategically in a less structured and more informal manner than bigger companies, while they might engage relatively more in (informal) visionary strategic management.

How relevant is strategic planning in SMEs?

Our literature analysis indicates that strategic planning in SMEs is subject to unique characteristics and influences. Although a high relevance of strategic planning in the context of SME management does exist, its extent and design differs from bigger companies.

Do SMEs plan less than large enterprises?

Furthermore, scientific literature provides evidence that the use of strategic planning methods and instruments is dependent on increasing company size, and thus that SMEs do seem to plan less than established larger enterprises.

Do strategic instruments matter for SME success?

Since the link between the use of strategic instruments and corporate success seems to be also prevalent in SMEs, it is essential to foster a respective awareness in the enterprise. Since SMEs are rarely small- sized big enterprises, the existing concepts and instruments have to be adapted accordingly.

Can strategic management help small and medium scale enterprises (SMEs)?

Earlier studies have established the importance of strategic management in the development of large corporations while few works have explored the possibility of using strategic management to help develop the critical sector of the economy, Small and Medium Scale Enterprises (SMEs).

What is strategic management for small businesses?

So strategic management for small business will assist you to set well-defined goals and objectives, and tailor your existing processes and activities, as well as introduce new processes and activities, to ensure that the business is in alignment with the goals and objectives.

Is there a relationship between strategic planning and performance in SMEs?

Relationship between strategic planning and performance o f small business (Watts &Ormsby, 1990 ). Prior 1985). However, an instance where strategic management is in practice in SMEs, research indicated that it

What are the limitations of process management for small and medium-sized enterprises?

Strategic management of small and medium-sized enterprises Abstract—Using principles of process management within SMEs has its limitations caused mainly by size of the enterprise and the related focus on operational management. Other specificities are function accumulation, informal leadership, preference for oral communication before written, etc.

What is strategic business management?

Strategic management is a broad term that includes innovative thinking, a strategic planning process and operational strategising. Strategic business management, more specifically, relies largely on research.

What is the strategic planning process for small businesses?

The strategic planning process helps small business organizations to identify their available resources and hence plan on how to appropriately and effectively utilize the resources for maximum benefit of the small businesses.

Is there a role for Strategic Planning in small and medium sized enterprises?

… While strategic planning research in large organizations has been studied extensively, little attention has been paid to strategic planning of small and medium sized enterprises (O’Regan & Ghobadian 2002).

What is the summary of strategies in strategic management?

The summary of strategies counted which strategies were recommended by the strategy formulation tools utilized earlier using the various information drawn from external and internal analysis.

Does marketing strategy play a critical role in firm performance?

The foundation of the research model of this current study is based on the theory that marketing strategy plays a critical role on firm’s performance in the global market that is vastly supported by the study of Zou and Cavusgil (1996).

Why is strategy so important to business success?

Here are five reasons why strategy plays such an important part of any company’s success. 1. Planning – Creating and tracking progress against an annual operating plan is an essential management tool for any company. What is often missing is the relationship these plans have to the future.

What is the importance of strategy in a firm’s competitive advantage?

It will not know its own position in the market as compared to its competitor and hence, the firm will not be able to derive a competitive advantage. The importance of strategy is manifold but the most important aspect is competitive advantage.

What are the benefits of strategic planning in business?

One significant benefit of strategic planning is that it creates a single, forward-focused vision that can align your company and its shareholders.