THE IMPACT OF STRATEGIC MANAGEMENT ON ORGANIZATIONAL EFFICIENCY

THE IMPACT OF STRATEGIC MANAGEMENT ON ORGANIZATIONAL EFFICIENCY

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ABSTRACT

This study is an empirical assessment of the impact of Strategic Management (particularly differentiation strategy) on Organizational Efficiency ,as supported by Glueck (1972) who affirmed that the application of strategic management  will ultimately lead to the efficient allocation of scarce resources in an organization.

A total of 124 were administered to employees of First Inland Bank, Intercontinental Bank, Furniture Mart and Viju Industries Ltd. The data were analyzed using Pearsons Product Moment Correlation Coefficient, Chi-Square and Student Tail-Test. The research instrument was self-structured, closed ended and found to be reliable as the result of the split half reliability test gave a positive correlation of 0.51. three hypotheses and six research questions were analyzed. The result from the tested hypotheses proved that strategic management has a strong impact on organizational efficiency, as the level of organizational efficiency of the understudied companies have been positively impacted by the implementation of strategic management.

CHAPTER ONE

1.0       INTRODUCTION

1.1       BACKGROUND OF THE STUDY

Until recent times, the attainment of organizational efficiency in a business organization, that is, the capacity of an organization to produce desired results with minimum expenditure of time, money personnel and material, - (Smith and Grimm 1987) depended on the intuition of business owners or managers. Such intuitions were usually based on the past experience or “hunch” of owners or Top managers which could bring about a level of organizational efficiency.

Although some of these intuitive decisions worked for sometime. It has been observed that as the organization increases in size and the business environment starts to experience rapid change as a result of the influence of various external factors. Hence, managers intuition is simply not suitable enough to attain organizational efficiency.

It has therefore become imperative for managers and business owners to utilize a systematic approach towards the attainment of organizational efficiency. There is need to attempt to match the resources of the organization to the rapidly changing environment within which its operates. This systematic approach is what is referred to as STRATEGIC MANAGEMENT.

Strategic management is the process of systematically analyzing various opportunities and threats vis-à-vis organizational strengths and weaknesses, formulating and arriving at strategic choices through critical evaluation of alternatives and implementing them to meet the set objectives of the organization – (Lomash and Mishra 2003). The strategic management process facilitate to optimally position a firm in a given dynamic environment.

This study is being carried out to analyze the relationship between the application of strategic management and the efficiency of a business organization, through the use of empirical and measurable data, collected from organizations which operate in today’s dynamic environment.

1.2       STATEMENT OF RESEARCH PROBLEM                                                             

What necessitated this research is the fact that in todays’ dynamic business environment, mere intuition and guesses have become highly inadequate to match the purpose of attaining organizational efficiency. The need for a better systematic and more predictable approach is required. Such approach can only be verified by a study which proves the existence and strength of the relationship between strategic management and organizational efficiency.               

1.3       SCOPE OF THE STUDY

This research will examine strategic management focusing on Differentiation strategy in particular as a tool for organizational efficiency. A comparison will be made between organizations which operate in a common business environment who have attained various levels of organizational efficiency through the application of Differentiation strategy i.e., offering unique products or services to that of the competitors. This comparison should reveal if there is variance in the level of organizational efficiency achievable as a result of the degree of differentiation strategy adopted.     

1.4              RESEARCH QUESTION

The following questions will be answered at the end of this study:-

i)                    Is there a strong relationship between strategic management and organizational efficiency?

ii)                  What effect does Differentiation strategy in particular have on the efficiency of an organization?

iii)                Can Differentiation strategy be responsible for market positioning?

iv)                What kind of effect does the application of differentiation strategy have on employee performance?

v)                  Is the application of differentiation strategy a myth or a reality?

vi)                Is differentiation strategy an applicable tool for increasing profitability level?

1.5       RESEARCH HYPOTHESIS                       

HYPOTHESIS 1: The level of organizational efficiency is in direct proportion with the level of implementation of differentiation strategy in an organization.

HYPOTHESIS 2:  Organizational efficiency maintains a strong positive relationship with Differentiation strategy in todays dynamic environment.

HYPOTHESIS 3:  Differentiation strategy is an applicable tool for increasing profitability level in a business organization.

1.6       OBJECTIVES OF THE STUDY                

The various objectives of the study are:-

i)                    To reveal that organizational efficiency is attainable in todays dynamic environment.

ii)                  To prove that strategic management plays a crucial role in the attainment of organizational efficiency.

iii)                To show empirical evidence of the relationship between differentiation strategy and the factors that determine the efficiency of an organization.              

1.7       SIGNIFICANCE OF THE STUDY 

i)                    This study is significant because it would reveal empirically, the relationship between strategic management and organizational efficiency.

ii)                  It would also reveal to managers, the possibility of attaining organizational efficiency through differentiation strategy.

iii)                It would enable managers to adequately match their limited resources to the dynamic environment.

iv)                This study will reveal how differentiation strategy can serve as a bench mark for the attainment of organizational efficiency.

v)                  Source of information for further research. 

1.8 OPERATIONAL DEFINITION OF TERMS

1.  STRATEGY: A pattern of organizational moves an managerial approaches used to achieve    organizational objectives band pursue organizational mission.

2.  STRATEGIC MANAGEMENT: A set of managerial decisions and actions that

      determines the long-run performance of a corporation.

3.  ORGANIZATIONAL EFFICIENCY : The capacity of an organization, or business to produce desiredresults with a minimum expenditure of resources.

4.  DIFFERENTIATION STRATEGY: the process of distinguishing  the differences of a                             product or offering from others, to make it more attractive to the target market.

5.   MARKET SHARE: Is the percentage of the entire target market that the organization has secured.

6.   PROFITABILITY: The ability of an organization to generate profit.

7. ENVIRONMENT: Is the combination of factors, both internal and external to the organization, which influence the activities of the organization directly. 

8.  CORPORATE STRATEGY: Is the major strategy for the entire organization.

9.  INTUITIVE STRATEGY: A non-systematic strategy that is based on the judgment of business owners or managers.

10. INDEPENDENT VARIABLE: the presumed cause, which in this study is Strategic Management.

11. DEPENDENT VARIABLE: The presumed effect, which in this study is Organizational Efficiency  


1.9 REFERENCES

1. Lomash, Suresh. and Mishra Paul. (2003), Business Policy and Strategic

                          Management, New Delhi: Vikas Publishing.

2. Smith, Gordon and Grimm, Charles (1991). “Management and Organizational

                          Change”, Strategic Management Journal,, Vol. 12, pp 557-562.




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