October 13, 2019

Ph.D. Research Proposal

Doctoral Program in Business and Management

Area of study: Organization Management

Improving Organizational Performance through strategic planning: An

experimental Approach to the small businesses of Nashik District

Submitted to:
Dr. Varsha Ainapure

Submitted by: Mitika Mahajan

 Introduction
According to Peter Drucker, “everything that is planned becomes immediate work and
commitment.” Strategic Planning is the application of thought, analysis, imagination
and judgment (Drucker, 1986). Strategic Planning is aimed to improve the
organization’s performance in terms of employee performance and financial
performance.
The small and Medium Scale industry is the backbone of any economy. According to
the data of the ministry of commerce, Small and Medium Enterprises contribute 37%
to the GDP of India and 43% of total exports are contributed by the SMEs of India.
SMEs of India provide employment to 117 million people across various sectors, and
constitutes 40% of the total workforce, which reflects the potential of SMEs to drive
economic growth (MSME’s most attractive segment in commercial credit with fastest
growth, low NPAs: Report, 2018).

Brief Literature Review

Strategic planning is the process of making or revising action plans based on external
environment analysis and internal strengths and weakness analysis (Berry, 1998). Small
organizations also should work on strategic planning as the companies are more
vulnerable to the external environment changes than the large organizations (Welsh &
White, 1981).
Organizational performance refers to measuring actual outputs against the intended
outputs, and it includes three areas of firm outcomes, financial performance, product-
market performance, and shareholder value (Richard, Devinney, Yip, & Johnson,
2009). The research related to organizational performance must include the issues
related to the nature of performance appropriate to the research context and nature of
measurement (Richard, Devinney, Yip, & Johnson, 2009).
The association of planning activity and organizational performance is evident in small
firms, from the longitudinal database of 2,956 businesses over a four-year period
(Gibson & Cassar, 2005). A logistical regression analysis using a sample of 290 firms
supports that there is a strong and significant influence of formalized planning process
on performance in growing small Austrian enterprises (Kraus, Harms, & Schwarz,
2006). The empirical research during the years 2007-2012, the Small and Medium
Enterprises of Czech and Slovak Republic also shown the positive relationships
between strategic planning and business performance (Karel, Adam, & Radomír, 2013).
According to the study conducted by Taiwo and Idunnu (2007), strategic planning
enhances better organizational performance which helps the organizations in long term
survival. The research studies state that there is positive relationship between strategic
planning and financial performance of the organization (Glaister & Falshaw, 1999), but
the strength of the relationship is a controversial issue since some meta-analysis shows
there is small but significant relationship between formal planning and organizational
performance (Shrader, Chacko, Herrmann, & Mulford, 2004). Another study suggests
that there is a small difference between the organizational performance of the
organizations having formal strategic planning and informal strategic planning (Mosoti
& Kamau, 2014).

Problem Statement
The research to define the relationship between strategic planning and organizational
performance is based on a conceptual research, where the results are derived from the
available data or through collecting information from the managers. The extent of the
correlation between strategic planning and organizational performance is not
quantified. This research is to measure and quantify the organizational performance
(financial) enhancement, i.e. how much profit increases after implementing strategic
planning in specific organizations.

Objectives of the study

1. To measure the improvement in the financial performance of firms after
implementing formal strategic planning.
2. To identify the impact of strategic planning on employee performance.
3. To identify the mediating factors that impact the execution of strategic planning.

Proposed Research Methodology

For research purposes, the selected organizations will be divided into two groups.
1. Experimental group
2. Control group.
The Experiment group organizations will receive a consultation from the researcher,
while the control groups will not receive any consultation from the researcher. The
experiment will be conducted for one financial year to measure the efficacy of strategic
planning on the organization’s financial performance and employee performance.

Hypothesis
1. Strategic planning and financial performance
H0 = Strategic planning improves the financial performance of small organizations.
Ha = Strategic Planning does not improve the financial performance of small
organizations.
2. Strategic planning and employee performance
H0 = Strategic planning improves employee performance of small organizations.
Ha = Strategic Planning does not improve employee performance of small
organizations.

Sample Size to conduct the research

𝑁∗𝑋
Sample Size: n = 𝑋+𝑁−1 (Daniel, 1999)
𝑧 2 ∗𝑝∗(1−𝑝)
X= 𝑒2

Where N = Population Size = 712 (Manufacturer of Food Products and Beverages)

e = Margin of error (5%)
p = estimated proportion of the population which has the attribute in the research
(0.5)
q = 1-p (0.5)
z = The value for the given confidence interval (95% confidence level z-score
is 1.96)
Minimum Sample size = 116

Data Collection Method

Primary Data: Structured interviews with the experts, and managers to identify the
factors to define financial performance and employee performance. Data will be
collected for the field experiment group using observations, and interviews.
Secondary data: To measure the improvements in financial and employee performance,
the financial data from balance sheets, and performance appraisals will be collected.
 Impact of the research
Small businesses generally do not seek help from professional consultants, which limits
the growth potential of the firms. The research will help small businesses to plan
strategically and increase the output of the organization and expand the business which
will help to generate more employment in the selected area.

Limitation of the study

The study will be conducted in a specific geographic region and specific industry,
which may not be applicable to all the industries in India.

Scope for further study

The study can be conducted for different small organizations of different manufacturing
and service industries of India, which will help small organizations to increase the
capacity of their operations and generate more output.

Expected findings
The researcher expects that the implementation of strategic planning will increase 5 to
10 percent of the net profit of the organizations.
Works Cited
Berry, M. (1998). Strategic planning in small high tech companies. Long Range
Planning, 455-466.
Daniel, W. (1999). Biostatistics: A Foundation for Analysis in the Health Sciences 7th
edition. New York: John Wiley & Sons.
Drucker, P. (1986). Management Tasks, Responsibilities, Practices. New York, United
States: Truman Talley Books.
Gibson, B., & Cassar, G. (2005). Longitudinal Analysis of Relationships Between
Planning and Performance in Small Firms. Small Business Economics, 207-222.
Glaister, K., & Falshaw, R. (1999). Strategic planning: still going strong? Long Range
Planning, 107-116.
Karel, S., Adam, P., & Radomír, P. (2013). Strategic Planning and Business
Performance of Micro, Small and Medium-Sized Enterprises. Journal of
Competitiveness, 57-72.
Kraus, S., Harms, R., & Schwarz, E. J. (2006). Strategic planning in smaller enterprises-
new empirical findings. Management Research News, 334-344.
Mosoti, Z., & Kamau, M. E. (2014). Assessing the Implication of Strategic Planning
On Performance Of Small Sized Organizations: A Case Study Of Small
Enterprises in Thika Town. Quest Journals Journal of Research in Business and
Management, 01-13.
MSME’s most attractive segment in commercial credit with the fastest growth, low
NPAs: Report. (2018, March 12). Retrieved from Economic Times:
https://economictimes.indiatimes.com/small-biz/sme-sector/sidbi-and-
transunion-cibil-launch-msme-pulse/articleshow/63269240.cms?from=mdr
Richard, P. J., Devinney, T. M., Yip, G. S., & Johnson, G. (2009). Measuring
Organizational Performance: Towards Methodological Best Practice. Journal
of Management, Vol. 35, No. 3, 718-804.
Shrader, C. B., Chacko, T. I., Herrmann, P., & Mulford, C. L. (2004). Planning and
firm performance: effects of multiple planning activities and technology policy.
International Journal of Management and Decision Making, 171.
Welsh, J., & White, J. (1981, July). A Small Business Is Not a Little Big Business.
Retrieved from Harvard Business Review: https://hbr.org/1981/07/a-small-
business-is-not-a-little-big-business