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The usefulness of strategic planning in a turbulent economic environment: A case of

Zimbabwe during the period 2007-2009

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DOI: 10.1108/17515631311295686

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 Business Strategy Series
The usefulness of strategic planning in a turbulent economic environment: a case of Zimbabwe during the period
2007-2009
Tsitsi Mufudza, Mirriam Jengeta, Precious Hove,
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Tsitsi Mufudza, Mirriam Jengeta, Precious Hove, (2013) "The usefulness of strategic planning in a turbulent economic
environment: a case of Zimbabwe during the period 2007‐2009", Business Strategy Series, Vol. 14 Issue: 1, pp.24-29, https://
doi.org/10.1108/17515631311295686
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 The usefulness of strategic planning in a
turbulent economic environment: a case of
Zimbabwe during the period 2007-2009
Tsitsi Mufudza, Mirriam Jengeta and Precious Hove
Downloaded by CHINHOYI UNIVERSITY OF TECHNOLOGY LIBRARY At 07:24 01 February 2018 (PT)
Tsitsi Mufudza, Mirriam
Jengeta and Precious Hove
are all based in Business
Management and
Entrepreneurship, Chinhoyi
University of Science and
Technology, Chinhoyi,
Zimbabwe.
The authors give many thanks
to the Management of Chinhoyi
University of Technology for
their encouragement; their
families for their moral support
and finally to the almighty God
for the enablement.
PAGE 24 j BUSINESS STRATEGY SERIES
Introduction: the Zimbabwean situation during the period 2007-2009
The period 2007-2009 went down as a historic one for both good and bad reasons on the
economic front, as the country reached the peak of its economic meltdown. Rampant inflation
and the collapse of the economy severely devalued the Zimbabwean currency. This resulted in
many organizations using the US dollar, Euro, Pound, South African Rand, Botswana Pula
among others. Inflation rate according to the Reserve Bank of Zimbabwe (RBZ) reached a
record of 3,714 percent in April 2007 (Shaw, 2007). On 13 July 2007, the Zimbabwean
government temporarily stopped publishing (official) inflation figures. The Central Statistical
Office Chief Statistician announced that it would be impossible to calculate the inflation rate any
further. This was so, mainly because of the lack of basic goods and subsequent lack of
information from which to calculate the rates. Furthermore, most computers had insufficient
number of digits and software. According to the Reserve bank of Zimbabwe, the inflation rate
reached 66,212.3 percent by December 2007 (Mount Holyoke College, 2007) and the unofficial
rate was Z$7.1 million to the US$1 (Mount Holyoke College, 2007). The Central Statistical
Office’s estimated inflation reached 6.5 quintillion by December 2008 (Makochekanwa, 2008).
The major problem associated with such figures was that most people, particularly the aged
ones, found it difficult not only to count, but to distinguish the notes. This hyperinflation was
caused primarily by the Reserve Bank of Zimbabwe’s choice to increase the money supply.
Initially the government was reluctant to allow business people to trade in other currencies, but
due to a widespread rejection of the devalued currency and the insurgence of the parallel
market, companies and individuals were permitted to transact domestic business in other
currencies, mainly the US dollar and the South African Rand. As a result, the Zimbabwean
economy has undergone dollarization and the Zimbabwean dollar has fallen out. Any measures
to address the inflation problem in the country seemed to create more problems, which had far
reaching effects on the business sector. Many policies were passed in a bid to solve the
economic woes and businesses were not given much time to adjust to the policies as they were
continually added. For instance, price controls were introduced on 25 June 2007 and business
people were forced to revert back to the prices of 18 June, which was a reduction of
approximately 50 percent. Those who refused to comply had their goods seized and sold by
the state (McGreal, 2007). As a result of price controls, most shops were forced to close down,
as the prices they were forced to sell at were too far below the cost of acquiring the goods. Daily
minimum cash withdrawals were also introduced to reduce money in circulation and
businesses’ sales decreased drastically as the people had no cash to purchase goods and
services. Businesses resorted to Real Time Gross Settlement (RTGS) as a way of effecting
transactions, but these were soon stopped as it continued to fuel inflation.
A very interesting turn around activity in the finance sector was the ‘‘burning’’ of money. This
scenario meant that depositors would deposit US dollar currency in their accounts in
exchange for trillions of Zimbabwean dollars, which they also could exchange for foreign
currency with other depositors. This created another very big problem for high demand for
cash resulting in cash shortages and subsequently restricted minimum cash withdrawals.
j VOL. 14 NO. 1 2013, pp. 24-29, Q Emerald Group Publishing Limited, ISSN 1751-5637 DOI 10.1108/17515631311295686
 These restrictions in cash withdrawals caused price hikes. Prices for goods were changing on
a daily basis in 2008. Quotations for goods procurement were valid for one day and eventually
everything was to be purchased on cash basis only. Those who had access to foreign
currency acquired for themselves vast properties since some were willing to give away their
hard earned properties such as beasts for mealie-meal; houses for a given number of months’
supply of basic commodities. This was barter trade in full swing and it was even extended to
salaries and rentals, as the Zimbabwean dollar was shunned by most people.
Shortage of basic commodities was one other major challenge faced by Zimbabweans
during the period 2007 to early 2009. This forced major retail outlets to close since there
wasn’t anything on the shelves. Foreign brands were also introduced in the informal sector
retail outlets, which were now mushrooming. That also saw the insurgence of black markets,
with anyone selling anything by the street corners. To date, these foreign brands remain a
major competitor on the domestic market, with some major players in the retail sector calling
for the buy-Zimbabwe campaign.
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Given this scenario, one may wonder how business strategists could formulate and execute
strategies in such a turbulent economic environment. Strategic planning is a mechanism for
driving performance by establishing consensus around ambition and long-term targets and
by inspiring organizational members through creating a vision and a sense of mission (Grant,
2003). Cole (2001) views this as a process directed by top management to determine the
fundamental aims or goals of the organization and to ensure a range of decisions which allow
for the achievement of those aims and goals in the long term, whilst providing for adaptive
responses in the shorter term. From the definitions it shows that the strategic planning process
involves setting long-term goals, and allocating resources to attain those goals. Corporate
strategy, according to Thompson and Strickland (2010), consists of the competitive moves
and business approaches that managers employ to grow the business. Under turbulent
conditions however, businesses do not aim to grow, but to survive. For instance, in Zimbabwe
with the hyperinflation experienced during the period 2007-2009, coupled with shortages of
basic commodities and foreign currency it was very difficult for businesses to aim to grow,
attract and please customers, compete successfully, conduct operations and achieve
targeted levels of organizational performance. In such economic situations, companies that
do well are those that do not plan formally but do according to what is demanded by the
situation. Welch and Welch (2005, p. 166); cited in Linn (2008) pointed out that if you want to
win, when it comes to strategy, ponder less and do more. However, this is against Kraus et al.’s
(2006) view that formalized planning increases performance.
The strategic planning process involves five stages, which are:
1. formulation of the vision, mission and objectives;
2. environmental scanning;
3. strategy formulation;
4. strategy implementation; and
5. evaluation and control.
The researchers will analyze these aspects separately to establish their feasibility under the
turbulent economic environment experienced in Zimbabwe during the period 2008-2009.

Vision, mission and objectives

The first stage of a strategic planning process is to come up with a vision, mission and
objectives:
A vision is a goal that is massively inspiring, overarching and long term. It is a dream, an
aspiration and an ambition. A mission statement encompasses the purpose of the company as
well as the basis of competition and competitive advantage. Objectives are used to
operationalize the mission statement, i.e. they help to provide guidance on how the
organization can fulfil or move towards the mission and vision (Dess and Lumpkin, 2003).

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VOL. 14 NO. 1 2013 BUSINESS STRATEGY SERIES PAGE 25
 In a way, a vision is an image of the future that a company aspires to create. For instance, a
company’s vision can be; ‘‘To be the largest retail supermarket in Zimbabwe’’; or, ‘‘To be a
centre of excellence in innovation and wealth creation’’. However, given the Zimbabwean
scenario, during the period 2007-2009, such dreams were difficult to pursue given the
uncertainty that characterized the environment. The question was how feasible it could be
for one to become the largest retail supermarket in Zimbabwean given that there were
shortages of basic commodities.
A mission statement clearly outlines what an organization does, for who it does it and how it
does it. It explains why an organization exists, for instance, to produce innovative graduates,
create knowledge, enhance entrepreneurship and provide community service through
quality teaching, training and technologically oriented research (Chinhoyi University of
Technology Strategic Plan 2006-2015). During the period under review, producing
innovative graduates and enhancing entrepreneurship through quality teaching was
impossible due to non-existence of resources including human capital. Many mission
statements were not operational during the same period.
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Objectives are ends that can be reasonably achieved within a specified timeframe and with
available resources. It was a nightmare to establish ends to be achieved in the period under
review due to uncertainty that characterized the environment coupled with the unavailability
of the resources. In coming up with objectives, organizational leaders are guided by the
organization’s vision to define measurable financial and strategic objectives. Financial
objectives involve measures such as sales targets and earnings growth. Strategic objectives
are related to the organization’s business position, and may include measures such as
market share and reputation. In 2007-2009, sales targets and earnings were difficult to
project and it was also difficult to set strategic objectives in terms of market share and
reputation, since business was at stand still.

Environmental scanning
This includes the following components:
B internal analysis of the firm;
B analysis of the firm’s industry; and
B macro environmental analysis.
The internal analysis can identify the organization’s strengths and weaknesses and the
external analysis reveals opportunities and threats. The industry analysis helps the
organization to assess the nature and intensity of competition in the industry in which it is
operating. The awareness and understanding of the external operating environment is of the
utmost importance to organizations, to enable business leaders to align their organization
strategies with the external environmental conditions (Betties and Hitt, 1995; cited in
O’Regan et al., 2007). Gavetti et al. (2005) suggested that strategy making is most critical in
times of change, and in unfamiliar environments. Contrary to the above, the Zimbabwean
situation was very tricky because most business people were overtaken by events, since the
pace at which changes were taking place were too enormous. Although Zimbabwean
business people were able to scan the environment, coming up with meaningful strategies,
to sustain their businesses was very difficult, as evidenced by closure of many businesses.
In such economic situations, business people do not formally plan but react to situations.

Strategy formulation
Using the information from the environmental scan, the organization should match its
strengths to the opportunities that it had identified while addressing its weaknesses and
external threats.
According to Kissinger (1994) strategy formulation is critical in order to prevent tactical skill
from dissipating into a random thrashing about. However, Linn (2007) argues that a plan that
is well reasoned strategically does not require the wasting of a great deal of a library’s
valuable assets, which is the time of its librarians. In a turbulent environment where changes

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PAGE 26 BUSINESS STRATEGY SERIES VOL. 14 NO. 1 2013
 are occurring every day it becomes a waste of time to sit down and formulate strategies.
According to Linn (2008) the more people spend on strategic formulation the more time
spend and the more resources are used up. This shows that in turbulent times the time spent
planning can actually be used to manage the environment and more output obtained. In
Zimbabwe during the time under study, there was now a need to meet every day in the
morning to find out which strategy was to be used that particular day. It was not guaranteed
that the strategy used today would be used tomorrow, hence, the idea of sitting down to
formulate the strategy to be used by the organization for a long period was no longer
feasible. Furthermore, some strategies became irrelevant before implementation due to the
rapid changes taking place in the economy:
When Collin Powell commanded the Army, he had a rule-of-thumb concerning the timing of how
he made his plans. He preferred to make his judgment when he had about 60% of the possible
information. He thought that making up his mind much sooner would be too risky and that by
waiting for much more information to be gathered his opportunity might evaporate (McNeilly,
2001).
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This is equally true in a hyper inflationary environment as when management might want to
sit down and draft the strategy formulation at that time opportunities would be lost as well.
According to McNeilly (2001) needed information takes little time, and it’s only the pieces
and bits of information that takes time and wastes it. Linn (2008) says that this often leads to
missing opportunities and wasting resources trying to find the last bits of information when
the vast of what is needed is already known.

Strategy implementation
According to Turki (2008) the implementation step creates a framework to execute the
selected strategy via a series of programs and specific recommendations. The selected
strategy is implemented by means of programs, budgets and procedures. Implementation
involves organization of the organization’s resources and motivation of the staff to achieve
objectives. It is an internal operation.
According to Turki (2008) a comprehensive roadmap for implementation will be constructed.
This is only true when the environment is stable. For example, in Zimbabwe, during the
period under study, after coming up with the comprehensive roadmap, it was not surprising
that implementation was almost impossible. For instance, it was very common for price
controls to be announced in the morning and all companies were required to follow the
prices gazetted. In such a scenario it became very difficult to follow a comprehensive plan,
and there would be need to change and find the best strategy that suits that particular
situation.
According to Linn (2008) great companies stick to a strategy and slowly build momentum
towards fulfilling their goals. This shows that most organizations would continue with the laid
out strategy, despite the organization’s goal, which is usually to make profits. Companies
operating under a turbulent environment need to concentrate on fulfilling the ultimate goal of
the organization if they need to survive. A survey showed that in Zimbabwe during the period
under study most companies were changing their strategies at an average of four times a
week, due to the external forces, which were changing almost on a daily basis.

Evaluation and control

Implementation of the strategy must be monitored and adjustments made as needed.
Evaluation and control consist of the following steps:
B define parameters to be measured;
B define target values for those parameters;
B perform measurements;
B compare measured results to the pre-defined standards; and
B make necessary changes.

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VOL. 14 NO. 1 2013 BUSINESS STRATEGY SERIES PAGE 27
 Evaluation and control is a continuous process, and the above steps are not a once off event.
This is because time and conditions change and also events unfold. In Zimbabwe during the
period under study, there was no time to do all the above steps, as time was not always on
the side of the business people. According to Turki (2008) at this stage there is a need to
match the gaps between the current state and the future state. However, this is only true
when there are likely to be no changes in the economy, and where it is possible to match the
future economy with the current economy. In a turbulent environment it is very difficult to
compare today and tomorrow, as tomorrow will always prevail a completely different
environment, which cannot be matched with any economic situation experienced before.
In a turbulent environment by the time the organization reaches the last stage in the strategic
plan, a lot would have happened, such that modifying the strategy would not be enough but
probably to start again the strategic process. According to Linn (2007) there is need to
evaluate performance constantly as this will help keep track of the changes happening
everyday. This is certainly true in an environment that changes rapidly. According to the
survey conducted, most business people were of the opinion that during the time under
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study it was not feasible to evaluate performance, as there would be no yardstick to measure
the performance. The strategies used to achieve the same results were totally different as
each day brought its own challenge.

Conclusion
This paper tried to highlight the feasibility of strategic planning in a turbulent environment. It
was noted that although it is important for an organization to have a strategic plan in times of
hyperinflation, it would be very difficult to formulate and implement the plan in such times.
This paper focused on every step of the strategic plan and tried to argue that each step
becomes irrelevant in times when there are rapid changes in the economy. It was noted that
strategy formulation and implementation are time-consuming and resource wasting, which
causes most strategies formulated to become obsolete before being implemented. Different
economic environments demand different approaches to strategic planning. Some of the
strategic planning stages however, remain vital in all situations, for example, scanning the
environment, as this enables the organization to quickly adapt to change.

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Further reading
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Central Statistics Office Zimbabwe (2007), Harare, Publications, Chinhoyi University of Technology
Strategic Plan 2006-2015.
Central Statistics Office Zimbabwe (2008), Harare, Publications, Chinhoyi University of Technology
Strategic Plan 2006-2015.

About the authors

Tsitsi Mufudza is a Lecturer at Chinhoyi University of Science and Technology in the
Department of Business Management and Entrepreneurship, and she holds a Master’s of
Business Administration. She lectures in the areas of business and its environment and
strategic management. Tsitsi Mufudza is the corresponding author and can be contacted at:
tsimufudza@gmail.com
Mirriam Jengeta is a Lecturer at Chinhoyi University of Science and Technology in the
Department of Business Management and Entrepreneurship and she holds a Master’s in
Strategic Management. She lectures in Principles of Management.
Precious Hove is a Lecturer at Chinhoyi University of Science and Technology in the
Department of Business Management and Entrepreneurship, and she holds a Master’s in
Strategic Management. She lectures in the subject areas of human resources management
and new product development.

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VOL. 14 NO. 1 2013 BUSINESS STRATEGY SERIES PAGE 29
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