7Planning: The Key to Enhanced Performance?

Strategy is one of the most over used words in management circles. The fixation with strategy singularly rests on the belief that it has a positive impact on organizational performance. Therefore, not unsurprisingly, many researchers have tested this assumption. The results to date are mixed. Some studies have shown a positive relationship between strategy and performance, while other studies have failed to find any significant relationship. Some commentators have identified the deployment of widely differing strategy constructs for the observed inconsistencies in the relationship between strategy and performance. In this chapter, we report the outcomes of a study designed to assess the perceived impact of the factors used to craft strategy on a wide range of performance indicators. The results show that a positive relationship exists between a number of the factors used in crafting strategy and some dimensions of performance. In particular, the analysis indicates that emphasis on: internal orientation, external orientation, departmental operation, resources for strategy, systems capability/creativity, and strategy as a control mechanism, are associated with the following performance measures: learning/growth, meeting customer demands and providing quality goods on time. We also examined the perceived operating environment of the SMEs surveyed. As a result, two basic environment types emerged. First, an operating environment characterized by product and process change and second, an operating environment characterized by increasing competition. The analysis indicates that there is no significant difference between the emphasis given to strategic planning by firms operating in either environment type.