The Impact Of Corporate Planning And Strategic Management On Performance Of Selected Oil Companies


The Impact Of Corporate Planning And Strategic Management On Performance Of Selected Oil Companies

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  • Name: The Impact Of Corporate Planning And Strategic Management On Performance Of Selected Oil Companies
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CHAPTER ONE INTRODUCTION 1.1     BACKGROUND OF THE STUDY Many of today’s successful business organizations continue to survive because many years ago they offered the right product at the right time. Many critical decisions of the past were made without the benefit of strategic thinking or planning. Whether these decisions were based on wisdom or luck is not important. They resulted in momentum that has carried these organizations to where they are today. However, present-day managers increasingly recognize that wisdom and intuition alone are not parameters to guide the destinies of large organizations in today’s ever-changing environment. Uncertainty, instability and changing environment became the rule rather than the exception. Managers are faced with increased inflation, increased foreign competition, technological obsolescence and changing market environment. Because these changes are occurring so frequently, there is increased pressure on top management to respond in order to respond more accurately timely schedule with a direction or course of action in mind, managers are increasingly turning .to the use of strategic planning or other words corporate planning and management strategy. Corporate or strategic planning is a process that involves the review of market conditions, customer needs, competitive strengths and weakness, socio-political, legal and economic conditions, technological developments and the availability of resources that leads to specific opportunities or threats facing the organization. In practice, the development of strategic planning involves taking information from environment and deciding upon an organizational mission and upon objectives and strategies. Whenever an organization has formulated its mission and developed its objectives, it knows where it wants to go. The next management task is to develop a grand “design” to get there. The grand design constitutes the organizational or management strategies. The role of strategy in strategic planning is to identify the general approaches that the organization will utilize to achieve its organizational objectives. It involves the choice of major directions the organization will take in pursuing its objectives. Strategic planning provides direction for an organization’s missions, objectives and strategies, facilitating the development of plans for each of the organization’s functional areas. A completed strategic plan guides each area in the direction the organization wants to go and allows each functional area to develop objectives, strategies and programs consistent with these goals. Moreover, strategists undertake corporate planning basically to ensure the effectiveness and viability of the organization through the optimal utilization of available human and material resources. Therefore, there is every need for strategic planning efforts in a business organization, especially in a highly competitive business environment like the oil industry. Without strategy, an organization is like a ship without a rudder, going around in circles. It’s like a tramp, it has no direction. Corporate planning and management strategy give best result when undertaken at the top management level by individual (Internal or External) or Committees. The process should be a systematic SWOT analysis that is the firm’s strength, weakness, opportunities and threats. The firm’s internal strengths and weakness determine the rate at which opportunities can be utilized and threats utilized or avoided. The failure of management to take advantage of opportunities as influenced by the external business environment will only means gross inefficiency and low corporate performance. In fact, the organization can be considered to have chosen forced or voluntary liquidation. In Nigeria, the oil industry is made up of exploration, production, oil servicing and contracting companies. The exploration and production activities is mainly handled by giant multi—national companies using corporate planning and strategy frame work as their point of focus. While on other hand, oil servicing/contracting companies are made up of mainly small oil companies. In most cases, corporate planning is less formal and almost a continuous process where the key executives meet frequently to resolve and address strategic issue and outline their next possible point of action. Therefore, this study will examine the degree to which corporate planning and strategy is undertaken in the oil industry and considers the effect it has on organizational performance.

1.2 STATEMENT OF RESEARCH PROBLEM Although corporate planning is relatively new development, it is an evident as stated by Phillip Kotler (1980, 241). The following are the research problem and they include: –        That no organization will thrive simply through reacting to each new development as it occurs. –        Ad—hoc initiative will result to inconsistent actions/decision not planned in advance –        Uncontrolled expenditure from the financial director will put the company into a very tie position (Vulnerable or the sudden resignation of the financial director will put the company in a very tie position). –        Lack of corporate planning and strategy will result in business failure or reduce profitability and growth of business organizations. Specifically, this study therefore will examine if corporate planning and strategy is undertaken by most oil companies and the scope of activities for which corporate planning and strategy is undertaken (market, technology, human resources), elements of corporate planning and strategy in the organization (objective, mission statements, policies, procedures) methods used in corporate planning and strategy (formal/informal, systematic and scientific, tools employed, level of management involved, environmental diagnosis), and finally how results are applied for corporate performance and efficiency.

1.3     OBJECTIVES OF THE STUDY The objective of this study is to: 1        To determine the effect of corporate planning on the performance of an organization. 2        To ascertain the relationship between corporate planning and the achievement of organizational goal. 3     To determine the effect of changes in the business environment on corporate plans. 1.4     RESEARCH QUESTIONS Based on the statement of problem, the following research questions are raised: 1        How does corporate planning affect the performance of your organization? 2.       What impact does corporate planning has on the achievement of organizational goals? 3        How does changes in the business environment affect the corporate plans of your organization.



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