IMPACT OF STRATEGIC MANAGEMENT ON GROWTH AND SURVIVAL OF AN ORGANIZATION (A CASE STUDY OF UNION BANK PLC)
This research is focused on impact of strategic management on growth and survival of an organization, using Union Bank of Nigeira Plc as a case study. The project is in chapters, from one to five. Literature review like the definition of strategic management, concept of strategic management, competition of an banking industry, the challenges and operating environment of an organization, fraud in banking industry. The bank business environment and the strategy formulation in bank. The problem militating against strategy planning in achieving bank growth and survival. For effective research work two research methods were used in collection of data which are primary and secondary sources. The limitation of the research study was also discussed. Data’s were analyzed using three methods which are simple average, weighted average/ means, and chi-square. The research project ended by summarizing the entire project work, conclusions and recommendations were given, suggestion for further studies and the bibliography to the research work.
TABLE OF CONTENT
Table of Contents vi - viii
CHAPTER ONE: BACKGROUND OF THE STUDY
1.0 Background of the study 1
1.1 Statement of the problem 2
1.2 Research Questions 3
1.3 Research hypothesis 4
1.4 Purpose of study 4
1.5 Significance of the study 5
1.6 The scope of the study 5
1.7 Definition of terms 5
CHAPTER TWO: LITERATURE REVIEW
2.1 Introduction 7
2.2 Definition of bank growth 8
2.3 Concept of Strategic Management 10
2.4 Competition in Banking Industry 12
2.5 Challenges Facing Banking Industry 14
2.6 Bank Business Environment 17
2.7 Strategy Formulation in Banks 18
2.8 Strategic Option to Banks 23
2.9 Relevance of Strategic Management to Banking 24
2.10 Problems Militating Against Strategic Planning In
Achieving Banks Growth and Survival 27
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Introduction 29
3.2 Research Design 29
3.3 Restatement of Research Questions 30
3.4 Restatement of Research Hypotheses 30
3.5 Data Collection Methods 30
3.6 Sampling Plan 32
3.7 Research Approach 32
3.8 Limitation of the Study 33
3.9 Methods of Data Analysis 33
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS OF FINDINGS
4.0 Introduction 35
4.1 Respondents Characteristic and Classification 35
4.2 Testing of Hypothesis 45
4.3 Analysis of Data 47
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION
5.0 Summary of Major Finding 53
5.2 Conclusion 54
5.3 Recommendations 55
5.4 Suggestion for Further Studies 57
1.0 BACKGROUND OF THE STUDY
Banks as a financial institution occupy a central position in various economic systems. They are perhaps, the most efficient tool of economic development; never the less they are regarded as the element that dictates the economy with respect to variations in time and space.
The Nigerian environment is enriched with mineral and agricultural resources. The country is blessed with agricultural resources. Like wise, the country is blessed with adequate supply of man power. These resources if tapped provide attractive prospects to businessmen and investors thus, creating an avenue for Nigeria to become a leading agricultural and industrial nation in the world.
The Nigerian economy experienced a rapid growth in the early seventies (70’s) especially during the era of oil boom. The gross domestic product (GDP) was estimated to have increased in real terms at an average of 9%.
However, the decline in oil revenue had led to country into pathetic recession/ naira was seen as overhauled and the economy approved generally distorted. Consequently, there was a high level of inflation and unemployment as well as low industrial output amidst low capacity utilization.
In 1986, the government intervened to stream the economy by introducing the structural adjustment programme (SAP). The programme among other things spearheaded the deregulation of the economy there by creating more flexibility enterprise. Since the introduction of structural adjustment programme. It has been observed that the economy is still beset with problems which adverse implications for suitable economy growth. These problems among others include:
a. A low growth of output
b. A persistent depreciation of naira exchange rate and its inflationary effect on prices
c. High rate of unemployment.
d. Excessive high borrowing rate which discourages productive investment.
The government has stated its determination to do away the problems and return the economy to a part of sustained and stable growth.
Consequently, it would not hesitate to issue drastic direction and policies as long as they fall in line. The implication of this is that business organizations including banks must be able to maintain flexible structure and remain on their toes, in order to exploit or adapt to new dimension that dominate in the economy.
1.1 STATEMENT OF THE PROBLEM
Strategic management to a large extent affects Nigerian banking system either positively or negatively. It is therefore the responsibility of a bank to plan its strategic management on growth and how to survive the test of the time.
It is quite obvious that days of limited entry exclusive product market and stationary protection are things of the past that does not exist in the era of skiff competition and more aggressive banking. Only those banks that are able to cope with the completion and dynamic of the prevailing environment wills survive. It is only through strategic management that threats and challenges that are presented by complexities of the banking environment can be checked and considering the nature of the Nigerian economy and the frequency of fiscal and monetary policy change as well as legislation whether these have any rapid growth and survival of banking performance. Most banks have been distressed today due to inability of the management to put in place strategies to solidify the position of the bank. In view of the above, several problems have emanated which have threatened the existence of several banks. Some of these problems are as follows:
a. Fall in the profit of the bank
b. Liquidity problem
c. Frequent changes of top management
d. Increased incidence of fraud and robbery attack
e. Frequent changes of fiscal and monetary policies
f. Finally, most banks plan their strategies on their needs and not on that of their customers.
1.2 RESEARCH QUESTIONS
The study shall proffer solution to the following research questions.
a. Do banks need to formulate strategic planning in order to accomplish its goals and objectives?
b. How relevant is strategic management to banking sector performance evaluation?
c. What are the mechanisms for strategic management?
d. Does strategic management enhance bank growth?
e. Does strategic management aid in attaining job satisfaction?
1.3 RESEARCH HYPOTHESIS
i. Ho: Strategic planning does not improve banks profitability
HI: Strategic planning improve banks profitability
ii. Ho: Strategic management does not enhance bank’s growth and survival.
Hi: Strategic management enhances bank’s growth and survival.
iii. Ho: Strategic management has no impact on job satisfaction.
HI: Strategic management has impact on job satisfaction.
1.4 PURPOSE OF STUDY
The main purpose of the study is to examine the impact of strategic management on growth and survival of an organization in this era of stiff competition, also to determine the following:
a. To determine whether banks needs to formulate strategic planning in order to accomplish its goals and objectives.
b. To determine how relevant is strategic management to the growth and survival of an organization.
c. To determine if strategic management enhances banks growth and survival.
d. To know the mechanisms for strategic management.
e. To determine if strategic management help in attaining job satisfaction.
Finally, the study shall proffer solutions to the problems encountered and recommend alternative strategies.
1.5 SIGNIFICANCE OF THE STUDY
As a result of economic recession, which has made several banks in the country to close down, the study had concerned itself with those factors which should be viewed in a situation when threats and opportunities present themselves to bank suddenly with the frequency of fiscal and monetary policy changes as well as legislation, the study shall view the growth and survival of this on bank performance. Therefore, this study will be important to the banking industry. Also recommendations will aid banks to increase its growth and profitability in the competitive environment.
1.6 THE SCOPE OF THE STUDY
Basically, there are three levels in decision making hierarchy of business firms. These are strategic level, tactical level and operational level. The study shall be limited to strategic amendment at a corporate levels, with union bank of Nigeria Plc (Head Office) as a case study.
1.7 DEFINITION OF TERMS
There are some terms used in course of writing this research work that need definition. These key concepts in the research work may mean other things in the ordinary sense, but an attempts has been made to interpret them as used in this research work:
a. Banking environment: According to Bassey, G .E (2002), it is the macro – framework within which the banking industry operates. It consist of the totality of factors controllable and incontrollable industry to which banks have no direct control on them, examples are industry, government, technology etc.
b. Performance: It is a term used in form of terminology to represent positive economic contribution and social well-being incurring less cost.
c. Planning: It involves the establishment of strategies to achieve a set objectives of a given firm.
d. Products: A product is a set of intangible physical attributes assembled in an identifiable form. Each product carries a commonly understood description name product attributes apparel to customers or their buying patterns.
e. Services: Services is Stanton, W.J (2001) define it as those separating identifiable essential intangible activities that provide want satisfaction and that are not necessarily tied to the sale of a product or another service.
f. Strategies: According to Ituwe, C.O (2006), they are carefully chosen plans of action which are geared towards the attainment of set target. Characteristically strategies define the resources method which are considered essential for reaching set target, usually this will involve ordering of priorities in the use of resources. In other words, strategies is a process of allocating resources.
g. Training Strategy: This has to do with an appropriate move by a firm at the right time to move into a target market to obtain profitability for the services to be rendered.
h. Top management: The represent the decision makers of an organization.
i. Corporate planning: According to Taylor and Sparkes (2007), corporate planning is a systematic exercise in determining the total resources of an organization for the achievement of its qualified objectives within a specific time frame..