The main purpose of this research study is to evaluate the impact of strategic planning on the financial performance of Dallah Albaraka Company. The company is one that does businesses in different industries within the Kingdom of Saudi Arabia (KSA). However, the focus of this study will be only on its financial business within the finance sector. The focus of the study will be to determine whether having and implementing a strategic plan can help a company to improve its financial performance, with the company being a case study. The questions for the study are 1) Is the strategic planning at Dallah Albaraka operationally efficient? 2) What is the effect of strategic planning on the corporate performance of Dallah Albaraka Company? 3) How do the implementation processes of strategic plans affect the financial goals of every department within Dallah Albaraka Company? Ten participants will be selected from among the top officials of the company to participate in a series of interviews, which will be spread over five days. Qualitative research design and methods will be used in the study, based on the interpretivism paradigm. The data to be used in the study will be collected through structured interviews. A thematic analysis method will be used to analyze the data, mainly because it is the simplest to use and is the most used method of analyzing qualitative data. The analysis process will include pinpointing, examination, and recordings of the various patterns that will be emerging from within the data. The emerging themes will be associated with particular research questions and the outcomes will be presented narratively.
Abdallah and Langley (2014) have described a strategic plan as a document that is used by a corporate organization to communicate its goals, the appropriate actions that are needed to achieve those goals and all other crucial elements that are developed in the planning process. Put differently, Abraham (2012) has defined a strategic plan a formalized roadmap that explains how a corporate organization implements its business strategies to achieve its set goals and objectives. Therefore, strategic planning can be defined as an organization’s process of defining its strategic goals or objectives, and allocating its resources appropriately in order to achieve the goals and objectives.
Both strategic planning and financial performance are the focus of this research study. In this case, Thompson and Martin (2005) and Edwards (2014) have defined financial performance as the degree to which a corporate organization is achieving or has achieved its financial objectives. In other words, it includes all processes that are used to measure the results and outcomes of an organization’s policies and operations in terms of money; financial performance is used to measure an organization’s overall financial health within a given period. Therefore, this study is meant to study the impact of strategic planning on the financial performance of a company.
The design and implementation entail the need to translate chosen strategies into organizational actions. In this regard, its proper implementation is expected to result in the improvement of the organizational financial performance. However, not much research has been done to establish whether organizations implementing strategic plans, specifically Dallah Albaraka, often realize increased financial performance as a result. Therefore, this study will focus on determining whether the implementation of strategic planning in the company yields increased financial performance for the periods that the plans have been implemented.
- To evaluate the effectiveness of planned strategies at Dallah Albaraka. The effectiveness of the planned strategies will be measured by the examination of the productivity and cost effectiveness, which will be measured as a ratio of outputs per inputs, measured in monetary terms.
- To find out the effect of strategic planning on the overall financial performance of Dallah Albaraka Company.
- To evaluate the effect of strategic planning on the financial goals of every department within Dallah Albaraka Company.
- Are planned strategies at Dallah Albaraka effective?
- What is the effect of strategic planning on the overall financial performance of performance of Dallah Albaraka Company?
- How do the implementation processes of strategic plans affect the financial goals of every department within Dallah Albaraka Company?
Critical Literature Review
Ismail, Poolton and Sharifi (2011) have viewed strategic planning as an attempt by companies to prepare for all eventualities by abstraction and the dynamics of the business environment. According to the researchers, strategic planning does not provide visions. More specifically, it is a plan that is used by corporate organizations to specify the fundamental conditions, factors and scope for future business undertakings. In this regard, the researchers have emphasized that a strategic plan is one of the crucial tools for strategic management, especially in the area of financial planning and implementation. The arguments of these researchers are relevant to the present study because they have described the scope of a strategic plan and planning process, which is important in terms of studying the relationship it has with financial performance. However, the researchers have not discussed whether there are some external and internal factors that may influence the effectiveness of strategic plans, particularly with respect to the financial performance of an organization.
In the opinion of Crittenden et al. (2015), strategic planning is an integral approach to innovation and new product building in a way that can enhance organizational growth and performance generally. According to Smith (2015), due to the dynamics of the external business environment, strategic changes resulting from planning processes are usually necessary for a corporate organization to adapt, grow financially and even survive in a volatile market, a position that researchers, such as Shivakumar (2014) and Ramaswamy (2013), have supported through studies that have advanced similar arguments.
Nonetheless, even though the foregoing researchers have underscored the importance of strategic planning in a corporate organization, others have advanced contradictory views. For instance, Treen (2012) and Ferrell (2010) have contended that strategic plans may be properly made, but the effectiveness of the implementation process affects the ways in which it influences the performance of an organization, especially in the areas of their finances. O’Connor and O’Conner (2015) have argued that strategic plans fail due to such factors as the failure to select the right people serve in strategic teams, strategic plans fail to ignite the commitment and passion of employees, the failure of companies to gather external market intelligence to incorporate into the plans, and attempting to execute many strategies simultaneously. Kivland and King (2015) and Ots and Nyilasy (2015) added that such factors as miscommunication, loss of trust, decontextulization, and compartmentalization hindered the successes of the many strategies of marketing firms. These arguments are very important in the present study, because they tend to show that there are strategic plans that fail, despite being properly made. In this regard, the arguments add the dimension of the implementation processes of strategic plans in relation to how they enable the performance of organizations, especially financial performance.
Otherwise, many researchers have focused on the link between strategic planning and financial performance of different companies in various industries. For instance, Kaissi and Begun (2008) used quantitative methods to study the association between strategic planning activities and financial performance in 2003, with a focus on the hospitality industry. The study revealed that there was a positive association between having a strategic plan and financial performance. Unfortunately, the researchers have not commented on the strengths of correlations between strategic planning and financial performance. In this regard, there is a possibility that the correlations could be either strong or weak. The outcomes of the study are important to this study, because it is clearly showing that there is an association between a company’s strategic plan and financial performance, which are the focus of this study.
Aldehayyat and Twaissi (2011) conducted a study in which they aimed at pointing out the strategic planning system characteristics and how they related to corporate performance. The study revealed that there was a strong positive correlation between strategic planning characteristics and corporate performance. The studies that were done by Song, Im, Bij and Song (2011) revealed similar results, though they were done in different industries and contexts. Even though the study did not focus specifically on financial performance, which is the focus of this research study, it is still relevant in the sense that financial performance is an important component of corporate performance. Here, the question of whether strategic planning has a strong positive relationship with financial performance still needs to be addressed.
While contributing to the discourse, Jenster and Soilen (2013) studied the relationship between strategic planning and company performance from the Chinese perspective. The researchers were interested in the link between strategies that were adopted by the Chinese firms and their performances. The researchers found out that certain strategies enabled the companies to improve their financial performance, while some did not yield any improvements. The implication of the foregoing study is that strategic planning does not always result in improved financial performance of a company.
From the reviewed literatures, it is clear that most studies just examined the correlations between strategic planning and financial performance of an organization. Besides, the literature produce mix arguments as to the effects of strategic planning, with some of the researchers arguing that it yields positive results, while some have contended that most of the plans fail, mean that they do not yield desirable financial results, generally. Clearly, most of the studies failed to reveal the factors that may result in successful implementation of strategic plans or in their failures.
Notably, the other problem with the previous studies that have been reviewed in the literature used only quantitative methods, which are always only focused on obtaining and manipulating numerical data. Even though quantitative methods are the most objective approach to research, they do not provide indepth information regarding a subject of study. Therefore, there is a need for a further study using qualitative methods in order to build on what quantitative studies have revealed.
Strategic planning is expected to result in improved financial performance of an organization. In some cases, the planning may not yield any change in the performance. However, the results of strategic planning processes on the financial performance of an organization are influenced by how the plans are implemented aligned with strategic goals of the company by the relevant personnel, who are mostly the top executives and departmental heads. Figure 1 shows a summary of the conceptual framework that will be used to guide the study.
Figure 1: Conceptual framework
Methodology and Methods
The choice of a qualitative design is because it allows an in-depth study of the phenomena under study (Maxwell, 2012). Besides, the design enables a researcher to collect information-rich data since there is an opportunity to probe for more information from respondents (Maxwell, 2012). The research philosophy that is best suited for a study that is based on a qualitative design is the interpretivism paradigm, because it supports the exploration of the nuances and parameters that cannot be studied through quantified or numerical data (Maxwell, 2012).
The reason quantitative methods will not be used is because numerical data will require that the company provide access to its financial records. However, since financial records contain sensitive information about the company’s finances and trade secrets, the company may not provide the required records. Nonetheless, they will be able to discuss their performance and the link that may have with their strategic plans. Besides, quantitative methods do not yield indepth data with respect to a subject of study.
This research study will be done in the context of the financial industry in the Kingdom of Saudi Arabia (KSA). The sector is one in which the use of strategic planning as a strategic management tool has been used and the main objective of every player in the industry is to achieve enhanced financial performance. The study will involve Dallah Albaraka Company, because the financial sector is one of the major industries in which it has heavily invested. In addition, it is a big company with various subsidiaries around the Kingdom, which makes representative of other industry players.
A purposive sampling technique will be used to select 10; only the top management officials, who are knowledgeable on strategic planning will be selected. A purposive sampling technique makes it possible to choose only those who the researcher feels have the required information.
Before commencing the study, a permission will be sought from the relevant officials of Dallah Albaraka Company in writing to be allowed to conduct the study. The written consent of the respondents will also be sought before they are allowed to participate in the study. Importantly, the respondents will be allowed to opt out of the interviews at will, even though this may affect the outcomes of the study. Even though it is anticipated that the study will be successful, it may not be easy to get all the responds due to their nature of work schedule, which may not allow them much time for the interviews. This problem will be dealt with by spreading the interviews over five days, depending on their free time.
The primary method of data collection to be used will be structured interviews. One of the reasons why interviews have been preferred in this study is that it will employ a qualitative research design and an interpretivism paradigm to gather qualitative data (Hall, 2008; Bryman, 2012). Besides, an interview approach allows a respondent in a study to provide as much information as possible and a research is able to seek for clarification on a specific issue (Blaikie, 2009; Galletta, 2013). In-depth information can also be obtained through an interview approach (Seidman, 2013).
During the interviews, the respondents will be asked about how the effectiveness of planned strategies at Dallah Albaraka links the company’s objectives to the ways it plans to achieve them and the means by which the company always plans to utilize. The respondents will also be asked to explain the effects of strategic planning on the overall financial performance of the organization and the financial goals of every department, based on Returns on Equity and the Economic Value Added (EVA) after implementing strategic plans of the company.
During the data collection process, the respondents will be asked the following questions:
- How long have you been using strategic planning in the company? This question will help the researcher in benchmarking the influence that strategic planning has had on the company’s subsequent performances from a benchmark period, which will be considered to be the year immediately preceding the commencement of strategic planning in the company.
- Since the company started using strategic planning as a business strategy, what is your opinion on its effectiveness, especially with respect to productivity and cost effectiveness? This question will be important to the study because it will help in achieving the first objective, which is about the effectiveness of planned strategies within the company. This will lead to the second question.
- How has the process of strategic planning influenced the overall financial performance of the company? This question will help in the achievement of the second research objective.
- What role has strategic planning played in the setting and achievement of the financial goals of every department of the company? This question will help the researcher to achieve the final objective, which is about the evaluation of the effects strategic planning has had on the financial goals of every department within the company.
With respect to the qualitative data, a thematic analysis will be used as a method of analysis. It is actually the most common method of analysis in a qualitative research (Braun and Clarke, 2013; Carla, 2013). The process will involve pinpointing, examination, and recording of the various patterns that will be within the data. The emerging themes will be associated with particular research questions. The outcomes will be presented narratively. Regarding the quantitative data, the analysis will involve the calculation of Returns on Investments to determine whether the financial strategic goals will have been met after implementing the strategic plans.
Before the study, a clearance to undertake the study will be sought from the university’s ethics committee, as suggested by Saunders, Lewis and Thornhill (2009). In order to gain access to the company, an official letter of request will be written to the company’s relevant personnel, requesting that the organization’s top employees be interviewed at their own convenience. The researcher will clearly explain the purpose of the study and that the information to be obtained will not be used for other purposes, but academics only. In order to access the organization, the researcher will seek the help of the company’s contacts with whom he is already familiar.
During the study, the information to be obtained will be kept confidential and the identity of the participants will be kept anonymous, unless a written permission or authorization is provided to do otherwise (Saunders, Lewis & Thornhill, 2009). Importantly, the participants will be required to participate voluntarily and their privacy will be respected (Saunders, Lewis & Thornhill, 2009). Most importantly, before the commencement of the study, each of the respondent will be required to provide his or her informed consent (Saunders, Lewis & Thornhill, 2009).
Validity and Reliability of the Research
Validity and reliability is usually associated with quantitative research studies. In qualitative studies, researchers talk of truth value, consistency and neutrality, and applicability, all of which constitute trustworthiness of the study. In this regard, trustworthiness will be achieved through a number of strategies. First, the biases in sampling will be acknowledged in the study report. Second, the interpretation of data will be made as transparent and as consistent can be made. Finally, peers will be involved in the data analysis process to reduce any possible research bias. With respect to reliability, the study will strictly follow qualitative methods in which the method of data collection will be interviews. Following the methods will make it possible to repeat in future studies.
Limitations of the Study
The limitation of the study is that it will be conducted with respect to only one company in the financial industry, which makes it difficult to generalize findings on the entire population of the industry players. Further research studies focusing on the entire financial industry in the country is necessary in the future.
It is anticipated that this study will find that strategic planning positively influences the financial performance of Dallah Albaraka Company. Therefore, the study will be important in the sense that it will show whether strategic planning really have positive impacts on an organization’s financial performance or otherwise, especially with respect to Dallah Albaraka Company.
Nonetheless, the study will have both practical and theoretical implications. In terms of practical implications, the results of the study will show whether planned strategies in Dallah Albaraka are effective with respect to enhancing financial performance the company overall and within each department, as explained under the study objectives. If the study finds that strategic planning enhances the financial performance of the study, the results will be in agreement with the argument of researchers such as Smith (2015), Shivakumar (2015) and Ramaswamy (2013). However, if the results reveal that strategic planning do not have any positive impact on the financial performance of the company, the outcomes will validate the arguments of Treen (2012) and Terren (2010), who have alluded to the fact that certain factors may lead to the failures of strategic plans. Based on the findings of the study, some recommendations will be made to Dallah Albaraka Company with respect to how it can benefit further from strategic planning.
Theoretically, the study will contribute to the growing body of literature about the relationship between strategic planning and financial performance of an organization. Besides, future researchers who will be interested in the same subject of the present study can use the results of the study as a foundation for further studies.
Provisional Work Schedule
|Tasks||Oct 2015||Nov 2015||Dec 2015||Jan 2016||Feb 2016||Mar 2016||April 2016|
|Writing the introduction|
|Critical literature review|
|Preparing interview questions|
|Writing the report|
|Editing and submission|
|Revising draft after supervisor’s feedback|
|Submitting the final dissertation|
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