Strategic Planning and Performance of Small Medium Enterprises: Evidence From Lagos State, Nigeria

Abstract

This study examines the strategic planning and its effect on small and medium enterprises performance in Lagos state, Nigeria. Specifically, the study evaluates the level of SMEs operators’ involvement in strategic planning, determines the factors influencing SMEs to adopt strategic planning in their operations, examines the perceived contributions of strategic planning in SMEs Performance, identifies the challenges facing the implementation of strategic plan in SMEs and also examines the effect of strategic planning on SMEs performance. A survey of four hundred and seventy (470) Small and Medium Enterprises (SMEs) were randomly selected from one thousand nine hundred and sixty- five (1,965) that registered with the Ministry of Commerce and Industry in Lagos State. Data were sourced via a structured questionnaire, while analysis of data was performed with the aid of frequencies, percentages, factor analysis and ordinary least square method of estimation. Results reveal that the majority of SMEs operators do not aware of the strategic planning process in their respective business organizations and their enterprises did not prepare enough for the formulation and implementation of the strategic plan. Furthermore, results also reveal that organizational complexities, scarce firm resources, new technology and environment dynamics in business operations influenced their adoption to strategic planning, while the presence of an effective strategic plan could facilitate good performance of SMEs via better decisions, customer satisfaction, increased capacity, and identification of problems, chance of success, better solutions, competitive advantage, and market recognition. Results show that inadequate resources, lack of experts and difficult to align organizational culture and strategic plan are the major challenges facing the implementation of a strategic plan in SMEs. Subsequently, the study recommends that entrepreneurial development agencies, as well as the government of Nigeria, should organize training and seminar for SMEs operators on the introduction and formulation of strategic planning. Hence the SME operators will have a full understanding of the industry in which it operates so as to cut an edge for the enterprises. Keywords: Strategic Planning, SMEs, Organizational Complexities, Firm Resources, Environment Dynamics DOI: 10.7176/EJBM/12-8-02 Publication date: March 31 st 2020