Strategic Profit Planning and Organizational Performance in Public Sector Commercial Banks of Nepal

Dilip Parajuli ,Prakash S Shrestha

doi:10.7176/rjfa/11-22-01

Abstract

This study aimed to examine strategic profit planning and its effect on the organizational performance of the public sector commercial banks of Nepal. Using a standardized questionnaire, primary data was obtained. Based on a judgment sampling method, 450 employees were taken for the sample. 72.70 percent of senior and middle-level employees participated in this study. In this study, budget planning, budget participation, budgetary sophistication, and budgetary control were considered as the independent variables and organizational performance was a dependent variable. The findings showed that the dimensions of strategic profit planning had a positive and important impact on the organizational performance of public commercial banks in terms of budget planning and budget participation. However, the other two dimensions of strategic profit planning like budgetary sophistication and budgetary control had a negative impact on the organizational performance of these banks. In such realities, companies need to focus on other factors that contribute to better performance apart from strategic profit planning dimensions, like employee motivation and invest more in staff development to enhance their organizational performance. Keywords: Budgeting, Commercial banks, Organizational performance, Public sector, Strategic profit planning DOI: 10.7176/RJFA/11-22-01 Publication date: November 30 th 2020

Highlights

One of the most critical methods used to organize and manage company activities is profit planning
The magnitude of organizational performance of employees is 4.37 with an S.D. of 0.47, which means organizational performance is high within the public sector commercial banks
The results indicate that budget planning, budget participation, budgetary sophistication, and budgetary control are positively related to organizational performance at 0.92, 0.81, 0.91, and 0.85 at a 1 percent level of significance

Summary

Introduction

One of the most critical methods used to organize and manage company activities is profit planning. The approach of using systematic criteria and thorough investigation to devise, execute, and monitor strategy and formally record organizational goals is strategic profit planning (George, Walker & Monster, 2019). It consists of a series of underlying processes designed to build or exploit a situation to produce a business with a more desirable outcome. This is somewhat different from the more defensive conventional tactical benefit planning focused on the movement of competition to guide the company's move. Strategic profit planning offers general guidance for individual units of industry, such as financial priorities, programs, human resources, and marketing (Hall, Jones, & Raffo, 2007)

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