The study examined the impact of strategic management on organizational performance using NDIC as case study. The study established that strategic management is the process that deals with the fundamental organizational renewal and growth with the development of strategies, structures and systems necessary to achieve such renewal and growth, with the organizational systems needed to effectively manage the strategy formulation and implementation processes.
The study adopted the descriptive survey design. The population of the study comprised 1, 860 employees of NDIC at junior, senior and management positions. The sample size of study is 186 employees, which is 10% of the population. The data collected were analyzed using descriptive statistics, and the regression analysis was utilized to test the research hypotheses at 5% level of significance.
The study found that respondents cohesively agreed that the practices of strategic management practices with reference strategic planning, strategic implementation and strategic evaluation and control are duly observed in the organization. Furthermore, the results of the regression analysis showed that (a) strategic planning has substantial impact on the stakeholder satisfaction about of NDIC (β=0.124; p<0.05); (b) strategic implementation has tremendous impact on public confidence in NDIC (β=0.128; p<0.05); and (c) strategic evaluation and control has robust effect on the adequacy of deposit insurance funds of NDIC (β=0.214; p<0.05)
The study concluded that strategic management practices (strategic planning, implementation and evaluation and control) has strong effect on organizational performance (in terms of stakeholder satisfaction, public confidence and adequacy of deposit insurance funds) of NDIC. The following suggestions were proposed; It is pertinent for NDIC to have a detailed strategic vision, and must be communicated to all employees in every cadre; Management of NDIC should adopt and implement corrective strategic measures to smoothen the difficulties experienced by the organization; Management of NDIC is urged to heavily prioritize on strategic management practices; Management of NDIC should carry out a comprehensive study on the implementation of strategic management practices in order to reposition and restructure the operational activities of the organization; Management of NDIC is encouraged to develop sub-strategic plans due to the highly dynamics of the Nigerian business environment, turbulence in market and the intensity of competition, which can nullify the potency of strategic management.
1.1 Background to the Study
The business of the 21st century regardless of its size is going to be part of the global business community affecting and being affected by social changes, events and pressures from around the world (Olanipekun, 2014). This is so because the business environment is changing, dynamic, turbulent and highly competitive. In this period, the relationship between business and society has changed radically. The key drivers of this change have been globalization of trade, increased size and influence of corporate organizations, the repositioning of government and the rise in the strategic importance of stakeholder’s relationships, knowledge and brand reputation (Dauda, Akingbade & Akinlabi, 2010). The competitive business environment has resulted into complexity and sophistication of business decision-making which requires strategic management. The management of various and multifaceted internal activities is only part of modern executive’s responsibilities. The firm’s immediate external environment poses a second set of challenging factors. To deal effectively with all that affects the ability of a company to grow profitably, executives design strategic management processes they feel would facilitate the optimal positioning of the firm in its competitive environment. Strategic process allows more accurate anticipation of environmental changes and improved preparedness for reacting to unexpected internal and competitive demands (Umar, 2008).
Porter (1990) argued that the essence of formulating comprehensive strategy is to relate an organization to its environment. According to Oyedijo (2012), a clearly defined strategy that would lead to enthusiasm among various stakeholders which include shareholders, employees, creditors, customers and suppliers, and would promote commitment that would enhance better performance of business organizations. Strategic management permits the systematic management of change. It enables an organization to purposefully mobilize resources towards a desired future. In the globalization era, strategic management has been considered as the most important practices that differentiates organizations from each other (Sharabati & Fuqaha, 2014). Strategic management is the key process to achieve organizational vision, strategy and objectives. All organizations whatever they are, whatever they do, they should perform a strategic management practices to ensure they fit into their environment.
Strategic management is a field that deals with the major intended and emergent initiatives taken by general managers on behalf of owners, involving utilization of resource to enhance the performance of firms in their external environments (Nag, Hambrick & Chen, 2007). Strategic management entails specifying the mission, vision and objectives of an organization and developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating the resources to implement the policies and plans, projects and programs. Strategic management as opined by Njeru (2013) is the level of managerial activity under setting goals over tactics. It provides overall direction to the enterprise. Without any clearly defined strategy, an organization would have no sustainable basis for creating and maintaining a competitive advantage in the industry where it operates (Nag, Hambrick & Chen, 2007).
Strategic management can depend upon the size of an organization, and the proclivity to change of its business environment. Therefore, a global transnational organization may employ a more structured strategic management model, due to its size, scope of operations and the need to encompass stakeholder views and requirements (Muogbo, 2013). Major management theories emphasized that private organizations can exercise strategic choices, even in the face of external constraints. The way and manner they face strategic issues can affect the overall growth and development of the organization. It goes without saying that the strategic framework must also address fundamental issues such as resource base, infrastructural challenges, appropriate level of technology and raw materials input.
1.2 Statement of Problem
The business environment in which firms operate is dynamic and turbulent with constant fast paced changes that render yester-years strategies irrelevant (Maroa & Munturi, 2015). The hypercompetitive business environment has pushed organizations to limits dictating the needs to adopt strategic management practices that support plans, choices, decisions that would lead to improved success, profitability, competitiveness and wealth creation. Strategic management addresses the question of why some organizations succeed and other fails, and also covers the causes for organization’s success or failure.
The performance of organizations has been the focus of intensive research efforts in recent times. How well an organization implements its policies and programmes and accomplishes its strategic objectives in terms of its mission and vision is of paramount concern. Managers in private and public organizations are becoming increasingly aware that a critical source of competitive advantage often comes from local product and services, best public relations strategy-of-the-art technology and having an appropriate system of attracting and managing the human resources of the organization (Monday & Akinola, 2015).
From the foregoing, and observing today’s trend, it is obvious that the space of change in business environment presents daily new challenges. Therefore, solution must be found for organizations, if they must meet such challenges. Various organizations, therefore, need to come with the applications of innovative ideas to create unique brands, customers’ friendly products/services that will bring about competitive advantages in terms of brand preference and stakeholder’s confidence.
Despite these, no research work has been conducted to investigate the impact of the broad subject of strategic management on organizational growth and development in the Nigerian insurance industry. Existing studies in Nigeria carried the subject matter in manufacturing sector (Muogbo, 2013; Monday & Akinola, 2014; Olanipekun, 2014; Akanbi, 2017) among small and medium-sized enterprises (Dauda, Akingbade & Akinlabi 2010; Abosede, Obasan & Alese, 2016; Agwu, 2018), banking industry (Akinyele, 2010; Aremu & Oyinloye, 2012). To the best of the researcher’s knowledge, none accessed the effect of strategic management on organizational performance of insurance sector in Nigeria. To this effect, the study attempts to empirically analyze how strategic management can be used the Nigeria Deposit Insurance Corporation (NDIC) to effectively derive plans for growth, development and improved performance.
1.3 Objectives of the Study
The broad objective of the study is to examine the effect of strategic management on the organizational performance of Nigeria Deposit Insurance Corporation (NDIC). The specific objectives are:
- To assess the impact of strategic planning on stakeholder’s satisfaction about NDIC.
- To find out the impact of strategic implementation on public confidence in NDIC.
- To determine the impact of strategic evaluation and control on the adequacy of deposit insurance funds of NDIC.
1.4 Research Questions
The study attempts to provide fact-finding answers to the following questions:
- To what extent does strategic planning influence the satisfaction of stakeholders about NDIC?
- To what extent does strategic implementation affect public confidence in NDIC?
- To what extent does strategic evaluation and control impact on the adequacy of deposit insurance funds of NDIC?
1.5 Research Hypotheses
In accordance with the objectives of the study, the following hypotheses were developed:
- H01: Strategic planning does not have significant effect on the satisfaction of stakeholders about NDIC.
- H02: Strategic implementation does not have significant effect on public confidence in NDIC.
- H03: Strategic evaluation and control does not have significant effect on the adequacy of deposit insurance funds of NDIC.
1.6 Operationalization of Variables
The dependent variable is organizational performance (Y), represented by three sub-variables namely stakeholders’ satisfaction (y1), public confidence (y2) and adequacy of deposit insurance funds (y3). On the other hand, strategic management (X), the independent variable is also represented by three sub-variables namely strategic planning (x1), strategic implementation (x2) and strategic evaluation and control (x3).
Going by the specific objectives of the study, the functional relationships of the variables are:
Specific Objective One: Impact of Strategic Planning on Stakeholders’ Satisfaction
y1= f(x1)………………… (1.1)
Specific Objective Two: Impact of Strategic Implementation on Public Confidence
y2= f(x2)………………… (1.2)
Specific Objective Three: Impact of Strategic Evaluation and Control on Adequacy of Deposit Insurance Funds
y3= f(x3)………………… (1.2)
1.7 Scope of the Study
The study is confined to the Nigeria Deposit Insurance Fund (NDIC) headquartered at Abuja, Nigeria. The sampling unit constitutes the staff of corporation. The population of the study consists of the all the staff at all cadres in the corporation. Based on available information obtained from the corporate communication department, the staff strength of NDIC is around 1, 856. 10% of the population size indicates the sample size of the study. This implies that the sample size of the study comprised 186 employees.
1.8 Significance of the Study
The use of strategic management practices amongst organizations in Nigeria is inevitable due to its unremarkable performance over years and as a result of weak decisions made on the dependence of obsolete traditional management practices. This study through its findings exposes the need for involvement of strategic management practices in the operations of NDIC and other organizations for improved performance. Management of NDIC and other organizations would be informed on how to enforce strategic management practices to boost performance and gain stakeholders’ and public confidence.
This study is equally important to business managers as it espouse the superiority of strategic management over ordinary management practices. Management of organizations, relevant stakeholders and government regulatory agencies on business affairs would benefit as the study unveils the capacity of strategic management to spur organizational performance. Government agencies would be prompted to promulgate regulations that would expand strategic management practices in Nigerian organizations.
In addition to these, this study contributes to empirical literature on the subject matter, by drawing evidence from the insurance industry, which can be used by other researchers in their future research endeavors.
1.9 Historical Perspective of Nigeria Deposit Insurance Corporation
The history of NDIC has with its origin in the industry traced back to a committee set up in 1983 by the Board of the Central Bank of Nigeria (CBN) in accordance with CBN Act, with a major obligation to examine the operations of the banking system in Nigeria. The committee in its report recommended the establishment of a Depositors Protection Fund. Consequently, the NDIC was established through the promulgation of Decree No. 22 of 15th June 1988. The NDIC is headquartered is Abuja, Nigeria. One of the key functions of NDIC is to guarantee the payments to depositors, in case of imminent or actual suspension of payments by insured institutions up to the maximum as provided in section 20 of the NDIC Act.
1.10 Definitions of Key Terms
Strategic Management: This refers to a systematic approach to a major and increasingly important responsibility of general management to position and relate the firm to its environment in a way that will assure its continued success and make it secure from surprises (Ansoff, 1984).
Organizational Performance: This is concerned with the overall productivity in an organization in terms of stock turnover, customers, profitability and market share (Olanipekun, 2014).
Strategic Planning: This refers to an organization’s process of defining its strategy and making decisions on allocating its resources to pursue the strategy (Kinyua & Ali, 2016).
Strategic Implementation: This refers to the initiation of activities in accordance to strategic plans (Amanda, 2015).
Strategic Evaluation and Control: This involves obtaining information on strategic performance and comparing it with existing standards (Amanda, 2015).