STRATEGIC PLANNING AND CONTROL: TOOL FOR THE GROWTH AND SURVIVAL OF SMALL AND MEDIUM SCALE ENTERPRISES

1.0 Introduction

1.1 Background Of The Study

Historical facts show that prior to the late 19th century, cottage industries controlled the economy of Europe. The industrial revolution changed the status quo and introduced mass production model, which triggered an unexpected reappraisal of the role and importance of small and medium sized enterprise in the global economy. Findings by economics over the years showed that small firms and entrepreneurships play a much more important role in economic growth and development.

Many economics developed and developing here come to realize the value of small business. They are seen to be characterized by dynamism, within innovations, efficiency, and their small size allow for faster decision making process.

Governments all over the world have realized the importance of this category of companies and have formulated comprehensive public policies to encourage, support and fund the establishment of SMES. Developments in small and medium enterprises are sin quo non for employment generation, solid entrepreneurial base and encouragement for the use of local raw materials and technology.

Nigeria’s SMEs (general an umbrella term for firms with less than 250 employees), at present experienced a lot of problems and hardship and this is not just as a result of the economic downfall. There are a number of bottlenecks, including serious under capitalization with difficulty in gaining access to bank credits and other financial markets, corruption and a lack of transparency but most damagingly, a seemingly lack of government interest in and support for the roles that SMEs play in national economic development and competitiveness.

Looking back, there has never been any real attempt on the part of government to formulate any tangible and lasting policies or programmes to support small business sector what is more damaging, however, is that this lack of support for small businesses have been negatively complemented by misplaced government intervention in what is seen as the commanding heights of the economy.

The woeful failure of such capital projects like the Iwopin paper mill, the Ajaokuta steel complex, the Bachita sugar factory and Leyland Daf, all come to mind here.

But why is it important that the new Nigerian government puts small firms policy at the top of its agenda? A study done by the federal office of statistics shows that 97% all business in Nigeria employs less than 100% employees. Looking at the earlier definition of SMEs, it therefore means that 97% of all business in Nigeria are to use the umbrella term “small business”. The SMEs provides on average, 50% of Nigeria employment and 50% of its industrial output.

The proportion of Nigerian SMEs and their impact on the economy is pretty much similar to those in another countries of the world especially in the advanced economics. In the UK and US, SMEs are seen as largely essential for European employment.

In European countries for instance, SMEs not only form the bedrock of their economy, but they are widely accepted as the main hope of their economic activities. They are seen not just as job creators, but also as creditors of wealth.

The key principles underlying the UK government’s approach include fostering an enterprise culture that encourages innovators and risks takers; providing and maintaining of supportive economic environment, identifying and removing barriers to growth and providing high quality business support for firms at all stages of their development.

This is where the problem resides. While the UK government and indeed the government of other advanced economics see SMEs sector as crucial to their continued growth and development, the Nigerian government, to put it mildly, does not have any concrete idea of what hidden potential lies within its SMEs, and even if it does, has no idea how to harness it.

Having said that, however, there is nothing wrong in Nigeria learning from those courtiers and adopting some of their policies and programmes, that best suit our needs.

However, in order for us to be able to do that, there has to be some acceptance that things are not going in the right direction. It means that the government has to concede that up fill now, its policies towards SMEs have been seriously flowed, and that if any progress has to be made, there has to be a change of direction.

This is what strategic planning and control come in place. Government has to efficiently plan its policies and formulate programmes that enhance the growth and sustenance of SMEs in the country.

Thus, the role of planning and control as they affects the growth and development of SMEs shall be the key focus of this research work.

Historical Background Of Star Paper Mill

Star paper mill limited (RC 22622) was incorporated as a paper converting company in 1977. The company has four major divisions. Star paper mill Limited also has offices in Lagos, Ibadan, Kaduna, Kano and Suleja.

The premier plants located at Aba, produces school exercise books of different types and a wide rang of stationary. It has an installed capacity of 25,000 metric tones per annum which translated into 38 million exercise books per annum in addition to 152 million envelopes of various sizes. Other products include typing sheets, duplicating paper and foolscap fly. The current percentage utilization is about 75 percent.

The second factor was commissioned in 1984 as a waste paper recycling plants, with an installed capacity of 10 metric tones of tissue paper in jumbo reels per day.

By 1992, a new paper machine was installed with the capacity of 60metic tones per day. Presently, the owerrinta plant has a total capital of 60 metric tones per day. This plant utilizes waste paper and paper off- cuts as its main sources of raw material and that constitute 90% both in volume and in naira value of the plant requirement locally sourced.

Just recently, a new product line sanitary towards for ladies with the brand name of “every woman” became a new addition to the stable.

1.2 Statement Of The Problem

This study has observed a problem facing small and medium scale business as a result of the economic downfall, there are a number of bottlenecks, including services under capitalization with difficulty in gaining access to bank credits and other financial markets.

Looking back, there has never been any real attempt on the part of government to formulate any tangible and lasting policies or programmes to support small business sectors. This is where strategic planning and control come in place, government has to effectively plan its policies and formulate programmes that will enhance the growth and sustenance of SMEs in the country.

With the benefit derived from SMEs:

1. What roles do strategic planning and control have to play in the growth and survival of small and medium enterprises in the country?
2. What are the problems militating against the survival of SMEs in the country and how can these problems be solved?
3. What are the contributions of strategic planning and control to the attainment of cooperate objective?
4. What steps are taken in implementing strategic planning and control in an organization?

1.3 Objectives Of The Study

The study will address the following objectives;

1. To ascertain the role of strategic planning and control in the growth and survival of SMEs in the country.
2. To measure the contribution of strategy planning and control in the enhancement of productivity and workers performance.
3. To identify the steps and processes that should be taken in implementing strategic planning and control in an organization.
4. To identify the problems militating against the survival of SMEs in the country and make recommendations on how to solve these problems.

1.4 Research Questions

The following are the research questions of the study:

1. What roles do strategic planning and control play in the survival of small and medium scale enterprises?
2. Have strategic planning and lead to the achievement of corporate objectives?
3. Have strategic planning ad control enhances the productivity of small scale businesses?
4. What steps and process should be taken in implementing strategic planning and control in an organization?
5. What are the problems facing SMEs in the country and how can these problems be solved?

1.5 Significance Of The Study

The findings of this study (when completed) will be of importance to managers, employees and future researchers.

The manager, this study will help him realize that strategic planning and control are tool for achieving of organization goals.

In the area of employees, they will be able to concentrate their energy on important issues this way, they will be able to bring out their best.

The future researchers who may wish to undertake related topics in this stud may find out that this work will be valuable guide to their endeavor.

This study will also be of immense benefit to small and medium scale business operators in particular and other business (large) organizations in general to determine the effective of strategic planning and control. The study will determine the factors or problems limiting the effectiveness of strategic planning and control in an organization. Also, the study looks into the problems or factors militating against the survival of small and medium scale enterprise and tends to make recommendations and suggestions on how to solve these problems

1.6 Scope Of The Study

The study is concerned with strategic planning and control as a tool for the survival of small and medium scale enterprises but because of tome and cost the study was limited to Abia state with star paper mil limited Aba, as a case study.

The researcher was of the view that since the industries and firms are located in the same geographical and socio-economic conditions, the constraints and challenges affecting one, affects others.

1.7 Limitation Of The Study

The study covered areas like technical and managerial competence, capital, work force, production capacity and strategies involved in the business activities within the area of study.

Many constraints such as time, finance and materials were encountered in collecting data for the research work.

Despite all these constraint, the research was successfully carried out.

1.8 Definition Of Terms

To ensure that the research work is easily understood, some technical terms used will be explained.

Objectives:

These are the future expectations of an individuals cooperate body or organization. They are the targets which an organization hopes to achieve.
Objectives are usually on a long term basis.

Organization:

This is an organized body of persons or cooperate bodies aiming towards a particular objective.

Small Scale Business:

These are firms organizations with less than 250 employees and whose asset base is below N200m.

Business:

This is an economic activity oriented towards producing goods and services at a profit of satisfaction to mankind.

Effectiveness:

It is ability to bring about the intended result. It has to do with the attainment and achievement of set goals and objectives.

Goals:

This is same thing with objectives, but while objectives are long term basis, goals are at short term basis.

Strategic Planning:

This is a process of defining organization strategic, decision and making decisions on allocation its resources, to measure this strategy, includes its capital and people.