THE IMPACT OF STRATEGIC PLANNING ON ORGANIZATIONAL PERFORMANCE - THROUGH STRATEGY IMPLEMENTATION

Abstract

Actuality of the research. Strategic management is a key factor of the success of any organization. At what degree managers pay attention to strategy formulation and its implementation is reflected on a company performance. The worldwide experience shows that successful companies have clearly formulated strategic choice so they reach set goals step by step. In this way, they get desired results at local or international levels.

Theoretical basis of the work. Literature analysis showed that the main field of interest of strategic management is to answer the following question – what causes performance heterogeneity between competitor organizations? (Rum-melt, 1994). According to the existing point of view, hetero-geneity in the performance indicators can be explained by the strategic planning process, strategy formulation and the degree of the planning strategy implementation (Minzberg, 1990; Parnell, 1997). Therefore, the impact of the above mentioned three factors on organizational performance is discussed in the following research. The organizational re-sults are measured with two mechanisms – the “Objective fulfillment” and “Relative competitive performance”. The objective fulfillment shows how an organization manages to reach its outlined short-term or long-term goals while “Rel-ative competitive performance” shows the degree of im-provement or worsening of company’s performance accord-ing to sales, profit, market share, etc.

Scientific novelty of the work. It is estimated, that the manufacturing companies’ in Georgia, which are focused on a rational and comprehensive strategic planning have better results than those putting less emphasis on strategic planning. Also, it is empirically proved, that the companies adopting rational and comprehensive strategic planning in Georgia do not focus on the degree of planning of strategy implementation.

Practical value of the work. Research results are important not only for those studying strategic management issues but for the managers of running enterprises in Georgia who try to succeed on a competitive market through the strategic planning process. The given study will help managers to identify impeding factors in making a strategic choice and overcome difficulties arising in this process.