Effects of Strategic Planning on Organizational Performance: A Survey of Law Firms in Mombasa County

The performance of any organization in the competitive economy is highly dependent upon the quality of its management as well as proper implementation of strategic management. Employing a proactive management culture within an organization can enable it to take advantage of opportunities that exist in any business environment. Strategic management is an important tool for any business organization to thrive and prosper. The study aimed at identifying the effects of strategic management practices, specifically planning in the performance of an organization by looking at what planned strategies are currently used by law firms in Mombasa to sustaining growth, effects of innovation and learning on performance of law firms in Mombasa, effects of goal setting as a strategy in the growth of law firms in Mombasa and also identify the effects of implementation strategy on the growth of law firms in Mombasa County. The researcher selected 20 respondents from each law firm making a total of 200 respondents. The study used cross-sectional survey as the design. Questionnaires were the major tools for primary data collection. Data collected was sampled, coded and analyzed with the help of a statistical tool (SPSS v 22). The study findings indicated that strategic planning has a positive correlation with performance. It was clear from the findings that coefficient of determination is 32.4% and that 32.4% of organization performance is attributed and determined by a combination of the four independent factors investigated in this study. The study used the Karl Pearson‟s coefficient of correlation (R). and showed a positive correlation between performance and planned strategies giving a correlation figure of 0.253, performance, innovation and learning giving a correlation figure of 0.321, performance and goal setting with a correlation figure of 0.041, and a positive correlation between performance and strategy implementation with a correlation figure of 0170. © 2016 Elixir All rights reserved. Elixir Org. Behaviour 94 (2016) 40252-40259 Organizational Behaviour Available online at www.elixirpublishers. com (Elixir International Journal) Tele: E-mail address: © 2016 Elixir All rights reserved Muthee Nkatha Sheila and Datche Owuor/ Elixir Org. Behaviour 94 (2016) 40252-40259 40253 Guilding, (2012) found out that different organizations dealing with different products and services constitute varying levels of performance and varying degrees of fit. They further states that Support is provided for the equifinality proposition (a principle that in open systems a given end state can be reached by many potential means), thus different strategic and structural alternatives are associated with similar performance levels. 1.1 Law firms in Mombasa County Law has been practiced in Kenya for many years and regarded as a noble profession guided by certain norms and practices. There have been major changes in the way law firms run their operations for the past decade. Legal practitioners for instance, were not permitted to advertise and market their services. However this has changed in the present days with many of this firms competing fairly just like any other business in the market to offer services to its clientele. These firms therefore have had embrace business management principles and practices in order to for them to remain competitive and sustainable in the market. In Mombasa the case is similar, there are over 500 law firms operating in Mombasa. These firms are faced by a number of challenges while serving their Clients. Key among them include lack of strategic plans, market sustainability and profit generation and lack of specialization in the market to meet the legal demand available i.e in the fields such as constitutional law, elections law, international law, environmental law, mining law, company law, intellectual property law, procurement law etc. ( Mwalimu, J ,2014, Kiprono A.E, 2013) The study therefore, will benefit law firms in Mombasa Kenya by providing these firms with knowledge to strategically place themselves in the market and offer quality services. Individual law firms can also carry out advanced research work on service provision and sustainability in the business with the help of this research. Law firms in Kenya have achieved and sustained their longstanding competitive advantage through various strategic management practices. The legal industry in Kenya has become very competitive and for a legal firm to survive it has to have a well laid out strategy to prove its purpose and existence in the industry. In the present era of globalization, industries and enterprises compete and confront each other on the global scale. The playing field is no more level, the rules not obvious and hierarchy doesn‟t provide context and orientation. According to Cole (1997) strategic management is a process by which managers can transform environmental factors (along with various internal, personal, and political considerations) into decisions that result in strategies (and plans of action for reaching them) that help guide the organization into the future and result in a sustainable competitive advantage. The effects of competition can be determined in terms of competitors; the labor force and the market size. All organizations face stiff competition from others which normally have competitive advantage over each other since they are all competing for the same clientele base. According to Cole (1999) the dynamism of hypercompetitive markets leads to an increasing divergence between intended and emerging strategies and, therefore, there is need for the explicit promotion of emergent strategies, allowing the corporation to react faster and become more flexible to trends in the hypercompetitive markets. The performance of a legal firm depends on the extent to which the use of strategic planning is realized in order to accomplish the set objectives and mission statement of that organization. Strategic planning therefore focuses upon long term objectives and short-term priorities. Awell-structured strategic plan enables management to comprehend the relationship of goals, objectives and action attainment. However, strategic planning is still not appreciated by the law firms and is still faced with some challenges in the legal profession. (Cole, 1997, Boniface 2007, kuratko, Hornsby and Hayton 2011). It is therefore for this reason that the researcher intends to shade some light on the strategies adopted by law firms in responding to completions. Therefore, this study seeks to answer the question: What are the strategic planning practices adopted by Kenyan law firms in gaining competitive advantage. 2. Literature Review 2.1 Issue Based (or Goal Based) Planning This model involves the carrying out of SWOT analysis to identify the organization‟s strengths, weakness opportunities and threats. The analysis may be for both internal and external factors. The model also deals with the following aspects including identifying and prioritizing major issues or goals, Design major strategies or programs to address issues in an organization , Designing and updating vision, mission and values, Establish action plans (objectives, resource needs, roles and responsibilities for implementation), Record issues, goals, strategies and or programs, updated mission and vision,and action plans in a Strategic Plan document, and attach SWOT analysis document, Develop yearly Operating Plan document, Develop and authorize Budget for year one funds needed to fund year one, Conduct the organization‟s year-one operations and Monitoring reviewing and updating Strategic Plan document. (Hill and Jones,1998) 2.2 Alignment Model The Alignment model ensures strong alignment among the organization‟s mission and its resources to effectively operate the organization. This model is useful for organizations that need to fine-tune strategies or find out why they are not working. Organizations experiencing a large number of issues around internal efficiencies might choose this model. This can be done through outlining of the organization‟s mission, programs, resources, and needed support by the planning group, Identifying what‟s working well and what needs adjustment, Identifying how these adjustments should be made and including the adjustments as strategies in the strategic plan to attain optimal performance. (Hill and Jones,1998) 2.3 Scenario Planning This approach helps planners to undertake strategic thinking. The model may be useful in identifying strategic issues and goals. The model is implemented through selecting several external forces and imagining related changes which might influence the organization performance, for example changes in regulations and demographic changes. Scanning newspapers and any other relevant information materials for key headlines, often suggesting potential changes, that might affect the organization‟s performance. Forecasting organizational scenarios (including best case, worst case, and OK/reasonable case) which might arise with the organization as a result of each change. Reviewing the worst-case scenario often provokes strong motivation to change the organization. Muthee Nkatha Sheila and Datche Owuor/ Elixir Org. Behaviour 94 (2016) 40252-40259 40254 Suggesting what the organization might do, or potential strategies, in each of the three scenarios to respond to each change. Detecting common considerations or strategies that must be addressed to respond to possible external changes and finally selecting the most likely external changes to effect the organization. (Hill and Jones,1998) 2.4 Conceptual Framework