Original Research

Relationship between strategic planning and financial performance: The case of small, micro- and medium-scale businesses in the Buffalo City Metropolitan

Shingirai Gomera, Willie T. Chinyamurindi, Syden Mishi
South African Journal of Economic and Management Sciences | Vol 21, No 1 | a1634 | DOI: https://doi.org/10.4102/sajems.v21i1.1634 | © 2018 Shingirai Gomera, Willie T. Chinyamurindi, Syden Mishi | This work is licensed under CC Attribution 4.0
Submitted: 24 July 2016 | Published: 09 May 2018

About the author(s)

Shingirai Gomera, Department of Business Management, University of Fort Hare, South Africa
Willie T. Chinyamurindi, Department of Business Management, University of Fort Hare, South Africa
Syden Mishi, Govan Mbeki Research and Development Centre, Department of Economics, University of Fort Hare, South Africa


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Abstract

Background: Arguments are made for strategic planning as an important organisational capability used to realise a firm’s goals and objectives. Despite this, conflicting views appear to emerge from the extant literature over the link between strategic planning and financial performance. Notably, within a South African context, a few studies have been conducted ascertaining this relationship especially within small, medium and micro-enterprises (SMMEs).

 

Aim and setting: The study aimed to determine this relationship using survey responses from a sample of 225 respondents classified as owners or managers of SMMEs operating within theBuffalo City Metropolitan in the Eastern Cape Province of South Africa.

 

Method: Data were analysed through regression and correlation analysis.

 

Results: Findings reveal strategic planning to have a positive relationship with the financial performance of the SMMEs. Furthermore, aspects of strategic planning (formulation, implementation, evaluation and control) were also found to have a positive relationship with financial performance.

 

Conclusion: Suggestions for theory and practice are made based on these findings, including how the adoption and usage of strategic planning cannot only be an important organisational capability but also a basis for attaining a competitive advantage within the SMME.


Keywords

strategic planning process; SMMEs; financial performance; Buffalo City Metropolitan Municipality; South Africa; Eastern Cape Province

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