STRATEGIC PLANNING & FINANCIAL PERFORMANCE:A LI

This literature review is a part of a study of the relationship between the degree of formality in the strategic planning process and organizational financial performance. An assumption was made for this study that strategic planning incorporates the process of budgeting. Organizational financial performance in this study was measured in terms of sales, stock price, earnings, return on equity, return on investment, return on total assets, and return on sales.

The Strategic Planning Concept, and the Formality of the Process

Formal strategic planning (FSP) is defined as "the process of determining the mission, major objectives, strategies, and policies that govern the acquisition and allocation of resources to achieve organizational aims" (Pearce, Freeman, and Robinson, 1987, p. 658). Strategic planning is a process which generates specific actions which are required to carry out a particular strategy.

By definition, thus, the strategic planning process begins subsequent to the adoption of a strategy. The entire strategic process within an organization, however, is a set of highly interrelated components, which function within a dynamic environment. Thus, in the socalled real world, strategic planning will often precede strategy development, because of the cyclical character of the strategic process.

There are five generally recognized elements of the strategic cycle. These eleme

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Financial Strategic Planning [Author(s) Performance Planning Formality and Date] Focus Focus Focus(((((((((((((((((((((((((((((( ((((((((((( ((((((((( ((((((((( Wooldridge and Floyd (1990) Broad Formal Internal Planning ((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((( The Links Between Strategic Planning and Performance Although the strength of the links between strategic planning and performance remains a matter of some dispute (Pearce, Freeman, and Robinson, 1987, pp. 658659), recent studies have demonstrated that such links, indeed, do exist (Habib and Victor, 1991, pp. 589606; Shrader, 1989, pp. 4560; Varaiya, 1987, pp. 487497). The nature of the relationship, however, has been characterized differently by different studies. FSP has been related to organizational performance both positively and negatively (Fisher, 1991, pp. 2528). Formal planned patterns of growth, as an example, have been positively related to organizational performance (Robinson and Pearce, 1988, pp. 4360; Hambrick and D'Aventi, 1988, pp. 123; Pearce, Robbins, and Robinson, 1987, pp. 125134)
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Some common words found in the essay are:
Kolb Black, Ulrich Lake, Kester Taggart, Performance Assessments, Betts Calingo, Michael McCaskey, Hambrick Lei, Yes Operating, Albanese Martocchio, Wooldridge Floyd, strategic planning, assessed applicable, financial performance, planning process, yes specified, strategic planning process, exhibit continued, broad formal, yes operating, operating income, formal internal, yes operating income, group/ financial specific, study group/ financial, financial specific measure,
Approximate Word count = 7070
Approximate Pages = 28 (250 words per page)