Strategic planning and performance of small and medium enterprises in Rubaga South constituency, Kampala capital city authority

Abstract

The study aimed at establishing the relationship between strategic planning and performance of SMEs in Rubaga South Constituency. Particularly, the study addressed the following objectives; (i)To examine the relationship between formalization of vision and mission and performance of SMEs in Rubaga South Constituency, (ii)To establish the relationship between nature of firm objectives and performance of SMEs in Rubaga South Constituency and also (iii) To investigate the relationship between adoption of firm strategy and performance of SMEs in Rubaga South Constituency. The study was based on the goal setting theory which was advanced by Locke & Latham. A cross-sectional design and stratified sampling technique were utilized to select a sample size of 160 respondents from a population of 280 respondents. Out of 160 questionnaires that were given out, 111 were valid bringing the response rate to 69%. The study was purely quantitative and therefore used only questionnaires to collect data from SMEs in Rubaga South Constituency. SPSS was used in the data analysis. Validity and reliability were ensured by computing the content validity index and the Cronbach’s alpha coefficient and variables with a coefficient of above 0.7 were selected respectively. The Univariate analysis was carried out including descriptive statistics to analyse sample characteristics. Bivariate analysis in form of, Pearson correlation to establish the nature of relationships. The findings revealed that strategic planning is significantly related to SME performance. Relatedly, formalization of vison and mission, nature of firm objectives and adoption of firm strategy were revealed to be statistically significant. The study concluded that SMEs proprietors should come up with an overall vision and mission for their SMEs, set specific and general objectives as well as adopt a given firm strategy in order to enhance their performance. The study further recommended that practicing and non-practicing managers establish a strategic intent for their organisation to determine where the organisation wants to be and the purpose of its existence and communicating the organisations strategic intent to the middle and lower-level managers in addition to setting challenging goals and individual objectives for employees. Key words: Strategic planning, Small and Medium Enterprises, Performance