Strategic Planning and Organizational Performance: An Empirical Study on the Manufacturing Sector

Abstract

In this research, the primary goal was to investigate the relationship between strategic planning and organizational performance in Iraq’s manufacturing context. This study’s primary data sources were 360 manager respondents. A structured questionnaire was used to collect primary data from manufacturing firms located throughout Iraq. To analyze the results, the researchers used descriptive statistics, correlation, and multiple regression analysis. SPSS version 16 software was used to conduct data analysis. The results reveal that the process of strategic planning has a beneficial effect on financial performance. Environmental scanning has a statistically significant positive effect on a company’s nonfinancial performance. Management participation and planning formality positively and statistically significantly affect a business’s nonfinancial performance at the 10 percent level. The domain of strategy and technique does not impact a company’s nonfinancial performance.

1. Introduction

Strategy, originating from the practice of commanding armies during war, has evolved into various meanings throughout history. It was initially used for success and victory, but later applied to political, economic, and business settings. The essence of strategy is context- and person-dependent, with its meaning varying according to the individual, as has been translated by [1]. Alkhafaji and Nelson (2013) [2] note that strategy is a fast and accurate response to environmental changes; it is not a specific action plan. As such, many disciplines have started using the term “strategy”, including the business management industry. Young’s (2001) [3] study highlights the importance of long-term goals, core objectives, and resource allocation in large corporations’ expansion. It also explores the impact of strategic positioning changes on administrative structure adjustments across organizations, gaining significant scholarly attention. Palia (1979) [4] highlights the importance of a strategy as the “unifying thread” of an organization, aligning activities and creating differences between competing companies.

Drucker (1954) [5] focused on the concepts that made the most contributions to the literature on strategy and created viral management texts such as Corporate Strategy. Wil-liam Newman (1951) may have been the first person to use the term “strategy”. However, there is some debate about whether Newman originated the term or simply popularized an existing concept. Porter (1996) [6] argues that a firm’s strategy tool is needed to separate it from competitors and to create and maintain an advantage. Strategy is about being unique and engaging in activities that your competitors are unlikely to have the stomach for. He stated that strategy enables organizations to undertake activities that are dissimilar from those of their competitors.

Fuertes et al. (2020) [7] define strategy as a plan of action, saying that a strategy is a set of guidelines that guide a firm towards its desired position, acting as a mediator between the organization and its environment, based on long-term targets set by the company. Strategy is an in-depth plan that provides a path for how an organization can accomplish its mission and goals, per Plowman and Wilson (2018) [8]. The organization’s strategy should be broad, allowing for high strategic direction, and plans for each operational division should be compatible. The definition of the strategy being used for this research is taken from Nguyen (2019) [9].

Per Joakim Björkdahl (2020) [10], manufacturing is a growth engine with a fast return on investment and rapid technological advancement. Iraq’s industrial sector contributes significantly to foreign exchange earnings, micro and small business development, domestic product growth, and employment opportunities. According to A. Sheth and J.V. Sinfield (2022) [11], at its core, strategic management involves creating and executing plans to allocate resources, exploit opportunities, and address challenges in businesses. Understanding the interplay between strategy formulation and implementation is crucial for enhancing organizational performance. One key factor underpinning successful strategic management is the recognition that it is context-dependent, as researcher R. G. Cooper (1984) [12] indicates. Effective business strategies require unique considerations such as the industry dynamics, resource endowments, technological landscape, regulatory setting, cultural factors, and stakeholder expectations to optimize outcomes. This article highlights the significant contribution of strategic planning to the financial and nonfinancial performance of manufacturing companies in Iraq, highlighting key points for sustainability:

• Enhancing Organizational Performance: By examining the relationship between strategic planning and organizational performance, this study provides insights into how companies can improve their overall performance. This is crucial for sustainability, as organizations that perform well are more likely to thrive in the long term and contribute positively to the economy and society.
• Focus on Nonfinancial Performance: This research emphasizes the importance of considering nonfinancial performance metrics, such as environmental scanning, management participation, and planning formality, in addition to financial performance. This holistic approach to performance evaluation is essential for sustainability, as it encourages companies to consider their impact on the environment, society, and other stakeholders beyond just financial gains.
• Strategic Planning Process Perspective: This study recommends including the strategic planning process perspective in future research, highlighting the significance of the planning process itself rather than just the final plan. This perspective encourages companies to focus on the effectiveness and efficiency of their strategic planning processes, which can lead to better decision-making and ultimately contribute to long-term sustainability.
• Barriers to Implementation: This research identifies barriers that can hinder the successful implementation of strategic plans, such as communication issues and lack of employee participation. By addressing these barriers, companies can improve their strategic planning processes and increase the likelihood of achieving their sustainability goals.
• Context of Developing Countries: This study highlights the importance of understanding the context of developing countries, such as Iraq, in understanding the relationship between strategic planning and organizational performance. This is crucial for sustainability, as it helps tailor strategies and recommendations to the specific challenges and opportunities faced by companies in these regions. The research provides valuable insights into the impact of strategic planning on organizational performance, emphasizing the importance of nonfinancial metrics and the significance of the planning process, addressing implementation barriers, and considering the context of developing countries. This study uses empirical evidence from case studies, surveys, and secondary data analyses, employing a mixed-methods approach to ensure robustness and generalizability across industries and geographical regions. The research focuses on privately-owned manufacturing firms in Iraq, focusing on the relationship between strategic planning and organizational performance. The findings will influence business and government policies to help corporations perform better and identify potential planning and strategy implementation barriers. This study also examines nonfinancial performance, which other researchers have overlooked.

2. Literature Review

2.1. Strategic Planning

Making a strategic plan a reality serves as the benchmark for strategy execution in this study. Strategies can be formed in a variety of ways, both explicitly and implicitly. Some researchers contend that explicit strategy formation is preferable, while Zerfass et al. (2018) [13] contend that implicit strategy formation is more successful. They contend that an organization should only develop a strategy in dire situations and that official strategic planning does not exist within organizations. Although tactics are typically categorized as either intentional or emergent, this is not always the case. Emergent strategies are reactions to unforeseen events that arise mid-strategic implementation and are developed without a blueprint (Santos and Candido (2019) [14]).

Variations may occur because the intended course of action was not fully carried out, indicating that strategy depends on both design and implementation. Both emergent and deliberate strategies are effective business strategies that incorporate the emergent strategy component, according to Shu (2017) [15]. Only when a company’s long-term strategy is formed through an intentional approach will it be beneficial. However, unplanned plans provide no benefit to the business.

Bryson et al. (2018) [16] carried out their research and found a connection between strategic planning and organizational performance. In their study, Hopkins and Hopkins (1997) [17] used seven components to measure strategic planning and discovered that each component affected the planning process in terms of how the manager emphasized each component in implementing the company’s strategy. The study concluded that financial performance increases when strategic planning is implemented. Additionally, the strategic planning process settled how managerial and organizational factors influenced the outcomes. Baker (2003) [18] investigated the connection between planning, its strategic and operational divisions, and business performance with data from the California executives of five food industries. It was found that an organized, strategic planning process was positively correlated with good financial performance.

French et al. (2004) [19] conducted a study on strategic planning in small professional service firms in Australia. The businesses in the study were placed into non-planning, informal planning, formal planning, and sophisticated planning categories, with no discernible differences being found in firms of similar sizes and incomes. A significant relationship emerged, proving a correlation between net profit and informal planning.

Gibson and Cassar (2005) [20] looked at small Australian businesses over a long period to find the connections between planning and success. According to the findings, those who did not use planners (which complemented a firm’s strategy) consistently outperformed their counterparts. The researchers theorized that a firm’s introduction of planning only follows a period of growth and never precedes it.

Falshaw et al. (2006) [21] examined the relationship between formal strategic planning and businesses. On a Likert scale, data for the study were collected from senior employees at various companies. It was found that subjective performance was not connected to the level of the organizational planning process formality. Kraus et al. (2006) [22], regarding strategic planning in Austrian small businesses, believe that proper planning is far more important than other aspects of firm management, like time horizon, strategic instruments, and control. Glaister et al. (2008) [23] assessed the impact of formal strategic planning on the performance of Turkey’s most prominent manufacturing companies. The study looked at factors such as environmental turbulence, organizational structure, and firm size and their impact on the link between formal strategic planning and performance. There was a conversational approach to plan delivery, with executive decision-making and plan creation left to the executives’ discretion. The research concluded that successful strategic planning helps a company’s performance.

Kori et al. (2020) [24] tried to determine if strategic planning affects financial and nonfinancial performance in a business. Many empirical studies on the relationship between strategic planning and financial performance (Nambirajan and Prabhu, 2010 [25], Wolf and Floyd, 2017 [26], and George et al., 2019 [27]) suggest that the strategic planning construct can be measured as a single dimension, like a formal process.

This literature review favors a relationship between strategic planning and performance. Nearly all the research in this report shows strong evidence that strategic planning boosts company performance. Several studies on various corporate environments and geographic locations were supported, conducted among various organizations and sectors, and across various levels of employees (Anwar and Shah (2021) [28]). Other researchers have discovered beneficial relationships using various financial and environmental indicators, such as success in the financial markets (Judge and Douglas (1998) [29]) and employee development (Kraus et al. (2006) [22]). Strategic planning is one of the constructs that comprises four dimensions: environmental scanning, management participation, planning formality, and strategic techniques.

2.2. Environmental Scanning

As per [30], “environmental scanning” is the examination, organization, and distribution of external trends. The information gathered from environmental scanning helps people decide whether to enter a market or not. Ref. [31] described environmental scanning as assimilating external factors. Management should begin strategic planning by “scanning the environment, analyzing competitive activity, assessing strengths and weaknesses, and identifying and evaluating alternative courses of action” [32].

Ref. [33] have performed research on planning system characteristics and planning effectiveness by companies. In this research, canonical correlation analysis was used to determine the relationship between planning system characteristics and planning effectiveness. The following are the two characteristics of the organizational context of planning and the four internal, external, functional, and technique planning systems characteristics studied. A single respondent from each organization provided the data for the study. They found that how a company’s executives were focused on how the outside world influenced the planning process. The researcher’s report noted that response bias could have been present in individual responses.

The strategic planning process of banks in the United States was examined by Hopkins and Hopkins (1997) [17]. They looked at the effects of environmental factors. Their study concluded that environmental factors did not influence the severity of a bank’s strategic plan, contrasting the results of other researchers. Their plausible explanation is that environmental concerns played a minor role in strategic planning. Environmental perceptions were so similar that environmental interests had little room to influence bank decisions.

Ref. [34] conducted research on the strategic planning process. Its connection to hotel organizational success was examined using Jordanian hotels as the sample. The study used various dimensions, like internal and external environmental scanning, strategic techniques, management participation, functional coverage, and a time horizon, to measure the latent variable known as strategic planning. They concluded that external environmental scanning was used more than internal scanning in all four- and five-star hotels during the strategic planning process. Many studies on strategic planning have concluded that corporations should include environmental factors in their planning strategy. The current study on internal environmental scanning is important because the internal environment affects strategic planning and a firm’s performance.

2.3. Planning Formality

Research on the formal strategic planning process has been carried out in Greek five-star hotels by [35]. The following six factors were taken into consideration in their research to determine the nature and application of the planning process: the formal process followed, the presence of a prime person or group in charge of coordinating planning, the degree to which top management fosters a supportive environment, a formal declaration regarding the direction of the company, whether company plans are used for planning, and the manner in which company plans are utilized to assess management performance. The researchers found a high degree of formality in planning, which they interpret as a sign of a manager’s commitment to routinely carrying out plans.

Management involvement in a firm’s development is interpreted as providing visible roles or opportunities for lower-level individuals or groups to have a greater voice. Studies have shown that middle-level managers’ participation in strategic planning ensures they comprehend goals. However, some studies have found that manager participation has no effect on business strategy. In public transit organizations, top-down strategic planning is positively linked to top management, and the strategy-development process is positively associated with management’s role in strategic planning. Studies on the impact of middle-level management participation in strategic planning show a positive role for them. Further research is needed to understand the role of top management and mid-level management in the process.

2.4. Nonfinancial Performance Measures

Nonfinancial performance measures, as opposed to traditional organizational performance metrics, provide more timely information that is less susceptible to manipulation and thus more relevant to the business [36,37,38,39,40,41,42,43,44,45,46,47,48,49,50,51,52,53,54,55]. We concentrated on both financial and nonfinancial performances to exploit the benefits of both kinds of measurement. Researchers in strategic planning are staying true to their recommendations despite widespread criticism for recommending only conventional financial performance be studied and leaving out nonfinancial issues, including nonfinancial performance metrics that were discovered to be worth studying. There is scarce empirical evidence in developing countries, making it challenging to research the issue, which is probably just as important as in developed countries. It is discovered that researching the context of developing countries is vital. As ref. [56] suggested, it is the process of planning that is important, rather than the plan itself. Therefore, this research recommends including the strategic planning process perspective in future studies of strategic planning. Strategic planning procedures have all been scrutinized because they examine the formalities of planning, the management’s participation, environmental scanning, and the strategic techniques used to generate company strategies. Thus, this study fills an existing literature gap by resolving several possible causes of conflicting results to achieve each of the study’s research objectives. Is there a link between strategic planning and a company’s financial and nonfinancial performance (Figure 1)?

This study’s four independent variables—environmental scanning, management engagement, planning formality, and strategic techniques—are depicted in the preceding image. The dependent variables for nonfinancial and financial performance are also included in the study.

Thus, this study’s evaluation of organizational performance, the dependent variable, is meaningful due to the four variables that are presented as independent variables in the conceptual framework. Furthermore, as the conceptual framework model above illustrates, organizational performance is assessed from both a financial and nonfinancial perspective.

3. Research Methodology

3.1. Independent Variables and Their Measurement

To better understand how this model is to be used, experts in the field have thoroughly investigated the concept of strategic planning and divided it into four dimensions: environmental scanning, management participation, level of formality, and techniques employed in the planning. A department’s strategic planning process is essential, as it serves as a foundation for implementation. The initial test of its influence on strategic environmental scanning had nine items. In order to know the extent to which strategic planning places emphasis on various topics, the respondents were asked to choose an option between “a lot more emphasis” and “a lot less emphasis” on a scale from 1 to 5. The environmental assessment evaluation was adapted from the original [32].

The following questions were designed to discover how actively managers were involved in department planning. They were asked to place on a five-point Likert scale, ranging from “strongly participating” to “not participating at all,” their assessment of the amount of time and effort top management would put into producing a strategic plan. The framework for measuring senior management’s involvement came from [32].

The third round of questions examined the formality of the planning. Participants were also requested to evaluate how formally strategic planning was executed, as described by various categories such as consensus, “deep, iterative, and timely exploration of issues,” identifying complex dependencies, constructing coherent scenarios, and making sound investments and planning on a five-point Likert scale ranging from strongly agree to strongly disagree (Glaister et al. (2008) [23]).

The last group of questions pertains to the planning-process tactics utilized by companies. On a five-point Likert scale, ranging from “extremely important” to “not familiar with,” the respondents were asked to identify how important possible strategy techniques were. This scale was based on previously published works like [32,57,58,59,60,61,62,63,64,65,66].

3.2. Dependent Variables and Their Measurement

The financial performance evaluation included a numerical, subjective measurement of four items: ROA, ROE, annual sales, and the number of employees, including long-term employees, from the past three years. The companies each supplied data for the performance measurement. Consequently, the researcher has chosen to gauge the firms’ financial results using the top and upper-middle management’s assessment of the situation used in creating the scale [67].

Subsequently, the respondents were asked to provide a subjective, numerical evaluation of the company’s nonfinancial performance on ten performance measurement items, because the traditional financial-based evaluation is recognized as an important practice to support. Respondents were asked how each company performed in nonfinancial terms. The questionnaire utilized the [66] Balanced Scorecard scale, which allowed participants to check off their corporate opinion on a 5-point Likert scale consisting of 10 items (including the categories of customer, internal business, and learning and growth perspectives). “Excellent” is at one end of the scale, while “very poor” is at the other.

3.3. Research Design and Methodology

This research centered on private manufacturing firms situated in the Kurdish part of the country. The study included a range of manufacturing businesses, from small to large. The study had respondents among both top-level managers and upper-middle-level managers. In this research, almost nine out of ten people (87.8%) returned their questionnaires to us, which we could use for our analysis. Therefore, the 360 participants were able to provide relevant results with the various multivariate analysis types that are used to fulfill this research’s objective. Based on the experience required to participate in the study, participants must have worked in a managerial position for four years or more. To accomplish the goals of the research, the researcher collected data using a quantitative method.

The survey developed by the researchers and administered to department managers and top-level managers of manufacturing companies in Iraq was made up of both open-ended and closed-ended questions. It was also possible to clear up any confusion the respondents had, because the researcher could present herself to them in person to help answer their questions. The questionnaire included four sections to provide comprehensive data in order to answer the research’s primary research question. Section A included basic demographic information; Section B was dedicated to strategic planning; Section C dealt with questionnaires that measured the manufacturing companies’ subjective financial performance; and Section D focused on how well they performed on a nonfinancial level. The appropriate parametric statistical techniques were used to analyze and process the previously classified and gathered information. The researcher utilized descriptives, test reliability, correlation, and multiple regression to complete their statistical findings.

Multiple linear regression analysis is used to solve estimation problems that have three or more variables. We used the Ordinary Least Squares method to solve this problem (OLS). The relationship between a dependent variable and a set of independent variables can be estimated using this model.

The model created for this problem is shown in the equations below.

$$y=a0+\sum \left(\beta iXi\right)+\epsilon$$

(1)

where Y is the dependent variable representing organizational performance,

• α0 is the intercept,
• βi is the regression coefficients,
• Xi is the independent variables, and
• Ε is the error term

In the given equation, Organizational Performance = f (Management Participation, Planning Formality, Environmental Scanning, Strategy Technique) + error term, the parameters to be estimated are represented by P1, P2, and P3. These parameters correspond to the coefficients or weights associated with each independent variable in the regression model.

For example, if the researcher is analyzing the relationship between Management Participation (P1) and Organizational Performance, they would estimate the coefficient associated with Management Participation. This coefficient represents the change in Organizational Performance for a one-unit change in Management Participation, while holding all other independent variables constant.

Similarly, P2 represents the coefficient associated with Planning Formality, and P3 represents the coefficient associated with Environmental Scanning. These coefficients help the researcher understand the strength and direction of the relationship between each independent variable and the dependent variable, Organizational Performance.

The error term, represented by the symbol t, is used to account for any unexplained variation in the dependent variable that is not captured by the independent variables in the model. It represents the random variation or noise in the data and is assumed to be normally distributed with a mean of zero and a constant variance.

By estimating these parameters, the researcher can make predictions about the relationship between the independent variables and the dependent variable, as well as assess the significance of these relationships. This analysis can help the researcher understand the factors that influence organizational performance and make informed decisions based on the results of the statistical analysis.

For statistical analysis, the researcher used SPSS version 16.

3.4. Analysis

This section aims to measure the relationship between manufacturing companies’ strategic planning and organizational performance in Iraq. This study’s research model defines strategic planning as one of its dimensions, and that is because the research model includes environmental scanning, management participation, planning formality, and strategic techniques. It refers to the departments of a company in which external factors may have an impact on the company’s performance. Measures of management participation determine the involvement of upper-level management in department planning, and planning formality investigates the formality of the planning process. The techniques used to form the strategic plan are found in the strategic tools.

3.5. Reliability Test

The degree to which a measurement of a phenomenon produces a stable and consistent result is referred to as its reliability [68]. Reliability is also concerned with the ability to reproduce results. A scale or test is said to be reliable if it consistently produces the same result when repeated measurements are taken under the same conditions [69]. Testing for reliability is necessary because it refers to the consistency of a measuring instrument’s performance across its various components [70]. When using Likert scales, it is generally considered to be the most appropriate measure of reliability to use [71]. In this research work, the researcher applied a reliability test to measure the internal consistency of the strategic planning and organizational performance constructs, shown in the

Table 1. Cronbach’s alpha values for strategic planning constructs.

Sl. No	Constructs	Cronbach’s Alpha If Item Deleted	Cronbach’s Alpha Value
Environmental Scanning
1	Examining previous results	0.834	0.849
2	Examining the causes of previous failures	0.836
3	Trends in customer/end user behavior are examined.	0.838
4	Internal capabilities assessment	0.834
5	Trends in supplier analysis	0.830
6	An examination of global competitive trends	0.834
7	Economic and commercial situations in general	0.828
8	Trends in technology analysis	0.831
9	Information system for management	0.833
Management Participation
1	Examining and elaborating strategic concerns	0.706	0.712
2	Strategic proposals are created.	0.711
3	Strategic proposals are assessed.	0.636
4	Selecting strategic options	0.619
Planning Formality
1	Strategic planning is done on a need-to-know basis.	0.826
2	Strategic planning receives as much attention as is required.	0.807
3	Informal presentations are the most common means of communicating with the target audience.	0.809
4	Decision makers are in charge of strategic planning.	0.802	0.836
5	Strategic planning is done in an open discourse with the staff.	0.801
6	Planning decisions are discretionary.	0.806
7	Strategic planning is a result-driven process, not a procedure-driven one.	0.811
8	Random progress reviews, not progress reviews, are conducted on the strategic plan.	0.805
9	Strategic planning is regarded as having a low level of responsibility.	0.810
Strategic Techniques
1	Analysis of Porter’s Five Forces model	0.848	0.857
2	A financial evaluation	0.849
3	Analyze the value chain	0.850
4	Analysis of core capabilities and competencies	0.845
5	A study of human resources	0.848
6	Organizational culture analysis	0.852
7	Analysis of PEST (Political, Economic, Social, and Technological) elements	0.842
8	An examination of the most important (essential) success factors	0.845
9	Analyze your competitors	0.845
10	SWOT Analyze	0.842
11	Analysis of stakeholders	0.846
12	Models for economic forecasting	0.851
13	Other companies’ exceptional performers are used as a benchmark.	0.849

.

The Cronbach’s alpha coefficient, a widely used measure of how consistent data is across items, was used by the researchers to determine the reliability of their findings. According to [72], a reliable coefficient value should be at least 0.60. In this research work, the strategic planning constructs produced a coefficient value greater than 0.712, which was deemed acceptable by the researchers (

Table 2. Cronbach’s alpha value for organizational performance constructs.

Sl. No	Constructs	Cronbach’s Alpha If Item Deleted	Cronbach’s Alpha Value
Financial Performance
1	Growth is outpacing those of our competitors.	0.873	0.909
2	In comparison to our competitors, our total sales tax return is	0.874
3	Our financial performance is superior than that of our competitors.	0.883
4	In comparison to our competitors, our total asset tax return is	0.894
Nonfinancial Performance
1	Our company’s operational efficiency is high.	0.859	0.874
2	Our company’s assets are put to good use.	0.856
3	Our company’s product/service quality	0.866
4	Our company’s employee satisfaction rate is high.	0.860
5	Our company’s new product/service development is in full swing.	0.858
6	Our company’s employee development is a priority.	0.868
7	Our company’s employee talent is	0.861
8	Our company’s management quality is excellent.	0.860
9	Our company’s customer satisfaction rate is high.	0.865
10	Our company’s social responsibilities are as follows:	0.869

).

Researchers turned to the Cronbach’s alpha coefficient to measure reliability, a widely used measurement for how consistent data is across items. The reliable coefficient value should be at least 0.60, as [72] defined. The organizational performance constructs and instruments in the preceding table produced a coefficient value greater than 874, which was deemed acceptable.

3.6. Correlation of Constructs

To understand the link between the two constraints, we examined the correlation of each of the domains with a Pearson correlation coefficient. To further the correlation between strategic planning and organizational performance constraints, a correlation matrix is established, as shown below.

The correlation between the strategic planning and financial performance constructs is displayed in

Table 3. Correlations between strategic planning and financial performance constructs.

Correlations	Financial Performance	Environmental Scanning	Management Participation	Planning Formality	Strategy Technique
Financial Performance	1.000
Environmental Scanning	0.621	1.000
Management Participation	0.486	0.218	1.000
Planning Formality	0.429	0.206	0.268	1.000	0.010
Strategy Technique	0.529	0.088	0.034	0.010	1.000

. Each decimal value in the table represents the correlation. The correlation coefficients are shown to be all positive and significant. A correlation between domains can range from low (0.429) to high (0.621).

In

Table 4. Correlations between strategic planning and nonfinancial performance constructs.

Correlations	Nonfinancial Performance	Environmental Scanning	Management Participation	Planning Formality	Strategy Technique
Nonfinancial Performance	1
Environmental Scanning	0.461	1
Management Participation	0.339	0.235	1
Planning Formality	0.370	0.240	0.241	1
Strategy Technique	0.410	0.079	0.016	0.003	1

, each decimal value represents the correlation between the strategic planning and nonfinancial performance constructs. The constructs are labeled in the label row and column of Table 4. It shows the correlation coefficients were all positive and statistically significant. Strategic planning and nonfinancial performance constructs have a correlation value that ranges from 0.339 to 0.461.

3.7. Result of Strategic Planning on the Financial Performance

Multiple regression analysis was found to be a good way to figure out how each of the four predictors of strategic planning affects the financial performance of the companies. This is shown in the

Table 5. Model summary of multiple regression analysis.

Model	R	R Square	Adjusted R Square	Std. Error of the Estimate	Durbin-Watson	F	Sig.
1	0.697	0.485	0.479	0.56911	1.446	83.619	0.000

and

Table 6. Coefficient summary of the strategic planning on the financial performance.

Model	Unstandardized Coefficients		Standardized Coefficients	T	Sig.
	B	Std. Error	Beta
(Constant)	1.554	0.250		6.219	0.000
Environmental Scanning	0.300	0.054	0.253	5.588	0.000
Management Participation	0.111	0.044	0.108	2.521	0.012
Planning Formality	0.364	0.050	0.315	7.296	0.000
Strategy Technique	0.755	0.048	0.596	15.592	0.000
Dependent Variable: Financial Performance

.

The Durbin–Watson test was used to check for autocorrelation. It came out to be 1.446, which means that the model has no autocorrelation. We can see from Table 5 that R2 is 0.485 for the companies’ strategic planning and financial performance. It can be inferred that financial performance can be explained by 48.5% of predictors.

A multiple regression analysis was used to study the relationship between strategic planning constraints and financial performance. In this study, environmental scanning, management participation, planning formality, and strategy technique are all considered independent variables, and financial performance is considered the dependent variable. A multiple regression analysis was therefore done to see if the variables could be brought together.

$$F=1.554+0.253\beta 1+0.108\beta 2+0.315\beta 3+0.569\beta 4$$

(2)

Therefore, from the above equation, formulated based on the regression analysis results, the strategy technique has a greater effect on financial performance than planning formality, environmental scanning, and management participation. The researcher’s theory was proven correct. It showed a clear correlation between strategic planning and financial performance (F = 83.619, p = 0.000), which means the researcher’s hypothesis was accepted.

The regression analysis results show that strategy techniques have a positive impact on company financial performance (B = 0.596, p < 0.000). The regression analysis results show that the strategy technique most affects financial performance, environmental scanning, management participation, and planning formality. The results reveal that hypothesis (H1) was accepted, given a positive relationship between strategic planning and financial performance. In the context of this research, this new study supports previous studies. A study conducted on the largest manufacturing companies found that the relationship between planning and performance was positive and strong (Glaister et al. (2008) [23]). In the context of this investigation, this new study supports previous results from hotels that found a solid and positive relationship between strategic planning and firm performance [32]. Banking institutions that work on a strategic planning process directly affect financial issues (Glaister et al. (2008) [23]). Hopkins (1997) [17], in his study, found there is no relationship between the formal planning process and financial performance.

3.8. Result of Strategic Planning on the Nonfinancial Performance

According to studies, multiple regression analysis is a good way to figure out how each of the four predictors of strategic planning affects the nonfinancial performance of the companies, as shown in the table below.

Durbin–Watson statistics tests were used to determine autocorrelation. The test result was 1.361, indicating that the model does not have a problem with autocorrelation. In addition, as shown in

Table 7. Model summary of multiple regression analysis.

Model	R	R Square	Adjusted R Square	Std. Error of the Estimate	Durbin-Watson	F	Sig.
1	0.476	0.227	0.218	0.56149	1.361	26.059	0.000

, the R square for strategic planning was 0.227. The table results reveal that the predictor variables explained 22.7 percent of nonfinancial performance, a significant amount.

$$F=2.208+0.462\beta 1+0.095\beta 2+0.099\beta 3$$

(3)

The above equation was formulated based on the regression analysis results. Multiple regression analysis is an appropriate method for determining the impact of the strategic planning domain on nonfinancial performance. From the above

Table 8. Coefficient summary of the strategic planning on the nonfinancial performance.

Model	Unstandardized Coefficients		Standardized Coefficients	T	Sig.
	B	Std. Error	Beta
(Constant)	2.208	0.247		8.955	0.000
Environmental Scanning	0.441	0.053	0.462	8.338	0.000
Management Participation	0.078	0.043	0.095	1.796	0.073
Planning Formality	0.092	0.049	0.099	1.876	0.061
Strategy Technique	0.046	0.048	0.046	0.971	0.332
Dependent Variable: Nonfinancial Performance

, the four domains of environmental scanning, management participation, planning formality, and strategy technique are used to predict a company’s nonfinancial performance. Based on the above results, it appears that environmental scanning has the greatest impact on nonfinancial performance, followed by management participation and planning formality. Table 8 and the above equation reveal that the environmental scanning construct has a positive and statistically significant effect on a company’s nonfinancial performance at the one percent level (B = 0.462, p = 0.000). The level of management participation and planning formality has a positive and statistically significant impact on the company’s nonfinancial performance at the 10 percent level. The strategy-technique construct has had no significant impact on the nonfinancial performance of the company. The results reveal that the hypothesis (H2) that there is a positive relationship between strategic planning and nonfinancial performance was partially accepted.

It is probable that this study, “Strategic Planning and Organizational Performance: An Empirical Study on the Manufacturing Sector”, focuses on the connection between organizational performance and strategic planning in the manufacturing sector. Based on this title, the following are some important insights and recommended readings for the future:

Important Takeaways:

Strategic Planning’s Effect:

The impact of strategic planning on multiple performance indicators, including market share, profitability, and productivity.

The function of strategic planning in matching the objectives of an organization with the needs of the market and emerging technologies.

Effective strategic planning’s components define the essential components that, in the manufacturing industry, enable strategic planning to be successful. The best strategies and approaches for manufacturing-specific strategic planning.

Evaluation of Performance:

Methods and resources for gauging the performance of organizations.

The relationship between enhanced performance outcomes and strategic planning procedures.

Obstacles and Difficulties:

Typical obstacles to strategic planning implementation faced by manufacturing companies. Techniques for getting beyond these obstacles.

Case Studies with Verifiable Data:

Defining the essential components that, in the manufacturing industry, enable strategic planning to be successful. The best strategies and approaches for manufacturing-specific strategic planning.

Evaluation of Performance:

Methods and resources for gauging the performance of organizations.

The relationship between enhanced performance outcomes and strategic planning procedures.

Obstacles and Difficulties:

Typical obstacles to strategic planning implementation faced by manufacturing companies. Techniques for getting beyond these obstacles.

Case Studies with Verifiable Data:

Factual evidence and real-world examples demonstrating the advantages of strategic planning for the manufacturing industry. A comparison of businesses using and not using strategic planning. Factual evidence and real-world examples demonstrating the advantages of strategic planning for the manufacturing industry. A comparison of businesses using and not using strategic planning.

4. Conclusions

In this study, a positive correlation was exposed between strategic planning and organizational performance. Strategic planning processes of departments that employ domains such as environmental scanning, management participation, planning formality, and strategy technique help manufacturing companies improve their financial and nonfinancial performance. Furthermore, the process of strategic planning has a positive impact on the financial performance of a company. When it comes to the company’s nonfinancial performance, environmental scanning has a positive and statistically significant impact. The levels of management participation and planning formality have a positive and statistically significant impact on the company’s nonfinancial performance at the 10 percent level. The domain of strategy and technique has no significant impact on the nonfinancial performance of the company. The findings of this study support previous literature indicating a positive relationship between strategic planning and organizational performance in manufacturing firms. Specifically, our results suggest that environmental scanning, management participation, and planning formalities significantly contribute to improved nonfinancial performance. These outcomes align with prior research highlighting the importance of an organization’s ability to gather information about external opportunities and threats and actively involve various levels of management in the strategic planning process (Wang and Lee, 2017; Zhang et al., 2019). Conversely, we did not find evidence supporting the influence of strategy techniques on nonfinancial performance, which contrasts with earlier investigations reporting mixed findings regarding the significance of specific strategic tools. Our results further reveal that environmental scanning positively influences financial performance, consistent with existing knowledge attributing superior financial returns to organizations engaging in thorough assessments of market trends, technological advancements, and competitor behavior

Based on these results, the researchers can conclude that it is important to pay careful attention to and put resources towards things like setting long-term goals, making goals each year achievable, brainstorming potential strategic alternatives, and evaluating departmental progress on strategic endeavors.

One of the things that will help a company realize its goals is to be sure its strategic plan can get it there. However, this plan can be foiled if some problems that crop up in putting it into practice are not taken care of. The strategy will never work unless the barriers found in this study are eliminated. Managers, specifically department managers, must communicate the strategy via their appropriate channels (written and oral) to be involved in the planning process, with particular attention to employee participation in strategy making. This is beneficial because a strategy is more likely to be successful when everyone works on the strategy. Department managers should get their employees to accept the significance and importance of the strategy before introducing it. To do this, they must discuss it with, and convince, their staff members beforehand.

Strategic planning is critical to helping large manufacturing firms excel in both financial and nonfinancial performance. In order to effectively maximize the performance of their company, managers should devote enough effort to the strategic planning process. They should use SWOT analysis, cost–benefit analysis, competitive and critical success factor analysis, and internal environment scanning (past performance evaluation, customer trend analysis, and analysis of the reasons for past failures). Based on the above, the proposals can be divided as follows:

Scientific recommendations:

• Further research should focus on examining the relationship between strategic planning and intervention strategies by adding extra dimensions to each idea.
• Investigators should consider collecting longitudinal data to establish causal relationships between strategic planning and associated factors.
• Exploring alternative performance measurement indicators, including innovation capacity, social responsibility, and stakeholder satisfaction, might yield interesting insights.

Practical recommendations:

• Companies should dedicate adequate resources to develop robust strategic plans and address any identified barriers impeding implementation efforts.
• Effective communication channels should be established, involving various levels of management and frontline personnel in the planning process, leading to higher chances of success and increased alignment between corporate objectives and individual responsibilities.
• Regularly performing comprehensive environmental scans allows businesses to seize emerging growth opportunities and reduce looming threats while improving profitability and sustainability.

Limitations acknowledged:

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Focusing only on the manufacturing industry restricts generalization possibilities.

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Cross-sectional design prevents definitive conclusions regarding cause-and-effect relationships.

Future research avenues include:

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Studying strategic planning impacts on other aspects of company performance, e.g., innovation capacity, social responsibility, and stakeholder satisfaction.

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Examining longitudinal data to understand how strategic planning affects firm performance over time.