Planning policies and effectiveness of firms engaged in systematic planning processes : a cross-validation study

1. Develop a classification scheme for strategic planning systems.

2. Describe the various clusters of planning systems which result from the classification scheme.

3. Determine the global effectiveness of strategic planning systems embraced by selected U.S. manufacturing firms with respect to designated measures of financial performance.

4. Determine effectiveness, with respect to financial performance measures, of strategic planning efforts which exist in the various industrial classifications of U.S. manufacturing organizations.

5. Determine the degree of effectiveness, with respect to financial performance measures, of the various clusters resulting from the classification scheme for strategic planning systems developed by this study.

The experimental design encompasses four distinct phases. The initial phase results in the identification of 1015 manufacturing organizations which comprise the study's population. Five-hundred manufacturing organizations are randomly selected for inclusion in the study's second phase concerned with the development and dissemination of a questionnaire. The third phase of the experimental design involves the classification or the 168 respondents to the questionnaire with regard to common dimensions exhibited by a firm's planning system. The classification phase is accomplished through the use of cluster analysis. The fourth phase evaluates the effectiveness of strategic planning systems on the basis of five performance measures—return on assets, asset turnover, profit maragin, return on equity, and net sales. The analysis or variance model is used to test for significance of the differences in performance of firms with strategic planning systems.

The results of the study are presented in three basic areas—(1) description of a modal firm for the three planning system classifications resulting fron the cluster analysis methodology, (2) determination of effectiveness of strategic planning systems embraced by U.S. manufacturing firms with respect to the designated measures of financial performance, and (3) determination of the degree of effectiveness of firms in the three clusters which resulted from the classification phase.

The results of the study reveal that none of the financial performance measures exhibit a performance patter that would support the overall conclusion that strategic planning improves a firm's performance. The conclusion advanced by this study is that strategic planning assists a firm in maintaining its relative perfomance position within the industry. In order to support this conclusion, firms are evaluated at three points in time—(1) the firm's performance the third year after adoption of a strategic planning system versus the firm's performance the third year before adoption of a strategic planning system; (2) the firm's performance the third year after adoption of a strategic planning system, versus the industry's mean performance over the same time period; (3) the firm's performance the third year before adoption of a strategic planning system versus the industry's mean performance over the same time period.