Strategic Management Tools Amongst Saudi Enterprises - Research Proposal Example

CHAPTER NINE: CONCLUSION 9.1 Introduction In this chapter, a general summary of the research project is presented along with a review of the study’s key findings in order to provide a background for the implications and contributions of the research outcomes. The chapter is organised as follows: First, a brief summary of the study’s research objectives and research questions is presented along with a description of the research approach. The key findings of the research are discussed, and the implications of the conclusions from those findings, which were presented in the preceding chapter, are explained in terms of the potential theoretical and practical contributions; these are discussed in more depth in succeeding sections, after an explanation of the limitations of the research. Finally, topics for further research suggested by the outcomes of the study are presented. 9.2 General Summary of the Research Study The research study investigated the use of strategic management tools amongst Saudi enterprises, specifically firms listed in the Tadawul, or Saudi Stock Exchange. There were three main objectives of the research project: First, to investigate which types of strategic management tools are used by Saudi-listed companies; second, to investigate the effectiveness of the strategic management tools used by the organisations being studied; and third, to identify the causes of the effectiveness (or lack of effectiveness, as the case may be) of the strategic management tools being used. A number of research questions in line with these objectives were developed, the most significant of which was, “To what extent does the organisational context contribute to the effectiveness or failure of strategic management tools?” which is discussed in greater detail in the following sections. Because of the obvious differences in the strategic objectives and activities of companies in different types of businesses, it was determined that the most effective metric to apply to determinations of strategic management tool “effectiveness” was management perceptions. This approach was confirmed by numerous prior studies such as those by Falshaw, et al. (2006) and Hahn and Powers (2010) that found measuring SMT effectiveness in terms of ‘objective’ measures such as revenues, profit margins, or returns on investment was most likely to lead to contradictory or otherwise inconclusive results. While managers’ perceptions are only valid in the context of their own firms, this actually helps to provide more reliable results: For example, if two managers in two different firms with different characteristics both have positive perceptions of the use of the same strategic management tool, then it can be concluded that tool is effective in a variety of circumstances or applications. The primary research for this study was conducted in two parts. The first part was a survey administered to 213 managers at 150 firms listed on the Saudi stock exchange. Because the number of listed firms fluctuates quite frequently, the target sample of 150 was felt to be a reliable representation of the entire population; in reality, it represented 87.2% of the listed firms, which numbered 172 at the end of 2013, an increase from 156 at the end of the previous year. Following the survey, in-depth, semi-structured interviews were held with 18 managers; these interviews sought to gain further insights into the results of the survey, particular a series of questions in which respondents were asked to assess the effectiveness of the SMTs they currently used in terms of different factors such as information-gathering, improving planning efficiency, performance management, and overall results at both the department/business unit and whole-firm levels. Following the completion of the primary research, quantitative analysis was conducted to test two hypotheses, specifically, whether or not perceptions of SMT effectiveness could be linked to specific SMT types, and whether or not perceptions of SMT effectiveness could be linked to particular characteristics of the firms using them. 9.3 Key Findings General results of the research showed that, the formal use of strategic management tools, i.e. where SMT use is considered an integral part of strategic planning and strategic management practise, was universal amongst the studied firms, which suggests it is virtually universal or least very widespread amongst Saudi firms overall. The most-widely used primary strategic management tools used by Saudi firms are Critical Success Factors (CSF) Analysis and Balanced Scorecards (BSC). SWOT Analysis is also commonly used, but as a complement to CSF and BSC; the overall assessment of the managers in the study was that SWOT has limitations that make it unsuitable as a primary SMT, although – because the choice of SMT is heavily-dependent on the organisational context of the firm – a small number of firms, approximately 8% of those surveyed, do use SWOT in that capacity. Because the combinations of CSF with SWOT and BSC with SWOT are favoured by a majority of the firms in the study (59.2%), and because the overall assessments of SMT contributions to firm outcomes were overwhelmingly positive, it was concluded that either of those combinations have a high likelihood (but not an absolute certainty) of success if selected and applied by any Saudi firm. SMTs are used by Saudi firms in both performance management and strategic planning applications, although the indications from the survey results and follow-up interviews were that managers consider SMTs more appropriate for the latter. Saudi firms also do not modify strategic management tools from their ‘original’ formats to fit particular requirements or circumstances, instead preferring to try different tools if one is found to be unsuitable; almost all of the firms had used a number of tools in the past (and most use more than one currently), with number of tools familiar to the responding managers’ experience averaging between three and four. The quantitative analysis showed that positive firm outcomes as measured by managers’ perceptions could not be related to the use of particular strategic management tools, but that there was a significant correlation between firm type and positive firm outcomes when SMTs are used. Drawing on the insights provided primarily from the semi-structured interviews, a basic typology of a firm in which SMTs would be successfully employed was developed, and has three main characteristics: The firm has a strategic vision and mission in place before the SMT is applied (as opposed to using the tool to help develop the vision and mission); the firm prioritises effective communication and information management in the performance management aspects of its overall strategy; and the firm applies the SMT more ‘holistically’ to its strategy, rather than applying the tool to achieve specific financial objectives. 9.4 Implications of the Research The research has two main implications. The first implication is that the advocacy of practically all of the research literature – that the use of strategic management tools is a benefit to firm performance – is correct, is reflected in business practise amongst Saudi firms, and is a shared perception amongst Saudi managers. While this is certainly welcome news for the proponents of various kinds of strategic management tools, it must be qualified with a couple caveats. First, the effectiveness of any specific SMT cannot be considered to be universal, but is dependent on the organisational context in which it is used. That being the case, it is not possible to objectively judge one strategic management tool as “better” than another. On the other hand, that is not necessarily a bad outcome, because it suggests that there is still plenty of opportunity for the development of new strategic management tools. The second implication of this research is that the findings and conclusions of much of the existing research may very well be outdated. In the three regional studies reviewed as part of this research project – Khan and Al-Buarki (1992) in Bahrain, Al Ghamdi (2005) in Saudi Arabia, and Aldehayyat, et al. (2011) in Jordan – several similar conclusions were offered: First, that strategic management tool use and the use of other formalised strategic planning processes was much less widespread than the present results indicate; second, that the use of strategic management tools was more prevalent in certain business categories – such as large multinational firms or financial institutions – as a consequence of those firms’ managers being obliged to adopt a ‘more professional’ approach; and that the organisational context with respect to the firm’s external cultural or political environment appeared to be a determinant of the firm’s choice of whether or not to use strategic management tools. None of these conclusions were reflected in the results of the present study; the use of strategic management tools is very widespread regardless of firm size or business sector, and while the organisational context plays an important role in determining which strategic management tools the firm chooses, it does not affect their overall decision to use some kind of strategic management tool. 9.5 Limitations of the Research The most obvious limitation of this research is in its setting. While the study sample did include a very high percentage of the target population, i.e. Saudi exchange-listed firms, to the extent that conclusions applicable to that entire population can be made with confidence, as was explained in Chapter Two, there are unique cultural aspects that have a strong influence on the organisational culture in Saudi Arabia, namely, the patriarchal characteristics of Bedouin tribal culture and the traditions of Islam. These characteristics take on added significance in view of the results of the study that reveal firm type as being related to perceived positive outcomes in the use of strategic management tools. While the characteristics that define the relevant type of firm are not obviously related to aspects of Saudi culture, it cannot be said with any certainty that cultural factors do not play a role in shaping them, at least not within the scope of the present study. Therefore, while there is strong confidence in the reliability of the results, it must be recognised that they may not apply to other cultural settings, despite there being no clear evidence that they would not. 9.6 Theoretical Contribution of the Research The theoretical contribution of the research is to add further insight to the study of strategic management perceptions and processes. The correlation of firm type to positive perceptions of strategic management tools’ effectiveness – type as defined by the characteristics that emerged as a result of this research – support the more contemporary views of strategic management as a continuous emergent process rather than a discrete vertical process, in line with the work of Rumelt, et al. (1991), Rollier and Turner (1992), Roberts and Stockport (2009), and Pryor, et al. (2011). In particular, the Opportunity Model of Morris (2005) appears to be well-illustrated in the strategic management approach as it is reflected in decisions made by Saudi managers about which SMTs to apply, in what manner they should be applied, and according to what value judgments the effectiveness of those tools is assessed. Because cultural constraints impose a certain degree of rigidity to the organisational structure of Saudi firms, the strategic management approach also illustrates Payne’s (2007) assertions about the potential for hybrid approaches to develop; that is, organisational contexts in which an emergent, more flexible strategic management approach can be adapted for productive use in an organisational structure conventionally better-suited to the vertical, directive approach to strategic management. The results of the study contribute to expanding ideas and concepts underlying strategic management, and hopefully will contribute in a small way to the development of more comprehensive theory in strategic management studies by presenting an addition to the typology of firms. 9.7 Practical Contributions of the Research The research provides a number of direct practical contributions to firms seeking to expand or improve their approaches to strategic management. At a very basic level, the results provide a robust confirmation of the effectiveness of strategic management tools. While the caution that strategic management tool choices must always be conditional, the results endorse SWOT/BSC and SWOT/CSF strategic management tool combinations as effective packages, depending on the firm’s strategic perspective; more internally-focused firms prioritising performance management perceive positive results with the former, while more externally-focused strategies are perceived to be better served by the latter. The results showing a relationship between firm type and positive perceptions of strategic management tool effectiveness – and by implication, positive perceptions of strategic management outcomes overall – provides three key points that can be practically applied by firms: Development of a strategic mission and vision statement as a precursor to strategic planning and management action, a more concentrated focus on improving and managing communications and information flow within the firm, and applying strategic management in as broad way as the firm finds feasible. From a research perspective, the study makes a practical contribution in providing a comprehensive body of data on strategic management for a national-scale business population. Because the study included more than 80% of the Saudi exchange-listed firms in its research sample, the results serve as a reliable model or comparative data set for similar studies elsewhere. 9.8 Areas for Further Research Several directions for further research are suggested by the outcomes of the present study. Because the SWOT/BSC and SWOT/CSF strategic management tool combinations were so prevalent in this study’s research sample, a further investigation focusing on firms using only those combinations would likely reveal more information about why those particular combinations are perceived to be effective, both in terms of the characteristics of the tools themselves and in terms of the characteristics and organisational contexts of the firms applying them. Another obvious direction for further research would be to repeat the present research in different geographical areas, or amongst different groupings of firms. For instance, the comparison between these results and non-exchange listed firms in Saudi Arabia, or between these results and exchange-listed firms in other Middle East countries would shed light on whether there were commonalities amongst firms in Arab cultures or not; if the latter turned out to be the case, then it would suggest that there are important factors related to firms’ being publicly-listed, or perhaps factors related to the Saudi stock market in particular, that have not yet been revealed. Alternatively, several points that emerged in the present study would be valuable sources of strategic management knowledge if studied in closer detail. For instance, the familiarity with the use of strategic management tools throughout firms, that is, in lower levels of management or even amongst line employees, was stressed as an important factor in whether or not an SMT could be successfully used. Examining that issue in greater detail would provide insight into ideas for management and staff training, and perhaps even refinements to the strategic management tools to improve “ease of use”. Along those lines, one area this study did not address was the “absence of use” of particular types of tools. While some insights were offered by managers – for example, the two or three managers who volunteered the information that their firms use “what-if” spreadsheet analysis informally as budget planning and monitoring tools – this study focused on how and why SMTs were selected by managers and not on why other tools were rejected. Exploring the latter issue would help to provide information on perceived flaws or shortcomings in some strategic management tools, which could contribute to improving them. Read More