Analysis of strategic planning practices on performance of smes in Nakawa division, Kampala, Uganda

Abstract

Strategic planning intends to address three main goals. First and foremost, it seeks to understand the core issues which the organization would want to achieve which culminates in the scrutiny of the vision and mission. Secondly, it seeks to design a comprehensive step-by-step guide framework for achieving goals, and lastly; providing a clear course of action for achieving set priorities in the future. The main purpose of this study was to analyze Strategic Planning Practices on Performance of SMEs in Nakawa Division, Kampala, Uganda. The specific objectives of the study were: To establish influence of contingency planning, goal setting, balanced scorecard and forecasting on performance of SMEs in Nakawa Division, Kampala. The study drew on the following theories: dynamic capabilities’ theory, contingency planning theory, goal setting theory and balanced scorecard. This study adopted a cross sectional survey design based on both quantitative and qualitative approaches. This study focused on SME owners and employees such as managers, human resources, operations among other employees that may have relevant information concerning this study. Nakawa division has several SMEs that cut across all sectors (Nakawa SME register, 2023). But this study focused on Manufacturing SMEs confined in designated industrial areas of Nakawa Division and only those that have been in business for not less than 5 years. This therefore constituted a study population of 120 SMEs (Nakawa SMEs register, 2023) and census sampling was applied. > The data for this study was collected using questionnaires that had both open-ended and closed-ended questions. To check if the research tools were reliable and valid, Cronbach's alpha was used. Items in the questionnaire with an alpha value above 0.7 showed that the tool was consistent. The data was analyzed using both descriptive and inferential statistics with the help of the Statistical Package for Social Sciences (SPSS). Descriptive methods such as mean, standard deviation, and percentages were used to explain the data. Regression analysis was used for the inferential part. The results were presented in tables and figures. Major findings were that Forecasting (r = 0.710) shows the strongest positive relationship with SME performance, followed by Contingency Planning (r = 0.645), Goal Setting (r = 0.559), and Balanced Scorecard (r = 0.550), all highlighting varying degrees of positive influence. In conclusion therefore Forecasting and Contingency Planning are critical for enhancing SMEs' adaptability and decision-making. Goal Setting and Balanced Scorecard contribute moderately but require further improvement for maximum impact. The study recommends that SMEs should prioritize accurate forecasting and robust contingency planning. Enhancing goalsetting frameworks and effectively leveraging balanced scorecards can further optimize their performance.