This study is an empirical assessment of the impact of Strategic Management (particularly differentiation strategy) on Organizational Efficiency ,as supported by Glueck (1972) who affirmed that the application of strategic management  will ultimately lead to the efficient allocation of scarce resources in an organization.

A total of 124 were administered to employees of First Inland Bank, Intercontinental Bank, Furniture Mart and Viju Industries Ltd. The data were analyzed using Pearsons Product Moment Correlation Coefficient, Chi-Square and Student Tail-Test. The research instrument was self-structured, closed ended and found to be reliable as the result of the split half reliability test gave a positive correlation of 0.51. three hypotheses and six research questions were analyzed. The result from the tested hypotheses proved that strategic management has a strong impact on organizational efficiency, as the level of organizational efficiency of the understudied companies have been positively impacted by the implementation of strategic management.






Title page                                                                                                                               

Certification                                                                                                                i

Dedication                                                                                                                  ii

Acknowledgement                                                                                                      iii

Table of Content                                                                                                         iv        



             Introduction                                                                                                         1               

.1        Background of the study                                                                                    1         

.2            statement of the research problem                                                                     2

.3            scope of the study                                                                                              2

.4            research questions                                                                                              2

.5            research hypothesis                                                                                            3

.6            objectives of the study                                                                                       3

.7            significance of the study                                                                                    3

.8            operational definition of terms                                                                          3

.9            references                                                                                                           5



2.0   Literature Review                                                                                               6

2.1   Historical Background Of The Selected Organization                                       6

2.2   Meaning Of Strategy                                                                                          7

2.3   Strategic Planning                                                                                               8

2.4    The Hierarchy Of Strategy                                                                                10

2.5    Various Definitions Of Strategic Management                                                 10

2.6    The Birth Of Strategic Management                                                                 11

2.7    The Strategic Management Process                                                                   13

2.8    Differentiation Strategy                                                                                     14

2.9    Competitive Strategies And Differentiation                                                     15

2.10  The Pitfalls Of Differentiation Strategy                                                                        16

2.11  The Benefits Of Strategic Management                                                                        16

2.12   Limitations Of Strategic Management                                                             17

2.13   Reasons Why Strategies May Fail:                                                                   17

2.14   Organizational Efficiency                                                                                 18

2.15   Differentiation Strategy And Organizational Efficiency                                 20       

2.16   References                                                                                                        21       



 3.0  Research Methodology                                                                                       24

3.1  Characteristics Of Study Population:                                                                  24

3.2  Sample Procedure                                                                                                25

3.3  Research Design                                                                                                  25

3.4  Description Of Research Instrument                                                                   25

3.5  Standardization Of Research Instrument                                                                        26

3.6  Re-Statement Of Research Hypotheses                                                              26

3.7  Data Analysis Technique                                                                                     26

3.8  Limitations Of The Study                                                                                    27

3.9  References                                                                                                           28



4.0     Data Presentation And Analysis                                                                       29

4.1     Introduction                                                                                                      29

4.2     Analysis Of Respondents Characteristics                                                         29

4.2.1  Industry Distribution Of Respondents.                                                                        29

4.2.2  Location Distribution Of Respondents                                                            29

4.2.3  Sex Distribution Of Respondents                                                                     30

4.2.4  Age Distribution Of Respondents                                                                    30

4.2.5  Marital Status Distribution Of Respondents                                                    30

4.2.6  Educational Qualification Of Distribution                                                       31

4.2.7  Designation Distribution Of Respondents                                                       31

4.2.8  Length Of Service Distribution Of Respondents                                             32

4.3     Analysis Of Organizational Characteristics                                                      32

4.4     Analysis Of Research Questions                                                                      33

4.4.1  Research Question 1                                                                                         33

4.4.2  Research Question 2                                                                                         33

4.4.3  Research Question 3                                                                                         34

4.4.4  Research Question 4                                                                                         35

4.4.5  Research Question 5                                                                                         35

4.4.6  Research Question 6                                                                                         36

4.5    Analysis Of Tested Hypothesis                                                                         36

4.5.1 Hypothesis I                                                                                                       37

4.5.2 Hypothesis II                                                                                                     37

4.5.3 Hypothesis III                                                                                                    37




5.0  Summary, Conclusion And Recommendations                                                   38

5.1  Introduction                                                                                                         38

5.2  Summary Of Findings                                                                                         38

5.3  Conclusion                                                                                                           39

5.4  Recommendations For Further Studies                                                               39

5.5  References                                                                                                           40


BIBLIOGRAPHY                                                                                                    41

Appendix I      Sample Of Administered Questionnaire                                     

Appendix II    Spreadsheet of scored responses

Appendix III –  Split-Half Reliability Test

Appendix IV –  Analysis Of Research Hypotheses

Appendix V     Statistical Frequencies






Until recent times, the attainment of organizational efficiency in a business organization, that is, the capacity of an organization to produce desired results with minimum expenditure of time, money personnel and material, - (Smith and Grimm 1987) depended on the intuition of business owners or managers. Such intuitions were usually based on the past experience or “hunch” of owners or Top managers which could bring about a level of organizational efficiency.


Although some of these intuitive decisions worked for sometime. It has been observed that as the organization increases in size and the business environment starts to experience rapid change as a result of the influence of various external factors. Hence, managers intuition is simply not suitable enough to attain organizational efficiency.


It has therefore become imperative for managers and business owners to utilize a systematic approach towards the attainment of organizational efficiency. There is need to attempt to match the resources of the organization to the rapidly changing environment within which its operates. This systematic approach is what is referred to as STRATEGIC MANAGEMENT.


Strategic management is the process of systematically analyzing various opportunities and threats vis-à-vis organizational strengths and weaknesses, formulating and arriving at strategic choices through critical evaluation of alternatives and implementing them to meet the set objectives of the organization – (Lomash and Mishra 2003). The strategic management process facilitate to optimally position a firm in a given dynamic environment.


This study is being carried out to analyze the relationship between the application of strategic management and the efficiency of a business organization, through the use of empirical and measurable data, collected from organizations which operate in today’s dynamic environment.


1.2       STATEMENT OF RESEARCH PROBLEM                                                             

What necessitated this research is the fact that in todays’ dynamic business environment, mere intuition and guesses have become highly inadequate to match the purpose of attaining organizational efficiency. The need for a better systematic and more predictable approach is required. Such approach can only be verified by a study which proves the existence and strength of the relationship between strategic management and organizational efficiency.               



This research will examine strategic management focusing on Differentiation strategy in particular as a tool for organizational efficiency. A comparison will be made between organizations which operate in a common business environment who have attained various levels of organizational efficiency through the application of Differentiation strategy i.e., offering unique products or services to that of the competitors. This comparison should reveal if there is variance in the level of organizational efficiency achievable as a result of the degree of differentiation strategy adopted.     


1.4              RESEARCH QUESTION

The following questions will be answered at the end of this study:-

i)                    Is there a strong relationship between strategic management and organizational efficiency?

ii)                  What effect does Differentiation strategy in particular have on the efficiency of an organization?

iii)                Can Differentiation strategy be responsible for market positioning?

iv)                What kind of effect does the application of differentiation strategy have on employee performance?

v)                  Is the application of differentiation strategy a myth or a reality?

vi)                Is differentiation strategy an applicable tool for increasing profitability level?

1.5       RESEARCH HYPOTHESIS                       

HYPOTHESIS 1: The level of organizational efficiency is in direct proportion with the level of implementation of differentiation strategy in an organization.

HYPOTHESIS 2:  Organizational efficiency maintains a strong positive relationship with Differentiation strategy in todays dynamic environment.

HYPOTHESIS 3:  Differentiation strategy is an applicable tool for increasing profitability level in a business organization.


1.6       OBJECTIVES OF THE STUDY                

The various objectives of the study are:-

i)                    To reveal that organizational efficiency is attainable in todays dynamic environment.

ii)                  To prove that strategic management plays a crucial role in the attainment of organizational efficiency.

iii)                To show empirical evidence of the relationship between differentiation strategy and the factors that determine the efficiency of an organization.              



i)                    This study is significant because it would reveal empirically, the relationship between strategic management and organizational efficiency.

ii)                  It would also reveal to managers, the possibility of attaining organizational efficiency through differentiation strategy.

iii)                It would enable managers to adequately match their limited resources to the dynamic environment.

iv)                This study will reveal how differentiation strategy can serve as a bench mark for the attainment of organizational efficiency.

v)                  Source of information for further research. 



1.  STRATEGY: A pattern of organizational moves an managerial approaches used to achieve     organizational objectives band pursue organizational mission.


2.  STRATEGIC MANAGEMENT: A set of managerial decisions and actions that

      determines the long-run performance of a corporation.


3.  ORGANIZATIONAL EFFICIENCY : The capacity of an organization, or business to produce desired results with a minimum expenditure of resources.


4.  DIFFERENTIATION STRATEGY: the process of distinguishing  the differences of a                             product or offering from others, to make it more attractive to the target market.


5.   MARKET SHARE: Is the percentage of the entire target market that the organization has secured.


6.   PROFITABILITY: The ability of an organization to generate profit.


7. ENVIRONMENT: Is the combination of factors, both internal and external to the organization, which influence the activities of the organization directly. 


8.  CORPORATE STRATEGY: Is the major strategy for the entire organization.


9.  INTUITIVE STRATEGY: A non-systematic strategy that is based on the judgment of business owners or managers.


10. INDEPENDENT VARIABLE: the presumed cause, which in this study is Strategic Management.


11. DEPENDENT VARIABLE: The presumed effect, which in this study is Organizational Efficiency  



1. Lomash, Suresh. and Mishra Paul. (2003), Business Policy and Strategic

                          Management, New Delhi: Vikas Publishing.


2. Smith, Gordon and Grimm, Charles (1991). “Management and Organizational

                          Change”, Strategic Management Journal,, Vol. 12, pp 557-562.




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