The Effect of Strategy Execution on Organizational Performance; a Case Study on Oromia Bank S.C.
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Date
2023-06
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Addis Ababa University
Abstract
The objective of the study was to examine the effect of strategy execution practices on organizational performance in the case of Oromia Bank. The study used the five principles of strategy-focused organizations to investigate such an effect. Mobilize Change Through Executive Leadership (mobilizing practices), Translate Strategy into Operational Terms (translating practices), Align the Organization to Strategy (alignment practices), Make Strategy Everyone's Everyday Job (motivating practices), and Make Strategy a Continuous Process (governing practices) are the five principles of strategy execution practices. Data were acquired from a targeted sample of 114 people via a census survey, and 109 of them completed a self-administered questionnaire. Explanatory research design and a quantitative research approach were used in the study. To analyze the relationship and effect of variables, descriptive statistics such as mean and standard deviation, Pearson correlation, and multiple linear regressions were used. The study's findings revealed that governing practices have a significant effect on organizational performance as the level of significance (P, 0.001) is less than 0.05, whereas mobilizing, translating, aligning, and motivating practices have no significant effect on organizational performance as p >0.05. The regression results also revealed that the adjusted R square value was 0.417, implying that strategy execution practices (predictors) account for 41.7% of the variation in organizational performance, with the remaining 58.3% accounted for by other extraneous variables that can affect organizational performance. Even if only governing practices have a significant impact on organizational performance, all four strategy execution practices have a positive beta value. Therefore, it can be concluded that governing strategy (making it a continual process) was the major predictor variable having high beta value of 0.425. Thus, strategy implementation is very important to maintain competitive advantage and increase organizational performance in all aspect when there are strong governance practices to make the strategy a continual process. As a result, it is recommended that Oromia Bank S.C. completely execute and design strategic orientations as a source of competitive advantage over its industry competitors in order to achieve superior performance. The findings also showed the need for additional research on the effect of strategy execution practices in a broader sense with some addition moderating variables and organizational performance