Abstract:
Strategic planning has become an important and indispensable function for the survival of any
business organization in any industry ever since the inception of strategic planning. Among
many industries, financial services industry faces a severe competition and risk. Hence thinking
strategically has become highly crucial. Within the financial services industry, banks in particular
have begun to concentrate on strategic planning as a positive response to increase in complexity
and change in the financial services industry.
In studies carried out by previous researchers, it has been revealed that among other things strategic
planning was used to improve financial performance as well. However, research on impact of
formal strategic planning on performance yields mixed results and had mainly focused only on
financial aspect of performance. The aim of this study is to examine the relationship between
formal strategic planning and performance in both aspects of financial and non-financial. Multiple
indicator measures of strategic planning were used to ascertain the strategic planning formality.
The study was conducted in the commercial banks of Sri Lanka. The results of strategic planningperformance
model reveal that being formal in strategic planning improves financial performance.
It further reveals that formal strategic planning have a positive impact on non-financial performance
than on financial performance.
