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STRATEGIC MANAGEMENT THINKING SAVE THE SME?
A NEW DAWN FOR SME.
By Ahmed T. Saeed
Many of the strategies, which small and medium firms may adopt, are
not strictly strategic by the normal criteria as applied to large
firms. For most small and medium firms the short term is more
important consideration than thinking five years ahead, and dealing
with practical considerations is important to the survival of the
firm. For a large organisation these issues would form a relatively
minor and localised functional concern. Studies have revealed that
the competitiveness of an SME is dependent on its owner/manager, and
the adoption of a strategic planning approach is affected by its
ownership structure.
Managers of SMEs are usually holding multiple roles as entrepreneur,
owner and owner-manager, the management focus tends to be operational
rather than strategic. In order to take advantage of supply chain
management as a means for competitive advantage and be successful in
doing so, SMEs need to be aware of the concept of SCM. This poses
greater challenges for owner/manager of SMEs, because they would need
to trade their short-term operational focus for longer-term
strategies and technological innovations – an approach unfamiliar and
uncharacteristic to SMEs. All generic skills in managing finances and
personnel are useful for the SME, the management of SME is very
different from that of a large corporation. Flexibility, multi-
tasking and dealing with a multiplicity of roles are the competences
needed by small and medium business owner/manager. The management of
strategy is primarily a process of responding to changes in the
environment, and using scarce resources both financial and managerial
to maximise the gains for the owner, however, he or she defines it.
Strategies, which are likely to be successful, are also contingent on
the industry or sector in which they are applied. Successful
strategies could include extensive advertising campaign, proper
product packaging, extensive communications campaign including, the
creation of awareness of local goods in a country, developing the
distribution network, innovation among others are some of the typical
success strategies in the industry.
In addition, a successful strategy for SMEs is likely to be based on
the ability to choose and negotiate a good site close to an attractor
store and then to manage cash flow and stock control effectively.
Success for SMEs is also linked with a focus on: Pricing products
lower than those of the competitors; emphasising high sales turn
over; emphasising cost reduction, checking quality of products; using
outside borrowed funds; and searching for cheap sources of finance.
The value for money factor in an industry suggests that small and
medium firms may only be able to compete successfully when both low
price and good quality are achieved.
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The concept of limited proactivity and personal management in the
concept of an involved marketing style, describing how small firm
marketing is often characterised by a high level of direct
involvement on the part of the owner-manager and how it relies
heavily on intuitive ideas and decisions and probably most
importantly on common sense. Addressing the problem of strategic
choice of marketing growth strategy in an SME is a function of
strategic situation, organisational characteristics, and entrepreneur
motivations. Many authors have commented on the typical limitations
of strategic alternatives available to the small firm by virtue of
such factors as small market share and limitations of resources and
skills. |
Because of these limitations, it has been suggested that
certain strategic alternatives are typically more appropriate for a
small firm, namely those that avoid direct competition with larger
firms and that involve the development of close customer
relationships and product adaptation. It has been suggested that for
SMEs, the most appropriate growth strategies are therefore product
development and market development.
In conclusion, it is evident that, given the nature of competition
across many industries including, industries where the adoption and
deployment of coherent strategies can make significant difference
between success and failure, the SME needs a radical examination and
evaluation of their thinking, so as be able to adapt in different
circumstances that could help provide a strategic foundation for a
sustainable competitive advantage, in industries and markets in which
they operate.
Ahmed .T.Saeed (Consultant in International Business Strategy)
(MSc) BA (Hons) (MCMI), MIMC, ACIM,) Lecturer in Business Strategy
(University of Westminster). Mobile: 07950368362
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