Strategic Planning
Strategic Planning Effects on Small and Medium Enterprises (SME) Performance
Strategic plans are the action by which a firm plans to achieve their goals. These goals explain where the business wants to be in the future, and apply to the whole organization as opposed to specific sections or departments. Strategic planning affects the performance of the entire business. This paper will focus on the importance of strategic planning, effective or otherwise, on small and medium businesses. Small enterprises are especially interesting because in this time of global competition as well as changing dynamics in markets, the growth of small businesses depends on their ability to use effective strategic planning. Small firms are useful drivers in the economy and key sources of employment. Implementing more effective planning strategies could prevent many necessary small businesses from going bankrupt in their first few years. Several researchers have apparently taken note of the lack of information focused on small enterprises and businesses. Strategy is the most important future indicator of firm growth. Strategic planning is near universally considered a major small business growth factor. Small business managers use and perceive strategy and planning in different ways than large firm managers. Understanding what strategic planning means to small businesses is necessary to gather information on the types of strategy used and the effect they have on performance. Many studies have recommended that business failure is due largely to an organization’s failure to plan. “Without a clearly defined strategy, a business has no sustainable basis for creating and maintaining a competitive edge in the marketplace.” (Norman and Thomas, 2003) This view is shared by various empirical studies that show a link between strategic planning and firm success (e.g., Bracker et al., 1988; Lyles et al. 1993). Studies have shown that the high failure rate among small firms, particularly
Strategic plans are the action by which a firm plans to achieve their goals. These goals explain where the business wants to be in the future, and apply to the whole organization as opposed to specific sections or departments. Strategic planning affects the performance of the entire business. This paper will focus on the importance of strategic planning, effective or otherwise, on small and medium businesses. Small enterprises are especially interesting because in this time of global competition as well as changing dynamics in markets, the growth of small businesses depends on their ability to use effective strategic planning. Small firms are useful drivers in the economy and key sources of employment. Implementing more effective planning strategies could prevent many necessary small businesses from going bankrupt in their first few years. Several researchers have apparently taken note of the lack of information focused on small enterprises and businesses. Strategy is the most important future indicator of firm growth. Strategic planning is near universally considered a major small business growth factor. Small business managers use and perceive strategy and planning in different ways than large firm managers. Understanding what strategic planning means to small businesses is necessary to gather information on the types of strategy used and the effect they have on performance. Many studies have recommended that business failure is due largely to an organization’s failure to plan. “Without a clearly defined strategy, a business has no sustainable basis for creating and maintaining a competitive edge in the marketplace.” (Norman and Thomas, 2003) This view is shared by various empirical studies that show a link between strategic planning and firm success (e.g., Bracker et al., 1988; Lyles et al. 1993). Studies have shown that the high failure rate among small firms, particularly
Cited: Amboise, G., & Muldowney, M. (1988). Management Theory for Small Business: Attempts and Requirements. Academy Of Management Review, 13(2), 226-240. doi:10.5465/AMR.1988.4306873 http://navigator-millersville.passhe.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=4306873&site=ehost-live&scope=site Brumm, C. A., & Drury, S. (2013). Leadership that Empowers: How Strategic Planning Relates to Followership. Engineering Management Journal, 25(4), 17-32. http://navigator-millersville.passhe.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=93728875&site=ehost-live&scope=site Skokan, K., Pawliczek, A., & Piszczur, R. (2013). Strategic Planning and Business Performance of Micro, Small and Medium-Sized Enterprises. Journal Of Competitiveness, 5(4), 57-72. http://navigator-millersville.passhe.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=93550682&site=ehost-live&scope=site Golde, R. A. (1964). Practical Planning for Small Business. Harvard Business Review, 42(5), 147-161. http://navigator-millersville.passhe.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=6813304&site=ehost-live&scope=site Harrington, H., & Voehl, F. (2013). Innovation Management: A Breakthrough Approach to Organizational Excellence - Part 1. International Journal Of Innovation Science, 5(4), 213-224. doi:10.1260/1757-2223.5.4.213 http://navigator-millersville.passhe.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=93658780&site=ehost-live&scope=site