Strategy and planning process in the Small Business and the Small & Middle Enterprises (SME) Sector

Résumé du document

An essential ingredient of small businesses is business planning. It is perceived to be vital by both governments and business support infrastructure, such as the Business Links (Beaver, 2002, p88). On similar lines, O'Gorman bases his idea on the fact that one approach to developing a successful strategy could be to engage in a formal planning process (2000, p291). Although planning is an essential tool that is frequently used and implemented in large corporations, it relies on different means for coordination and control in SMEs, due to differences in scale. The extensive research on corporate strategy is not relevant for small businesses since they are more driven by new opportunities and strive to minimize their commitment to resources. (Stevenson and Gumpert, 1985, pp 86-87). This paper evaluates the statement of O'Gorman about the impact of planning on a successful strategy for small and medium-sized firms. Firstly, we will analyze the notion of planning for SMEs in formulating their strategy. In the second part, the paper will present the reasons why in reality owner managers of small businesses do not engage as formally as managers of large corporations in the planning process. Finally, the paper will evaluate the considerations presented to clarify the initial hypothesis.

Extraits

[...] Entrepreneurs communicate a better world just as they see it and expect a unified vision shared with their stakeholders. Such a vision may offer the owner-manager a control over the destiny of the business. Gibb and Scott go beyond this idea by presenting the strategic foresight of entrepreneurs who generally have the ability to anticipate and adapt to changes in the environment (1985, p273). Unfortunately, entrepreneurs are not all gifted with both technical know- how and business skills (Bhide p153). [...]

[...] Thus, the lack of formal planning does not imply the absence of strategic thinking which systematically precedes the making of decisions (Foster p125). To sum up this point, small businesses that engage in contemporary strategic management practices tend to outperform those that do not. But this does not mean that formal procedures are either necessary or desirable, although some organisations recommend them. Planning enables the comparison with the initial intentions and describes the evolution of the business. However, the process of strategic thinking and planning rather than the plan itself could appear to be the key driver of business performance (Beaver 2002, p 75). [...]

[...] I should have stuck to the cooking parts of the business and got somebody else to take care of all the other parts.” (Beaver p101). Following this example, entrepreneurs often recognise after a failure that they should have asked help in their planning process to allow the survival of their business and concentrate on innovation. (Larty, Entr 207, Tutorial 4). Thus, effective planning must be supported by adequate financial control system and communication tools which focusing on the market niche the business is targeting (O'Gorman p292). [...]

[...] As long as a coherent strategic thinking is at the heart of the business, the firm could be successful, but only if its strategy is combined to the genuine and enthusiastic will of the entrepreneur. References Ansoff, H.I. (1965) “Corporate Strategy”, New York McGraw-Hill. Beaver, G. (2002) “Small Business, Entrepreneurship and Enterprise Development”, New york: Prentice Hall Bhide, A., (1994) Entrepreneurs Craft Strategies that Harvard Business Review. Bhide, A.,(2000), Origin and Evolution of New Businesses”, Oxford University Press. Bolton, B and Thompson, J. (2000) “Entrepreneurs: Talent, Temperament, Technique”, Oxford: Butterworth Heinemann Bracker, J. (1980), Historical Development of Strategic Management Concept”, Academy of Management. The Academy of Management Review, pp219-225. Brown, D. [...]

[...] Burns, P., Dewhurst, J., (1996), “Small business management”, 3rd ed. Basingstoke: Macmillan Press Ltd. Cave, F. (2005) “Financial Issues and Practice in ENTR 208, lecture week 7. Cohn, T. and Lindberg, R., (1982), quoted p 292 in Carter, S and Jones-Evans, D. (2000) New York: Prentice Hall. Cooper, A.C., Willard, G.E., Woo, C.Y. (1986), “Strategies of High- performing new and small Firms: a re-examination of the niche concept”, Journal of Business Venturing, New York, pp247-260. Cope, J (2005), “Strategy in small firms” ENTR 208 lecture, Week 5. [...]