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AFRICAN ECHO NEWS

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.

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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