Strategic Planning and Sme

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CHAPTER 1
THE PROBLEM

1.1INTRODUCTION AND BACKGROUND

Businesses operates in an environment charactiresed by rapid political, economic, social and technological changes, Increased competition, shortages and high costs of natural resources. To be able to survive and grow, business must necessarily adapt to the changing external environment. To ensure that the business survive, a committed effort by top management is required. The principles of strategic management apply to all types of business (large or small), all institutions and all non-profit organisations. J Kroon 1995

Strategic planning is the process that an organisation uses to ases its current position in the industry , develop its vision for the future and to design the steps necessary to achieve that vision. Busness analyses tecniqueis can be used in strategic planning example the SWOT Ananlusis (strengths, weakness, opportunities and threats. http://en.wikipedia.org/wiki/strategic_planning.

1.2STATEMENT OF THE PROBLEM

Although small and medium-sized enterprises (SMEs) typically employ a major share of an economy’s total employees, SME management suffers from an insufficient business-related knowledge base that top managers in SMEs possess. Indeed, formal plans or cost controls are often only provided on an irregular basis and planning instruments are usually only used by a small number of individuals and developed rather intuitively (Brinkmann, 2002). These shortcomings point towards the importance of examining the value of strategic planning for SMEs in more detail. Given the role of strategic instruments in large companies and the notion that rational decision-making should prevail in enterprises regardless of size, practitioners and academics alike have recently called for an increased use of strategic planning in SMEs. In this vein, several empirical studies reveal a link between strategic planning and success (e.g., Rue and Ibrahim, 1998; Bracker, Keats and Pearson, 1988;...
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