Strategic Planning in Sme's

Topics: International trade, Strategic management, Strategic planning Pages: 19 (5296 words) Published: February 23, 2009
Table of Contents


1.0 Introduction:3
1.1 Definitions:5

2.0 Literature Review7
2.1 Why companies go global7
2.1.1 Clustering8
2.2 SME Approaches to Internationalisation9
2.2.1 Imports/Exports:10
2.2.2 Foreign Direct Investment:10
2.2.3 Strategic Alliances/Joint Ventures:10
2.3 Market Entry11
2.4 Exporting11
2.5 Licensing12

3.0 Background Theory12
3.1 What is Planning and why is it important12
3.2 Long Term Planning13
3.3 5 P’s of strategy (Mintzberg and Quinn, 1996)14
3.4 Internationalisation Theory15
3.5 Stages of Internationalisation and SMEs15

4.0 Internationalisation Risks and Challenges16
4.1 Barriers to exporting18

5.0 Managerial significance of Strategic Planning19
5.1 Recommendations20



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1.0 Introduction:

Many organisations attempt to diversify when their flagship product has reached the maturity point in its current market life cycle (Levitt, 1965). In order to ensure the long run sustainability of the firm, they must try to diversify or develop new products. According to Ansoff (1957), a firm has four options; market penetration, new product development, market development or diversification. For the purpose of this study we will be focusing on market development in relation to small to medium sized enterprises.

This study will analyse the importance of strategic planning in the success of the process of internationalization. Internationalisation can play a very important role in determining firm’s long-term success, and the scale of expansion and risks involved are substantial (Smolarski and Wilner, 2005). Strategic planning describes the strategy a firm will use to achieve its goals in the long run (David, 1989). We will access the importance of organisation wide planning in the success of SME’s in new markets. Our study will focus on the departmental roles of marketing, human resources and finance. We will attempt to integrate the marketing strategy of Flahavans and the human resource strategy of the Four Seasons. The main aim of the study is to access why there is a paucity of strategic planning in SME’s when studies have shown that firms with strategic planning outperform those without simply by having direction and a unified goal (Wang, 2008)

This text will begin with a brief introduction to the underlying theories in strategic planning and internationalization. We will also look at what an SME is and their importance to economies around the globe. Following on from this will the text will review the relevant literature in the area and propose some recommendations and access the managerial significance of this area.

There has been a sizable body of literature published on the internationalisation of SME’s in recent years (Coviello, 1999; Knight, 2000; Zacharakis, 1997; Lu& Beamish, 2001). This text will attempt to access the role of strategic planning in the market entry decision. SME’s are faced which more difficult decisions than MNE are when it comes to new markets. SME’s can enter new markets by direct export, licensing, contract manufacturing, strategic alliance or through a merger or acquisition (Kotler, 2002).

1.1 Definitions:

What is Internationalisation?

The term internationalisation refers to the growing of transactions and interdependence between countries. (Scholte, 2008). It can also be described as the “process of integrating an international, intercultural, or global dimension”. (Boston College 2003) (Johanson and Vahlne, 1977) as cited by (Slater et al...

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Fillis, I
Giddens,A. (2006). Essentials of Sociology. New York. W.W. Norton & Company, 2006
Knight, G
Levitt, T. (1965) Exploit the product life cycle, Harvard Business Review, vol 43, November-December 1965, pp 81-94.
Lu, J.W
Masten, S.E. (1993). Transaction Costs, Mistakes, and Performance: Assessing
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McCafferty, J. (2008) The New Globalists [datamonitor] Available at:
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Nakos, G. & Brouthers, K.D. (2002). Entry Mode Choice of SMEs in Central and Eastern Europe. Entrepreneurship Theory & Practice, 27(1), 47-64.
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Pehrsson, A. (2004). Strategy Competence: a successful approach to international market entry. Strategic Management Journal Vol. 42 Issue 6 pp.758-768
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Scholte, J. (2008). Defining Globalisation. [datamonitor]. Available at:
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Slater, S. (2001) Marketing 's Contribution to the Implementation of Business Strategy: An Empirical Analysis. Strategic Management Journal, Vol. 22, No. 11 (Nov., 2001), pp. 1055-1067
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Wilson, K. (2006) Encouraging the Internationalisation of SMEs. [datamonitor] Available at:
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Woodcock, C.P., Beamish, P.W., & Makino, S. (1994). Ownership-Based Entry Mode Strategies and International Performance. Journal of International Business Studies, 25(2), 253-272.
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Zacharakis, A. (1997). Entrepreneurial Entry into Foreign Markets: A Transaction Cost Perspective. Entrepreneurship Theory & Practice, 21(3), 23-39.
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