The dominant paradigm in strategic management is characterised by two principal functions: strategy formulation and implementation. There are two important contributors to these approaches Ansoff (1965), Andrews (1971, 1986) and Porter (1979, 1980, 1985, and 1998).
In general strategic management is about how the strategy is developed at a first stage and implemented at a second stage. (Stacey 1993; Karami, 2002).
Ansoff and Mc Donnell (1990) separated goal setting from strategy. Strategic management has been defined by, as a process of a systematic approach for managing strategic change which consists of positioning the firm through strategy and capability planning, real time strategic response through issue management and systematic management of resistance during strategic implementation.
Johnson and Scholes (1993) suggest that is not sufficient to state that strategic management is the management of the process of strategic decision-making, because strategic management is different in nature from other aspects of management.
Small -medium enterprises (SME) according to Preston et al (1986) is independently owned and operated and which is not dominant in its field of operation.
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For example Scott and Bruce (1987) provided the qualitative definition of an SME. They indicated that an SME is one which has three characteristics:
Management is autonomous usually managers are also the owners.
Capital is complete and ownership is held by an individual or small group.
Operations are mainly local. Workers and owners are in one home community, but markets need not be located in the same community.
Small scale enterprises worldwide have been recognized as engines of growth and development (Harper, 1984; et al, 1997; Ba-el and Felsenstein, 1990) and in many countries there has been some considerable effort to support them so as to create the necessary employment opportunities, incomes and productive capacity. Moreover the evidence available about the role of small enterprises some of the reasons for them being preferred as follow: ease of formation, capital requirements, flexibility, mobility and a variety of other factors.
Seen from a global perspective, small enterprises have a specific position in global economic affairs. The global market is conquered by world class competitors in the form of multinationals and for the developing countries, small business appears to be the way to compete. http://www.evancarmichael.com/African-Accounts/1639/20-Background-Entrepreneurship-and-Small-Business-Enterprise-Growth-in-Uganda.html
Specifically the increase in the role of SMEs in the United Kingdom is better than anywhere else in the world. It seems thought that all the new firms are really small and that as a consequence shows that the share of SMEs in employment and GDP appears to be less than in most other Organisation for Economic Co-operation and Development (OECD) countries.
SMEs have made an important contribution to innovation, and to maintain competition in the business market. Moreover SMEs have increased the entrepreneurial culture and the flexibility of the economy.
Small enterprises constitute the backbone of economic activity and employment in most countries. The role of small enterprises in society is therefore an area of great interest. Politicians, interest groups, professionals and others seek to support the development of small enterprises and to secure healthy working conditions. The scientific community has also taken an interest in this group of enterprises.
It seems that small enterprises are somewhat puzzling. The drive towards growth is resisted by many owners of small enterprises who are quite satisfied with being small. Health and safety policy interventions and regulations are often met with fierce resistance from small enterprises, although many of them have good and close relationships between owners and employees.
In previous research done about environmental analysis SMEs in particular, studies have investigated the relationships between the different environmental conditions and the usage of different types of information sources by executives in formulating competitive strategy found that (1) high and low rich information sources were used less under highly changing, unpredictable conditions and (2) low rich information sources( such as income statements , memos or letters) were used more than high rich sources ( face to face discussions with workers, customers or suppliers) under steady, expected circumstances.
Results suggest that environmental conditions affect the type of sources ( low rich versus high rich) used by executives in selecting a competitive strategy (that is low cost leadership or differentiation ).
Jennings and Lumpkin (1992) argued that the types of information that CEOs seek differ according to their firms competitive strategies. This shows that strategy can determine scanning behaviour as well as being affected by it.
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Interest in small-scale enterprise in the UK has increased enormously in the recent years. This has been paralleled with an equally large increase in research on this form of economic activity. Regrettably, much of the research has not been high quality; due to mainly failures to recognize the special problems studying the small business poses from researchers. Despite the great increase in the small business in the UK it is importance in the economy is often still underestimated ( Storey, 1994). One reason for this is that there remains tendency to see small businesses as less central to economic activities are the focus of newspapers and television business programmes.
The main aim of this paper it to investigate and evaluate small enterprises and the strategy that they use to operate.
What is the basis for comparative advantage for small enterprises?
How effective is strategic management for small enterprises?
The methodology of the current dissertation includes the secondary research and the primary research.
First of all, the potential features of the dissertation, which might be observed using a plan, can be identified on the basis of a literature review (secondary research).
First of all, the possible features of this situation will be observed using a schedule, can be identified on the basis of a literature research (secondary research).
Such a literature review will present certain things as worthy of inclusion, and should allow the researcher to prioritise those aspects of the situation to be observed.
Using a huge number of organisations would be really nice but this not practical. The researcher was limited by the speed and accuracy with which it is possible to observe and record actions. So items for inclusion will be restricted to the most significant and relevant, because it is simply not feasible to include everything. Previous research and previous theories provided the key to deciding which features of the simulation warrant the focus of the attention.
Structure of the dissertation
This paper involves the discussion of issues that occur in small enterprises and how effective is the strategic management process regarding the literature review and the research on companies in Parc Menai Bangor.
Chapter 2 - literature Review
Research in small enterprises has been developing over the past two decades. There are a variety of academic journals which focus specific on small enterprises in national economies. There is an impression that these studies cover every aspect of the topic. However analysing the topic there are remains for further development of this topic.
Furthermore there is a big need for more practical research in management and marketing issues small enterprises are issues that have occurred already is difficult for them to be called numerous. It must be said those problems occurred in short supply, especially in relation with strategy, are no doubt of great worth but still insufficient.
Traditionally research concerning strategy was based on traditional on world-famous, successful corporations. Craven et al (1994) point out that conceptual focus and experiential examination of the strategy which has centered on problems and experiences of large firms.
Research in entrepreneurship has debated the differences between entrepreneurial and small business ventures for quite some time, arguing that entrepreneurial ventures are small growth-oriented, strategically-innovative firms, while small business ventures are neither growth oriented nor strategically innovative. However, scholars often treat both types of ventures analogously in terms of both construct and theory, which poses clear problems given their differences. As a result, opportunities have been missed to advance both the understanding of new firm survival and growth and the understanding of how theoretical perspectives in strategic management apply to entrepreneurial and small business ventures. Since there is a recognisition about the strategies of small firms than the strategies of large firms, these problems present a substantial opportunity to refine strategic management theory for the entrepreneurial and small business contexts. Thus, this paper is going to examine the extent to which small firms may engage in strategic pursuits of competitive advantage to determine the applicability of strategic management theories to the contexts.
Entrepreneurial ventures and small businesses both play important roles for economic growth and job creation in society (Solomon, 1986; Storey 1994). Given their significance, agreeing with Carland and colleagues' (1984) statement that small firms are neither innovative nor strategic? Making an assumption that most firms face competition of some sort, then should not all such small firms theoretically pursue some form of strategy. If so, most prior research on small firm strategy, which tends to raise non-growth-oriented small firms with growth-oriented firms, may have missed substantial opportunities to understand better, how theoretical perspectives in strategic management apply to entrepreneurial and small business ventures.
The configuration approach in small enterprises.
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The configuration approach belongs to the type of methods characterized by terms such as holistic, universalistic, integrative, synergetic, universal.. The roots of the configuration approach can be found in older approaches which were swept away from the ordinary of business administration in help of up-and coming quantitative methods. Concepts of this scenery mislaid influence in the second half of the 20th century. These days, similar but modernized approaches are growing in German as well as English management literature.
The configuration approach allows, or even better yet requires, a dynamic perspective: The growth of a firm needs to be interpreted as a series of configurations over time. The history of a company is therefore the history of a series of configurations (which is similar to one of the demands of the resource-based view).
However, interventions by the entrepreneur will direct the development of the firm towards the desired configuration.
In principle, configurations are unique; however, similar configurations may allow to create typologies. Experience with certain types of configurations can help identify the strategic position of an individual enterprise and to estimate its prospects for further development. It can also help define interventions in the sequence of typical phases in the configuration history in order to avoid dangerous paths and to move towards favourable paths. The configuration approach can thus be combined easily with the life cycle approach in strategic management theory.
Small firms are most likely to differ considerably in the types of strategies they pursue. However, growth is a core assumption of strategic management theories. For a selection of reasons, the vast majority of firms are and remain small, pursuing strategies to survive, either not wishing to, or not successfully pursuing and achieving the growth strategies of large firms. Such strategies for survival may be characterized by plans such as using minimal overhead (Ebben & Johnson, 2006; Winborg & Landstrom, 2001), choosing an attractive industry (Stearns, Carter, Reynolds, & Williams, 1995), and building a loyal customer base (Liao & Chuang, 2004). Conversely, strategies for (small firm) growth may be characterized by tactics such as a focus on management and workforce training to grow the size of the employee base, issuing equity to external stakeholders to fund growth, developing technological sophistication to monitor and manage growth, seeking flexibility to adjust to new Small Business Strategies and changing markets, and introducing new products (Storey, 1994). Since most small firms appear to pursue survival strategies (Carland et al. 1984), and survival predominately depends upon a loyal customer base (Reider, 2008), we decided to narrow our scope of small business strategies to focus on exploring two strategic approaches consistent with building a loyal customer base -- providing the highest possible quality, and providing better customer service (Liao & Chuang, 2004). Since another strategic approach to small business survival includes minimal use of resources (Ebben & Johnson, 2006; Winborg & Landstrom, 2001), we also retain this approach within the scope of our study. In the next sections, we review the literature on these different strategies and offer testable hypotheses about the relationship between their use and a small firm's ability to survive and grow. Through examining the relationship between these dominant small business strategies and their effects on survival and growth, we can shed some light on the differences and applicability of strategic management theory to the small business context