Strategic Management Practices And Competency In Small And Medium Enterprise

Project and Seminar Material for Business Administration and Management BAM

Strategic Management Practices And Competency In Small And Medium Enterprise


Abstract


This study was carried out to examine the strategic management practices and competency in small and medium enterprise using Gusau Local Government area in Zamfara State as a case study. The study was specifically carried out to find out whether there is a significant relationship between strategic management practices and the performance of small and medium enterprise, ascertain whether small and medium enterprise owners have adequate competence required for the execution of strategic management, and identify the strategic management practices adopted to promotes the performance of small and medium enterprise. The survey design was adopted and the simple random sampling techniques were employed. The population size comprise of SMEs owners in Gusau Local Government area in Zamfara State. In determining the sample size, the researcher conveniently selected 53 respondents and 50 were validated. Self-constructed and validated questionnaire was used for data collection. The collected and validated questionnaires were analyzed using frequency tables and mean scores. While the hypotheses were tested using Pearson correlation statistical tool, SPSS v23. The result of the findings reveals that there is a significant relationship between strategic management practices and the performance of small and medium enterprise. The study also revealed that he strategic management practices adopted to promotes the performance of small and medium enterprise includes: cost strategy, differentiation strategy, focus strategy, and combination strategy. Therefore, it is recommended that SMEs organizations need to adopt superior strategies if they are to survive the harsh business environment. This can be done through carrying out a detailed and accurate situational analysis, involvement of consultants and all employees in strategy formulation, ensuring implementation of strategy is participatory and continuously reviewing the strategies implemented by their organizations. To mention but few.


Table of Content


  • Title Page
  • Certification
  • Dedication
  • Acknowledgement
  • Table of Content
  • List of Tables
  • Abstract

Chapter One:

Introduction

  • 1.1 Background of the Study
  • 1.2 Statement of the Problem
  • 1.3 Objective of the Study
  • 1.4 Research Questions
  • 1.5 Research Hypothesis
  • 1.6 Significance of the Study
  • 1.7 Scope of the Study
  • 1.8 Limitation of the Study
  • 1.9 Definition of Terms
  • 1.10 Organisations of the Study

Chapter Two:

Review of Literature

  • 2.1 Conceptual Framework
  • 2.2 Theoretical Framework
  • 2.3 Empirical Review

Chapter Three:

Research Methodology

  • 3.1 Research Design
  • 3.2 Population of the Study
  • 3.3 Sample Size Determination
  • 3.4 Sample Size Selection Technique and Procedure
  • 3.5 Research Instrument and Administration
  • 3.6 Method of Data Collection
  • 3.7 Method of Data Analysis
  • 3.8 Validity of the Study
  • 3.9 Reliability of the Study
  • 3.10 Ethical Consideration

Chapter Four:

Data Presentation and Analysis

  • 4.1 Data Presentation
  • 4.2 Analysis of Data
  • 4.3 Answering Research Questions
  • 4.4 Test of Hypotheses

Chapter Five:

Summary, Conclusion and Recommendation

  • 5.1 Summary
  • 5.2 Conclusion
  • 5.3 Recommendation
  • References
  • APPENDIX
  • QUESTIONNAIRE

Chapter One


Introduction

1.1 Background of the Study

Small and Medium-sized Enterprises’ (SMEs) vital role and contribution in creating employment and economic development worldwide has attained an increased attention. According to Zacharakis, Neck, Hygrave and Cox (2002), the SME sector is progressively being acknowledged as the key driver for economic growth in the developing and developed countries. It is a significant source of job creation, technological development, revenue creation, and innovativeness and thus, a key asset in the economy at large. In most nations across the world, the degree of economic dependence on SMEs has risen in recent years (Barney, 2002). Specifically, the need for strategic management practices in SMEs to improve performance has been an area of debate and focus as most policy makers feel that these are important in improving the SMEs sector and the economy in general. Small and Medium-sized Enterprises play an essential role in the world (Eden & Ackermann, 2013). As market conditions are more dynamic and competition is tighter, many SMEs in Indonesia and other countries establish their efforts to understand how SMEs can maintain and improve their financial and marketing performance. Some policy and strategic experts have encouraged firms to omplement strategic management practices in order to be able to compete. There is still, however, an unresolved debate regarding the effect of SMP on the overall corporate execution (Eden & Ackermann, 2013).

One of the main concerns of most policy makers in Nigeria is how to improve the economy through the aid of SMEs in order to sustain the country’s economic development. Thus, a major focus to policy makers is to establish an appropriate strategy in order to support and improve SMEs. To deal with global challenges that hinder sustainable development, world leaders developed the Millennium Development Goals, MDGs in 2000, which were expected to be achieved by 2015 (Etuk, Etuk, & Baghebo, 2014). One of the MDGs was to ‘eradicate severe poverty and hunger’. It became important for countries to establish strong socio-economic structures that would ensure that the goal is attained. Countries including Nigeria have since then been working to improve the standards of living of its citizens to achieve the goal according to Etuk et al. (2014). The role of SMEs in Nigeria can be enormous since the country’s economy is dominated by SMEs in manufacturing, construction, commerce and industry, trading, services, and agricultural industries.

SMEs are critical in the economic growth of the developing and developed countries and provide job opportunities to many people. In Nigeria, SMEs contribute 60 per cent of GDP and 70 per cent of the overall employment (SMEs Development Agency of Nigeria, 2012). SMEs are extremely vulnerable and the rate of failure is also high such that no country can ignore it. Maduka (2018) observed that 60 per cent of SMEs crumple during their first three years of operations. In the United States, 80 per cent fail in their first five years. In the Nigerian case according to Abidemi (2018), approximately 70 per cent of Nigerian SMEs fail in the first five years of existence. This being the situation, there is a need for greater efforts in order to reduce the rate of ‘mortality’ for SMEs. Eventually, a more robust SME sector will aid in building the nation’s wealth resulting in the general improvement of the economy. Even though most nations have instituted support programmes to help their SMEs and entrepreneurs, efforts tend to be focused on determining the industry’s performance (Tobora, 2015). It is the cautious selection and right application of suitable technique which establishes the success of SMEs. Strategic management practices offer the overall direction to SMEs and entail identifying the objectives of the organization, developing plans and policies designed to attain the objectives and then apportioning the necessary resources to implement the policies and plans.

Even though there are numerous benefits associated with the adoption of strategic management practices, there are still a number of SMEs that do not use them as they believe that they are only helpful in large firms. It is a well-known fact that SMEs have significantly contributed to the Kenyan economy as observed by Mueni (2008). According to the scholar, the sector has set a record of 75 per cent in job creation. This way, SMEs have played a key responsibility in poverty eradication given the type of advantages of the sector.


1.2 Statement of the Problem

The small and medium-sized enterprise (SME) sector has an important role to play in developing economies not only in economic development, but also in poverty alleviation and job creation. The sector faces a number of constraints especially in accessing finance, markets; training and technology. Although, there are many advantages to use strategic management, there are still many SME organizations that resist using it, since some of them may think this process is only useful for larger organizations and due to this, they do not recognize that it‟s also very helpful for SMEs as a whole (Pushpakumari& Watanabe, 2010). Besides, there are not much research has been done in Nigeria on the impact of strategic management practices on SME. When considering the increasing importance of strategic management in SMEs and their contributions to Nigeria ‟s economy, it is obvious that there is a growing need for researches giving understanding on the role of strategic management. One can argue that the need for such information will become more important as the competition is becoming fiercer than before, due to many new SMEs enter into market.


1.3 Objectives of the Study

The broad objective of this study is to examine the strategic management practices and competency in small and medium enterprise.

Other specific objectives includes:

  1. Find out whether there is a significant relationship between strategic management practices and the performance of small and medium enterprise.
  2. Ascertain whether small and medium enterprise owners have adequate competence required for the execution of strategic management.
  3. Identify the strategic management practices adopted to promotes the performance of small and medium enterprise.

1.4 Research Questions

The study will be anchored by the following question;

  1. Is there is any significant relationship between strategic management practices and the performance of small and medium enterprise?
  2. Does small and medium enterprise owners have adequate competence required for the execution of strategic management?
  3. What are the strategic management practices adopted to promotes the performance of small and medium enterprise?

1.5 Research Hypotheses

  • Ha: There is no significant relationship between strategic management practices and the performance of small and medium enterprise.
  • Ho: There is a significant relationship between strategic management practices and the performance of small and medium enterprise.

1.6 Significance of the Study

The study may be beneficial to small and medium business owners as it may help them understand the importance of SMPs in influencing firm profitability. This is because contributors of the study may offer information into issues related to the management of SMEs including how they evaluate productivity and performance, personnel management and succession planning. Moreover, they may be able to establish the most appropriate strategies to adopt for their firms. The study may also be of help to scholars as it may add knowledge to the field of strategic management. The research may provide room for further studies on improving the adoption of SMPs among SMEs.

Interested investors may also benefit from the study as they may be able to carry out an external business analysis and know where to invest. The study maybe important for legislators and policy makers as it may offer information related to SMEs and how laws can be generally improved to sufficiently cater for the SME sector.


1.7 Scope of the Study

The scope of this study boarders on strategic management practices and competency in small and medium enterprise. By extension the study will find out whether there is a significant relationship between strategic management practices and the performance of small and medium enterprise, ascertain whether small and medium enterprise owners have adequate competence required for the execution of strategic management, and identify the strategic management practices adopted to promotes the performance of small and medium enterprise. The respondents of this study will be obtained from SMEs owners in Gusau Local Government area in Zamfara State.


1.8 Limitation of the Study

This research project, like all human endeavors, had some challenges that threatened to derail the study’s completion. One of the reasons is that the time allotted for this work was so limited that the researcher did not have enough time to complete the task thoroughly. During data collection, the researcher also had to put forth extra effort to understand the respondents’ interview schedules, several of whom fell into the incomprehensible age group. Also, there were financial and transportation constraints to deal with. Insufficient funds tend to impede the efficiency of the researcher in sourcing the relevant materials, literature, or information and in the process of data collection (internet, questionnaire, interview).


1.9 Definition of Terms

Small and Medium Scale Enterprises:

Small and medium-sized enterprises (SMEs) are businesses whose personnel numbers fall below certain limits.


1.10 Organizations of the Study

The study is categorized into five chapters. The first chapter presents the background of the study, statement of the problem, objective of the study, research questions and hypothesis, the significance of the study, scope/limitations of the study, and definition of terms. The chapter two covers the review of literature with emphasis on conceptual framework, theoretical framework, and empirical review. Likewise, the chapter three which is the research methodology, specifically covers the research design, population of the study, sample size determination, sample size, and selection technique and procedure, research instrument and administration, method of data collection, method of data analysis, validity and reliability of the study, and ethical consideration. The second to last chapter being the chapter four presents the data presentation and analysis, while the last chapter(chapter five) contains the summary, conclusion and recommendation.


Chapter Five


Summary, Conclusions and Recommendations:

5.1 Introduction

This chapter summarizes the findings on the strategic management practices and competency in small and medium enterprise. The chapter consists of summary of the study, conclusions, and recommendations.


5.2 Summary of the Study

In this study, our focus was to examine the strategic management practices and competency in small and medium enterprise using Gusau Local Government area in Zamfara State as a case study. The study was specifically carried out to find out whether there is a significant relationship between strategic management practices and the performance of small and medium enterprise, ascertain whether small and medium enterprise owners have adequate competence required for the execution of strategic management, and identify the strategic management practices adopted to promotes the performance of small and medium enterprise.

The study adopted the survey research design and randomly enrolled participants in the study. A total of 50 responses were validated from the enrolled participants where all respondent were SMEs owners in Gusau Local Government area in Zamfara State.


5.3 Conclusions

Based on the findings of this study, the researcher concluded that;

  1. There is a significant relationship between strategic management practices and the performance of small and medium enterprise.
  2. Small and medium enterprise owners does not have adequate competence required for the execution of strategic management.
  3. The strategic management practices adopted to promotes the performance of small and medium enterprise includes: cost strategy, differentiation strategy, focus strategy, and combination strategy.

5.4 Recommendation

Based on the responses obtained, the researcher proffers the following recommendations:

  1. SMEs organizations need to adopt superior strategies if they are to survive the harsh business environment. This can be done through carrying out a detailed and accurate situational analysis, involvement of consultants and all employees in strategy formulation, ensuring implementation of strategy is participatory and continuously reviewing the strategies implemented by their organisations.
  2. SMEs should have written and clearly defined mission and vision statements. These statements should be communicated to employees or members of staff during the rolling out of strategy. This is important because vision and mission statements state where the firm is heading and what it would like to achieve in the future.
  3. SME owners should strive to make the strategic management process as inclusive as possible from the lower level employees to senior management. This creates a sense of ownership and ensures that employees feel part of the entire process since they are the ones to implement the strategy.
  4. Owners of SMEs should continuously be evaluating the progress of various strategies and take corrective measures on timely basis.
  5. In order to reduce on high rate of business failure, SME owners must have interest in improving their managerial skills through regular training. Further, owner managers should develop superior strategic objectives which include technology and innovation, business efficiency and growth and good customer service.
  6. SMEs should always strive to have the right resources because the success of any business strategy depends primarily on the availability of resources (financial and human), value judgment, energy and skill of its managers and the strategic implementation within the context and parameter of the uncertainty and ambiguity of the environment subjected to volatility.

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