Strategic Management Practices And Competitive Advantage Of Small And Medium Size Enterprise In Yaounde

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Strategic Management Practices And Competitive Advantage Of Small And Medium Size Enterprise In Yaounde


Abstract


This study is an empirical assessment of the Strategic Management Practices And Competitive Advantage Of Small And Medium Size Enterprise In Yaounde ,as supported by Glueck (1972) who affirmed that the application of strategic management will ultimately lead to the efficient allocation of scarce resources in an organization.
A total of 120 were administered to Small And Medium Size Enterprise Operators In Yaounde. The data were analyzed using Chi-Square and Student Tail-Test. The research instrument was self-structured, closed ended and found to be reliable as the result of the split half reliability test gave a positive correlation of 0.51. three hypotheses and six research questions were analyzed. The result from the tested hypotheses proved that strategic management has a strong impact on organizational efficiency, as the level of organizational efficiency of the understudied companies have been positively impacted by the implementation of strategic management.


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).

The SME sector according to a study carried out in Western Uganda by Ayozie, Jacob, Umukoro and Ayozie (2013) revealed that it forms a vital fraction of the country’s economy. There is evidence to support the same especially by looking at areas such as farming, iron smelting and cottage industries. SMEs started many years ago in the country and are developed using numerous state policies and programmes. According to Ayozie et al. (2013), the performance of most firms, both the large corporations and SMEs is highly attributed to the strategies that the companies have adopted in their operations. For this reason, most SMEs lack the needed resource capacity to implement in their operations. Consequently, they fail to enjoy the benefits linked to the implementation of strategic management practices in terms of improved performance within the organisation.

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.

It is essential to recommend strategic management practices that can assure and guarantee firms’ existence and survival (Ndambuki, 2010). In relation to the distribution of Kenyan SMEs, most of them are located in Nairobi County, Kenya’s capital and they operate in all types of industries. A research by one Mburu (2009) investigating the reasons for trade deficits by SMEs in Nairobi established that most SMEs are still at the formative phase.
The main role of SMEs in any region across the globe has been methodically acknowledged as a way of ensuring fast development and industrialisation, which forms the foundation of this study particularly in relation to how to ensure strategic management to guarantee business sustainability. Strategic management is an unending process that assesses the business and sectors in which the firm operates and sets goals to meet stakeholder needs (Pushpakumari & Watanabe, 2010). The SME sector has a vital role to play in developing the economy, creating employment, technological advancement and innovation. The SME sector faces challenges such as accessing finance, training, technology changes, and markets. Even though there are many benefits of employing strategic management practices in business operations, some SMEs are not able to implement them because of the high costs involved (Pushpakumari & Watanabe, 2010). Moreover, there are only a few studies that have been conducted in Kenya on the effect of strategic management practices on SMEs, as well as, their contribution to the country’s economy. It is, however, evident that there is a growing concern for scholars to understand the role of the strategies in enhancing performance of SMEs especially now that the SME sector keeps growing day in day out.

There are less systematic studies to support various strategies and policies to assist SMEs, mainly due the lack of existing data. Studies into SMP and their adoption have become central in SMEs owing to their vital role in improving the economy. There is, however, a major dispute on whether SMEs should create strategic plans as some scholars hold that formal SMP are mostly unsuitable for small businesses that lack adequate cash flow (Analoui & Karami, 2003). In cameroon, according to cameroon Economic Survey (2016), SMEs contribute to job creation and wealth creation resulting in economic improvement. However, the role of strategic management practices cannot be ignored because SMEs have proven to be a major asset in the economy of SMEs in Yaoundaand Cameroon at large.


1.2 Statement of the Problems

The business failure rate continues to rise due to numerous hindrances to performance. Such hindrances include poor service delivery, inadequate cash flow, laws and regulations, leadership gap, lack of ICT, general economic conditions, inadequate customer service, poor locations and vital factors such as corruption, poor infrastructure, failure to implement appropriate strategies, poverty, and low demand for goods and services. The performance of SMEs across the world and Cameroon in particular has not been impressive.

The association between business strategy and organisational performance has been a topic of attention in the strategic management field. Irrespective of this development, there has not been much thought given to the relative evaluation of the association.

Typically, SMP are linked to large corporations. SMEs are generally operated and run by the owners who also act as managers and make strategic decisions mainly based on practical perceptions than academic ones. The business leadership should make effort to address strategic concerns including restructuring, resource mobilization, process changes, technological changes, leadership shifts and cultural alterations. Well-established strategies together with appropriate implementation will lead to the success of the organisation. Whereas the contributions of SMEs to development are usually recognized, players in the sector face myriad challenges which hinder the firms’ growth.
Numerous studies have focused on SMEs both globally and locally. Chilala (2014) carried out a research on Ghanaian SMEs and the problems they face in foreign market Chen, Windasari & Pai (2013) carried out a research on SM in SMEs of East Asia. Stonehouse and Pemberton (2002) investigated SMEs strategic planning in the United Kingdom even though such may not apply to the Kitui context. Mulinge (2009) carried out a study on marketing practices that SMEs adopt in dealing with clothing and footwear in Makueni District whereas Muua (2009) studied the importance of acquiring skills to be efficient in marketing by SMEs. Nkondi (2014) carried out a research on the causes of the degree to which the operational and running costs impact the competitive performance of textile SMEs in Kenya.

From the studies, none focused on the influence of strategic management practices on the performance of SMEs. Again, there is a noticeable supposition that SMEs have formal strategies in place, which is not the case. Moreover, there is the issue of location as most of the studies conducted were mainly in concentrated towns such as Yaounda, Cameroon, and in which the case may be different for smaller towns such as Yaounde.


1.3 Objectives of the Study

The objectives of any research study is to find a solution to the problem or tofind relationship that exist between the problem and other problems or breaking the problem into its components parts through an exploration or analysis so that the superior and readers alike will understand the problem more clearly with the hope that it will eventually be solved through the present study.

The main objective or purpose of the study is to conduct a research on the strategic management practices and competitive advantage of small and medium size enterprise in Yaounde.

The various specific objectives of the study are:-

  1. To reveal that organizational efficiency is attainable in todays dynamic environment.
  2. To prove that strategic management plays a crucial role in the attainment of organizational efficiency.
  3. To show empirical evidence of the relationship between differentiation strategy and the factors that determine the efficiency of an organization.

1.4 Research Questions

A research question serves as a guide to the researcher in his guess for answer to the problem being investigated. Research question should therefore focus on the problem and should be general enough to give rise to other minor research questions.

The following questions will be answered at the end of this study:-

  1. Is there a strong relationship between strategic management practice and organizational efficiency?
  2. What effect does Differentiation strategy in particular have on the efficiency of an organization?
  3. Can Differentiation strategy be responsible for market positioning?
  4. What kind of effect does the application of differentiation strategy have on employee performance?
  5. Is the application of differentiation strategy a myth or a reality?
  6. Is differentiation strategy an applicable tool for increasing profitability level?

1.5 Research Hypotheses

A hypothesis is the statement of relationship between variables. To understand better what aspect of the relationship between the variable that the researcher is interested in she makes a conjectural statement or tentative statement about this relationship. This conjecture or tentative statement is the hypothesis in this case, the research hypothesis under study area as follow:

HYPOTHESIS 1: The level of organizational efficiency is in direct proportion with the level of implementation of differentiation strategy in an organization.

HYPOTHESIS 2: Organizational efficiency maintains a strong positive relationship with Differentiation strategy in todays dynamic environment.

HYPOTHESIS 3: Differentiation strategy is an applicable tool for increasing profitability level in a business organization.


1.6 Significance of the Study

  1. This study is significant because it would reveal empirically, the relationship between strategic management practice and organizational efficiency.
  2. It would also reveal to managers, the possibility of attaining organizational efficiency through differentiation strategy.
  3. It would enable managers to adequately match their limited resources to the dynamic environment.
  4. This study will reveal how differentiation strategy can serve as a bench mark for the attainment of organizational efficiency.
  5. Source of information for further research.

1.7 Scope of the Study

This research will examine strategic management practice focusing on Differentiation strategy in particular as a tool for organizational efficiency. A comparison will be made between organizations which operate in a common business environment who have attained various levels of organizational efficiency through the application of Differentiation strategy i.e., offering unique products or services to that of the competitors. This comparison should reveal if there is variance in the level of organizational efficiency achievable as a result of the degree of differentiation strategy adopted.


1.8 Limitations of the Study

In the process of carrying out this study, the following problems were encountered by the researcher, this includes:

Time Factor:

The time within which this work must be completed and submitted for appraisal stood as an impediment to this project work.

Financial Resources:

Due to lack of finance at the disposal of the researcher, affected the quality of this work, cause my sponsor(parents) prefers to spend money on my younger once admission into the University recently (2021/2022) academic session) rather than devoting huge financial resources on this study that will be of economic and academic importance in years to come.


1.9 Operational Definition of Terms

1. Strategy:

A pattern of organizational moves an managerial approaches used to achieve organizational objectives band pursue organizational mission.

2. Strategic Management Practice:

A set of managerial decisions and actions that determines the long-run performance of a corporation.

3. Organizational Efficiency:

The capacity of an organization, or business to produce desired results with a minimum expenditure of resources.

4. Differentiation Strategy:

The process of distinguishing the differences of a product or offering from others, to make it more attractive to the target market.

5. Market Share:

Is the percentage of the entire target market that the organization has secured.

6. Profitability:

The ability of an organization to generate profit.

7. Environment:

Is the combination of factors, both internal and external to the organization, which influence the activities of the organization directly.

8. Corporate Strategy:

Is the major strategy for the entire organization.

9. Intuitive Strategy:

A non-systematic strategy that is based on the judgment of business owners or managers.

10.Independent Variable:

The presumed cause, which in this study is strategic management practice.

11. Dependent Variable:

The presumed effect, which in this study is Organizational Efficiency


1.10 Organizations of the Study

The chapter one consist of the introductory part of the study which includes the study background, the statement of the research problem, the study objective and scope of the study.

The second chapter is a critical review of other literatures relevant to the study and its objectives including the theoretical framework for the study. While the third chapter is methods of data collection, sampling and data analysis used in conducting the study. The fourth chapter centres around the research findings including an analysis of how it relates to previous findings. The fifth chapter consists of the summary of findings, conclusion and recommendations base on the study objectives.


Chapter Five


Conclusions and Recommendation

5.1 Introduction

This chapter summarizes the findings On The Strategic Management Practices And Competitive Advantage Of Small And Medium Size Enterprise In Yaounde. The chapter consists of summary of the study, conclusions, and recommendations.


5.2 Summary of the Study

In this study, our focus was On The Strategic Management Practices And Competitive Advantage Of Small And Medium Size Enterprise In Yaounde. The study is was specifically focused on revealing that organizational efficiency is attainable in today’s dynamic environment; proving that strategic management plays a crucial role in the attainment of organizational efficiency and showing empirical evidence of the relationship between differentiation strategy and the factors that determine the efficiency of an organization.

The study adopted the survey research design and randomly enrolled participants in the study. A total of 100 responses were validated from the enrolled participants where all respondent are SME operators in Yaounde, Cameroon.


5.3 Conclusion

The success of any corporate organization is critical to its survival. Without good performance and high profitability, companies are doomed to staleness and possible bankruptcy. In the SMEs, success is altogether more important considering the plethora of areas for competitive advantage. Competitive advantage could be achieved through product design, customer relationship management, customer service, product requirements, etc. To excel in all these faucets, strategic management practice is critically important and the findings of this study have confirmed this fact. strategic management practice has been found to significantly influence corporate performance and profitability. through the review of related literature and the analysis of the study, recommendation were made that the study entreats all savings and loans companies to adopt in order to achieve higher performance and profitability through effective strategic management practice practices.


5.2 Recommendations

Based on the findings of the study, the study recommends the following:

5.2.1 Increase Performance with strategic management practice

The study showed that strategic management practice and its practices have significant effects on corporate performance, especially sales growth. Knowing the right strategic practices to adopt is key to maximizing the performance of not just the individual employees of a company, but the company as a whole. The study therefore recommends that managements of savings and loans companies take the practice of strategic management practice seriously in order to ensure sustained high corporate performance.

5.2.2 Consider Marketing Environment in Making Strategic Decisions

The findings of the study and previous literature on the subject have shown that the external environment exerts a strong influence on strategy formulation or on the relationship between strategy and other variables such as performance. Any strategy a company adopts must be done with the prevailing environment and a forecast of future conditions in mind. The study therefore recommends that savings and loans companies factor into their strategic management practice decisions, the marketing environment and the prevailing macro conditions in order to come out with an effective strategic plan that would have positive impact on corporate performance.


Strategic Management Practices And Competitive Advantage Of Small And Medium Size Enterprise In Yaounde


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