Strategic Planning And Performance Of Small Scale Business In Rivers State

Project and Seminar Material for Business Administration and Management BAM

Strategic Planning And Performance Of Small Scale Business In Rivers State

Chapter One


1.1 Background Of The Study

Small and medium-sized businesses (SMEs) may benefit from strategic management techniques to improve their performance. SMEs have been a popular topic of discussion. Strategy management techniques have been hailed as one of the most effective management tools for boosting company performance via better decision-making and methodical strategic development and execution. Although strategic management has been more popular in the private sector since its inception, interest in applying it in the public sector has grown in recent decades (Smith 1994). Since the 1980s, a number of changes in the public sector have taken shape as a consequence of increasing awareness of the significance of quality in the public sector. According to Barnely & Hesterly (2008), a successful strategy is one that creates a competitive advantage that distinguishes a company from its rivals by providing a useful, uncommon, and difficult-to-copy advantage. As a result, the strategy should be distinctive in order to establish a competitive advantage for the country. As eloquently said, competitive advantage is at the core of positioning.

According to Thompson Strickland (2007), a strategy is a plan that gives direction on how the organization will accomplish its purpose and goals. Wheele and Hunger (2008) described a strategy as a plan that provides direction on how the organization will achieve its mission and objectives. Strategic management techniques allow SMEs to prevent misalignment with the environment; they serve as a connection between a company and its surroundings, and they must be compatible with the organization’s objectives, values, external environment, resources, organizational structures, and systems (Ansoff & Mc Donnell, 1990). According to Hussey (1991), strategy is at the core of strategic management since it aids a company in formulating and implementing different tasks in order to stay competitive in a volatile environment. An organization’s strategy establishes its distinct image, as well as the purpose and direction of its activities and interactions with both internal and external stakeholders (Grant, 1988).

Mintzberg (1998) differentiates between intended, realized, and emergent strategies, defining an intended strategy as a deliberate strategy that is planned and conceived by management, an emergent strategy as a strategy that emerges over time, and a realized strategy as a strategy that is observed and influenced by both the intended and emergent strategy.

In Rivers State, SMEs play a critical role in job creation, poverty reduction, economic growth, rural industrialisation, fair income distribution, infrastructure development, and overall national development. In Rivers State’s SME clusters, there are about 69,902 SMEs employing approximately 1737,709 people. The contribution of SMEs to the GDP of Rivers State is projected to be 25%, and SMEs provide around 80% of all employment in different industries. Therefore, the success of these SMEs is critical for Rivers State. Initially, strategic management was mostly used by big corporations, but rising risk, errors, and economic volatility required today’s professional managers in all types of businesses to take strategic management seriously in order to remain competitive in unpredictable settings.

Hoffman and Bamford (2017) (Hanger & J Wheelen, Hoffman & Bamford, 2017). Superior strategic management techniques can give all small businesses with the resources they need to survive, develop, and retain a competitive edge over their rivals. Small businesses may utilize strategic planning tools to defend themselves from a volatile business climate and guarantee their survival and development (Dansoh, 2005, Pistrui Huany, Welsch, & Jing, 2006,). Strategically planned SMEs are more likely to have better sales growth, larger profit margins, higher return on assets, faster staff growth, higher international expansion, and are less likely to fail (Wang, Walker, & Redmond, 2007,). Strategic planning equips SMEs with an operational network that enables them to acquire a competitive edge and enhance their company’s performance (Pillania, 2008).

1.2 Statement Of The Problem

According to Richard (2001), several factors contribute to the high failure rate of new companies, including a lack of sufficient operating capital, inadequate market selection, and quickly changing external market circumstances. Many academics have even gone so far as to suggest that strategic management processes in SMEs are especially ineffective because such businesses lack the necessary managerial and financial resources. Techniques and practices of strategic management (Cragg and King, 1998). The inability of SMEs to make sufficient use of key business and management practices is the major cause of the high failure rate, as many of them fail to create an initial plan and those who do construct a plan have to continuously modify and utilize it as a benchmarking tool. The use of strategic planning and management in business organizations, whether public or non-profit, can help organizations clarify their future direction, think strategically and develop effective strategies, establish priorities, deal effectively with rapidly changing circumstances, build teamwork and expertise, and solve major organizational problems, according to Zaei, et al. (2013).

The Rivers State government has introduced various programs to promote SME development, including modernization of agriculture, the Rivers State Micro Finance Agency (RIMA), trade fairs, and the construction of market structures such as Mile 1 market and Rumuokro market park, among others. Despite all of these programs, we continue to see many SMEs collapsing and underperforming, indicating that significant investment is required.

1.3 Objective Of The Study

The objectives of this study are to:

  1. To investigate the link between SMEs’ strategic approaches and their performance.
  2. To determine the link between strategic planning policies and SMEs’ development.
  3. To see whether strategic planning has an impact on the performance of a small business.

1.4 Research Questions

  1. What is the link between SMEs’ strategic approaches and their performance?
  2. What is the link between strategic planning policies and SMEs’ development?
  3. Does strategic planning have an impact on the performance of a small business?

1.5 Significance Of The Study

The purpose of this research is to look at the link between strategic management techniques and the performance of SMEs in Rivers State. As a result, this study will be important for research for academic reasons, and students will have access to a broader range of materials. In terms of practical application, the results of this research will be utilized as a guideline for the budget and planning departments of all organizations, whether small and large, as well as other relevant entities, in order to enhance the design and administration of small and medium businesses. The study will advise SMEs and their managers, as well as their owners, on realistic implementation and adoption methods, as well as important management practices, in order to enhance organizational performance. Finally, policymakers will benefit from the research since it will highlight the significance of strategic management techniques and the necessity for suitable regulations to assist SMEs to enhance their overall performance.

1.6 Scope Of The Study

The research focused on the strategic management practices and performance of small and medium-sized enterprises (SMEs) in Ahoda, Rivers State, Nigeria.

1.7 Limitation Of Study

The study was limited to SMEs in the Ahoda Local Government Area of Rivers State, Nigeria. This is because not all SMEs in Rivers State can be covered, given the short duration of the study and the budget limitations.

1.8 Definition Of Terms


An act of presenting a play, concert, or other form of entertainment.

Small Scale Business:

A small scale enterprise, or more simply, a small business, is one marked by a limited number of employees and a limited flow of finances and materials.

Strategy Formulation:

This is the process of establishing a business mission, conducting research to determine critical internal factors, establishing long-term objectives, and choosing among alternatives.

Strategy Implementation:

It involves the activities and decisions that are made to install new strategies to support existing ones. Some people also refer to it as operational management, and it is also called the action stage of strategic management.

Strategy Evaluation:

This involves the activities and decisions that keep the process on track and it also serves as a corrective measure in measuring organizational performance and taking corrective actions.


This is the ability of a business to earn a profit.


Growth is defined as a progression from a lower or simpler form of evolution to a higher or more complex form of evolution.

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