Strategic Planning in Small and Medium Enterprises (SMEs): A Case Study of Botswana SMEs

Abstract

Although small and medium enterprises contribute immensely to the economy of a country, they are characterised by low performance and high failure rate which is often blamed on lack of resources such as funds, land and skilled labour. Many business management specialists argue that even on the availability of such resources, some SMEs still fail due to lack of strategic planning. Extent literature indicates that formal strategic planning improves business performance as it involves deriving a game plan that enables SMEs to anticipate and respond to the turbulent market by arranging their resources and capabilities accordingly.As such, this research investigates the status of strategic planning by SMEs in Botswana. The study also investigates the perceived value of Strategic Planning by SME owner managers, and the extent of planning as well as identifying the barriers that prevent effective strategic planning. Using semi-structured interviews of 36 Small and Medium firms selected across several sectors, the study finds that strategic planning efforts do exist within SMEs but most of these firms engage in strategic planning activities to a limited extent. The study also finds several barriers, which contribute to lack of strategic planning. For instance, the study finds that most SME owner/managers have limited knowledge in the area of strategic planning. Some indicated that they do not plan because of the size of the business. Whereas some admitted that they still possess the traditional based thinking where most business decisions are based on intuition. The findings of this study have implications for policy decision makers and SME owner managers.

Methodology for Strategic Posture Determination of SMEs

“…Some examples of strategic planning in the developing countries can be found with the following authors (Derbaliev & Trpkova, 2011). Undoubtedly, the results of Mintzberg , together with some other authors, are also significant in the field of strategic planning (Kimemia et al, 2017;Nomsa & Tebogo, 2017;Fuad, 2001).…”

“…Specific corrective measures in the SPACE matrix model can be identified on the basis of the outline plans and the subsequent profiles, as well as on their comparison. The author David (David, 2011) also believes that the SPACE tool is highly useful in the process of strategy defining. Main task of corporate strategy is not to describe the current stateof-art, but to identify and explore core competencies that must be added (Rajesh, et al, 2008).…”

An Evaluation of the Adoption of Management Accounting Practices (MAPs) by Small and Medium Enterprises (SMEs) in Zimbabwe and Their Impact on Firm Performance: A Case of Lupane SMEs

“…It has been found that SMEs face challenges ranging from power shortages, lack of capital, poor management skills and competencies and inadequate information and corruption, inadequate equipment, lack of transport and insufficient resources, high costs of finance, lack of proper and adequate infrastructure, use of old technology, information assymetry, lack of marketing skills and market knowledge and inadequate management and entrepreneurial skills (Muiruri, 2017;Zindiye, et al, 2012;Nyamwanza, et al, 2015).A Finscope survey found that the main constraint to growing the businesses was sourcing of funding, limited operational space, lack of business support, lack of business acumen and failure to keep appropriate financial records (Finscope, 2012). The Small and Medium Entreprises Association of Zimbabwe (SMEAZ)believed that the major challenges faced by SMEs were mainly because the SMEs themselves did not have viable business models, reliable and attractive track records, accounting records and lacked good corporate governance principles (SMEAZ, 2017).It is further believed that the failure of SMEs in Zimbabwe is caused by the deficiency of basic management functions of planning, organising, leading and controlling, lack of entrepreneurial culture and lack of strategic planning (Chivasa, 2014;Dumbu & Chadamoyo, 2012;Sandada & Chikwama, 2016;Majama & Magang, 2017). Chong, (2012) insisted that the most critical factors associated with the success of SMEs are nonmanagement characteristics such as honesty, integrity, hardwork, business reputation, customer service and product quality at competitive prices (Muiruri, 2017).Despite the above challenges faced by SMEs, various government efforts to enhance SMEs performance highligted earlier provide opportunities for the development, growth and expansion of SMEs.…”

Strategic Entrepreneurship and Performance of Small and Medium Scale Enterprises in Aba Metropolis

“…By employing strategic entrepreneurship methods, SMEs can gain meaningful direction and the ability to illustrate its success to key stakeholders (Kuratko & Audretsch, 2017). A strategic plan also needs to be inculcated because without a strategic plan, SMEs may lose its direction, unknowingly drift away from its values, and lack the ability in adequate delivery of its services or products to its clients (Majama & Magang, 2017). Thus, strategic entrepreneurship is established with how firms' strategic intent can facilitate continuous leveraging of entrepreneurial opportunities for advantage seeking purposes in order to create wealth (Foss & Lyngsie, 2011).…”

“…Given the importance of small and medium scale enterprises to economic and social development, their lack of longevity, is however a cause for concern because the survival of business is critical to the sustainability of economies (Mohammed & Obeleagu-Nzelibe, 2014). It has been estimated that, internationally, only 30% of SMEs survive to the second generation, while fewer than 14% make it beyond the third generation (Majama & Magang, 2017).…”