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Chapter 2

Strategy development in different

contexts

4.1 SMEs (small and medium sized enterprises)

SMEs often lack the management skills required for formal planning approaches and
often rely more on informal planning using their intuition and understanding of their
businesses. In small organisations, formal structures and controls may be lacking.

According to Birley (1982), a formal top-down process may be unsuitable for small
businesses for four reasons:

 Differences in goals. In a small company, the goals of the business are often
inseparable from the goals of the owner-manager and immediate family group.

 Limited scope of product/market choices. Small-business managers typically
consider a much narrower range of strategic options than do their large-
business counterparts.

 Limited resources. Smaller companies lack the resources to invest in new
strategic ventures and rapid growth.

 Organisational structure. Strategic implementation demands the setting up of
an appropriate structure and selection of an appropriate team to carry it out.
Small companies may not have the personnel available, or the owner may be
unwilling to lose their absolute control.

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