MISSION AND VISION, ENVIRONMENTAL SCANNING AND FORMALITY OF STRATEGIC PLANNING AS PREDICTORS OF THE PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES (SMES) IN THE GAUTENG PROVINCE OF SOUTH AFRICA

Maxwell SANDADA

Abstract


Faced with volatile business conditions and the hyper competitive market environment, SMEs are continuously focusing on finding ways to improve their performance. This paper attempts to establish the effect of mission and vision, environmental scanning and the formality of the strategic planning process on the performance of SMEs. A quantitative research approach was pursued through a self-administered survey questionnaire. Descriptive statistics, correlation analysis and regression analysis were used to analyse the data. The main findings of the study suggest that, the mission and vision statements, environmental scanning and the formality of strategic planning have a positive effect on the performance of SMEs. The formality of strategic planning emerged as the factor with a stronger impact on SME performance than environmental scanning and mission and vision. The study provides some practical insights for SMEs for improving their performance in line with the identified effect of these three factors. Ultimately, improving their performance along these factors is set to reinforce SME sustainability and which will further stimulate their profitability.

Keywords


Key words: SMEs, Gauteng, South Africa, business performance, mission and vision, environmental scanning, formality of strategic planning

References


Atkinson, H. and Brown, J.B. (2001). Rethinking performance measures: assessing progress in UK hotels, in International Journal of Contemporary Hospitality Management, 13(3):128-135.

Bart, C.K. (2001). A model of the impact of mission statements on firm performance, in Management Decision, 39(1): 19-35.

Bart, C.K. and Hupfer, M. (2004). Mission statements in Canadian hospitals, in Journal of Health Organisation and Management, 18(2): 92-110.

Bryman, A. and Bell, E. (2007). Business Research Methods. 2nd ed. Oxford: University Press.

Chong, H.G. (2008). Measuring performance of small-and-medium sized enterprises: the grounded theory approach, in Journal of Business and Public Affairs, 2(1):1-10.

Chow, C.W. and Van Der Stede, W.A. (2006). The use and usefulness of nonfinancial performance measures,in Management Accounting Quarterly, 7(3):1-8.

David, F.R. (2003). Strategic management: concepts and cases. New Jersey: Pearson.

Dhurup. M. (2012). Determinants of internal service quality and the relationship with internal customer satisfaction, in African Journal of Business Management, 6(11):4185-4195.

Efendioglu, A.M. and Karabulut, A.T. (2010). Impact of strategic planning on financial performance of companies in Turkey,in International Journal of Business and Management, 5(4): 3-12.

Forbes, D.J.and Seena, S. (2006). The value of a mission statement in an association of not-for-profit hospitals, in International Journal of Health Care Quality Assurance, 19(5): 400-419.

Falshaw, J.R., Glaister, K.W. & Tatoglu, E. (2006). Evidence on formal strategic planning and company performance, in Management Decision Journal, 44(1):9-30.

Finkelstein, S., Harvey, C. and Lawton, T. (2007). Vision by design: a reflexive approach to enterprise regeneration, in Journal of Business Strategy, 29(2): 4-13.

French, J. S., Kelly, S. and Harrison, J. (2004). The role of strategic planning in the performance of small professional services firms, in Journal of Management Development, 23(8):765-776.

Hirota, S., Kubo, K., Miyajima, H., Hong, P. and Park. W. (2010). Corporate mission, corporate policies and business outcomes: Evidence from Japan, in Management Decision Journal, 48(7):1134-1153.

Hunger, J.D. and Wheelen, T.L. (2007). Essentials of strategic management. 4th ed. New Jersey: Pearson Education.

Johnson, R. B. and Onwuegbuzie, A.J. (2004). Mixed methods research: a paradigm whose time has come, in American Educational Research Association, 33(7): 14-26.

Johnson, G., Scholes, K. and Whittington. R. (2008). Exploring Corporate Strategy. 8th ed. Essex: Pearson Education.

Jorosi, B.N. (2008). Environmental scanning in Botswana’s SMEs: a study of the manufacturing industry, in Libri, 58: 224-233.

Jusoh, R. and Parnell, J.A. (2008). Competitive strategy and performance measurement in the Malaysian context, in Management Decision, 46(1):5-31.

Kantabutra, S. and Avery, C.A. (2010). The power of vision: statements that resonate, in Journal of Business Strategy, 31(1): 37-45.

Kantabutra, S. (2008). Vision effects in Thai retail stores: practical implications, in International Journal of Retail and Distribution Management, 36(4):323-342.

Karami, A. (2008). An investigation on environmental scanning and growth strategy in high tech small and medium sized enterprises: paper read at the high technology firms conference held at the University of Twente between 21 and 23 May 2008. Twente: 1-17.

Kraus, S., Harms, R. and Schwarz, E. J. (2006).Strategic planning in smaller enterprises - new empirical findings, in Management Research News, 29(6):334-344.

Mazzarol, T., Rebound, S. and Soutar, G.N. (2009). Strategic planning in growth oriented small firms, in International Journal of Entrepreneurial Behavior and Research, 15(4): 320-345.

Mcllquham-Schmidt, A. (2010). Strategic planning and corporate performance. What is the relationship? Aarhus University Business School working paper 02.

O’regan, N. and Ghobadian, A. (2004). The importance of capabilities for strategic direction and performance, in Management Decision, 42(2): 292-312.

Panigyrakis, G.G. and Theodoridis, P.K. (2009). Internal marketing impact on business performance in a retail context, in International Journal of Retail and Distribution Management, 37(7): 600-628.

Pellissier, R. and Kruger, J.P. (2011). A study of strategic intelligence as a strategic management tool in the long-term insurance industry in South Africa, in European Business Review, 23(6):609-631.

Popoola, S.O. (2000). Scanning the environment for competitive advantage: a study of corporate banking managers in Nigeria, in Libri, 50: 210-216.

Punn, K.F. and White, A.S. (2005). A performance measurement paradigm for integrating strategy formulation: A review of systems and frameworks, in International Journal of Management Reviews, 7(1): 49-71.

Phillips, P.A. (2000). The strategic planning/finance interface: does sophistication really matter?, in Management Decision, 38(8): 541-549.

Rossouw, D., Le Roux, S.J. and Groenewald, D. 2003. Strategic management: South African perspective including the balanced scorecard. Cape Town: New Africa Books.

Schiffman, L. N and Kanuk, L. L. (2009). Consumer Behavior. 9th ed. London: Pearson Education.

Sedmark, M. and Longhurst, P. (2010). Methodological choices in enterprise systems research, in Business Process Management Journal, 16(1): 76-92.

Smit, P.J., Cronje, G.J.J., Brevis, T. and Vrba, M.J. (2007). Management principles: a contemporary edition for Africa. 4th ed. Cape Town: Juta & Co. Ltd.

Sum, C., Jukow, L. and Chen, S. 2004.Taxonomy of operations strategies of high performing small and medium enterprises in Singapore, in International Journal of Operations and Production Management 24 (3):321-345.

Tang, T. and Zhang, Y. (2005). Marketing strategy and business performance of small construction firms in China. Macquarie Graduate School of Management working papers in management: 1-12. March.

Tapinos, E., Dyson, R.G. and Meadows, M. (2005). The impact of performance measurement in strategic planning, in International Journal of Productivity and Performance, 54(5/6): 370-384.

Ungerer, M., Pretorious, M. and Herholdt, J. (2007). Viable Business Strategies: a systematic, people-centric approach. 2nd ed. Johannesburg: Knowres Publishing.

Verbeen, F.H.M. and Boons, A.N.A.M. (2009). Strategic priorities, performance measures and performance: an empirical analysis in Dutch firms, in European Management Journal, 27: 113-128.

Wery, R. and Waco, M. (2004). Why good strategies fail. Handbook of Business Strategy: 153-157.

Zikmund, Babin, Car, and Griffin, (2009). Business Research Methods. 8th ed. South Western Education. Chicago.


Full Text: PDF

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.