OROMIA STATE UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MANAGEMENT
Article review on Determine the effect of strategic management practices on
performance of small and medium sized enterprises

MBA PROGRAM
By Kelifa Shurefa

IDPG/MBA/W/14/1365
Submitted To:Feyera(PHD)

DEC,2022
 1. INTRODUCTION
The article is entitled as “determine the effect of strategic management practices on performance of
small and medium sized enterprises
The paper examine the type or size of the organization, as strategic management is a successful
approach. The plan that is developed and adopted will determine the organization's success or failure.
Strategic planning is a mechanism used by smes to protect them from irrational business situations. Njeru
(2015) investigated the effectiveness of smes ' strategic management practices. The performance of the
firm would increase with the adoption of superior strategies.

Ethiopian scholars have not yet looked at how strategic management practices affect the performance of
small and medium-sized businesses (smes) there. Researchers have looked into this issue in nations such as
Uganda, Kenya, the United States, Nigeria, and Kenya. The performance of smes and overall strategic
management techniques are not correlated, according to local studies.

1.2. Problem Statement

Adopting strategic management methods enables businesses to comprehend their strategic position,
determine how to make future strategic decisions, and manage strategy in practice. Studies have
demonstrated that adopting superior tactics boosts organizational effectiveness. In order to improve the
performance of small and medium-sized businesses in Kenya, Nyariki (2013) looked into strategic
management as a competitive tool. Performance of smes is positively correlated with the use of strategic
management practices. Performance can be strongly impacted by strategy development, implementation,
and evaluation. This is for smes that are located in other nations other than Ethiopia. If there is a
considerable impact of strategic management practice on performance, the researcher wants to know about
it. The ability of non-financial acts to provide insight into company operations, which in turn helps
business.
2.Theoretical and Empirical Concepts
2.1 Theoretical Concepts
The article discusses the Strategic management based on the belief that an organization should continually
monitor internal and external events and trends so that timely changes can be made as needed. The term
strategic management consists of strategy formulation, implementation, and evaluation. At a most basic
level, corporate strategy will outline exactly what businesses you are going to engage in, and how you plan
to enter and win in those ,markets.
It is significantly vital that you have an overall corporate strategy in place, as that strategy is going to direct
all of the smaller decisions that you make. For example, smaller businesses that are only going to enter one
or two specific markets with their products or services are going to have an easy time identifying what it is
that makes up the overall corporate strategy.
According to (David, et al, 2017) Functional strategies seek to improve implementation of business and
corporate strategies. Functional strategies include marketing strategies and human resources strategies.
Lema et.al (2012) argue that by subjective measurement, firm managers or owners are willing to give their
perceptions about business performance, including their perception in regards to the sensitive or
confidential information needed by the firms to survive in a competitive and rapidly changing environment
2.2 Empirical Concepts
The article discusses the theory of Gure & Karugu (2018) studied strategic management practices and
performance of small and micro enterprises in Nairobi City, Kenya. The study used a descriptive research
design and the primary data was collected by use of self- administered semi-structured questionnaire. They
found that the Michael Porter’s generic stratege significantly influenced the organizational performance of
SMEs.
Most Small business enterprises place less emphasis on making effective strategy for improved
performance. Yunus (2010) found that there is a positive and significant relationship between strategic
management practice and organizational profitability and market share. 140 participants were randomly
selected in Lagos metropolis, Nigeria.
3. Method and Data Analysis
3.1. Research Design
The researcher uses descriptive research designs to explain a process and affairs of an object, person,
group of people, or organization as it is at the time the study is conducted.
3.2 Source of data
Primary data sources :-The primary data were collected from managers of sample enterprises through
structured questionnaire that has been filled by managers of those SMEs.
Secondary data sources, the secondary data were generated from relevant documents such as
profiles of the enterprises, previous articles, website addresses, meeting reports and thesis conducted
on this particular topic.
3.3 Data Collection Methods
The researcher has used open and close-ended questionnaire to the respondents/managers as a
primary data collection tool. The researcher has referred some questionnaires developed by other
researchers and took some of the items.
4.Summary of findings

 Enterprises relatively focused on strategy implementation even though the mean values are close to
each other and strategic management practice increase performance of SMEs to above a small extent
but below average extent.
 As the researcher analyzed the correlation matrix, there is a weak positive relationship between
strategy formulation, performance, implementation and evaluation. But there is a moderate and
positive relationship between strategy implementation and performance and the relationship is
significant at 5% for strategy formulation and at 1% for strategy implementation and evaluation.

5.Conclusion
In this study different issues related with strategic management have been investigated such as analysis
of internal and external environmental factors, strategic planning tools and types of strategies adopted
by smes. Overall there is a positive and significant relationship between strategic management practice
(strategy formulation, implementation and evaluation) and performance.

6.The Strengths & Weaknesses

6.1. Strengths

 This paper contributes to the recent literature on Adopting strategic management methods enables
businesses to comprehend their strategic position,
 This paper determine how to make future strategic decisions, and manage strategy in practice.
 Again methodologically the study prefers to use is relevant to the issue.
  The author tries to support the case in a lot of theories that written on strategic management
Exhaustively explain each theoretic aspect with empirical evidence

6.2.Weakness
 The article used very limited empirical evidence in discussing the issue.
 The conclusion drawn is not well aligned with the discussion of results.
 The data is not denoted in the clear way for someone who have a knowledge to interpreted n/data
7.Suggestion for future researches
The result shows in the Journal of Business and Management has made some very important suggestions
for future investigation to be conducted by other researchers. This article focused on the effect of strategic
management practice.
1. The findings shows there is lack of adequate empirical literature on the relationship between strategic
management practices and SMEs performance in Ethiopia, so it is recommended that a repeat study
to be done to confirm the results.
2. A research has to be conducted to identify the problems that limit SMEs to practice strategic
management issues to above a moderate/ average extent.
3. As the author states the study used primary data collected at one point in time and hence its accuracy
could not be assured, therefore the author recommends that a similar study be done but using data
collected over period of time should be used.
4. As the researcher perceive the reason for lower adjusted R square was due to that performance of SMEs
could be explained by other factors instead of strategy formulation and evaluation Therefore, research
has to be conducted by adding other variables that can explain the performance of SMEs This research
has to be conducted on the large business organizations to know the level of extent that strategic
management affects their performance.
5. Research has to be conducted that can state the effect of internal environment factors on
performance of small and medium enterprises.
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