Strategic Management in Small and Medium Enterprises - Literature review Example

Introduction to Management Name Course Name and Code Instructor’s Name Date Introduction Allen (2011) notes that success can be considered relative because different people define success differently based on what their priorities are and what they consider important to them. The same case applies to small enterprises who define success differently. For lifestyle firms that have no growth intentions and are meant to offer their owners with reasonable lifestyle, their description of success differs significantly from high-growth firms whose main objectives are to diversify and grow as noted by Verreynne (2012). The author indicates that lifestyle firms see success as the capacity to effectively and efficiently meet the needs of customers, generate profit and settle initial investments and more emphasis is placed on family, provision for retirement, lifestyle for the owner and happiness. On the other hand, high-growth enterprises measures success in terms of profitability, effective and efficient satisfaction of the needs, expectations, wants, tastes and preferences of customers, meeting employee needs, attaining shareholder goals, enhancing and achieving product and service quality and attaining overall growth (Verreynne, 2012). Verrynne notes that unlike lifestyle enterprise, high-growth enterprises place more efforts on the organization and its shareholders and less on personal situation of the CEO. Owing to the difference in aspirations, the techniques utilized to attain success for the two types of enterprises are varied and must be designed to meet their specific needs although making money is not the defining factor in achieving success for either. According to Libecap & Hoskinson (2011), due to the changing political, social, economical, financial, legal, ecological and technological market forces and the complexities, volatility and stiff competition that characterizes modern business environments, understanding what is important to one’s business and taking the right plans and actions to achieving that is critical for the success of the organization. This means having a clear, realistic, attainable vision of the future and aligning it with suitable actions as argued by Verreynne (2012). This informs the basis of this report that seeks to analyse successful management of small firms by discussing the article “The secret to running a successful small firm? Mind your own business written by Martie-Louise Verreynne. The differences in goals and management of “lifestyle firms” and growth-oriented firms As earlier highlighted, lifestyle businesses are significantly different compared to high-growth businesses. Among areas that these two businesses are different are in terms of goals. While lifestyle businesses are keener on maintenance of the status quo and even minimizing their operations, high-growth businesses are more focused on developing new operations and systems that will help them diversify and enhance its existing market shares while sustaining its competitive advantage (Verreynne, 2012). Lifestyle small business perceive their success as their capacity to not only make profits but also ensure customers who they are close to are to satisfied and ensure that the business is able to repay the initial investments put in by the business owner (Verreynne, 2012). In addition, there are other fundamental goals and objectives for lifestyle businesses which are namely lifestyle of the owner or the managers, happiness, family and generation of retirement provisions. The success in relation to the lifestyle businesses is very personal and more often than not emotional to the management as discussed by Verreynne (2012). In regards to the high-growth businesses, the goal is to create a balance in ensuring all the needs, expectations, wants, preferences and goals of all relevant stake holders to the businesses such as customers, shareholders, investors, employees are effectively and sufficiently addressed (Verreynne, 2012). The main goal for high-growth businesses are to achieve a variety of objectives, mission and visions which ranges from making profits, minimizing costs, enhancing customer satisfaction, increasing employee relations and happiness, improving on the quality of products and services produced, achieving set shareholders goals and more significantly, ensuring gradual but steady business growth (Scarborough, 2011). In addition, goals and objectives for growth-oriented businesses are to develop and enhance innovation (Libecap & Hoskinson, 2011). The main focus in the high-growth businesses is on the business and more specifically on developing and implementing systems, processes and frameworks that would generate business growth and ensuring both the internal and external environment of the business is effectively and efficiently catered for reported by Verreynne (2012) . Little or no attention is given to the personal situation of the owner or the manager other than that which is necessary. Other than a difference in goals, lifestyle businesses and growth, oriented businesses are different in terms of management. The lifestyle firms are managed and directed towards personal success of the manager or the owner while the management systems and processes are designed to complement the lifestyle goals and objectives of the business owner. In terms of deriving a suitable living, ensuring future financial security for the CEO in terms of retirement provisions and ensuring the firm’s customers are satisfied, with whom the business usually have close relations with (Verreynne, 2012). In regards to management in the growth oriented businesses, the businesses are more engaged in involving all the stakeholders in important and critical business processes such as through devolving decision making, while the volume of sales are generated and increased through innovation (Verreynne, 2012). In addition, the management process is designed to safeguard and ensure the welfare of its internal environment. According to Verreynne (2012), management in high-growth businesses is more likely to invest in training and developing the human resources and investing in systems that helps the business expand and grow in terms of market shares and accelerating business performance and ensuring the business’ sustainable competitive advantage. The management in firms with growth intentions is keen on holistic approach to management by not only satisfying all the varied stakeholders and generating profits but also and defining success in terms of the firm’s ability to meet these needs (Scarborough, 2011). To facilitate business growth, growth oriented businesses rely on managerial practices and aspects such as employee training and development, innovation, decentralized decision-making and internationalization among others (Libecap & Hoskinson, 2011). Unlike lifestyle firms, whose management has minimal desire and few goals to enhance, innovate and diversify, management in high-growth firms rely on diverse managerial practices and achievement of diverse range of goals and missions to ensure sustainable business growth. How the management of small firms aligns with or differs from management of firms described in the course Martie-Louise Verreynne places greater emphasis on businesses being able to work out what is fundamental for them, making the necessary plans, and taking suitable steps to achieving that what is important. She states ‘Success rests in the ability to work out what is important to your business, and then take the necessary steps to attain it’ (Verreynne, 2012). She adds that regardless of the type of business be it a lifestyle business or a growth oriented business, developing clear goals and vision of the future and correlating them with suitable actions and plans are essential to the success of the business (Verreynne, 2012). This means that the underlying principle in effective management in achieving anticipated success is setting measurable, specific, clear, attainable and realistic goals and vision and putting in place systems and frameworks that ensures the set goals and visions are effectively and efficiently achieved as supported by Chaston (2009). Management regardless of the type or size of the firm although interested in making profits, the most important principle is to ensure all relevant stakeholders are satisfied as supported by Libecap & Hoskinson (2011). Effective management is much more than generating financial gains and more of creating a balance in ensuring the needs and goals of the internal and external environment are sufficiently addressed (Scarborough, 2011). Therefore, while managing varied forms of organizations that have diverse goals and aspirations, it is fundamental to utilize techniques to attain success that are aligned to the organization’s goals and aspirations as echoed by Verreynne (2012). As earlier suggested, management of firms both small and large, lifestyle and growth oriented ones is about understanding what is important to one’s business and taking the right plans and actions to achieving that is critical for the success of the organization, which means having a clear, realistic, attainable vision of the future and aligning it with suitable actions. Management of small firms as described in Martie-Louise Verreynne’s article slightly differs from the management of firms described in the course. Since the functions and role of management irrespective of size and type of firm are not only restricted to goal setting and aligning actions that ensures the goals set are attained but also to plan that entails mapping out specifically how to attain certain goals. Organize which entails organizing the team and resources as per set plan, staff that involves selecting, recruiting, training and developing the right employee for the right job at the right time and at the right cost as highlighted by G.B.D.E.E. & G.B.D.E.S. (2000). Additionally, lead, which entails motivating, encouraging, communicating and offering guidance to employees and finally, control that involves regularly checking results against set goals (Chaston, 2009). Be it as it may, management of small firms as described in Martie-Louise Verreynne’s article aligns with the management of firms described in the course. Since the article just as the course materials emphasizes on the need to develop clear goals and objectives that are measurable as a means to measure the performance and the effectiveness of the management of achieving anticipated outcomes. In addition, both emphasizes the significant role the human resources plays in achievement of success particularly in how the management communicates, relates and engages with them especially when it comes to decision making, change management and in solving organizational problems (Verreynne, 2012). A company is as good as its workforce (Libecap & Hoskinson, 2011). Management of firms should be able to effectively and efficiently apply varied management best practices to suit varied situations and generate desired outcomes (Hodgetts & Kuratko, 2000). This calls for flexibility and adaptability on the management part in being able to accommodate changes when they occur and ensuring the firm achieves what it defines as success as argued by Chaston (2009). For instance, management in high-growth firm should be able to enhance innovation and devolved decision making in order to meet the needs of the stakeholders while ensuring profitability and growth. It is crucial that the personal goals of the manager of the business do not override the professional management goals (Daft, et al., 2010). The personal goals of the manager of the business should in fact align cohesively with the professional management goals to safeguard against conflict of interests. Having a clear vision of the future of the business as suggested by Martie-Louise Verreynne’s article in regards to ensuring success entails assessing the future business potential, opportunities and threats and developing strategies that ensures the potential and opportunities are effectively and adequately captured while ensuring the identified threats are mitigated and effectively managed (Analoui & Karami, 2003). Conclusion ‘The secret to running a successful small firm? Mind your own business’ an article written by Martie-Louise Verreynne is a revelation. I did not only view success of business in terms of monetary gains they achieve but also I was not keen on the role lifestyle firms, which are businesses with no growth intentions, play to the economy as significant employers and as producer of essential products and services as discussed by Verreynne, (2012). Through the article, I have learnt that irrespective of the size and the type of business, the success is defined in terms of the ability for the business to determine and establish what is important to the business and thereafter, taking the necessary actions to achieving them. In addition, establishing clear visions of the future of the business and what one would like it to be like and establishing a linkage between the desired future with suitable actions and strategies (Singh, 2001). As stated by Martie-Louise Verreynne, ‘whether it is by maintaining a lifestyle and providing self-employment, or growing a business for future generations, having a clear vision of the future and linking it with the appropriate actions are key’(Verreynne, 2012). This means taking steps to assess the business strengths and weaknesses and capitalizing on the strengths and ameliorating the weaknesses and more significantly identifying available opportunities and risks and effectively and efficiently averting the risks and taking advantage of the business opportunities as echoed by Singh, (2001). Irrespective of the type of business, ensuring the customers are satisfied is crucial since as illustrated in the article, both lifestyle firms and growth oriented firms despite differences in goals and management, the mutual focus is on ensuring the needs of the customers are adequately met to ensure what either defines as success is achieved (Analoui & Karami, 2003). It is important for the personal goals of the manager of the business to complement the professional management goals in order to ensure there are no conflicts of interests. Other lessons learnt about management of firms from the course materials and the article by Martie-Louise Verreynne is that all forms of businesses have a part to play in the economy and none is important than the other (Verreynne, 2012). Singh (2001) suggests that successful managers are those who are able to determine what is important for the business and they are able to develop strategies and goals aligned to this to ensure success. Due to the difference in aspirations in different business such as lifestyle firms and high-growth firms, the techniques utilized to attain success for the two types of enterprises are varied and must therefore be designed to meet their specific needs (Verreynne, 2012). I have had important insights in regards to defining success. Despite the fact that generating profits are ways of determining if a business is performing well or not, success of the business should not be pegged on profitability alone but on what is important for the business owner whether it is to sustain a particular lifestyle or to grow and expand the business. Primarily, management of firms entails adequately fulfilling the managerial functions of planning, organizing, controlling, leading and staffing (Hodgetts & Kuratko, 2000). Since my main interests are in management of small firms particularly growth oriented businesses, I have learnt the importance of applying varied management practices and setting broader range of goals such as making profits, satisfying customers, enhancing product and service quality and ensuring business growth among others as discussed by Verreynne, (2012). References Allen, K. 2011. Entrepreneurship For Dummies. New York: John Wiley & Sons. Analoui, F., & Karami, A. 2003. Strategic Management in Small and Medium Enterprises. Sidney: Cengage Learning EMEA. Chaston, I. 2009. Entrepreneurial Management in Small Firms. London: SAGE Publications Ltd. Daft, Daft, R.L. & Willmott, M.H. 2010. Organization Theory and Design. Sidney: Cengage Learning EMEA. G.B.D.E.E. & G.B.D.E.S. 2000. The Functions of Management: An Overview. London: DfEE. Hodgetts, R.M., & Kuratko, D.F. 2000. Effective Small Business Management, Volume 2001. New York: John Wiley & Sons. Libecap, G.D. & Hoskinson, S. 2011. Entrepreneurship and Global Competitiveness in Regional Economies. Melbourne: Emerald Group Publishing. Scarborough , N.M. 2011. Effective Small Business Management: An Entrepreneurial Approach. New Jeresey: Prentice Hall-usa. Singh, Y.P. 2001. Effective Business Management. New Delhi: Anmol Publications Pvt. Ltd. Verreynne, M. 2012. ‘The secret to running a successful small firm? Mind your own business.’The conversation. Accessible from http://theconversation.edu.au/the-secret-to-running-a-successful-small-firm-mind-your-own-business-4917 Read More