Strategic Management Practices and Performance of Small and Medium Sized Enterprises in Kenya

Abstract

Adoption of strategic management practices conceptually enables firms to understand their strategic position and identifying how to make strategic choices for the future and manage strategy in action. Employing strategic management is critical to firm’s performance. Strategic management demands efficient systems to counter unpredictable events that can sustain their operations and minimize the risks involved. Theoretical and empirical evidence supports the argument that adoption of superior strategies leads to improved organization performance. However, most studies have dealt with large firms and put diverse conditions for the benefits of strategic management to be felt. The main challenge lies with small firms which do not have the resources and capacity to implement strategic management practices. This has seen the argument by some scholars that investment in strategic management practices involves erosion of small firms’ resources (leading to decline in performance) with no corresponding benefits; such resources should be applied to areas of more priorities. The study sought to determine the strategic management practices adopted by top one hundred SMEs in Kenya and the influence of strategic management practices adopted on organization performance and used both primary and secondary data. This study targeted top one hundred small and medium sized enterprises in Kenya. The study population was the 2014 top one hundred small and medium sized enterprises as documented by the business daily. The study used descriptive design and data was collected using primary and secondary data. The study found that that top one hundred SMEs had adopted strategic management practices relation to situational analysis, strategy formulation, implementation and evaluation. All the SMEs had written mission and vision statements and paid a lot of attention to strategy formulation, implementation and evaluation. The SMEs had adopted participatory mechanisms in strategic management practices and hence ensuring success of strategic management practice. The study also found that adoption of strategic management practices influence organization performance. Superior strategies have positive relationship with organization performance. The study recommended that top management for all the SMEs and other organizations to strive to make the strategic management process as inclusive as possible from the lower level employees to senior management. Further the study recommended that management to take measures to ensure that they adopt superior strategies which will give their companies competitive advantage and lead to superior performance.