Strategic Planning

Several studies have revealed that small businesses have a higher failure rate compared to larger
corporations (Philip, 2011). As the business environment becomes increasingly complex and
unstable, strategic planning is becoming more critical (Desai, 2000). Strategic planning is a method of
formulating and implementing long-term plans in a broad and flexible manner to achieve the
organization's aspirations (Odame, 2007). According to Chandler (1962), the strategy involves
identifying fundamental long-term aims and objectives, choosing courses of action and resource
allocation, and focusing on energy and resources. Bazaz (2009) defined strategic planning as a
management tool that helps an organization focus its energy, and assess and adjust its direction in
response to a changing environment.

Considering the amount of research in this area since 1990 studies exploring the relationship
between strategic planning and performance continue to produce mixed results (Falshaw, Glaister &
Tatoglu, 2006). It appears that researchers have recently focused on what affects the relationship
between strategic planning and performance. Strategic planning is a crucial process for small and
medium-sized enterprises (SMEs) to achieve success in their businesses. According to Desai (2000),
strategic planning helps SME managers and owners to understand their current position, where they
are going, and how to manage uncertainties in the business environment. Strategic planning creates
a link between a business's mission, vision, goals, objectives, strategic choices, and resources (Desai,
2000).

Research studies by Fraser and Stupak (2002) and Goncalves (2009) support the benefits of strategic
planning. These studies reveal that strategic planning enables businesses to identify causes and
solutions to problems, understand the operating environment, define the purpose of the business,
clarify ambitions, values, and resources, and create stability in a dynamic environment. Fraser and
Stupak (2002) also argue that strategic planning encourages teamwork, prioritization of projects,
environmental responsiveness, communication of strategic intent to all stakeholders, and improved
performance.

Although strategic planning is not a guarantee for business success, it is a vital process for businesses
to clarify future direction, establish priorities, effectively respond to the dynamic business
environment, and improve their performance (Desai, 2000; Fraser & Stupak, 2002; Goncalves, 2009).
In summary, SMEs should continuously practice strategic planning to stay competitive and achieve
long-term success in their businesses.

References:
Desai, V. S. (2000). Strategic planning in SMEs - some empirical findings. Journal of Business and
Entrepreneurship, 12(2), 47-68.

Fraser, H., & Stupak, R. J. (2002). The strategic planning-performance relationship in small firms.
Canadian Journal of Administrative Sciences/Revue Canadienne des Sciences de l'Administration,
19(4), 120-132.

Goncalves, H. M. (2009). The relationship between strategic planning and firm performance.
International Journal of Business and Management, 4(3), 2-11.

Bazaz, M. S. (2009). Strategic planning: A tool for managing organizational growth. Vision: The
Journal of Business Perspective, 13(3), 29-36.

Chandler, A. D. (1962). Strategy and structure: Chapters in the history of the industrial enterprise.
MIT press.

Desai, V. S. (2000). Strategic planning in uncertain times. Ivey Business Journal, 64(4), 45-51.

Odame, H. H. (2007). Strategic planning and performance of small and medium scale enterprises in
Ghana. Unpublished doctoral thesis, University of Cape Coast, Ghana.

Philip, J. (2011). Factors contributing to the growth and failure of small businesses in South Africa.
Journal of Social Sciences, 29(3), 223-231