A PROPOSAL ON THE EFFECTS OF STRATEGIC MANAGEMENT ON SMES PERFORMANCE IN LAGOS NIGERIA

Abstract

The study will investigate the effects of strategic management on SMSs performance in Lagos state. The following objectives will be used for the study: following objectives will be ascertained; To ascertain if business strategy influence performance of SMEs in Lagos state, to find out if Organizational structure have effect on the performance of SMEs in Lagos state and to find out if environment have effect on performance of SMEs in Lagos state. The method of data analysis that will be used by the researcher is the simple percentage. More so, percentage and degrees of the responses will also be used in the analysis. Here, the ratio of those whose responses were not in the affirmative will be found and conclusions will be drawn there upon.  Representations of the level of responses will be made in tabular form. The Statistical Package for Social Sciences (SPSS) software will be used to test the hypotheses

Chapter one

Introduction

Background of the study

Modern organizations are experiencing environment that are changing rapidly and subject to increase in irregularities. As a result, the sustained corporate success that extends over decades and continuous expansion has come to be a luxury enjoyed by few companies. The situation is inevitable considering the fact that an organization is a corporate entity and a product of the society. Despite these environmental constraints, some firms have sustained their success over the years, maintained distinctive competence over their competitors and large enterprises have adopted various strategic management practices to guarantee their fit within the constraints of their environment

Meanwhile, companies grow from a one-man business into large multinational organizations whose activities cut across regional boundaries, such growth requires that strategic management had to be introduced in the operations of these organizations. Strategic Management is a concept that concerns making decisions and taking corrective actions to achieve long-term targets and goals of an organization (Bakar, 2011). It is a set of decisions and actions that result in the formulation and implementation of plans designed to achieve a company’s objectives (Pearce and Robinson, 2008). The business environment in which firms operate is dynamic and turbulent with constant and fast paced changes that often render yester-years strategies irrelevant (Ofunya,2013). Therefore, it is important that good strategies are put in place to bailout the enterprises from the uncertainty that surrounds unpredictable environment. Strategic management addresses the reason why some organizations succeed while others fail (Melchorita, 2013; Porter, 2001). Strategic management involves identifying the organization’s current mission, objectives, and strategies, analyzing the environment, identifying the opportunities and threats, analyzing the organization’s resources, identifying the strengths and weaknesses, formulating and implementing strategies and evaluating the results (Robbins and Coulter, 1996).

According to Fred (2005), strategic management is the process and approach of specifying an organization’s objectives, developing policies and plans to achieve and attain these objectives, and allocating resources so as to implement the policies and plans. In other words, strategic management can be seen as a combination of strategy formulation, implementation and evaluation. Johnson and Scholes (2002) observed that suitable strategy to be pursued by an organization depends on the external environment in which the organization operates and its internal environment characterized by its strengths and weaknesses. The strategy must also be consistent with the firm’s vision, mission and objectives. In strategic management, the firm must analyze the advantages, disadvantages, trade-offs, costs and benefits of each alternative strategy. The ultimate success of the identified strategy depends on its implementation and proper evaluation. There is no doubt that aside helping firm to cope with change and enables it to focus on resources and efforts in the market, it also provides long term direction for the firm. Strategic management is of critical importance to the performance and growth of SMEs (Otieno, 2010). The strategic management sets the direction of the firm enabling the organization to meet its financial and non-financial objectives, it enables the company to become competitive through response to market demands and acts to respond to changing customer’s demands and technology (Tsuma, 2013).

Despite the SME sector’s enormous size and contribution to the Nigerian economy and the evident commitment by the government through various support programs to see a strong, vibrant and enduring sector. The Small-Scale Enterprises are often faced with diverse challenges that prevent their growth and optimum performance. These challenges are in diverse areas including insufficient knowledge in strategic management, poor access to financial services, weak business linkages and lack of promotional services. It has been established in the literature that poor performance of SMEs is possibly due to varied attitudes toward strategic management. Despite various contributions of SMEs to various economic growth with employment creation, increase in GDPs and others, business continuity remains a major challenge confronting the sector (Adewoye and Salau, 2022). However, it has been mentioned that some SMEs do not even have strategic plans and as a result they encounter performance irregularities (Ofori and Atiagbe, 2012; Danso, 2005). So also, thus Analoui and Karami, (2003) affirms that for firms that strategically plan, they have achieved sustainable and competitive advantage over those that don’t. However, Adeyemi et al. (2017) asserts that owners and managers of SMEs in Nigeria are poorly aware of the contribution of strategic management practice to the success of their organization and the way in which it can be undertaken

Statement of the problem

This study felt that strategic management, a key pillar for business survival, may be adapted and applied to ensure sustainable development of SMEs, on a more consistent basis. Strategic management literature focused primarily on large businesses. The reaction of SMEs is naturally one of being intimidated; and therefore they prefer to operate in the usual manner and mindset. Where there is no change, different results cannot be expected. Anthony Robbins, the most famous Neuronlinguistic Programming specialist, once remarked: “To keep on doing the same thing and expect a different result is a form of insanity”. For reasons stated above, a research on strategic management for SMEs is very essential. Therefore, SMEs should not be discouraged to adopt strategic management if they have not done so. It can start off with its own style, and incorporate strategic management gradually. The study therefore seeks to assess the effect of Strategic Management on the performance of Small and Medium Scale Enterprises (SMEs) in order to enhance their sustainability in Nigeria. Using Lagos state as a cases study

Objective of the study

The following objectives of the study will be ascertained:

1. To ascertain if business strategy influence performance of SMEs in Lagos state
2. To find out if Organizational structure have effect on the performance of SMEs in Lagos state
3. To find out if environment have effect on performance of SMEs in Lagos state

Research question

The following research questions will be formulated;

1. Does business strategy influence performance of SMEs in Lagos state?
2. Does Organizational structure have effect on the performance of SMEs in Lagos state?
3. Does environment have effect on performance of SMEs in Lagos state?

Research hypotheses

The following research hypotheses will be formulated

H1: business strategy does not affect the performance of SMEs in Lagos state.

H2: Organizational structure do not affect the performance 0f SMEs in Lagos state.

H3: environment have no effect on performance of SMEs in Lagos state

 Scope of the study

The scope of the study covers the effects of strategic management on SMEs performance in Lagos state, Nigeria. The study will be limited to selected SMEs in Lagos state

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