Effective strategic planning in small and medium sized firms

Little attention has been paid to the strategy‐making processes of small and medium‐sized firms (SMEs), or to the effectiveness of strategic planning in the SME sector. Planning often fails because of implementation problems often associated with SMEs’ lack of capability to determine and overcome potential barriers to strategic planning. This paper examines the concept of formal strategic planning, presents the findings of a critical analysis of the suitability of formal planning for SMEs, and identifies some of the barriers which prevent effective implementation of strategic plans. Suggests that SMEs that engage in formal strategic planning experience fewer barriers to implementation than those that do not and that subsidiary firms tend to place a greater emphasis on formal planning than independent firms. Indicates that the eight barriers to deployment examined are experienced to a lesser degree by subsidiary firms compared with independent firms. However, the differences are not statistically significant. Suggests that apart from the preparation of written strategic plans by subsidiary firms, there is little transferability from the parent firm of influences that impact on the reduction or elimination of barriers to the deployment of strategic plans. Parent firms may wish to encourage their subsidiary firms to think and act as part of a larger group and to make greater use of the more significant resources of the parent firm.