SME Strategic Issues

Introduction

Small and Medium Sized Enterprises (SMEs) are the businesses where the personnel numbers are below a certain limit. SMEs play a crucial role in the economy of the countries across the globe for employment and raising the National Income of the nations and the strategic planning of the SMEs are also contributing factors in enhancing the economic growth and social development (Schaper, 2015). In the recent years, the numbers of the SMEs are increasing rapidly across the international nations where the entrepreneurs in the SMEs are contributing in the economy positively by doing their operational activities. The CEO plays an important role in the SMEs where it is the responsibility of the CSO and the leader of the companies to allocate the organisational resources, time, assets and energy which are contributing factors for achieving success in the economy. The aim of the study is to explore the strategic issues that are faced by the SMEs in doing their business operational activities in the market. The aims of the study are explained further,

• To critically evaluate the contemporary issues relating to the SMEs
• To explore the strategic issues in the management of the SMEs
• To explore the alternative solutions for the development of the business of the SMEs
• To investigate and evaluate business expansion strategic planning for the SMEs
• To critically appraise change and development process for the development of the SMEs

The above-mentioned objectives of the study can be fulfilled through conducting interview with the entrepreneurs of the SMEs situated in the UK which in turn helps to gather primary data and information directly from the entrepreneurs of the SMEs. Through this study, it is possible to explore the existing contemporary issues of the SMEs as well as develop proper solutions after analysing the corresponding issues faced by the SMEs so that the enterprises can develop proper strategic planning for enhancing the business growth and opportunities to achieve future success. In the recent years, the growth of the SMEs is increasing rapidly where the entrepreneurs of the v are also able to invest more and expand their businesses across the international countries by resource utilisation and hiring a huge number of efficient employees which are the major contributing factors for the success of the SMEs. As per the department of Business Innovation and Skills, 99.9% of the businesses in the UK are SMEs where the entrepreneurs are successful in developing strategic planning and investing the resources for the success of the organisations and it contributes a huge amount in the National income of the UK economy. In this regard, the government is also playing an important role in enhancing growth and opportunities of the SMEs so that the entrepreneurs can expand their business operational activities across the international borders for successful brand expansion and securing future suitable development. Additionally, the vast majority of the businesses are small business and even the larger firms in the UK are successful SMEs where the strategic planning and resource utilisation are helpful for the entrepreneurs to make the SMEs successful. The interview process with the entrepreneurs of the SMEs in the UK is effective for collecting the first-hand information which is important in this study to explore the existing issues for the SMEs as well as acknowledge the role of the entrepreneurs and their strategic planning to mitigate the issues. Through this study, it is hereby possible to critically analyse the current situation of the SMEs and strategic planning for making the SMEs successful for securing future sustainable development.

Findings and discussion

Through the interview process, it is possible to gather primary information directly for the entrepreneurs where they are helpful to provide appropriate information about the current situation of the SMEs and their strategic planning for the success of the SMEs. In this regard, the information of the respondents is expressed further.

Findings:

• Respondent 1:

As per the findings, the respondent stated that, digitalisation is a big problem for the business. It is a great issue to digitalise the business where the respondent lacks proper financing due to poor resources and financial assets for which it is quite difficult for the entrepreneurs of the SMEs to digitalise the business and promote the brand at the international market. In addition to these, the competitive market threat is another serious issue where it is difficult to gain highly competitive advantage for the business as there are a huge number of competitors in the market for which the brand cannot gain high market share. Lack of market share and poor competitive advantage are the threats for the SMEs, and these must be considered a great issue for the SMEs to expand their business across the international nations (Pham, 2018). Additionally, the political threats due to misunderstanding with the local council, lack of opportunities in the export and import of the products of the businesses and lack of proper resources and assets which are the major issues for which the entrepreneurs face difficulties to smoothen the process of conducting the business operational activities and expanding it across the market.

• Respondent 2:

As per the entrepreneur of respondent 2, human resource management is one of the greatest issues which deteriorate the performnace of the firm as a whole. Lack of proper knowledge and technical skill among the employees deteriorates their performnace for which the efficiency of the SMEs lacks to match the quality level of the business. In this regard, due to lack of proper financial investment and resources of the firms, the entrepreneurs also fail to arrange proper training and development program and induction process for improving the skill and knowledge of the employees. In this regard, the entrepreneurs fail to manage the employees in their SMEs through providing monetary and on-monetary benefits to all the staff members and for this they also fail to retain the efficient staff members for the success of the business (Venkatraman, and Fahd, 2016). This is also another contemporary issue for the respondent. As per the information provided by the respondent 2, it is necessary to improve capabilities of the entrepreneurs in the SMEs to manage the human resource of the companies for retaining skilled workforce for the firms which are the key stakeholders for achieving the organisational success. Through human resource management, they can enhance the organisational performnace and it is helpful for achieving success and make the SMEs successful in near future.

• Respondent 3:

The third respondent stated that, leadership and management is one of the critical issue for all the SMEs where the lack of experience of the entrepreneurs raises this issue where the entrepreneurs fail to manage the business operational activities as well as maintain the leadership style that is necessary for leading the organisation towards achieving success for all the SMEs. In this regard, lack of proper leadership style, poor tactics to manage the strategic planning and lack of analytical skill of the entrepreneurs are the major issues for developing a good leadership approach on the SMEs which is necessary for achieving organisational success (Lampadarios, 2016). In his regard, the participant stated that it is necessary for the entrepreneurs to develop proper leadership style to improve organisational culture and achieve success as well as develop a suitable working environment where the employees can work cooperatively. This is hereby a serious issue for the entrepreneurs to improve their leadership skill with proper problem solving and critical analytical skill for making the business successful where the problem solving and critical analytical skill will be helpful for analysing the current market situation and explore more effective solutions for the v so that they can develop proper st6artegic planning to achieve success.

• Respondent 4:

The fourth participant also stated that, financing and resource utilisation are the major problem for which the organisations cannot achieve success. Lack of adequate finance and poor skill of resource utilisation deteriorates the performnace of the firms. It is necessary for the organisations to invest time and money in the right perspective for successful resource utilisation, lack of proper knowledge and skill is the reason were the SMEs cannot maintain proper economies of scale where they cannot produce more with their resources. It is also another serious issue for achieving success where the enterprises fail to allocate the organisational resources as well as enhance the capabilities of the employees (Wonglimpiyarat, 2015).

• Respondent 5:

As per the findings, the entrepreneurs faced the problem of making strategic planning due to lack of experience of the entrepreneurs. In order to achieve success in the SMEs, it is necessary to develop appropriate strategic planning for the firms to reallocate resources, improving employee’s capabilities, proper resource utilisation and follow the strategies to produce quality products for satisfying the customers. These are crucial for the entrepreneurs in achieving success in the SMEs. However, due to lack of experience, poor knowledge in the strategic planning of the business management, lack of analytical skill and lack of knowledge about market situation are the major factors for which the entrepreneurs fail to develop appropriate strategies to achieve success int he SMEs (McCann, and Ortega-Argilés, 2016).

Critical Discussion:

As per the above findings, it has been seen that, there are several issues which are faced by the SMEs such as lack of leadership and management, difficulties in digitalisation of the business, poor financing, lack of management, poor knowledge in problem solving and decision making skill and lack of management of the employees which raises difficulties for all the SMEs to achieve success (Musa, and Chinniah, 2016). It is necessary for the SMEs to resolve these problems for achieving success. As per the current situation of the SMEs, the major issue of lack of process of digitalisation due to poor financing. Lack of digitalisation further deteriorates the chance of promoting the business and it is a serious problem, where it is difficult for the entrepreneurs to improve brand visibility in the market and retain long term customers for the business. On the other hand, lack of leadership style is another major problem where lack of experience of the entrepreneurs and poor capabilities fail to manage the business operational activities and other internal system of the firms. In this regard, it is necessary for the entrepreneurs of the SMEs to improve the skill and abilities of leadership so that the business planning and activities can be managed well (Blackburn, 2016).

Additionally, it is necessary to manage the business activities and the employees as well for achieving organisational success. Due to lack of experience, the entrepreneurs also face difficulties in managing the employee who are the major stakeholders for doing the business operational activities and achieving the future success. In this current situation, it is necessary for the entrepreneurs to develop proper strategic management planning to imporve business opportunities and minimise the market threats of high competition, new entrants and substitute products which are main threats for the SMEs (Bryson, 2018). On the other hand, in order to manage the environmental threats including the political instability, maintaining social norms and ethical principles of conducting business and environmental sustainability which are also necessary for the SMEs to manage for successful expansion of the businesses. As per the above findings, to make the business of the SMEs sustainable, it is necessary to manage the employees through different employment scheme and program as well as promote proper leadership style to develop suitable environment to work with cooperation and communication (Haines, 2016). Hereby, human resource management through managing transparency and fairness at the workplace, providing rewards and benefits, perform ace related pay and health safety measures to the workforce as well as sense of achievements and self-actualisation is necessary for retain the efficient staff members and lead the organisation towards achieving success.

On the other hand, as per the above findings, the entrepreneurs face the issue of poor leadership style and in this regard it is necessary for the entrepreneurs to develop appropriate leadership approach to run the business successfully where implanting ethical principles of doing the business, managing the employees, creating values for all the stakeholders are important for making the business successful. On the other hand, the above findings demonstrate that the SMEs are facing problems in develop proper strategic planning for expanding the business across the international markets due to lack of experience (Wheelen et al., 2017). In this regard, improving critical analytical skill as well as problem solving, and decision-making skill is important though which the leaders can develop proper strategic planning for the business. Additionally, making the business digitalise for managing the customers over the website of the company as well as promoting the brand through advertisement are also necessary steps for the SMEs to achieve future success and secure future sustainable development through strengthening their customer’s base (McLean, 2018).

Conclusion

It can be concluded that, the study is useful to explore the current issues faced by all the SMEs in the UK where proper interview with the participants in the SMEs and discussion over the findings are appropriate for critically analysing the current situation of the SMEs. Through this paper, it is also effective to explore the managerial problems in the v for which the entrepreneurs face the threats of competition and they lacks in expansion of the business successfully. Through this study, the aim of evaluating the contemporary issues in the SMEs and critically analysing the existing current situation of the business are fulfilled. The study also focuses on the investigating the development process of the business where the above discussion is useful to explore the strategies through which the entrepreneurs can resolve their existing problems and improve efficiency to run the SMEs strategically by developing effective strategic planning for the businesses. As per the findings the major issues are such as lack of digitalisation, poor financing and resource utilisation, improper management, lack of proper leadership style and poor management of the human resource for which they face issues in achieving future success and gaining highly competitive advantage and market share across the international countries. In this regard, the research provides a scope to develop some suitable recommendations through which the entrepreneurs in the SMEs can resolve their existing issues and develop proper strategies to explore more opportunities in the business for gaining competitive advantage and market share across the international borders.

Recommendations

It is necessary for the SMEs to develop proper strategies to overcome the current situation of the business and achieve success in near future. The suggested recommendations for the SMEs are such as,

• It is necessary to reallocate the organisational resources and time for improving economies of scale so that the SMEs can produce more amount by utilising adequate amount of resources. In this regard, the investment on research and development is effective for producing new products and services for the SMEs.
• The entrepreneurs of the SMEs need to reallocate the resources and invest in marketing planning which in turn helps to digitalise the companies in the market. In such an era of digitalisation, it is necessary for all the SMEs to promote their brand and products in the market through advertisement and digitalising their business activities, this would be helpful for the companies to attract more audiences in the market and retain them for long run. Digitalisation through developing company’s ow website and social media marketing are helpful for improving brand visibility in the markets.
• Human resource management is one of the effective planning for managing the workforce in the SMEs and in this regard, the entrepreneurs need to create values for all the staff by providing them proper salary and performnace related pay. In addition to this, it is necessary to give them freedom to work and encourage their creativity to improve their interest to perform better and make the business successfully.
• Monetary and non-monetary rewards for all the employees must be improved by the entrepreneurs of the SMEs where the entrepreneurs need to provide monetary rewards as well as freedom, integrity and motivation to all the staff to so that they contribute with their full potential to achieve the organisational success.
• The entrepreneurs need to imporve the leadership and management skill and in this regard proper leadership style is effective strategy for achieving future success of the SMEs., in this regard, the leaders must be innovate and cooperative where the leader supports the employees and encourage their creativity as well as improving cooperation is necessary for working collaboratively to achieve future success.
• The entrepreneurs need to enhance internal and external; communication with all the stakeholders of the SMEs including the government, customers, employees and distributors which are necessary for building trust and loyalty among them and it in turn helps to achieve future success of the SMEs.
• In the current situation of the SMEs, it is a serious issue to develop proper strategic planning due to lack pf experience, problem solving and decision making skill of the entrepreneurs of the SMEs and in this regard, it is necessary for all the entrepreneurs to improve their critical analysis and decision making skill for understanding the current business position and developing appropriate strategic planning for achieving future success.
• The entrepreneurs also need to enhance business performnace through sharing their knowledge and skill with the employees and it is important to develop working in partnership strategy for making the business successfully.
• In order to manage innovation and creativity of the SMEs to gain highly competitive advantage and market share, it is also necessary for the entrepreneurs to improve innovation and implement latest technology for digitalisation of the business and providing the customers in a better and unique way.

The above-mentioned recommended suggestions are helpful for the entrepreneurs for the SMEs to achieve future success by resolving the existing problems and improving the current situation of the business. It is important for the SMEs to explore more business opportunities by resource utilisation and digitalisation of the business which in turn helps to enhance communication and cooperation among all the stakeholders contributing in achieving organisational success.

Reference List

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