nyamwanza_final (1) princples of management.docx

7/23/2019 nyamwanza_final (1) princples of management.docx

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Strategy Implementation for Survival and Growth among Small to Medium-sized

Enterprises (SMES) in Zimbabwe

!

"#$%E&'I $!'M'$Z'

(&**+,!)

"hesis submitted in the ulfilment of the &e.uirements for the %egree of %o/tor

0hilosophy in the usiness Management1

%epartment of usiness Management

a/ulty of 2ommer/e

MIDLANDS STATE UNIVERSITY

Supervisors: 0rofessor Steve 2arter

0rofessor !eo 2hu May

2014

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ABSTRACT

The Zimbabwean economy has been in free fall with an economic decline of up to 50%

over the past seven years. However, since February 200, the economy has stabilised

and si!ns of !rowth are now evident. "onetheless, there has been massive scalin!

down in terms of capacity utilisation and employment creation on the part of lar!e

businesses, a situation made worse by the dryin! up of direct forei!n investment. This

situation calls for locally#driven solutions to boost both economic activities and

employment creation. $mall to edium#si&ed 'nterprises ($'s) have a *ey role to

play in drivin! local economic development. However, to date, social and economic

support structures have had little impact on the !rowth and survival of $'s. The

social, economic and political chan!es that are impactin! on the business environment

re+uire owners to be proactive. hile a supportive environment and favourable policies

have not resulted in $'s playin! a bi!!er role in Zimbabwe-s economy, there is

evidence of their !rowin! contribution. $trate!ic plannin! and implementation are

pivotal tools in increasin! $'s- contribution to economic development and

employment creation. ost $'s players have a business vision and !oals. hile

strate!ic plannin! and performance measurement are in place, in some instances

$'s adopt identical strate!ies but produce very different results. This calls into

+uestion the manner in which these strate!ies are implemented. usiness

owners/mana!ers have to chan!e the way they do business. This study eamines how

$'s in Zimbabwe implement strate!ies to achieve both survival and !rowth. 1t also

see*s to establish the reason why $'s implement strate!ies the way they do. This is

phenomenolo!ical study which used a multiple case study approach to unravel how

Zimbabwean $'s implement strate!ies. convenience samplin! techni+ue was used

to select those institutions that had a strate!ic plan and were realisin! some !rowth. 1n

depth interviews were conducted to draw information from a sample of respondents

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from all sectors. The study ascertained that most $'s adopted different approaches to

strate!ic plannin! and implementation. Two forms of strate!ic focus were identified i.e.

the traditional family businesses whose strate!y formulation approach is decided on by

family members. The focus here was more local !eo!raphic epansion and unrelated

diversification which resonated well with the desire for the security of the family

members. 3n the other hand the innovative or!anisations had a formal business focus

strate!y formulation approach which emphasi&ed !rowth in the business throu!h

vertical inte!ration and epansion beyond Zimbabwe. How strate!y was formulated

influenced the implementation approaches adopted by the $'s. The study found that

most $'s epanded at the local level, which resonated with the desire for personal

economic security. To a lar!e etent, the implementation of their business strate!y was

determined by the desire for such, with business operations bein! anchored by the

ac+uisition of property as insurance a!ainst potential failure. $uch assets will be sold to

raise capital internally when epandin! or miti!atin! failure instead of sourcin! loans or

outside investments. The study su!!ests found out that most $'s focused more on

business survival than !rowth. 1n order to support national economic !rowth, there is a

need to marry the survival model and the !rowth model. For survival and !rowth $'sneed to formalise and adopt systematic approaches to strate!y formulation and

implementation if these institutions are to contribute meanin!fully to economic

development and employment creation. 1t is hoped that future studies will help develop

and refine implementation models so that $'s in Zimbabwe in order for them to

improve strate!y implementation for sustained !rowth.

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DEDICATED TO THE EVERLASTING LOVE OF

y wife "dinatsei "yamwan&a, my children 4illian, 4arry and 4oyce and my mother

enipher "yamwan&a

nd

1n memory of my late father 6uthbert 7aul "yamwan&a, always a fountain of 8o*es and

wisdom, rest in eternal peace.

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ACKNOWLEDGEMENTS

1 am immensely indebted to the followin! people9

y supervisors, 7rofessor $teve 6arter ('$#:;) and 7rofessor


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TABLE OF CONTENTS

bstract ii

@edications iii

c*nowled!ements v

Table of 6ontents vi

4ists of Tables ii

4ist of Fi!ures iii

=elevant definitions iv

CHAPTER I A

1"T=3@:6T13" A

A.A 1ntroduction A

A.2 ac*!round to the 7roblem A

A.B $tatement of the 7roblem AA

A.C =esearch Duestion AB

A.5 ims of the $tudy AB

A.E 3b8ectives AC

A. 7ropositions AC

A.G ustification for the $tudy ACA. ssumptions A5

A.A0 @elimitations AE

A.AA 4imitations of the $tudy AE

A.A2 $tructure of the Thesis A

A.AB $ummary A

CHAPTER 2 AG

2.0 41T'=T:=' ='>1' AG2.A 1ntroduction AG

2.2 The $'s contet AG

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2.B @efinition of $'s (Duantitative approach) 2B

2.C @efinition of $'s (Dualitative approach) 2C

2.5 $'s and the 3peratin! 'nvironment 2E

2.E Hi!h Failures amon! $'s BB

2. $trate!y Formulation BG

2.G @efinition and 6ontetualisation of strate!y implementation 5C

2. $trate!y 1mplementation framewor*s EC

2.A0 process perspective of strate!y implementation E

2.AA behavioural perspective

2.A2 3r!anisational culture GA

2.AB 6ritical factors for implementation G5

2.AC 3r!anisational structure GG

2.A5 3perational processes 2

2.AE =esource allocation B

2.A 7eople C

2.A.A Trainin! A00

2.AG 6ommunication A02

2.A 6ontrol and feedbac* A0G

2.20 $ummary A0

CHAPTER 3 AAA

B.0 ='$'=6H 7=36'@:='$ "@ 'TH3@343?< AAA

B.A 1ntroduction AAA

B.2 3verview of the research AAA

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C.0 7='$'"TT13" @T9 63"T'T:41$T13" 3F F1=$ ACG

C.A 1ntroduction ACG

C.2 3r!anisation ?=:A ACG

C.B 3r!anisation ?=:2 A52

C.C 3r!anisation H='A A55

C.5 3r!anisation H='2 A5

C.E 3r!anisation H='B A5

C. 3r!anisation ='A AE2

C.G 3r!anisation ision formulation responsibility AE

5.C $trate!y 1mplementation AGG

5.5 7rere+uisites for strate!y implementation AA

5.E 4eadership and strate!y implementation A

5. Human resources and strate!y implementation 2AC

5.G 'mployee rewards, reco!nition and strate!y implementation 2AG

5. 3r!anisational culture and strate!y implementation 22B

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5.A0 3r!anisational communication and strate!y implementation 22

5.AA 3r!anisational resources and strate!y implementation 2BB

5.A2 3r!anisational processes and strate!y implementation 2BC

5.A2 =eview of pro!ress and evaluation 2BE

5.AB $trate!y implementation in $'s9 an overview 2BE

5.AC $ummary 2B

CHAPTER 6 2C0

E.0 @1$6:$$13" 2C0

E.A 1ntroduction 2C0

E.2 $ummary of findin!s 2C0

E.2.A $trate!y formulation 2C0

E.2.2 ?eneric strate!ies 2CB

E.2.B $trate!y implementation 2CC

E.2.C 4eadership and strate!y implementation 2C5

E.2.5 Human =esources and $trate!y 1mplementation 2CE

E.2.E 3r!anisational culture and strate!y implementation 25A

E.2. 3r!anisational communication and strate!y implementation 252

E.2.G 3r!anisational resources and strate!y implementation 25E

E.2. 3r!anisational processes and strate!y implementation 25E

E.2.A0 $ummary of findin!s 2E0

E.2.AA Further studies 2EB

CHAPTER 7 2EC

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.0 63"64:$13"$ "@ ='63'"@T13"$ 2EC

.A 1ntroduction 2EC

.2 6onclusions 2EC

.2.A $trate!ic formulation and strate!ic implementation 2EC

.2.2 ?eneric strate!ies used 2EC

.2.B 4eadership and strate!y implementation 2E5

.2.C Human resources and strate!y implementation 2E5

.2.5 3r!anisational culture and strate!y implementation 2E5

.2.E 3r!anisational communication and strate!y implementation 2EE

.2. 3r!anisational resources and strate!y implementation 2E

.2.G 3r!anisational processes and strate!y implementation 2EG

.2. 7rere+uisites for strate!y implementation 2EG

.B =ecommendations 2B

.C 4imitations 2E

.C $ummary 2E

='F'='"6'$ 2

""':='$ 20

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LIST OF TABLES

A.A !ricultural etension services (!rite) forecast of crop yields B

A.2 $ectoral performances (% ?=3TH) 200#20A5 C

2.A $trate!y implementation framewor*s EG2.2 $trate!y implementation framewor* and *ey variables E

B.A indicators of !rowth in $'s A25

5.A 'vidence of plannin! A2

5.2 $trate!y implementation concepts AGG

5.B 7rere+uisites for strate!y implementation A2

E.A $ummary of findin!s 2E0.A 7rere+uisites for strate!y implementation 2E

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LIST OF FIGURES

2.A $trate!y implementation framewor* 5C

2.2 strate!y implementation framewor*s 0

2.B $trate!y implementation framewor* E

B.A $trate!y implementation framewor* A20

B.2 The data analysis approach AB

5.A >ision and strate!ic plannin! approaches AA

5.2 7lannin! and implementation matri for $'s in Zimbabwe AG5

5.B $trate!ic plannin! process AGG

5.E >alues !uidin! strate!y implementation in $'s 2AG

5. $urvivalist approaches to strate!y implementation 2B

.2 $trate!y implementation factors for Zimbabwean $'s 22

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R!"#$% D&'$'%'($)

S*#!! %( M+',*-)'.+ E$%//')) SME) - any business with less than A00

employees. (Zimbabwe 7olicy Framewor*, 200C).

S%/#% &(/*,!#%'($ plannin! processes underta*en in firms that mi!ht

contribute to performance.

P/&(/*#$ *#),/*$% a measure of the epected improvement in

business activities ($harma and ha!wat, 200E).

O$/8*#$#/ the founder and mana!er of a business.

O$/8*#$#/ the founder and mana!er of a business.

T/#+'%'($#! 9,)'$))) those businesses that were pursued traditionally by

fricans in Zimbabwe li*e transport and retail business.

S,/"'"#! means to remain in business but not entirely realisin! !rowth of the

business.

G/(%: the !rowth of the businesses as measure by diversification, epansion

and increase in both employee numbers and revenues.

I$&(/*#! )%(/ the informal sector is that part of an economy that is not taed,

monitored by any form of !overnment or included in any !ross national product (?"7).

F(/*#! )%(/ the economic activity that occurs within the purview of state re!ulation

or a business that is re!istered with the state for purposes of taation.

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CHAPTER 1

1;1 INTRODUCTION

$mall to edium#si&ed 'nterprises ($'s) are facin! unprecedented challen!es in a

chan!in! business, political and economic environment which cannot be solved by

policy interventions alone. There is need for businesses to chart their own destiny in

order to prosper and survive in this challen!in! environment. usiness onitor

1nternational ($eptember 200) noted that re!ional inte!ration and the liberalisation of

trade is an ambitious pro8ect aimed at buildin! closer economic cooperation between

$outhern frican @evelopment 6ommunity ($@6) countries and international traders.

This will result in increased competition, especially for $'s in the host country. This

emphasises the need for $'s to use internal mechanisms in order to survive and

!row. This chapter presents the bac*!round to the research problem, and sets out the

research problem, ob8ectives and hypotheses, the 8ustification for the study, and the

limitations and delimitations for this study on strate!ic plannin! and strate!y

implementation amon! $'s. The chapter will also outline the structure of this thesis.

A.2 B#


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fundamental chan!es to its political, economic and social systems, as proposed by

$&abo (200A) for the 6entral 'uropean 1nstitute, (6'1) re!ion. $&abo (200A) notes, that,

the core element of the political and economic transformation of any country in transition

is the creation of a sound private sector and the further development of $'s and

entrepreneurship. This statement underscores the importance of $'s in all countries

includin! Zimbabwe which has eperienced stunted !rowth for more than a decade. 1n

20A2, it was estimated that, of the currently employed population over the a!e of A5 of

5.C million, GC% were in informal employment, AA% were in formal employment and 5%

were in employment not classifiable (Zimstats survey results, 20A2). ccordin! to this

survey 52% of informal sector employees were employed in the wholesale and retail

trade, and repair of motor vehicles and motor cycles, followed by other services and

manufacturin! at AC% each. These statistics demonstrate the contribution of the $'

sector to national development and the world economy in !eneral. auer (2000)

observed that JK $'s contribute E0 per cent to total employment and 55 per cent of

total revenues of the private sector in the 'uropean :nion.L However, informal sector

statistics, includin! $'s in Zimbabwe, are !enerally not included in official statistics on

economic performance despite the fact that they employ so many people.

any countries have sou!ht to boost the role played by $'s in the national economy.

1n developin! economies, measures have been put in place to support $'s. These

include the creation of an enablin! environment throu!h the enactment of suitable laws,

policies and procedures (Zimbabwe ?overnment $trate!ic 7olicy @ocument on $'s,

200C). The Zimbabwean ?overnment has set aside fundin! and infrastructure for the

support of $'s. However support such as inputs and machinery in a!riculture, have

failed to reverse declinin! a!ricultural outputs and imports have been brou!ht in to plu!

the food production deficit. This is also true of other sectors. $'s- contribution to the

national economy has failed to meet epectations despite the preferential treatment

!iven to the sector and the faith that policy ma*ers have placed in it. assey (200C)

states that the way, in which firms and !overnment a!encies behave, in relation to

investment decisions is flawed and that those involved follow received wisdom, act on

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hunches and !enerally appear indifferent to ensurin! that they receive maimum return

on their investments. The table below shows the trends in a!ricultural yields in

Zimbabwe, which ne!ates to some etent the notion that !overnment assistance will

contribute to increases activity and output9

T#9! 1;1!ricultural 'tension $ervices (!rite) Forecast 6rop yields

S(,/ T:

='*9#9#$ 11

M# 200>

This su!!ests that, while resources were available, the problem lay with those who

implemented the policies or the way the policies were implemented. @espite policy

interventions which reached their pea* (ufud&a, en!eta and Hove, 20AB) in the

decade after the year 2000, Zimbabwe-s economic performance continued to

deteriorate. The Zimbabwe 1ndependent reported in February 200 that the Zimbabwe

6on!ress of Trade :nions (Z6T:) had painted a !loomy picture of economic indicators.

These included hyperinflation of AE00%, a cumulative economic decline of about 50%

over the past seven years, an unsustainable bud!et deficit of CB% of ?@7, chronic

shorta!es of forei!n currency, the sporadic availability of fuel, s*ills shorta!esI and

mass unemployment and a collapse of wor*ers- real earnin!s. This was despite a

number of policies that sou!ht to reverse the trend, a!ain pointin! to issues of strate!y

formulation and how such strate!ies were implemented at macro and micro level.

?overnment continued to devise policies to support $'s and business in !eneralI for

eample, the inistry of 1ndi!enisation,


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the new economic dispensation. ccordin! to the Zimbabwean inister of Finance-s

bud!et statement, 20AB9

As a result of these policy measures, the years 2009-2011 saw serious

economic rebound avera!in! 9"# per cent, sin!le di!it inflation below # per

cent"$

'conomic performance by sector is outlined in table A.2 below.

T#9! 1;2 SECTORAL PERFORMANCES ? GROWTH 200@-2015

200

ctual

20A0

ctual

20AA

actual

20A2

estimate

20ABpro8ecte

d

20ACpro8ecte

d

20A5pro8ecte

d!riculture, huntin! andfishin! 2A.0 BC.G 5.A C.E E.C E.C E.A

inin! and +uarryin! BB.B E0.A 25.A A0.A A.A 22.0 A5.0

anufacturin! A0.0 #C.5 A5.0 2.B A.5 B.2 2.G

'lectricity and water A. A.A .G 0.B 2.2 E.E 5.C

6onstruction 2.A 5.C E.2 C. E.2 5.2 5.2

Finance and insurance C.5 5.E 2.0 5.A E.0 .5 E.B

=eal estate 2.0 5.C B.A C. E.2 5.2 5.2@istribution, hotels andrestaurants E.5 G.G C.B B. C.0 C.E C.2

Transport and communication 2.2 20.5 AG. 5.G B.C 2.E 2.

7ublic administration 2.0 0.0 C.G B.0 2.0 A.2 A.0

'ducation 2.G 0.5 0.5 A.C 0.5 A.0 A.B

Health B.2 A5.G A0.C 2.5 2.0 B.0 C.0

@omestic services 2.2 E. 0.C A.5 A.5 A.5 B.0

3ther services 2.B AC.E A0. 5.0 2.5 2.5 B.0

GDP #% *#/


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Zimbabwe with cheaper finished products and this made the local industry

uncompetitive resultin! in reduced production and demand for local resources. The

thrust became recapitalisation of industry which proved to be a mira!e with little forei!n

direct investment comin! into the country.

This is confirmed by the followin! observations9

Zimbabwe-s economy remains in a fra!ile state, with an unsustainably hi!h

eternal debt and massive deindustrialisation and informalisation. The avera!e

?@7 !rowth rate of .5% durin! the economic rebound of 200#A2 is moderatin!.

This economic slowdown is due to li+uidity challen!es (e.!. the lac* of and hi!h

cost of capital and revenue underperformance), outdated technolo!ies, structural

bottlenec*s that include power shorta!es and infrastructure deficits, corruption

and a volatile and fra!ile !lobal financial environment. (onyau M andara,

20AC).

From a policy point of view, several measures can be adopted to address this situationI

however, !iven the precarious state of !overnment finances, very little financial

assistance will be forthcomin!. The fi!ures outlined above provide an indication of the

performance of or!anisations at the micro level. hat they do or do not do determines

overall economic performance. 3r!anisations and businesses therefore have to loo*

inwards to survive, !row and prosper. The contribution of $'s to the economic

turnaround is not visible in these statistics, but the official position is that the vast

ma8ority of $'s are operatin! outside the parameters of these sectors since they are

mainly informal players.

However, $&amosi, @ubury and Hi!!ins (200C9CCC) found that, in transition based

economies, there has been a ma8or emphasis on creatin! a political and economic

environment within which $'s can develop. 1n similar vein, assey (200C) points out

that, developin! individuals who wor* in $'s or own them will enhance $'s-

performance. $&amosi et al (200C) lamented the little attention bein! paid to the role

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played by strate!ic plannin!. $trate!ic plannin! is a variable that $' players have

direct control of, unli*e eternal elements li*e !overnment policy. $'s can only be as

successful as their strate!y implementation approaches are.

?iven the prevailin! operatin! environment, strate!y formulation and implementationplay a si!nificant role in $'s- success. =aymond and 6roteau (200E9A0A2) observe

that, J?lobalisation, the internationalisation of mar*ets, the liberali&ation of trade,

dere!ulation, the *nowled!e economy, e#business, and new forms of or!anisation, all of

these interrelated phenomena pose new challen!es to small and medium#si&ed

enterprises.L Zimbabwe has adopted policy driven support to businesses includin!

fundin! arran!ements for distresses industries particularly in the 6ity of ulawayo, but

such policies have not yielded the desired results due to the nation-s bud!etary

problems. 4ittle or no emphasis has been placed on the people who are supposed to

act to fulfil these policies- aspirations and help !row economic activity. 7olicy

intervention alone will not si!nificantly impact economic activities in Zimbabwe. ore

has to be done inside the country-s or!anisations, especially amon! $'s, in order to

compete effectively.

3-=e!an and ?hobadian (200E) ac*nowled!e that the business environment has rarely

been more challen!in!, as increased chan!e brin!s !reater uncertainty. The impact of

policy directions tends to be short#lived, as the environment continues to assume its

own form. ufud&a et al-s (20AB) study observed that the measures adopted to address

inflation in Zimbabwe seemed to create more problems, which had far reachin! effects

on the business sector. This does not su!!est that there should be no policy support for

businesses. 1t should also be noted that, as reported in the Financial ?a&ette (February

A#2B, 200), the orld an* reported that Zimbabwe-s economy was set to !row by

B.% percent in 200, endin! nearly a decade of dramatic decline, which resulted from

policy shifts. However this !rowth as per table A.2 above is anchored in services and

minin!, while most of the manufactured products are bein! imported. @ue to economic

challen!es, there was dere!ulation and this resulted in the invasion of $outh frican

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businesses that are investin! in the country (The Zimbabwean A#2B $eptember 200).

The problem is that local businesses did not have the capacity to compete with $outh

frican companies thereby losin! the local mar*et to forei!n businesses.

ccordin! to the Financial ?a&ette ("ovember 2E# @ecember 2, 200)9

J%isposable incomes have since &ebruary this year, when the country adopted

multi currencies and abandoned the 'imbabwe dollar, remained low but

production costs have remained on the hi!h side" (he multi-currency

environment has made it e)tremely difficult for companies to undercut

competition lest they would have si!ned their own death warrants in an economy

that is becomin! a dumpin! !round for cheap imports from South Africa, Asia

etc" with multi-currency and liberalisation of the economy shorta!es became a

thin! of the past" (he new economic dispensation is however turnin! into a battle

for survival"$

7eople are now ma*in! decisions to buy cheaper commodities and will !ive preference

to competitively priced !oods comin! from abroad. any policies were passed in a bid

to solve the economic woes, to the etent that businesses had hardly had time to ad8ust

to the policies when more were added (ufud&a et al, 20AB). This su!!ests that while

policy re!imes may be helpful, in the case of Zimbabwe, they achieved very little and in

some cases had ne!ative effects. case in point was the shorta!e of basic

commodities durin! the period 200 to early 200 followin! !overnment-s decision to

slash prices or to print money (ufud&a et al, 20AB). The very survival of $'s is thus

under threat and they need to strate!ise to counter these environmental challen!es and

increased competition. 3-=e!an and ?hobadian (200E) ar!ue that $'s need to

carefully consider their strate!ic approaches if they are to !ain and retain competitive

advanta!e. The Financial ?a&ette ("ovember 2E N 2 @ecember) reported thatsuspected cases of industrial sabota!e are on the rise, particularly in the food industry.

1f this statement were true then $'s would find it difficult to compete with well#

resourced businesses which can throw ethics out of the window in order to !ain mar*et

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shareI and in the process ruin their competitors includin! $'s. The Financial ?a&ette

also stated that desperation to survive is forcin! certain players to bend the rules and

hatch cruel strate!ies to eliminate potential threats throu!h acts of sabota!e in a bid to

create monopolies while profiteerin! at the same time. The challen!es to survive and

!row under these conditions are enormous especially for $'s. 3ne mi!ht wonder how

businesses can formulate and eecute strate!ies in such a turbulent economic

environment (ufud&a et al, 20AB). This study eplores the latter of the two issues,

!iven that $'s- own actions determine whether they stabilise, survive or !row as

business concerns. $trate!y implementation has been the focus of numerous studies,

particularly because the process from pro8ect formulation to pro8ect implementation is

not effective and therefore not ade+uate in today-s business world ($orooshian,

"or&ima,


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enterprise may ta*e to penetrate mar*ets or to benefit from resources ori!inatin! from

other countries.L He added that Jinternalisation K implies numerous ris*s for $'s,

which are already very limited in terms of resources.L 1n this re!ard it will be interestin!

to investi!ate whether the actions ta*en by $'s reflect their awareness of the

challen!es posed by the new environment and whether their actions (strate!y

implementation) are ade+uate to secure survival and !rowth.

u!ler, as cited by =aymond and 6roteau (200E9A0AB) observes that $'s must

develop themselves strate!ically in order to remain competitive, !row and prosper in the

current comple environmentI the bi!!est challen!e lies in $'s ta*in! advanta!e of

the enlar!ed economic area. He concluded that $'s need to adopt new plannin! and

plannin! control tools to secure and stren!then their competitiveness. J$'s K are

unli*ely (to) survive in their present form without improvin! +uality, cost competitiveness

and mana!ement practicesL ($&abo, 200A). This introduces the +uestion of the +uality

of $'s and whether or not they have the capacity to deal with both strate!y

formulation and implementation issues and challen!es. any +uestions come to the

fore when issues of strate!y implementation are eamined. How well#prepared are

Zimbabwean $'s to cope with the new challen!es and what action do they need to

ta*e in order to meet the overall !oal of survival and !rowthO hat they do will

determine whether or not they will survive or !row in the new Zimbabwean and !lobal

environment.

$'s- actions will be lar!ely determined by their or!anisational structure. $&abo (200A)

notes, that, the main constraint faced by $'s is a lac* of entrepreneurial, mana!erial

and mar*etin! s*ills. These deficiencies are li*ely to affect the manner in which $'s in

!eneral and in Zimbabwe in particular implement strate!ies. $&abo (200A) hi!hli!hted

that while most owner#mana!ers and start#up entrepreneurs are eperts in terms of

their products and services, they often lac* wider mana!erial s*ills which hinder their

lon! term success, strate!ic plannin!, medium term vision, mar*etin!, identification of

customers, patience, acceptance that they will not !et rich overni!ht, mana!ement of

9


24/325

innovation, commitment to +uality, *nowled!e of +uality systems, *nowled!e of forei!n

lan!ua!es, cash flow mana!ement, and information technolo!y N all of which are critical

s*ills in confrontin! the challen!es of the mar*et economy. The view epressed above

typifies Zimbabwean businesspersons, who, !oin! by the events of 200G, were involved

in currency dealin! and money burnin! (ille!al dealin! in forei!n echan!e which ruined

the local currency) which do not re+uire any level of plannin!. 3ne only had to be in the

ri!ht place at the ri!ht time to profit. The new business environment re+uires $'s

owners and mana!ers to en!a!e in proper business mana!ement practices, particularly

those relatin! to strate!y formulation and implementation. This is essential if $'s are

to play their epected part in movin! the economy forward. 3f particular concern will be

the approaches, both intended and unintended, that $'s owners adopt to implement

strate!ies in their or!anisations and how these approaches impact the or!anisations-

chances of survival and !rowth with the overall !oal of fosterin! national !rowth.

$everal studies have indicated that strate!y implementation is a difficult tas*, but there

is uncertainty re!ardin! the true rate of implementation (@andira, 20AA). @andira-s

(20AA) study found that B% of mana!ers believe that implementation is more critical

than formulation and G0% believe that implementation is that part of the strate!ic

plannin! process over which mana!ers have the least control. lthou!h @andira (20AA)

did not specify the types of or!anisations she surveyed, how $'s implement strate!y

ma*es for an interestin! case study !iven the role that they play in the economic

activities of a country. 6hen, ?uo and 4i et al (200G) ar!ued that many studies on the

implementation of strate!y have focused on the importance of implementin! strate!y

and what it entails, the reasons for the lac* of implementation and ways of up!radin!

implementation. Furthermore, the few studies on the evaluation of strate!y are limited to

specific enterprises or to a particular strate!y li*e 16T, '=7 methods and TD. There is

therefore a need to investi!ate how $'s in Zimbabwe are implementin! strate!ies in

!eneral in a dynamic environment.

1;3S%#%*$% (& %: P/(9!*

10


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@istortions in the Zimbabwean economy have created opportunities for arbitra!e.

ccordin! to the Zimbabwean 1ndependent (February 200), in such a situation, many

emer!in! businesses focus on the rapid accumulation of wealth throu!h speculative

activities. The ma8ority of Zimbabwean $'s could be facin! challen!es in terms of

strate!ic plannin! and, implementation with some focusin! on fast wealth accumulation

without an attendant increase in production or sales, especially ille!al forei!n currency

dealers who lived lar!e or over pricin! of commodities. =einec*e and hite (200C920)

support this view and contend that, Jmany $'s are survivalists in nature rather than

respondin! to mar*et opportunities.L

$ince the economic and political environment in Zimbabwe provides very little

inspiration and !iven the fact of re!ional inte!ration $'s need to employ strate!ic

plannin! and implement strate!ies to ensure their survival and !rowth. ccordin! to

Ho!!etts and ;urat*o (200A), Jstrate!ic plannin! can contribute to performance by

!eneratin! relevant information, by creatin! a better understandin! of the environment,

and by reducin! uncertainty.L

Hitt et al, as +uoted by 3-=e!an and ?hobadian (200E) report that mana!in! directors

are confronted by an increasin!ly dynamic, comple and unpredictable environment

where technolo!y, !lobalisation, *nowled!e and chan!in! competitive approaches

impact on overall performance. 3-=e!an and ?hobadian (200E) concur that the de!ree

and compleity of the current environment is drivin! firms, both lar!e and small, to see*

new ways of conductin! business to create wealth. 7orter (A09B) claims that

Jnational prosperity is created, not inheritedL and has shown that for many $'s are

seriously disadvanta!ed, but these disadvanta!es should become the stimuli for

superior performance. However, ?ud!in et al, as cited by c"amee, 3-=eilly and

$hiels (200B) commented9

A ma*or findin! of this study is that in +orthern reland and the epublic of

reland the population of small firms e)pands slowly and relatively few firms

!raduate into the ran.s of medium or lar!e companies"$

11


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This situation also obtains in Zimbabwe, where $'s have eperienced very slow

!rowth and few eventually !raduate into lar!e businesses. The aim of this study is to

determine the etent to which $'s in Zimbabwe use strate!y formulation and

implementation to sustain and !row their businesses and to evaluate the contribution

these tools ma*e to business operations in view of the less than impressive !rowth of

$'s. 6an we safely say that the lac* of !rowth is due to lac* of strate!y formulation

and implementation deficienciesO 1t is widely ac*nowled!ed that mana!ers strive to

formulate sound strate!ic plans for their or!anisations but the ma8or problem has been

the implementation of such plans (@andira, 20AA). This affects most or!anisations.

However, the accurate and effective implementation of strate!y is no lon!er simply a

matter of window dressin!, but a matter of the survival or death of such or!anisations

(6hen, ?uo and 4iI 200G).

?iven the challen!es faced by $'s in Zimbabwe, the focus has shifted towards

moribund ideolo!ies li*e the uy Zimbabwe campai!nI however, the salaries earned by

the ma8ority of citi&ens are way below the poverty data line and locally produced

products are uncompetitive. chievin! a competitive ed!e re+uires that $'s ta*e

action to produce !oods and services that local consumers both desire and can afford,

rather than relyin! on patriotism. This study eamines how $'s implement strate!ies

and why they choose to implement strate!ies in a particular way. $orooshian et al

(20A0) ar!ue that well#formulated pro8ects lead to superior performance when they are

efficiently implemented. t present, many enterprises lac* an understandin! of the

importance of strate!ic implementation (6hen et alI 200G)I this study see*s to establish

the level of such understandin! amon! $'s and how they marshal or!anisational

resources to drive strate!y implementation.

1;4 R)#/: ,)%'($

12


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The role played by $'s in any country-s economic development cannot be

overemphasi&ed. 1n Zimbabwe, $'s are epected to play an increasin!ly si!nificant

role in the face of a sta!natin! economic environment as the si!ns of initial !rowth are

be!innin! to fade. hat $'s actually do is considered to be more critical than the

operatin! environment since what they do is shaped by the environment. @o $'s

owners in Zimbabwe understand strate!ic implementation issues and how do strate!y

implementation approaches usin! or!anisational resources affect their operations and

enhance their chances of survival and !rowthO hy do they implement strate!ies in

particular waysO

?overnment policies have had both ne!ative and positive impact on the $'s, for

eample !overnment policy to brin! in imports in the country had the positive impact

that products and !oods became available but at the same brou!ht about a lot of

pressures on $'s who had to respond to this new challen!e. The capacity of $'s in

the form of strate!y formulation and implementation are crucial in ne!atin! the new

challen!e. How they respond to the environment challen!es will determine whether they

will fail, survive or !row. Therefore it will be interestin! to investi!ate how they

implement strate!ies and the reasons behind the decision to do so. 1t is only strate!y

implementation that $'s can actually enhance their performance.

1;5 A'* (& %: )%,+

The aim of this study is to determine how $'s in Zimbabwe implement strate!ies with

a view to su!!estin! ways in which their contribution to economic !rowth can be

enhanced throu!h their survival and !rowth.

1;6 O9%'") (& %: S%,+

hile the relationship between strate!ic plannin! and implementation seem to beclearly documented, this study see*s to etend this understandin! by eaminin! how

$'s implement strate!ies to ensure their survival and !rowth.

13


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This study was !uided by the followin! ob8ectives9

To investi!ate how strate!y formulation approaches adopted by $'s in

Zimbabwe impact strate!y implementation.

To determine what Zimbabwean $'s owners consider as prere+uisites foreffective strate!y implementation.

To analyse the strate!y implementation approaches employed by $'s for their

survival and !rowth.

To recommend approaches that $'s could employ in order to ma*e strate!ic

plannin! and performance measurement an intervention tool for $'s- survival

and !rowth.

1;7 P/(()'%'($)

The practical acceptance of strate!ic mana!ement by $'s mana!ers/owners

enhances the survival and !rowth of $'s in Zimbabwe.

$'s mana!ers/owners- approaches to strate!y formulation have a si!nificant

impact on strate!y implementation.

$'s operators who identify the prere+uisites for successful strate!y

implementation have a !reater chance of ensurin! their survival and !rowth.

The implementation approaches adopted by $'s result in either business

survival or !rowth.

1;> ,)%'&'#%'($ &(/ %: S%,+

Financial resources and policy en!ineerin! mi!ht not ma*e for better $'s unless they

are e+uipped with strate!ic mana!ement and performance evaluation s*ills. This study

will help to promote the use of strate!y formulation and implementation by $'s

mana!ers and owners in order to cope with chan!e. 1t will help build or!anisations that

can play a more prominent economic role in Zimbabwe. ost $'s have remained

survivalists and frican economies need !reater impetus to move forward. How

strate!ies are implemented can play a si!nificant role in $'s- survival and !rowth in

14


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Zimbabwe and in frica in !eneral. There is a missin! lin* between strate!y formulation

and strate!y implementation to the etent that some researchers have su!!ested JK

that they be done simultaneously while other researchers have cited the separation of

formulation and implementation phases as the root cause of many strate!y failures,L

(@andira, 20AA).

The study will contribute to the body of *nowled!e on $'s in frica in !eneral and

Zimbabwe in particular and will be of interest to scholars, students and policy ma*ers. t

a personal level, it will assist the researcher to attain a hi!her +ualification in

mana!ement and will broaden the researcher-s *nowled!e and understandin! of

strate!ic mana!ement and $'s issues.

1;@ A)),*%'($)

That all $'s in the study reflect the characteristics applicable to !rowin!

$'s.

That $'s in this study have a systematic approach to strate!y

implementation and that their approaches are well set out to allow for a

scientific research approach and overall comparison.

1;10 D!'*'%#%'($

The study focuses on owner#mana!ed $'s that have been in business for five or

more years. ccordin! to 6hid and 6&e!le!y as cited by 7en! (200B) JK mar*et

oriented institutions ta*e years to develop.L JThis implies that institutions in their early

phases will be immature and inconsistent with the needs of a mar*et driven system K

prior research reveals that networ*in! is more intense where institutions are wea* or

absentK networ*in! is instrumental in facilitatin! business activityL (7en!, 200B).The

Zimbabwean economy suffered si!nificant distortion over the past decade and it will be

difficult to ma*e comparisons over different economic cycles. However, for the purposes

of this study, or!anisations that have been in eistence for a minimum of five years will

15


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be considered !iven 7en!-s (200B) observation that in the later phase of institutional

transition new rules of the !ame become firmly established as firms stren!then and

mature. He concludes that at this point, mana!ers may be compelled to spend less time

networ*in! and focus more on developin! mar*et#based strate!ies in pursuit of their

or!anisational !oals. These businesses are li*ely to have developed mana!ement

systems and procedures.

The tar!eted $'s should have less than A00 employees. The study will tar!et $'s

in the retail, services and manufacturin! sector to allow for cross case study analysis of

the use of strate!y formulation and implementation with a view to identifyin! similarities

and differences. $'s in Harare, ?weru, utare and ulawayo will be used in the

study, as these are the ma8or economic hubs and they are more li*ely to be home to

$'s that are suitable for this study. The selection pool will be very broad, but selection

will only be limited to those $'s that meet the selection criteria adopted for this study.

1;11L'*'%#%'($)

The use of self#reportin! may not be a true reflection of an $'-s use of strate!ic

plannin! and implementationI there mi!ht be too much reliance on claims by

owner/mana!ers.

usinesses may en!a!e in strate!ic plannin! and strate!ic performance measurement

without documentin! itI hence there mi!ht be no written verification.

The views and perceptions of owners/mana!ers may not necessarily reflect the true

state of affairs of the business. However, it is !enerally accepted that, as the main role

players, owner#mana!ers- attitudes and beliefs often determine an $'-s business

conduct. Thus, for the purposes of this study, it is assumed that owner/mana!ers- views

on strate!ic plannin! and performance measurement will ade+uately reflect the actual

situation.

1;12 S%/,%,/ (& %: T:)')

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6hapter 2 reviews the relevant literature on the role of strate!y formulation and strate!y

implementation in the development, survival and !rowth of $'s, the strate!ies $'s

currently employ for !rowth and survival, and how strate!ic orientation influences

strate!y implementation.

6hapter B presents the methodolo!y used in this study.

6hapter C presents and interprets the data !athered from the interviews with $'s.

6hapter 5 discusses the findin!s of the study in detail.

6hapter E compares the findin!s with those of previous studies.

6hapter presents conclusions and recommendations.

1;13 S,**#/

This chapter presented the bac*!round to the research problemI and outlined the

research problem, ob8ectives and hypotheses, the 8ustification for the study and the

limitations and delimitations of this study on strate!ic plannin! and performance

measurement amon! $'s. The chapter also outlined the structure of this thesis.

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CHAPTER 2

2;0 LITERATURE REVIEW SME) STRATEGY FORMULATION AND

IMPLEMENTATION

2;1 I$%/(+,%'($

The role played by $'s in Zimbabwe-s economic development cannot be

overemphasi&ed as the country-s economy has sta!nated and unemployment is risin!.

$'s are deemed to be the sin!le most important approach to addressin! the

challen!es confrontin! Zimbabwe. This chapter analyses the eistin! body of literature

on $'s, strate!ic plannin! as a foundation for effective implementation, and how

strate!ies can be implemented effectively. The !rowth and survival of $'s and the

economy is believed to be stron! influenced by the strate!y formulation and

implementation variables. The main ob8ective is to eamine the $'s- perspectives on

strate!ic plannin!, its influence on strate!y implementation and the subse+uent impact

on $'s- survival and !rowth. review of related literature was underta*en in order to

establish the perspectives of scholars in the field of strate!ic plannin!, $'s- !rowth

and the measures of these variables. 1n addition, the literature on strate!y formulation

will provide a basis to review various perspectives on strate!y implementation. This

study assumes that all or!anisations have some form of plan or ob8ectives that !uide

their operations, in line with the views of $ouminen and antere (20A0). They ar!ue

that it is eceptional to come across an or!anisation, whether private, public or third

sector that does not have any plan or ob8ectives and add that strate!y is somethin! that

contemporary mana!ers have little choice but to en!a!e with. The researcher reviewed

only peer#reviewed articles and 8ournals. thematic approach was used to review the

literature.

2;2 T: SME) ($%%

efore discussin! the issues related to strate!y implementation it is important to

contetualise the $'s sector in Zimbabwe and in !eneral. ithout this understandin!,

it will be difficult to understand the issues related to strate!ic plannin! and strate!y

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implementation with re!ards to this very important sector. ccordin! to =einec*e and

hite (200C9), micro and small enterprises are re!arded as vital elements in modern,

dynamic economies. $'s have !ained !reater importance in Zimbabwe due to the

economic challen!es the country eperienced from the year 2000 to date. The

unemployment rate in Zimbabwe is estimated at more than G5%I in order to survive,

Zimbabweans have had to relocate to the diaspora or start $'s. This resulted in the

lar!e#scale !rowth of $'s in Zimbabwe. 3n!ori and i!iro (20A0) contend that in

frica, $'s employ more than C0% of all new entrants to the labour force because

they are labour intensive. They add that a baseline survey conducted in ;enya in A

found that the $' sector employed 5.A million people, accountin! for C% of total

employment. 1n reco!nition of the importance of the sector, the ;enyan ?overnment

created a $'s policy framewor* in 200B to promote employment creation, income

!eneration and poverty alleviation. The situation in Zimbabwe is similar to that

described by 3n!ori and !iro (20A0) in that the economic base is said to be driven by

$'sI however, the circumstances are very different. 1t is clear that $'s play a very

si!nificant role in the country-s economy and scholars should assist in promotin! the

development of this sector. The sheer si&e of the $' sector demands attention from

both policy ma*ers and development practitioners (=einec*e and hite, 200C9C).

?overnments have adopted policies to support $'s with a view to !rowin! the

contribution of this sector to employment creation and economic !rowth. 7olicies

desi!ned for lar!e enterprises may fail to impact the broader population because they

do not apply to the vibrant $' sector. 1mprovements in the conditions in which $'s

operate can contribute to national economic and social development (=einec*e and

hite, 200C). 1n Zimbabwe, a policy framewor* document was prepared in 200C with a

view to promotin! the activities of $'s by creatin! a supportive environment and

providin! them with assistance.

ccordin! to $harma and ha!wat (200E), J$'s cover a wide spectrum of industries

and play an important role in both developed and developin! economies.L They add,

JThe $'s sector accounts for C0 per cent of industrial production, B5 per cent of total

19


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eports and provides about G0 per cent of employment in industrial production in 1ndiaL.

$tatistics on $'s- contribution to economic activities in Zimbabwe were difficult to

come by. However, considerin! that the unemployment rate in Zimbabwe is estimated at

G5%, it can be surmised that many people are employed by $'s. hile the sector

clearly contributes to ?@7, there are no statistical data to support this view.

Zimbabwe-s ?@7 was estimated at only P5 billion in 20A0I this only pertains to the

formal sectors of the economy. However, some of the country-s economists have ar!ued

that this fi!ure could be as hi!h as P billion if the informal sector is ta*en into account,

su!!estin! that almost 50% of the economy is not ta*en into account in the official

statistics. Zimbabwe-s economic fundamentals have been e+uated with those of

Zambia, whose ?@7 is estimated at PA0 billion. ?iven the above, it can be concluded

that $'s, includin! those in the informal sector, are ma8or contributors to employment

and economic development in Zimbabwe. ?iven the low rate of F@1, they will be

epected to ma*e a si!nificant contribution to economic development.

Zimbabwe-s economic development is intrinsically lin*ed to the development of the $'

sector. 'vidence from other countries confirms the validity of this statement. $um, ;ow

and 6hen (200C) report that $in!apore, Hon! ;on!, $outh ;orea and Taiwan have

attracted international attention due to their phenomenal economic !rowth. 1n some of

these countries, the primary mode of economic !rowth shifted from forei!n investment

to epansion of their locally !rown enterprises. Therefore $um et al (200C) conclude

that their net phase of economic !rowth will depend on the ability of home#!rown

$'s to develop into lar!e, national corporations. "ot only does Zimbabwe re+uire

robust $'s for substantial economic !rowth in the face of diminished F@1 and

economic sanctions, it also needs to nurture the development of national corporations.

The country simply has to develop its own economy via stron! $'s#bac*ed

development leadin! to the development of locally !rown corporates. 3n the !round

most of the $'s have remained 8ust that, with a minimal contribution to the economic

20


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development of the country. This study posits that the problem could be associated with

the vision of the entrepreneurs and how they pursue that vision.

The economic activities pursued by countries have a restrainin! factor on the overall

activities of $'s. @evelopin! countries have a narrow spectrum of economic activities.Zimbabwe is driven by a!ricultural activities. Temtime and 7ansiri (200E) observed that

otswana still faced the problems of economic diversification, employment creation,

income distribution and poverty alleviation. The same is true for Zimbabwe. $'s are

seen as a viable way of broadenin! economic activities in developin! countries such as

Zimbabwe and otswana. lthou!h otswana-s economy is sli!htly different from that of

Zimbabwe, both have structural wea*nesses that are almost identical. Therefore $'s

are sustainable forms of diversifyin! the economy away from minin!, they create

substantial 8ob opportunities, and they help to narrow the !ap between rural and urban

development, and alleviate poverty. $'s- activities are channelled into specific

sectors, creatin! intense competition in narrow mar*ets and therefore re+uire proactive

strate!ies on the part of $' players to survive and !row.

$um et al (200C) eplain that prioritisin! the development of $'s can ma*e a country

competitive and achieve economic !rowth, Jdue to the presence of an ecellent

business infrastructure and a pool of competent local (mostly $'s) enterprises to

provide operational support in materials, product desi!n, and support services to multi#

national corporations operatin! in $in!aporeL. The lac* of +uality infrastructure in

Zimbabwe could inhibit $'s- performance but the issue of competent local enterprises

is e+ually important. 6ompetent $'s assist in the development of other economic

sectors, as is the case in $in!apore. The situation in Zimbabwe mi!ht be very different,

!iven that the ma8ority of $'s- owners in Zimbabwe were pushed into startin!

businesses as a result of desperate situations such as the hi!h unemployment rates.

6ompetent $'s are said to be those that set !oals and wor* hard to achieve these

!oals. lthou!h no study has been carried out on the competence of Zimbabwean

$'s, the +uality of $'s is +uestionable. 6ompetence is a *ey component of the

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!rowth of $'s and has a si!nificant influence on strate!y formulation and

implementation. 6ompetent $'s mi!ht not be present in Zimbabwe, !iven the

unemployment push into startin! $'s and the fli!ht of s*ills to the diaspora. @espite

this !larin! shortcomin!, $'s still contribute to the economic development of

Zimbabwe. 1t will be interestin! to eamine the level of competence amon!

Zimbabwean $'s and how this influences strate!y implementation.

The shorta!e or absence of competent entrepreneurs does not detract from the role that

$'s play in economic development in Zimbabwe, especially !iven the fact that its

economy is in transition. 7en!, in @anis, 6haiburn and 4yles (200) and 1rwin (20AA)

ac*nowled!es that, JTransitional economies have typically relied upon the !rowth of

$'s to spur economic !rowth and employment especially considerin! the difficulty of

privatisation and restructurin! lar!e state owned enterprises.L s a result, 1rwin (20AA)

believes that development partners re!ard supportin! $'s as an important part of

their wor* and believe that assistin! more firms to start up and !row has an impact on

economic !rowth and poverty reduction. He adds that developin! countries- Jpoverty

reduction strate!y pro!rammesL fre+uently include support for $'s and points out

over the past five years, the orld an* !roup alone had approved more than PA0

billion for support pro!rammes. $upport for $'s has been viewed as critical to their

development in both developed and developin! countries. The Zimbabwean

?overnment has sou!ht to boost $'s- activities throu!h various support schemes and

policies and has put the necessary le!islative framewor* and support infrastructure in

place. However, $'s policies alone do not always deliver the results. The orld an*

has observed that $'s have not always made the difference that mi!ht have been

epectedI entrepreneurial activity remains limited, poverty hi!h and !rowth sta!nant

(1rwin, 20AA). This scenario is self#evident in the Zimbabwean economy which re!istered

initial !rowth post the adoption of the multiple currencies policies but has now sloweddown. Therefore, what $'s do within their internal business environment has !reat

si!nificance for their survival and !rowth prospects. $'s- strate!y formulation and

implementation mi!ht hold the *ey to their !rowth and survival.

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This above discussion su!!ests that $' policies in Zimbabwe could have failed to

deliver as the economy has remained moribund. 7olicies and direct assistance alone

cannot deliver the desired results, but should be coupled with other in!redients li*e

strate!ic plannin! and strate!y implementation which are the focus of this study, since

the underlyin! assumption is what happens in an or!anisation is critical to its success,

survival and !rowth. To a lar!e etent, the development of $'s in Zimbabwe and

elsewhere should be determined by internal factorsI includin! how they formulate and

implement strate!ies and which factors $' owners have direct control over.

2;3 D&'$'%'($ (& SME) ,#$%'%#%'" #/(#:

1t is important to provide a wor*in! definition of $'s in Zimbabwe. Ter&iovs*i et al, as

cited by =ahman (200A) note that, Jusinesses !enerally are defined or classified on

+uantifiable characteristics such as number of employees, sales volume or worth of

assets. However the classification based on number of employees is commonly used in

mana!ement research.L For the purposes of this research study, the criterion used is

the number of employees since other variables were rendered useless by the

hyperinflationary environment and the serious undervaluation of assets followin! the

dollari&ation of the Zimbabwean economy. 1n addition to the serious problem of low

capacity utilisation in most businesses due to undercapitalisation, it would be difficult to

use definitions that combine measures in the case of Zimbabwe, !iven that the usa!e of

assets or low turnover can misdirect one to the wron! institutions. 1t is ac*nowled!ed

that the definition of an $' varies accordin! to sector, !eo!raphical location and the

researcher ("icholas, 4edwith and 7er*s, 20AA). For the purposes of this study, these

variables will be i!nored due to the difficulties cited above.

1n line with the above observations, =ahman (2005) reports that the ustralian ureau

of $tatistics ($) cate!orises business into three !roups9 small (A#C employees)Imedium (50# employees) and lar!e (A00 or more employees).

23


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3n the other hand, due to differences in location, naloui and ;arami (2002) used

$torey-s definition for $'s as follows9

(he S/s sector is disa!!re!ated into three components:

/icro-enterprises: the firms with between 0 and 9 employees Small enterprises: the firms with between 10 to 99 employees

/edium enterprises: the firms: the firms with 100 to 99

employees"$

This definition would be on the hi!h side for a developin! country li*e Zimbabwe and

would be most suitable for developed countries. The ustralian ureau of $tatistics-

definition of one to employees noted by =ahman (2002) is close to the Zimbabwean

standard for $'s, as the ?overnment of Zimbabwe (200C) policy framewor* for $'sclassifies $'s as employin! less than A00 employees. 3r!anisations with fewer than

A00 employees are therefore the focus of this study.

2;4 D&'$'%'($ (& SME) ,#!'%#%'" #/(#:

1n some cases $'s are described by their characteristics. $uch characteristics are

relevant in situatin! $'s and are the *ey to their success. ?iven their influence on the

performance of $'s, these characteristics impact strate!ic plannin! and

implementation. They are important determinants of how $'s implement strate!iesand will be used in this study to interro!ate this +uestion.

Hudson, $mart and ourne (200A) note that $'s may be differentiated from lar!er

companies by a number of characteristicsI these are !enerally described in ddy et al,

ACI urns and @ewhurst, AEI ?hobadian and ?allear, AI ppiah#du and

$in!h, AGI erry, AGI arri et al, AGI 3-=e!an et al, AGI Haywood, A as9

ersonalised mana!ement, with little devolution of authority

Severe resource limitations in terms of mana!ement and manpower, as

well as finance

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eliance on a small number of customers, and operatin! in limited

mar.ets

&lat, fle)ible structures

3i!h innovative potential

eactive, fire-fi!htin! mentality nformal, dynamic strate!ies$

These characteristics help define $'s and more importantly the approaches these

or!anisations adopt in pursuit of strate!y formulation and implementation. They have a

si!nificant impact on how $'s !o about implementin! strate!ies. 3-=e!an and

?hobadian (200C) observe that, J3ther distinct differences (with lar!e or!anisations)

include limited resources, lac* of specialist epertise (6arson, AG5) reliance on a few

*ey customers (>en*atraman, A0) unable to influence, to any si!nificant de!ree, thethreats of the eternal environment (6romie, A0).L The fore!oin! characteristics mi!ht

impede the proper implementation of strate!ies, resultin! in subdued performance.

ost $'s in Zimbabwe are epected to have such characteristics. =aymond and

6routeau (200E) contend that $'s are often less endowed with human, financial, and

technolo!ical resources than lar!e enterprises. How do these characteristics affect

strate!y formulation and ultimately strate!y implementation amon! $'s in ZimbabweO

These issues mi!ht have si!nificant effects on strate!y implementation which mi!ht be

different from those witnessed in the developed countries that form the bul* of this

literature review. ill traits in developed countries be replicated in a country that is at a

crossroads in terms of economic developmentO $uch a study has not been carried out

in the contet of $'s !enerally in developin! countries, and specifically in Zimbabwe.

These characteristics are *ey determinants of how $'s implement strate!ies. 1n

Zimbabwe, accordin! to bo*o and $mith#Hunter (200) entrepreneurs who adopt a

reactive strate!y use an approach that lac*s anticipation of needs and thus often fail to

develop firms with the capacity to implement day to day operations. They add that such

entrepreneurs are !enerally panic stric*en, run around a lot and have hi!h levels of

frustration. 4ess competent mana!ers react more ne!atively to situations, cite more

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problems and seem to have more critical issues to attend to than those who use the

plannin! approach. c7herson-s (AA) survey in Zimbabwe found that most

businesses were very small and only a very small percenta!e had !rown in terms of

employment and turnover in the past ten years (bo*o and $mith#Hunter, 200). bo*o

and $mith#Hunter (200) also note that the micro and small enterprises surveyed

ehibited different !rowth patterns that could be lin*ed to the +ualitative characteristics

of such businesses in Zimbabwe, !iven the lac* of !rowth of Zimbabwean $'s. 3ne

would be interested in determinin! whether the +ualitative characteristics affected

strate!y implementation in any way. lthou!h bo*o and $mith#Hunter (200)

hi!hli!hted these differences in !rowth, it was not clearly stated how these

characteristics affected strate!y implementation and ultimately survival or !rowth which

this study see*s to establish.

2;5 SME) #$+ %: O/#%'$ E$"'/($*$%

The economic environment in Zimbabwe has eperienced ma8or swin!s over the years.

The operatin! environment plays a ma8or role in both strate!y formulation and strate!y

implementation. arllett and ?hoshal, as cited by donisi (200B) characterise the new

economy as bein! information#based, *nowled!e driven and service intensive. They

ar!ue that appropriate responses to these discontinuities re+uire or!anisations to be

fleible and adaptable. The only constant in the business environment is chan!e.

6han!e can be defined as the effect of uncertainty on parameter variations and

ad8ustments made to reflect the current status of a manufacturin! system within a

production and control system (;oh and $impson, 200). ;oh and $impson (200) add

that manufacturin! enterprises- customers often demand shorter lead#times, near

perfect or even perfect delivery, a reduction of the product life cycle and increasin!

customisation. ana!ers are under pressure to rapidly improve enterprise performance

and to adapt to chan!e and uncertainty in order to maintain competitive advanta!e. Thisoperatin! environment poses serious challen!es to $'s anywhere in the world. $'s

are !enerally handicapped in their ability to respond to these chan!es and to eploit the

opportunities that present themselves.

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ou&dine#6hameeva (200E) posit that mana!ers have to assimilate chan!in!

environments, ta*e account of mar*et instability and ensure that they are constantly up#

to#date on new information and developments, even thou!h such information is

necessarily incomplete and in a rapidly evolvin! world +uic*ly becomes obsolete. This

re+uires institutions to formulate strate!ies and be committed to their implementation.

The Zimbabwean economic environment is currently bedevilled by rapid chan!e which

impacts on both strate!ic plannin! and the implementation of chosen strate!ies. The

environment in Zimbabwe was characterised by hyperinflation from 2000, to

stabilisation and modest !rowth post February 200. usiness owners re!ard this

environment as a hostile one that cannot be controlled by the entrepreneur and is

continually chan!in! (bo*o and $mith#Hunter, 200). 1f these factors cannot be

controlled by the entrepreneur, the most appropriate response would be to address

factors that are under the control of $'s owners, such as strate!y formulation and

implementation.

The formulation of plans is made comple by a challen!in! environment which business

owners have little control over. The failure to control environmental factors is

compounded by an apparent lac* of information infrastructure which is said to la! 20

years behind local economies in the $@6 re!ion (bo*o and $mith#Hunter). ost of

the re+uired information is simply not available to $'s and this ma*es strate!yformulation very difficult and affects strate!y implementation. $trate!y formulation

becomes intuitive. 1t should be noted that the +uality of strate!ic plans affects strate!y

implementation ($hah, 2005). This is compounded by the policy shifts pursued by the

!overnment and !overnment a!encies, creatin! uncertainty in the business

environment. ccordin! to bo*o and $mith#Hunter (200), entrepreneurs adopt the

business strate!ies that they consider most appropriate to the environment.

However, these strate!ies have to be implemented in the situation of uncertainty whichcharacterises the Zimbabwean business operatin! environment. :ncertainty can be

defined as unpredictable events in the manufacturin! environment that disturb the

operations and performance of an enterprise (;oh and $aad, 2002). ;oh and $impson

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note that other studies have referred to this uncertainty as Qdisturbance- (4indau and

4umsden, A5I Fri&elle et al, AGI $aad and ?indy, AG). Thoburn et al (2000)

observe that many products are now 8ud!ed accordin! to !lobal standards and, that,

components are now sourced at !lobal level. They caution that failure to meet !lobal

demand and supply either by over or under supply may have profound effects not only

on manufacturers but on even minor players in the supply chain and sometimes entire

economies, includin! their service sector. To a lar!e etent, matchin! !lobal demand

and supply is a conse+uence of strate!ic plannin!, which is a si!nificant variable in

business success. 1n conclusion, Thoburn et al (2000) advise that many world class

companies that are hi!hly operationally efficient have nevertheless confronted tradin!

difficulties. ?iven the lac* of resources, it mi!ht be very difficult for $'s in Zimbabwe

to embrace this adviceI they have to find novel ways to survive and !row.

3-=e!an and ?hobadian (200C) state that

S/s tend to be more vulnerable to environmental forces compared with

lar!er or!anisations in aspects such as access to financial capital, stron!

reliance on narrow ran!e of products, and more limited mar.et presence$"

?iven these challen!es, there is need for proper plannin! and effective implementation

of strate!ies in order to maimise performance in the face of limited resources.

1nstitutional transitions thus entail fundamental and comprehensive chan!es to the

formal and informal rules of the !ame that affect or!anisations (@anis et al, 200).

bo*o and $mith#Hunter (200) postulate that the hi!h income firms do not necessarily

adopt the type of strate!ic plans presented in the strate!y literature, but do have a clear,

predetermined sense of direction that !uides their !oal orientation, particularly with

re!ard to mar*ets and products. n interestin! findin! of their study is that while firms

that adopted a comprehensive plannin! approach had a vision, this focused on the

short term and had hi!h situational responsiveness. 3n the other hand, low output firms

emphasise environmental considerations over the direction of the firm and the way they

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operate is a direct response to environmental considerations i.e. a reactive strate!y

(bo*o and $mith#Hunter, 200).

This has translated into low output firms reactin! by reducin! costs. However, it is not

clear from bo*o and $mith#Hunter-s study how they !o about reducin! costs. Theyfound a similarity across the cases in dealin! with day to day operations in that they all

used critical point strate!y which is survivalist. 1n Zimbabwe, the ability to survive in the

business environment is critical, but it is also important to !row these enterprises.

bo*o and $mith#Hunter (200) concede that entrepreneurs can respond differently to

the environment even when their perceptions of it are the same. The bottom line in both

cases is that entrepreneurs have a stron! desire for their enterprises to succeed, are

hardwor*in!, creative and have the ability to see* out opportunities (bo*o and Hunter#

$mith). The +uestion that arises is whether hard wor* is sufficient for the continued

!rowth of the business. hat impact does centralisation have on the actual

implementation of strate!ies, especially in the Zimbabwean environment where much

still needs to be done to develop $'sO

"aic*er and $aun!weme (200) ac*nowled!e that today-s business environment is

characterised by more volatility and uncertainty than ever before, with !lobalisation

bein! the order of the day and a reality for all players on the domestic and international

scene. ?iven this scenario, hard wor*, creativity and the ability to see* out opportunities

mi!ht not be sufficient to !row a business, let alone survive. They point out that

businesses have to focus on developin! their internal value chain capabilities in order to

compete and adapt to the chan!in! environment, which confirms the cost cuttin!

approach referred to by bo*o and $mith#Hunter. @espite the purported chan!es in

strate!ies, $'s in Zimbabwe seem to have continued to stru!!le, with their

contribution not bein! reco!nised in official statistics. This mi!ht boil down to their

approaches to strate!y formulation and implementation which focus on competin! onthe basis of price at the epense of other variables.

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ar&abhows*i and ;aplan (20A0) note the need for the transformation of $'s and

su!!est that there is a need to unpac* the human a!ency, brin!in! to the fore the

potential for transformation as well as for routini&ation in action. The decisions made by

$'s owners will determine whether or not they move, !row, sta!nate or decline. This

implies that the practice theory should be the primary theoretical framewor* for

conceptualisin! the role that action plays in $'s- success. 1t should be noted that the

results that we obtain are a result of the actions that we ta*e as individuals and

or!anisationsI hence the need to eamine strate!y implementation, but action should

arise from the thou!ht processes that individuals en!a!e in. @o $'s in Zimbabwe

plan their actions or do they continue to do more of the same despite chan!es in the

environmentO How do chan!es in the environment impact strate!y implementation in

the Zimbabwean situationO lthou!h the environmental issues have been alluded to in

this literature review, they will not form part of this study, since this is a variable outside

the control of the entrepreneurs despite it bein! critical to strate!y implementation. 3nly

factors under entrepreneurs- control, i.e. internal factors, will be considered for this

study.

The new economy entails e#business and *nowled!e driven enterprises that could lead

to more responsive and a!ile methods to deal with chan!e and uncertainty. ;oh and

$impson (200) identify such methods as *ey competitive advanta!es formanufacturin! enterprises. $outh frican products now dominate every sector in

Zimbabwe, increasin! competitive pressures on $'s. 6ompetition is destroyin! the

mar*et share of local products. This calls for strate!ic responses that must be

supported by strate!y implementation. re Zimbabwean $'s e+uipped to deal with

these challen!esO =ecapitalisation and retoolin! of business have been difficult to

achieve in the Zimbabwean contet, thereby leavin! most businesses ill#e+uipped for

the new challen!es. How does this affect effective strate!y implementation in

ZimbabweO This study aims to understand how $'s owners levera!e the limited

resources that they have to overcome apparent shortcomin!s in strate!y

implementation to survive or achieve !rowth. The issue at hand is therefore not how the

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environment affects strate!y implementation, but rather what entrepreneurs do to

achieve their !oals and move their businesses forward.

The lac* of resources could affect $'s- ability to adopt concepts such as a!ile

manufacturin! and they mi!ht therefore fail to deal ade+uately with the chan!es in theenvironment. Their focus mi!ht be mere survival rather than reactin! to chan!in!

mar*ets as dictated by customers- needs. They could be ill#e+uipped to deal with an

environment that is sub8ect to ma8or chan!esI this affects their ability to formulate and

implement strate!ies.

Thoburn, runachalan and ?unase*aran (2000) posit that companies have had to

reduce the time devoted to mar*etin! their products and maimise the fleibility of their

production systems in order to manufacture hi!h +uality products in low volumes at a

modest price. ithout the necessary access to various resources, the ability of $'s to

respond to environmental chan!es mi!ht be stron!ly compromised. daptin! to such

chan!es re+uires a proactive approach to strate!y, but the ma8ority of $'s adopt a

reactive approach due to several internal deficiencies. This will impact on both survival

and !rowth.

?indy, as +uoted by ;oh and $impson (200) eplains that9

/anufacturin! responsiveness relates to the ability of manufacturin! systems toma.e a rapid and balanced response to the predictable and unpredictable

chan!es that characterise today4s manufacturin! environments"$

=esponsiveness entails some form of control to ensure that there is a lin* between what

was planned and what is bein! done. The unpredictability of the environment brin!s

uncertainty to $'s- operations. $ome $'s in Zimbabwe cannot be defined as a!ile

and fleible as they tend to ta*e a lon! time to ma*e the necessary ad8ustments or

simply call on !overnment to intervene in the face of mountin! competition. Foreample, the poultry industry and other manufacturers complained about the uneven

playin! field when imports were brou!ht into the country to cushion the poor, instead of

streamlinin! operations and strate!ies in order to compete effectively with products from

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outside the country. This is a reactive strate!y that relies on tried and trusted ways of

doin! business to save them in the lon! term.

$ome authors have ar!ued that most businesses fail due to mana!ement deficiencies.

de aal (200) ar!ues that, in the five years prior to his study, more shareholder valuewas destroyed as a result of mismana!ement, wron! decisions and poor eecution of

strate!y than throu!h compliance standards and scandals combined. He cites the oo&

llen $urvey of A 200 lar!e corporations that found that of the BE0 worst performers,

G% of value destroyed was caused by strate!ic missteps and operational

ineffectiveness. $trate!ic missteps and operational ineffectiveness is not only restricted

to lar!e or!anisations and can also be prevalent in all types of or!anisations includin!

$'s. These issues relate to strate!y formulation and implementation issues which

lead to most companies operatin! well below their true capability. 1n view of the

fore!oin!, 1n the absence of deliberate steps to cope with environmental chan!es,

$'s mi!ht continue to underperform, resultin! in business failure. 3perational

ineffectiveness results in strate!ies not bein! implemented properly, leadin! to the

destruction of value. n investi!ation into how $'s implement strate!ies would be

useful in avoidin! operational ineffectiveness which can stunt survival and !rowth.

=espondin! to the environmental factors essentially means matchin! the or!anisation

to the chan!in! environment ('*wulu!o, 200E). To understand how $'s implement

strate!ies in a chan!in! operational and competitive environment, it is important to build

taonomies on how these businesses implement strate!ies with a view to enhancin!

overall or!anisational performance and !rowth. This study aims to identify the factors

that affect strate!y implementation and build a framewor* that $'s currently use for

strate!y implementation in the face of a rapidly chan!in! business environment. The

insi!hts !ained from this study will hopefully improve practical and theoretical

understandin! of the role of strate!y and its impact on performance. $trate!yimplementation is an evolvin! art and will in the lon! run affect or!anisational

performance.

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2;6 H': F#'!,/) #*($ SME) #$+ )%/#%' (/'$%#%'($

?iven the assumption that $'s are drivers of economic !rowth, one would be for!iven

for thin*in! that all $'s will be successful. However, "aylor (A) and ;ohtama*i,

;raus, a*ela and =on**o (20A2) report, that, the rate at which $'s are failin! isdisturbin!ly hi!h and has a ne!ative impact on economic !rowth. This view is supported

by $mit and 6ron8e (A2), who observe that, the survival rate of small businesses in

$outh frica tends to be +uite low compared with similar or!anisations in $in!apore and

the :$. They note that the survival rate in sia, 4atin merica and est frica is on

avera!e 50%I while in 'ast and $outhern frica (inclusive of Zimbabwe) it is only about

A0%. There seems to be a ma8or discrepancy in the manner in which $'s are

spawned in $outhern frican and how they are mana!ed, resultin! in this low survival

rate. '*wulu!o (200E) confirms that small businesses are stru!!lin! to survive at both

national and international level, an indication that they operate in hi!hly uncertain and

competitive mar*ets which demand sound $'s- mana!ement practices. any factors

could cause this trend. These could be environmental, as postulated by 3-=e!an and

?hobadian (200C)9

S/s tend to be more vulnerable to environmental forces compared with

lar!er or!anisations in aspects such as access to financial capital, stron!

reliance on narrow ran!e of products, and more limited mar.et presence"$

?iven the seemin!ly hi!h failure rate amon! $'s it is pertinent to understand how

$' owners in Zimbabwe fail or succeed in strate!y implementation. any

environmental factors ne!atively affect $'s- operations in Zimbabwe, particularly

durin! the period after the economic reforms post February 200. There is increasin!

research to show that the +uality of firms is far important than the +uantity of $'s for

economic !rowth. =educin! the failure rate of or underperformin! $'s in Zimbabwe

will !o a lon! way to address the economic challen!es that the country faces. hile it is

not disputed that $'s- operations can be si!nificantly affected by eternal factors, the

inability to develop these $'s could be lin*ed to issues of strate!ic plannin! and

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implementation, !iven the lac* of access to capital mar*ets and the narrow ran!e of

products available due to depressed manufacturin! in the country rather than simply

environmental issues. :nderstandin! the way $'s are mana!ed both in the short and

lon! term and strate!y implementation from the perspective of $'s owners can be

central to unloc*in! their inherent value.

The survival and !rowth of $'s is to a lar!e etent or!anisational, with strate!ic

plannin! bein! a ma8or factor. ;ohtama*i et al (20A2) ar!ue that strate!ic plannin!

contributes to the success of $'sI however, they indicate that there have been

contradictory findin!s with re!ard to the plannin!#performance relationship. @andira

(20AA) notes that althou!h remar*able pro!ress has been made in the field of strate!ic

mana!ement, the problem of strate!y implementation failure persists. This study ar!ues

that strate!y implementation is at the heart of whether or not $'s contribute to the

success or failure of a nation-s economic development. To avoid failure, $'s in

Zimbabwe have to pay particular attention to issues of strate!ic plannin! and

implementation.

Temtime and 7ansiri (200E) found that9

(he ma*or cause of small business failure is poor mana!ement$ whether the

causes are labelled financin!, competition, mar.etin! etc" (here is a distinctscarcity of strate!ic plannin! in the ma*ority of S/s"$

1f this is the case, it would appear that $'s merely drift without any compass to !uide

them. However, several analysts have found evidence of plannin! on the part of $'s.

For eample, bo*o and $mith#Hunter (200) confirm that the hi!h income firms in

Zimbabwe do not necessarily have strate!ic plans as presented in the strate!y literature

but have a clear, predetermined sense of direction. They state that the owners set the

direction !uided by their !oal orientation, particularly with re!ard to mar*ets andproducts. They have a business vision and activities are !uided by that vision. However,

it is not clear how $'s in Zimbabwe actually implement this vision and the nature of

the results that are !enerated by such an approach.

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$&abo (200A) ar!ues that the main constraint faced by $'s is the lac* of

entrepreneurial, mana!ement and mar*etin! s*ills to respond effectively to

environmental issues. hile most owner#man!ers and start up entrepreneurs are

eperts in their product and service, they often lac* wider mana!erial s*ills and this

hinders lon! term success. $&abo (200A) adds that strate!ic plannin!, medium term

visionin!, mar*etin!, findin! customers, bein! patient not epectin! to J!et rich

overni!htL, mana!in! innovation, commitment to +uality and *nowled!e of +uality

systems, cash flow mana!ement, and information technolo!y are critical elements of

the mana!ement re+uired to meet the challen!es of the mar*et economy, especially at

the international level. These factors will affect $'s- overall approaches to strate!y

implementation. Zimbabwean $'s have some of the charact

nyamwanza_final (1) princples of management.docx

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