Essence and main components of strategic planning
Table of contents: The Kazakh-American Free University Academic Journal №9 - 2017
Author: Zhakenov Nurlan, Kazakh - American Free University, Kazakhstan
Management in small business today is not a separate category,
worthy of attention of a businessman who simply tries to survive in the market
without thinking about the intricacies of the organizational process.
Naturally, it is impossible to recognize the effectiveness of proper management
in the formation of a profitable enterprise; moreover, this component
rightfully refers to one of the most important. However, in matters of small
business, the question is whether to replace the usual management of management
or to direct their own efforts to achieve stability for the enterprise.
Management in small business is presented to the businessman as a suitcase
without a handle, which is as difficult to throw as it is to carry it on.
However, it is still too early to make unambiguous conclusions about the appropriateness
of a set of measures aimed at all aspects of entrepreneurial activity.
What is management? The simplest and most capacious answer is management;
however, this is not entirely true. In addition to directly directing the
company to achieve certain goals, management also enables the leader to become
part of the organization as such, to fully disclose the advantages and
disadvantages of the entrusted company, and therefore to properly choose the
company's strategy of behavior in the market. Moreover, management is not an
action from time to time, it is a whole package of measures that integrates
literally into the life of an enterprise, becomes part of a collective.
Business management covers all aspects of the enterprise, and it is in small
organizations that it is possible to cover them all. Small business is perfect
for a manager who does not have material support and, therefore, a vast
organizational structure. With the help of management, a small organization
functions as a single mechanism, debugged and efficient.
The features of management in small business are largely dictated by
the specific characteristics of this sector of entrepreneurial activity. So,
for example, in a small enterprise it is easier for the head to introduce
psychological aspects of personnel management, to focus on the collective
factor. The small scale of the organization makes management adaptive, and the
leader is much more sensitive to environmental factors. You cannot ignore those
features that are dictated by the specifics of the industry in which small
businesses operate. The role of management in a small business is to cover this
specificity, maximize the effect of benefits and level out possible opposition
from the disadvantages. Provided that the entrepreneur approaches the issue of
management in small business from the standpoint of readiness for change and non-standard
solutions, the effect will be deafening. Often, when it comes to the
advisability of competitive advantages, it is the sphere of small business that
appears to be a real battlefield, where wars go on survival and every advantage
is used to the maximum. Management is able to give such an advantage, to rally
the team around a common goal, to create a thoughtful strategy and tactics for
the firm .
Whether it is the management of small and medium-sized businesses or
the process of making managerial decisions in the largest company without a
manager, this process is doomed to failure from the very beginning. It is the
manager, or rather the leader, that is the missing element that makes the
management strategy perfect and relevant. No matter how thoughtful the
management strategy of the enterprise is, it is the leader who will determine
whether it will function. And, not always the manager and the leader are the
same person, not at all. In this case, the task of the manager to integrate
such a person into the management process, make him a trustee and thereby give
the organizational structure of the complexity. If it is not about the
personnel of the enterprise, then the task of the manager is first of all a
critical analysis of the organization, its capabilities, the reserve of the
fortress, and the potential advantages in the future. Management in a small
business, perhaps in comparison with large organizations really seems petty and
fussy, but this requires the specifics of the activities of such an enterprise.
As for the manager himself, it is often not just a person with
organizational skills, but also a desire to implement them. Often it is better
for the owner of an enterprise to abandon the functions of a manager, since
such skills are comparable to a talent that is or is not. Unfortunately, the
owner of the enterprise can not always admit to himself that the management
functions in his face look bleak and in the future this leads to considerable
losses for the enterprise as a whole. Small business management is less
tolerant of mistakes and wrong decisions. Of course, we can say that the scale
of financial losses is incomparable with a large organization, however, if such
errors are not critical for a big business, then in the case of a small firm it
is a direct threat to existence. Work on maximizing efficiency from managerial
decisions in the sphere of small business should be conducted on an ongoing
basis. Management is a continuous complex, and not a job to improve the
functioning of an enterprise from time to time .
The first task that confronts the manager is to make a decision
about the organizational structure of the enterprise, whether it will be a
vertical, hierarchical structure or will be presented in the form of a
decentralized system. Advantages and disadvantages have both options, however,
it should be noted that in the general majority of small businesses tend to
introduce a vertical management structure. It ensures the absence of conflicts
and ambiguities in the understanding of management decisions enables faster
transfer of orders and, therefore, makes the enterprise more maneuverable.
However, on the other hand, the temporary loss of the manager's working
capacity in the conditions of the modern market practically discards the organization
on the backyard of the market.
We should start with financial management. Financial management in
small business is the most responsible obligation of the manager, since every
penny needs a specific target orientation in the formation of a start-up
enterprise, literally. First of all, the work of the entrepreneur should be
aimed at choosing a priority direction for the waste of profits, whether the
capital will be directed to the development of the organization or to other
target segments. Refinancing of profit is reasonable in the event that the
enterprise is able to continue to function in the selected segment and
moreover, in the course of time to take the leading positions. The withdrawal
of profits or the repayment of debt obligations at its expense is appropriate
if the entrepreneur is only interested in short-term profits and will
subsequently change the segment.
Financial management of small business is in a situation of constant
shortage of material resources, and the manager must take this moment into
account. The work of a small business enterprise does not bring Huguenot
profits, able to recoup the failed project; the actions of the manager should
be cautious and verified. The best option is the introduction of already used
in such segments of the techniques to increase the profitability of the
enterprise. Work on cost management is also important. Financial management is
aimed not only at improving the profitability of the business, but also at
reducing the overall cost index. Optimization of production is necessary at any
level of business, as it allows the entrepreneur to significantly increase the
reserve strength of the enterprise, make it more stable. Financial management
in the sphere of small business is; first of all, work to increase the capacity
of the enterprise. A profitable approach to business valuation is associated
with this area and may well be ranked in the field of financial management.
Financial management in small business and non-profit organizations
is characterized by a high percentage of orientation precisely on the
productivity of the workforce. This approach is quite understandable in view of
the lack of significant production capacity of enterprises in the small
business and its orientation on the provision of services. Financial flows in
the sphere of small business are not characterized by high throughput; on the
one hand this makes management in such organizations more productive, and on
the other hand, sets the manager to take into account all possible risks for
the financial position of the enterprise. Financial management in a small
business is essentially a critical choice with a huge responsibility. Financial
management in a small business, an abstract or an article devoted to this topic
does not take into account the specifics of the local segment of the organization's
activity, needs more experience and willingness of the manager to dedication
than directly in the training literature.
Strategic management in small business in the conditions of the local
market outlines a fairly clear profile of the behavioral structure of the
enterprise. It is thanks to effective strategic management that the enterprise
as a whole understands the target orientation of its development. That's right,
the organization should not only work for profit, but also have a strategic
landmark. The role of strategic management in the micro-business environment
was previously underestimated due to the fact that the global forecast for a
small segment is in principle not productive, since the work of the
organization is not subject to global risks. But already today one can say that
small business is still a transformational sector of entrepreneurial activity,
and the role of strategic management is to take this into account. Business management
in this area should primarily affect ambitious plans for the future.
The management of small business from the position of strategic
orientation has some disadvantages. For example, a small organization, whose
role is to work in a small, well-defined segment, can easily get into debt
dependence due to careless financial management that is inextricably linked to
strategic orientation. An organization that has set itself the goal of
surpassing its small segment should first of all prepare a basis for such a
breakthrough, and therefore, in the first couple of years, such an enterprise
loses the lion's share of profits, which will be used for refinancing. The
peculiarities of strategic management in small firms are also the lack of
extensive opportunities to search for and implement innovations. Often, it is
the innovative potential that is the basis for achieving a leading position in
the market. A small organization is in principle incapable of accumulating a
sufficiently large number of specialists in the search for and implementation
The organization and management of small businesses is largely based
on the specific nature of the chosen industry. In matters of strategic
management, it is also necessary to take this moment into account. For example,
the management of a small business for the cultivation of mushrooms is
associated with an established sales channel and before the strategic development
in this area, it is necessary to prepare the soil in advance for an increase in
the number of products. The strategic management of a small business does not
end with the identification of trends for development. The manager also
requires constant monitoring of the implementation of the strategy and making
adjustments to the overall plan. The strategic management of small business
from the average differs not only in scale, but also in greater attention to
detail. The strategic management of small business is in fact a synergy of
tactics and an orientation toward further development. The role of the manager
consists in an integrated approach and a clear formation of the target
orientation for the enterprise, and the requirement for the quality of the
decisions taken will be much higher than in the sphere of medium business .
Finally, special attention is paid to the popularization of the
management theme in the teaching sphere, which gained an unprecedented scale.
"Term paper management in small business", "Management in small
business abstract", - these are only isolated examples of general interest
in controlling activity from both ordinary people and start-ups. However, it
should be clearly understood that the abstract, course work, even the most
advanced textbook is not able to give a clear system of actions of the manager.
Course "management in small business" or an abstract is a necessary
theoretical basis; however, the manager should not rely only on it. The essay
does not tell the entrepreneur how to behave in a critical situation, you can
get experience in this field only by trial and error, and the manager only
needs to - not be afraid to act, but, unfortunately, this is what the ordinary
When improving the organization of activities and management
functions, in addition to survival issues, the tasks of increasing the
efficiency of financial and production management are being worked out. And
also business ties and issues of coordination of partnership relations, optimal
and frugal attitude to resources and reducing transaction costs per unit of output.
The described approach testifies to the growing organizational maturity of a
small business enterprise, readiness for structural growth and scaling of
Let us consider the validity of using the strategy of increasing the
degree of microeconomic interaction in the organization itself. Some time ago,
the interaction of large production structures with a small business
representative occurred in such a scenario as the use of support from large
businesses (stability of orders, transactions, etc.) in exchange for ensuring
the efficiency of their capital turnover. However, in the current crisis
conditions for big business, such a strategy for small business development
faced natural barriers and was ineffective.
At present, in some sectors and spheres of economy, small
enterprises have reached such a level of concentration that conditions for
their economic interaction and cooperation, especially in the absence of state
support, were created. First of all, this applies to industry.
There were conditions for active horizontal interaction of small
businesses among themselves, which eventually became a phenomenon of the
horizontal interaction strategy. Especially the given strategy is effective at
a similar kind of manufacture (the same type production). In contrast to the
classic "embedding" of a small enterprise that had a place in the
technological chain of a large one.
The most common is the symbiosis of two small enterprises (paired
partnerships, strategic alliances), most often on equal parity terms. This strategy
allows you to achieve several goals for small businesses:
Implementation of large capital-intensive projects;
Reduction of costs per unit of output due to economies of scale,
as well as transaction costs.
Thus, one can draw a conclusion about the effectiveness of
cooperative development strategies for small enterprises. And in the West, such
relations as cooperatives are already widely used and widely used by small
businesses, in particular in European countries.
In conclusion, I would like to note that the correctly chosen
strategy allows you to see the way of development of the organization from the
initial state to the required one. Those. Answers the question «how to achieve
this state?» Or «how to achieve strategic goals?»
There are no universal prescriptions for 100% suitable for all
strategies, this is true for small businesses. However, there are system
solutions and models that have already shown their effectiveness, and one of
them is the use of a cooperative strategy. And the talent of the manager and
the owner of a small business is to develop a strategy taking into account the
unique features of his organization and the changing environment .
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Table of contents: The Kazakh-American Free University Academic Journal №9 - 2017