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 [1].

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 [2].

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 of know-how.

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 [3].

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 entrepreneur lacks.

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 business processes.

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 [4].


1. Grushenko V.I., Fomchenkova L.V. Krizisnoe sostoyanie predpriyatiya: poisk prichin i sposobov ego preodoleniya [Crisis Condition of Enterprise: Searching for the Reasons and Solutions]. - Menedzhment v Rossii i za rubezhom. - 2007. - №11. - p. 14-18.

2. Markova V.D., Kuznetsova S.A. Strategicheskiy menedzhment [Strategic Mangement]. – M.: Infra-M, 2001.

3. Zub A.T. Strategicheskiy menedzhment. Teoriya i praktika [Sytrategic Management. Theory and Practice]. M.: Aspekt Press, 2002. - 415 p.

4. Pinkovetskaya Yu.S. Malyie predpriyatiya Rossii: zakonomernosti, klassifikatsiya i napravleniya povysheniya effektivnosti [Small Businesses of Russia: Rules, Classification and Trends of Efficiency Development] [Text] /, 2011. - 204 p.

Table of contents: The Kazakh-American Free University Academic Journal №9 - 2017

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