Strategic management practices in agro-processing SMEs: The case of Harare SMEs

Abstract

The study sought to explore the level of adoption of strategic management by SMEs in the agro-processing sector as well as to establish the factors which motivate or impede the adoption of strategic management practices by the same organisations in order to find out what were the requirements to ensure these businesses take advantage of strategic management. The study was motivated by the importance of the SMEs sector to world economies and to Zimbabwe specifically given the level of deindustrialisation as well as the high formal unemployment rates. The findings of the study are useful to a number of organisations including entrepreneurs in SMEs as well as the Ministry of SMEs. Literature reviewed showed that SMEs contribute more than 80% of most economies in terms of employment and GDP, a factor which makes SMEs very critical for any economy especially Zimbabwe which is a developing nation. In order to carry out the study a qualitative descriptive study was conducted from a total of 280 SMEs registered with the SMEAZ classified as agro-processing a total 70 were targeted from which 140 respondents were targeted. The response rate achieved was 57% since a total of 80 out of the targeted 140 respondents were reached successfully and responded validly. The major findings were that 64% of respondents indicated that they do not have formal long term plans and strategies in place. In addition majority of the respondents indicated that they were not taking advantage of physical, financial and human resources better than their competitors as sign motivated by the absence of strategies and plans like financial strategies and competitive strategies. However, these respondents indicated that they faced huge threats from potential and current competition and new products these all supported the view that the SMEs were not making use of strategic management to deal with any potential threats beforehand. The SMEs indicated a number of challenges which affected their adoption of strategic management and some of the factors include the lack of knowledge of strategic management as well as the lack of technology and financial resources required to pursue their desired strategies. However, it is recorded on literature that implementation of strategies was a major challenge with over 80% of strategies failing to be implemented. Finally the study found that SMEs required government support as one of the key factors for them to implement and pursue any strategies with some respondents indicating that they advocate for reduction in the taxation and licensing requirements which are very costly to their businesses. The study finally recommends for the increase in training of SME management on business management skills especially strategic management so that practitioners are aware of the requirements and contributions it can make to business success.