The Effect of Strategic Management Practices on SME Performances in Makassar, Indonesia

Abstract

Abstract:The increasingly dynamic market conditions and competition among companies encourage business owners, including small and medium enterprises (SME) owners in Indonesia and in other countries to understand how SMEs can be maintained or enhanced their marketing and financial performances. In order to compete, strategic and policy management experts encourage companies, including SME to apply strategic management practices. This study aims to measure how strong the effect of the implementation of strategic management practices on the performance of SMEs in Makassar, Indonesia especially the performance associated with sales turnover, break even point (BEP), and profit. This research uses quantitative data with primary data source through interview process and questionnaire. The interview process was conducted with the head of the small and medium enterprises (SME) in Makassar, whereas questionnaires were distributed directly to 178 respondents by the survey officer. Of the 178 questionnaires distributed to the respondents, 158 of them (88.76%) were eligible to be processed and analyzed. The results show that the strategic management practices such as strategic planning, strategic execution, and strategic evaluation have a positive and significant impact on sales volume, BEP achievement, and profits of SMEs, especially in medium-sized of enterprises. But the level of education does not serve as an important factor in moderating these strategic management practices against sales volume, BEP and profits. The study also shows that the determination of mission and strategic formulation (part of strategic management practices) have no significant effect on sales volume, BEP and profit. The results of this research are expected to contribute both to the academic community and to business actors, especially managers and/or owners of SME in Makassar. Another practical contribution is to provide inputs to policy makers such as Department of Cooperative and SME in Makassar, in order to develop the quality of SME to remain competitive and still exist in an increasingly dynamic and more competitive market.

The influence of strategy formulation practices on the perceived financial performance of small and medium enterprises: The Zimbabwean experience

“…Of interest is that the findings do not support the claim by Omsa et al (2017) that SME strategy process is based on unreliable information gathered through informal means. The findings illustrate that the limited resources and expertise on the part of the entrepreneur does not affect the undertaking of important strategic management activities such as strategy formulation.…”

Impact of Strategic Management Practices on the Business Performance of SMEs in Pakistan

“…And we got the answer from the 326 business units. All the items of study variables in the research questionnaire have been adopted from the available relevant literature (Omsa, Ridwan & Jayadi, 2017;Agwu, 2018;Gure & Karugu, 2018;Ali & Qun, 2019). Considering the understanding level of target respondents, the questionnaire was into the Urdu language from English through the National University of Modern Languages (NUML) Faisalabad campus.…”

“…A significant connection between strategic management practices and firm performance has been identified. Earlier to it, (Omsa, Ridwan & Jayadi, 2017) have examined the effectiveness of strategic management practices in Indonesian SME firms. Their study has undertaken quantitative research with primary data analysis.…”

“…Agwu (2018) suggests that SMEs are helped to look forward to these circumstances and be skeptical. He further states that SMEs are engaging in the strategic formulation have witnessed more growth in sales, high capital returns, better profitability margins, superior growth of staff, global business enhancement, and there are few chances of failure in the business arena (Omsa, Ridwan & Jayadi, 2017).…”

The effect of strategic management and organizational commitment on employees’ work achievement

“…The sample used in the calculation of cluster sampling probability proportionate to size model (PPS) with the formulation of Slovin (Omwenga, 2016) obtained 386 employees at 12 Universities of Muhammadiyah in Indonesia. The developed instrument combines part of the existing questionnaire related to strategic management, organizational commitment, and job performance, using a Likert scale ranging from one to five using the Method of Successive Interval (MSI) (Omsa et al, 2018). The strategic management questionnaire was made with guided questionnaires once used by Wheelen, et al (2015) with a total of 28 questionnaires.…”