STRATEGY FOR SMALL FIRMS/ BUSINESSES & INTERNATIONAL BUSINESS

Definition of Small Businesses, their current situation in country & use of Strategic
Planning
-Small business firms are those which are independently owned & operated by individuals &
do not wield a dominant place in their respective field, by common definition these firms have
a turn over of below 2 crores per annum & employment of below 15 persons. Though accurate
data is not available but it is estimated that there are 20 million such units in the country
-Studies reveal that 80-85% of these businesses do not follow business strategy, which means
absence of any long term planning of business growth & live mostly on short term planning &
their intuitive judgment.Unlike industrially advanced countries in the West & Far East like
Japan Korea & Taiwan, where small industries become an integral part of the large industries &
draw lot of technical & financial support from the latter, situation in India is disappointing,
where small industry is treated as a labor intensive low tech entity & is generally exploited by
the larger industry, more for the purpose of low labor cost & working capital advantage without
much technology & quality up gradation support. This philosophy has made most of the small
industries. Financially a weak entity which most of the time keeps fighting for survival leaving
very little time for quality work & graduation into larger industries
- As a nation we need to seriously address these issues if we have to create a healthy &
employment oriented Industrial environment
-It is only the balance 15 – 20 % which do work out futuristic plan by analyzing the business
environment & thus over a period graduate into medium & large scale co’s 1
Reason quoted for majority not doing any Strategic Planning
-Lack of Technical & Financial Support - as explained earlier smaller units do not get much
support from the larger units & are thus struggling most of the time, engrossed in day to day
operational problems so fire fighting. Thus there is hardly any time to do any quality work
-Unfamiliar with Strategic Planning – lack of training & experience
-Lack of skilled knowledge – do not know how to do this exercise systematically
-Lack of trust / openness - in sharing information, data
Importance of Strategic Planning in Small Businesses in Indian context.
-In Indian context, where we have second largest population in the world & we need to
generate higher employment opportunities in rural & semi urban areas where 70% of our
population lives, it is of utmost importance that we develop an infrastructure where small
businesses can be operated in a scientific & systematic manner to have a strong sustenance
base, which today is totally lacking. Our technical Training Institutes are totally inefficient to
impart quality education for such purpose. There is hardly any infrastructure to train small
business operators in managerial skills, which can go a long way in helping people to build
quality & value in their occupation
-For implementation of Strategic Planning, small businesses should be made familiar to do the
following exercise to remain successful
-Define mission - Purpose & plan of our business, now & in future
-Set objectives – what do we want to achieve now & the next few years ( 2 – 3 yrs ) 2
Formulate Strategy – economic environments, various alternatives to achieve alternatives,
which is the best for us to choose. Financial, Technical & man power, infrastructure plans
to achieve them
Determine process / policies to achieve the objectives
Establish programs, how do we do this most economically & with acceptable quality
Prepare performance budget – 1 to 3 yrs, which should high light revenues, investments, costs
& profitability. How would be additional resources mobilized.
Prepare implementation plan, lay down system so that every body knows what he has to
do
Lay down performance measures – key factors to control & how
Feed back & correction mechanism
Strategic Decision making plan for any business
8. Develop basic business ideas
- Product / service
- Target market, target customer
- Business potential
- Competition
- Cost benefit data, break even & pay back analysis
1. Strategy Formulation
- SWOT analysis
- Scan external environments – resource requirement & availability
- Scan internal environment – prepare marketing, operation, financial, HR plans
- Risk analysis & financial feasibility
• Time table for various activities
- CPM & PERT charts
- resource availability plan
9. Implementation plan
- Draw a complete action plan
- Identify critical activities & establish control points
12. Control, Evaluation & Correction Mechanism