Methodology for strategic posture determination of SMEs

Abstract

Very dynamic and intense changes in the business ecosystem, as well as the need for obtaining and maintaining a competitive edge position require from enterprises to determine the most appropriate business strategies. In this respect, the determination of a strategic posture could be observed as the first step in the process of defining solid business strategy. This paper presents the methodology for strategic posture determination of SMEs. The methodology itself that is explained in detail is based on the original work of A. Rowe and the research has been conducted on the sample of 179 companies from an emerging market of various sizes, ownership structures and industry sectors. A modified strategic analysis tool for defining company’s strategic posture (modified Strategic Position & Action Evaluation - SPACE analysis) presented in this paper investigates the basic dimensions of external environment and enterprise itself: environment stability (ES) and industry strength (IS), as well as competitive strength (CS) and financial strength (FS). Along with the presented mathematical modeling that determines resultant vector describing the strategic posture, the paper presents the mean scores of each variable from the questionnaire results that are calculated for every strategic posture. The results obtained contribute to the precise definition of the strategic position of companies and are useful for future works related to small and medium-sized firms’ strategic posture evaluation. The vast majority of sampled companies experience aggressive and competitive strategic postures with unstable resultant vector intensity.