The Conflict between Strategic Method Application and Theoretical Knowledge in Small and Medium Sized Companies: The Case of the Czech Republic

By Sebestova, Jarmila | Business: Theory and Practice, June 2016 | Go to article overview

The Conflict between Strategic Method Application and Theoretical Knowledge in Small and Medium Sized Companies: The Case of the Czech Republic


Sebestova, Jarmila, Business: Theory and Practice


Introduction

In the ever changing economic environment of the world, characterized by continuous structural changes and enhanced competitive pressures, the importance of small and medium sized enterprises (SMEs) has increased. The sector of small and medium sized enterprises in the economy plays a very important role; it is the driving force of business, growth, innovation and competitiveness. It plays a crucial part in job creation, and is generally a factor regarding social stability and economic development. The main barriers to the effectiveness of the strategy implementation can be named as (Strnad 2009):

-Barrier to vision--only 5% of employees understand what the strategy means;

-Barrier to human resources--only 25% of managers have personnel motivation connected with the business strategy;

-Barrier to managers or owners--85% of them dedicate no more than one hour per month to improving or discussing changes in this document;

-Barrier to resources--60% of business units do not have a connection between the budget and the strategy.

This brings about weak results in strategy implementation and the adaptability process, because 90% of businesses cannot fulfill their goals according to their vision. This means that they learned lessons from their business strategy failures. Since the manager is an agent of a business and not a passive observer, he is required to develop a strategy by management techniques using (Stacey et al. 2000).

This approach can be expanded with the resource-based approach of managing a company (Barney 1991) by adding components of knowledge to provide strategic flexibility. The successfulness of each strategy depends on behavioural models, but all models need the below stated four significant steps (Tidd et al. 2007; Rylkova, Chobotova 2011):

-Copy the main goals from the strategy;

-Effective internal and external linkage with other subjects in the market;

-Support for conducting changes in an organization;

-Supportive environment.

The challenge for the next stage of the analysis is to find the gap between the knowledge of strategic methods and their implementation. This could enrich both theoretical and practical economic crisis type entrepreneurial education so that in the case of such a crisis they would be more adaptable to changing conditions. Furthermore, the time delay is an obvious reaction to the changing conditions in the market, also meaning that if there is confusion between strategic and operational management, problems and difficulties are addressed immediately so that major problems do not occur from a business perspective.

The main purpose of this paper is to discuss the current difficulties between the entrepreneurial needs in the area of graduate knowledge and management style and the methods used in common business practice, according to the business stage. The methods of evaluation were based on a face-to-face standardized survey and a comparison with previous findings in this area. Two quantitative hypotheses were developed, one for each research group. According to the chosen part of the questionnaire we set up two main quantitative-based hypotheses to evaluate the strategic methods using the whole sector.

-H1: There is a connection between the strategic methods and the business stage. The main method users will be in the start-up or stagnation stage, due to difficulties in the business area.

-H2: Enterprises will confirm that the graduate must have the same knowledge of the methods, which they use. The main emphasis will be placed in the area of Controlling.

1. Previous research

According to Synek et al. (2007) and Kislingerova et al. (2010) the advantages for SMEs result from the disadvantages of large enterprises. Small and medium-sized enterprises play an important economic and inevitably also political and stabilizing role in developed market economies. …

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