Effect of Managerial Practices on the Implementation of Strategic Plans by SMEs in Nairobi, Kenya

Abstract

A well-conceived strategic plan enhances business performance, decision making, catalyse strategic change and contribute to strategic direction in organizations (Wilson & Eilertsen, 2010). Being a formal managerial process, strategic planning involves sequence of analytical and evaluative procedures to formulate an intended strategy.  It also aligns the major objectives, strategies, and policies that govern the acquisition and allocation of resources to achieve organizational goals. (Johnson, Scholes & Whittington, 2008; O’Regan and Ghobadian, 2002). Its benefits are competitive advantage through matching firm capabilities and competencies to the external environment, effective decision making, optimal allocation of resources and long-term prosperity of the firm . This study seeks to investigate how managerial practices affects the implementation of strategic plans by SMEs in Nairobi County in Kenya. Prior studies indicated that many SMEs are practicing strategic planning but the implementation process remains a challenge leading to shelving of well-formulated strategies that fail at the implementation stage. While existing studies focused on relationships between various factors that impact on the strategy implementation, this study endeavored to establish the influence of managerial practices on implementation. To achieve the main objective, a survey of 96 SMEs was conducted from a population frame of 810 SMEs registered by the Nairobi City Council. Both quantitative and qualitative data were collected. A questionnaire containing both open-ended and closed questions was used for data collection. The response rate of 91.67% was achieved. Data collected was analyzed using the Statistical Package for Social Sciences (SPSS) software. The study results indicate that managerial practices affect implementation of strategic plans in Kenyan SMEs.  Based on the findings, the study has recommended that SMEs should take initiatives to improve their management practices through lobbying, professional and industry organizations, adoption of best practices and taking advantage of both government and private sector initiatives.

Key Words: Strategic Planning, Management Practices, Internal Environment