The Role of Strategic Planning in Determining the Performance of Micro, Small and Medium Enterprises: A Case Study Of KWFT

Abstract

The SME sector in Kenya plays an important role in the social economic development of the country. Its significance can be seen in terms of contribution towards economic growth, employment creation, poverty reduction and development of an industrial base. Although small and medium-sized enterprises (SMEs) typically employ a major share of an economy’s total employees, SME management suffers from an insufficient business-related knowledge base that top managers in SMEs possess. The study thus evaluated the role of strategic planning in performance of micro and small medium enterprises. More specifically, the study investigated the factors affecting strategic planning process at KWFT; determined the extent to which strategic planning has contributed to improved organizational performance in KWFT; and found out the challenges faced during strategic planning at KWFT. Both quantitative and qualitative approaches were employed because of the data collection procedure utilized in the study. The target population of this study was 112 management staff at KWFT. In this regard, a sample size of 41 respondents was adopted. Purposive sampling was used to keenly look at where the strategic formulation is done. In this study, the researcher used primary source of data. In this study, semi-structured questionnaires were used as the data collection method. Data was analyzed descriptively. Findings reveal that leadership styles, management processes and procedures, skills possessed by the strategic team, high level of competition and the high level of competition in the micro finance sector are key factors affecting strategic plans’ implementation. Key aspects of strategic planning that contribute to SME performance include its ability to: enable SMEs to achieve high sales returns and gain efficiency and enable SMEs to gain a sustainable edge over its competitors.