Developing a strategic framework for the strategy process and alignment in small and medium ...

420 Pages·2013·4.03 MB·English

by  Amina Elshamly

UNIVERSITY OF GLOUCESTERSHIRE
UNITED KINGDOM
Developing a strategic framework in small and
medium sized enterprises (SMEs)

Amina Basiouny Mousa Elshamly

A thesis submitted to
The University of Gloucestershire
In accordance with the requirements of the degree of
Doctor of Philosophy
In the Faculty of Business, Education and Professional Studies
In the School of Business & Management

First supervisor Second supervisor
Barry Davies (Prof) Tony GEAR (Prof)
Associate Dean, Research Research Degree Supervisor
University of Gloucestershire University of Gloucestershire

Jun 2013
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Abstract
Aims: The purpose is to understand the strategy process approach within SMEs to gain a better
understanding of how a SME performs the strategy process. The research aims to develop a strategy
process framework through the findings of a case study within a SME, by comparing those findings
with the existing literature.
Methodology: The research paradigm is moderate constructionism that adopts first a deductive
approach to obtain the required theoretical knowledge of how strategy process (phases, activities,
and tools) function and how they have been used within empirical studies, with a specific focus on
case studies in SMEs. This is achieved through the establishment of a conceptual framework of the
strategy process including phases and activities. Second, an inductive approach is adopted to induce
from the research findings how the strategy process of the SME evolves. This mixture of deductive
and inductive approaches is known as abductive. The research adopts an abductive approach
culminating in a strategy process framework based on the Balanced Scorecard (BSC), the findings
of the case study, and the literature. The research strategy is a single case study using semi-
structured interviews during which the interviewer conversationally obtained the required
information. This was complemented by documentation evidence. The data analysis process used
thematic analysis and an enumeration approach.
Results: Whilst the literature lays out a systematic, sequential process, the picture presented by the
case study in a SME is somewhat different. The SME was involved in several different aspects of
strategy as defined in the literature review, including several phases of the strategy process, and the
activities within each of these phases. Some activities were more frequently performed than others,
in a very ad-hoc manner. Moreover, The SME did not have a coherent strategy process. The
process that the SME uses is messy; it is not systematic; it is not sequential and is not clear. These
results are incorporated in a revised conceptual framework to reflect the strategy process actuals
used within the SME of the present study. The reasons that explain the finding and the need of the
framework may be summarized as: Ambiguous communication of information, Inability to manage
development, innovation without a flexible approach, a lack of systematic methods for defining
strategy, short-term cash flow issues, and high risks in the SME.
Originality/value is contribution to knowledge (theory and empirical): First: a comprehensive
literature review investigated and extended the strategy process phases and activities literature, by
establishment of a conceptual framework of the strategy process including phases and activities.
Second: this conceptual framework was revised based on these findings to reflect the strategy
process actually emplaced within the SME in the present study, this aided an overall understanding
of the theory of the strategy process. Third: due to the lack of formal strategy the SME had much
‘emergent’ strategy, which it failed to deal with effectively. Normatively, it should work to
overcome this, by implementing a more coherent and formal approach to the strategy process
framework (using the BSC framework with support of other strategic tools [QFD and SWOT
analysis]. Fourth: the methodological implementation of the research paradigm of moderate
constructionism and validation through crystallization.
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Declaration
I declare that the work in this thesis was carried out in accordance with the regulations of the
University of Gloucestershire and is original except where indicated by specific reference in the
text. No part of the thesis has been submitted as part of any other academic award. The thesis has
not been presented to any other education institution in the United Kingdom or overseas.
Any views expressed in the thesis are those of the author and in no way represent those of the
University.

Amina Basiouny Mousa Elshamly

Jun 2013

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Acknowledgements
In the name of Allah, The Most Gracious, The Most Merciful
First and foremost I give thanks to God Almighty, the Beneficent and Merciful, for sustaining me
such that it became possible to complete this thesis successfully.
Also, my eternal gratitude for the guidance of my supervisory team, Professor Antony Gear and
Professor Barry Davies, as they followed me through the most difficult stages of completing this
thesis.
Special thanks to Professor Hussien Sharara, who supervised me during my MBA in Egypt and as
part of this joint scholarship program.
I am indebted to the staff of the Student Achievement Centre Aina Wylie and Crispin Wassell who
have countless times reviewed my thesis for its language utilization and grammatical structure.
My nostalgic remembrance of parents, my sisters, my brothers and my friends Zienab Abdala and
Sally Ali reminds me of their encouragement and continuous moral support throughout a lifetime
of study, without which the completion of this thesis would have been no more than a dream.
And last, but by no means least, my dear husband, his unlimited support, patience, sacrifice and
enthusiasm during the course of my research. I am very grateful to him. I hope he will be
successful in his life.

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The Author
Amina Elshamly is an Egyptian student, who has attended Ain Shams University in Cairo,
Egypt, graduating with a Bachelor of Commerce in Business. She was appointed as a tutor
at the Business School, University of Gloucestershire, in marketing research for both
undergraduate and postgraduate courses. Prior to her PhD, she held the position of
assistant Lecturer in Cairo, Egypt at the Faculty of Commerce, and in the Cairo Academy
within the Faculty of Commerce, at Sadat Academy. Her teaching experience has
predominantly been at undergraduate level, mainly in the field of Management. She also
taught the following courses: Operations Management, Financial management, Business
Strategy, Mathematics, Marketing research and Statistics. During the period that she
attained her MBA degree (a two year course with thesis), with the dissertation title: “A
Proposed Approach to Achieve the Integration between Decision Support Systems and ISO
9000: An Empirical Study on the Pharmaceuticals Sector”, she held a position as assistant
supervisor for the Department of Management, Faculty of Commerce, Ain Shams
University.
She expects to publish the following papers:
 The developments of the strategy process stages: phases and activities (Submitted to
international journal of management review)
 A Business Strategy Development Framework for SMEs ( the paper has been accepted
in the 6th Annual EuroMed Conference 2013)
 Developing a strategic framework for the strategy process in small and medium sized
enterprises (SMEs).
 The developments evaluation of the Balanced Scorecard generations.
 Integration of the BSC with other strategy management tools (SWOT and QFD).
 Evaluation of strategy process phases and activities in small and medium sized
enterprises (SMEs).
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Contents
Abstract .......................................................................................................... 2
Declaration ...................................................................................................... 3
Acknowledgements .......................................................................................... 4
The Author ...................................................................................................... 5
Contents .......................................................................................................... 6
List of Abbreviations ...................................................................................... 17
Chapter one: Introduction ....................................................................... 18
Introduction .................................................................................................... 18
Research context (SMEs) .................................................................................. 18
Criteria for defining SMEs in the present study .................................................... 19
Importance of SMEs ........................................................................................ 19
Reasons for investigating the strategy of SMEs .................................................... 19
Research Aim, Objectives and Questions ............................................................ 20
The SME investigated in the present study .......................................................... 22
Contributions to knowledge .............................................................................. 23
Thesis Structure .............................................................................................. 24
Chapter Two: Strategy process ............................................................... 28
Introduction .................................................................................................... 29
Origin of strategy ............................................................................................ 29
Characteristics of SMEs ................................................................................... 31
Strategy process .............................................................................................. 34
Stage 1: Rational (deliberate) strategy approach vs. emergent strategy
approach ....................................................................................................... 35
Rational (deliberate) strategy approach ............................................................ 35
Criticism of the deliberate approach ................................................................ 36
Emergent strategy approach ........................................................................... 37
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Stage 2: Deliberate and Emergent strategy approaches
(strategy formation process) ............................................................................ 40
Strategy formation process ............................................................................. 42
Stage 3 strategy process .................................................................................. 45
Strategy dimension ....................................................................................... 45
Modern Strategy process: ‘processual approach’, ‘strategy as practice’ and ‘post-
processual strategy approach’. ........................................................................ 47
Strategy process phases, including activities ..................................................... 51
Introduction .................................................................................................... 51
Phase one (environmental analysis) ................................................................. 53
Phase two (strategy formulation) ..................................................................... 57
Phase three (strategy implementation) ............................................................. 61
Phase four (strategy review and control) .......................................................... 65
BSC framework and strategy process .............................................................. 69
Chapter Three: BSC and the strategy process ....................................... 74
Introduction and background to the BSC (origin) .................................................. 75
Application of the BSC ..................................................................................... 77
Application of the BSC in SMEs ........................................................................ 78
Introduction ................................................................................................. 78
BSC in SMEs and large organizations .............................................................. 80
Limitations of the BSC for SMEs .................................................................... 80
Why SMEs fail when using BSC ..................................................................... 81
The benefits of using BSC ............................................................................. 82
BSC in SMEs in different countries ................................................................. 82
The benefits and limitations of BSC ................................................................. 84
Positive accounts of BSC ............................................................................... 84
Negative accounts of BSC .............................................................................. 87
Evaluating the BSC Approach ........................................................................ 90
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First generation ............................................................................................. 93
Second generation .......................................................................................... 96
Third generation ............................................................................................ 99
Characteristics of the third generation BSC .................................................... 103
Coherency and balance ................................................................................ 104
Cause-effect relationship and quantification ................................................... 105
Strategy map ............................................................................................. 107
Strategy focused organizations ..................................................................... 108
Performance measurement ........................................................................... 110
Key performance indicator ........................................................................... 111
Summary .................................................................................................... 113
Chapter Four: Integration of the BSC with other strategy
management tools (SWOT and QFD) ................................................... 115
Introduction .................................................................................................. 115
Overview of strategic tools ............................................................................. 115
SWOT analysis ............................................................................................. 118
Quality Function Deployment (QFD) ............................................................... 119
Definition .................................................................................................. 119
Quality function deployment process ............................................................. 121
House of strategy (HoS) .............................................................................. 125
Section One: Integration overview for large organization ............................... 125
The Integration of BSC and SWOT .................................................................. 126
The Integration of BSC and QFD ..................................................................... 134
BSQ (integrating BSC with SWOT and QFD).................................................... 140
Section Two: Integration overview for SMEs ................................................. 148
Operating SWOT analysis in SMEs .................................................................. 148
Operating QFD in SMEs ................................................................................. 150
Operating BSC in SMEs ................................................................................. 152
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The integration between BSC and SWOT analysis in SMEs ................................. 154
The integration between BSC and QFD in SMEs ................................................ 155
The integration between BSC and QFD and SWOT analysis in SMEs ................... 157
Summary ..................................................................................................... 158
Chapter Five: Methodology .................................................................... 163
Introduction .................................................................................................. 163
Research paradigm ......................................................................................... 165
Research approach ......................................................................................... 169
The conceptual framework (deducted from theory) ........................................ 172
Content, context, and process ....................................................................... 174
Sequential/interactive .................................................................................. 174
Emergent/deliberate strategy approach (and how emergent works) ..................... 175
Micro/macro view....................................................................................... 176
Activities ................................................................................................... 177
Qualitative or quantitative ............................................................................... 178
Justification for Qualitative research ................................................................. 179
Research strategy ........................................................................................... 180
Design of Case study ...................................................................................... 181
Single case study justification .......................................................................... 183
Units of analysis and case selection .................................................................. 186
Case study protocol ........................................................................................ 187
Interview ...................................................................................................... 189
Data analysis process .................................................................................... 192
Steps of the coding process .......................................................................... 196
Quality criteria for a qualitative approach (case study based research) .................... 200
Introduction ............................................................................................... 200
Factors for consideration .............................................................................. 200
Credibility ................................................................................................. 202
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Transferability (external) ............................................................................. 203
Dependability (reliability) ............................................................................ 204
Conformability (objectivity) ......................................................................... 205
Ethical consideration ...................................................................................... 206
Summary .................................................................................................... 206
Chapter Six: Analysis and discussion .................................................. 208
Introduction .................................................................................................. 209
Section one: Environmental Analysis (EA) phase ........................................... 211
Activity one: Analysis of External Environment ............................................. 212
Review of Actors’ data ................................................................................ 217
Discussion of the External Environmental Analysis Activity ............................. 218
Activity Two: Analysis of Internal Environment Activity ................................ 221
Review of Actors’ data ................................................................................ 224
Discussion of the Internal Environmental Analysis Activity .............................. 225
Activity Three: Evaluation of opportunities Activity ....................................... 226
Review of Actors’ data ................................................................................ 227
Discussion of the ‘Evaluation of Opportunities Activity’ .................................. 227
Activity Four: Strategic fit Activity ............................................................... 228
Review of Actors’ data ................................................................................ 230
Discussion of the Strategic fit Activity ........................................................... 231
The overall interpretation ............................................................................. 232
Summary .................................................................................................... 235
Section two: Strategy formulation (SF) phase ................................................. 238
Introduction .................................................................................................. 239
Developing Mission, Vision Statement Activity / Goal Setting Activity /
Objective Setting Activity 239
Review of Actors’ data ................................................................................ 245
Discussion ................................................................................................. 246
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