This report aims at explaining the differences between the strategy formulation of small and large firms, by examining major factors directly influencing the management and the strategy formulation within a firm. This analysis indicates that strategy formulation in large firms is a very formal process handled by top executives especially dedicated to this process. Small firms in contrast often suffer from a lack of resources and managerial skills. As a result, in small companies, the importance of strategy is often underestimated and not worked out with sufficient accuracy. This leads to a company’s performance often remaining under its market opportunities.
Table of Contents
- Abstract
- Definitions
- Strategy formulation
- Definition of small & large firms
- Strategy formulation in large & small firms
- Major objectives
- Differences between small & large firms
- Management & skills
- Resources
- Porter's generic strategies
- Conclusion
- References
Objectives and Key Themes
This report aims to explain the differences between strategy formulation in small and large firms, examining major factors that influence management and strategy formulation within a company. It analyzes how strategy formulation in large firms is a formal process handled by top executives, while small firms often lack resources and managerial skills. This analysis highlights the underestimation of strategy in small companies and its impact on performance.- Differences in strategy formulation between small and large firms
- Influence of resources and managerial skills on strategy formulation
- Importance of a formal strategic approach in small businesses
- Impact of resource constraints on decision-making in small firms
- Relevance of Porter's generic strategies in different firm sizes
Chapter Summaries
- **Abstract:** Introduces the topic of strategy formulation differences between small and large firms and the report's objective.
- **Definitions:** Provides definitions of strategy formulation, small and large firms based on turnover, employee count, and balance sheet total.
- **Strategy formulation in large & small firms:** Explains the fundamental differences in approach between large and small firms, highlighting factors like objectives, management skills, and resources.
- **Major objectives:** Contrasts objectives of small firms (stability, independence, family employment) with large firms (growth, market share, synergies).
- **Differences between small & large firms:** Details specific differences in formality, time perspective, management structure, influence of needs, information reliance, and resource management.
- **Management & skills:** Explains the role of management in strategy formulation, emphasizing the difference in managerial skills and expertise between large and small firms.
- **Resources:** Discusses the impact of financial resource limitations on decision-making and strategic options for small firms, contrasting them with the abundant resources of large firms.
- **Porter's generic strategies:** Introduces Porter's three generic strategies (low cost, differentiation, focus) and their suitability for different firm sizes.
- **Conclusion:** Summarizes the key findings about the differences in strategy formulation between small and large firms, emphasizing the importance of formal strategic planning for small companies to overcome resource and managerial limitations.
Keywords
The main focus of this report is on the strategy formulation process in both large and small firms. The report delves into key factors that influence strategic decision-making, including the availability of resources, managerial skills, and the impact of firm size on the formalization and effectiveness of strategy. It also examines the role of Porter's generic strategies in optimizing business performance for firms of varying sizes. Key terms and concepts include: strategy formulation, small firms, large firms, resource constraints, managerial skills, Porter's generic strategies, competitive advantage, and business performance.
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- Diplom Betriebswirtin (FH) Diana Ruthenberg (Author), 2004, The difference of strategy formulation in small and large firms, Munich, GRIN Verlag, https://www.grin.com/document/134629
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