Enterprise in recession: The role and context of strategy

Abstract

The converging forces of globalization, technology, deregulation, economic restructuring and the present threat of recession in many parts of the small business sector, make strategy and strategic thinking an essential prerequisite if business survival is to remain on the agenda for many entrepreneurs and owner-managers. This paper examines the actions and responses of a sample of small firms in the Midlands region of the UK, currently facing adverse trading conditions or the threat of recession. In an earlier study conducted by one of the authors (Beaver, 1997) these firms described themselves as ‘practitioners of strategic management’. Whilst there is no guarantee of immunity for any business from the effects of deteriorating economic conditions, it can be expected that those firms that engage in strategic management, better understand and respond to the changing nature of industry positioning and competitive advantage, and make timely and appropriate adjustments to preserve or enhance their market position (Bracker, Keats and Pearson, 1988; Jennings and Beaver, 1997). Put another way, it is generally well accepted that suboptimal performance and potential business failure are closely correlated with a lack of attention to business strategy (Birley and Westhead, 1990; Wheelen and Hunger, 1992 and 1998; Jennings and Beaver, 1997). It follows therefore, that those firms facing tough trading conditions should fashion their competitive responses in accordance not only with any contingency plans that may have been developed, but should act in a positive and timely manner to underpin their chosen strategic position. Given that many small businesses experience a measure of disadvantage (Beaver and Harrison, 1994; Jennings and Beaver, 1996 and 1997), due not only to the size of the enterprise, but also to their resource-base and operating context, the need to embrace strategic management thinking and actions, especially in a recessionary environment, has never been more necessary.

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