Strategic management in developing countries: A case study on Iran's SMEs-after sanctions lift

That "Strategic Management and Planning" plays a crucial role in development of large companies is an undeniable fact; however, not many work studied feasibility of strategic management utilization on development of Small and medium sized enterprises (SMEs) which are considered as one of the most critical sectors of each economy. Where studies are done in this area, are mostly conducted in the advanced economies and a few studies have focused on the developing economies with presence of limitations in scope and methodology. Strategic management practice in Iran has less than two decades and managers got familiar with the term "strategy" dusting these years. However, such practices were not based on actual needs of enterprises so that many efforts in this field faced failure or not completely implemented. Prior to assess the role of the strategic management in SMEs performance, we need to get insight of their situation, tendency, requirements for practicing strategic management and one step over, brightly access their characteristic to propose appropriate tools and materials to proceed. This study briefly reviews the strategic management concept, then move to SMEs definition and economical importance, their situation and problems in developing countries focused in Iran, and finally employing strategic management in SMEs and its effect on their performance. The main aim of the study is to uncover the impact of firm characteristics, perceived market factors and strategic choices on operational and general performance while discovering the characteristics, tools and tendency of strategic planning activities, and assessing the organizational significance of strategic management in SMEs performance. On the other hand, obstacles in the practice, and does employing strategic management affects firm performance during and after sanctions lift. Field study using a standardized questionnaire was chosen as the survey method. The sampling frame consists of randomly selected 60 firms in Tabriz city of Iran. The findings indicated that SMEs in Iran do strategic planning, however, mostly unstructured. Those who do not employee strategic plan, suffer from lack of knowledge, and ponder over uncertainty. The firms in general have been targeted less than a year period as their strategic planning period, still even larger firms' planning horizon is about three years, not so long. Strategic decision making in Iran also is considered centralized and the owner has the most significant role in making strategic decisions, followed by board of directors. About the oral sources used in strategic planning, still customer stands high, and in written sources, MIS report prepared within the firm has the highest usage. Finally, increasing total sales, reducing total cost, and increasing total factors productivity are the top three goals set by studied firms as a strategic goal. Effects of firm characteristics, perceived market factors and strategic choices on general and operational performance, low cost strategy positively impacted delivery and quality performance of the firms during the sanctions period. Planning flexibility had positive impact on firm delivery and flexibility performances both during the sanctions as well as after sanctions lift. However, with lower significance it impacted the quality performance of the firm during the sanctions, and cost efficiency after the sanctions lift. Planning time period affected financial performance of the firm both in sanction time and after its lift. Price competition negatively affected market and production performance after sanctions relief. Low cost strategy positively affected the production performance during the sanctions period. Differentiation strategy affected market performance significantly. The last, planning flexibility affected production performance positively during the sanctions. In sum, strategic planning and environmental scanning has a positive role in firm's performance in Iran, during the sanctions and after sanctions lift. This practice can be a good tool for firms in developing countries like Iran, mostly in tough circumstance such as sanctions, unstable political situations etc.