1 The Impact of Strategic Management on startup companies performance
Abdallah.M.Alshanty
Abstract
Strategic management has been helped to find effective solutions, through the establish a mature strategic concept, starts from strategic planningprocess, which is important in start-up phase (Mazzaro, 2004). This research is concentrated in the extent of apply and practice of strategic management in startups companies in Turkish Republic of Northern Cyprus (TRNC), and the impact of these applied on the efficiency and effectiveness of performance in this sector. This paper is also aims to determine the apply and practice of strategic management in these companies, and identify the impact of these process on efficient and effective of performance of this sector. This research examines several hypotheses regarding to the impact of strategic management on startups companies performance: 1) Top managers of startup companies have a knowledge about the concepts and methods of strategic management.2) there is a statistical significant relationship between knowledge of top managers about concepts and methods of strategic management and apply and practice in their companies.3) There is a statistical significant relationship between knowledge of startup managers in environmental analysis and the application and practice of strategic management.4)There is a statistical significant impact of strategic management on efficiency and effectiveness of performance in startup companies in Turkish Republic of Northern Cyprus.
Keywords: Strategic management, startup companies, Performance, Organizational performance, Turkish Republic of Northern Cyprus,
Introduction
The managers of startup companies have a short considering in strategic terms, that reflecting from the lack in a clear long term vision for their companies, palaces matter came from managers of these companies in concern about how they can face the challenges that may hinder the growth of company, which could lose in their minds formulate a strategy for the future (Sandberg,2001), so the strategic vision in such this case is important to ensure the continuity for startup companies, this matter isn't for start-up phase only, but should be focus on developing a strategies to ensure the continuity of business for these companies for a long term.Building a strong and distinct strategic perspective, requires performance development in a business environment, that characterized by constant change, and strong competition on resources. To achieving this goal force startup companies to have a deep strategic vision and a clear mission (Aljuboori, 2005), through it, startup companies can looking to the to determine what could be in long term in technological changes and competitive, economic, political, social,that facing companies under the globalization and what surroundings from the opportunities and risks, but the main challenge, it's management challenge, that face the top level of management in startup companies as a strategic leadership should have a high degree in awareness and understanding in strategic management (Nelson,1997; Delmar Shane,2003).Startups companies face several challenges, foremost among administer challenge facing managers of those companies. and situation is further complicated under business environment is constantly changing, and influenced by technological development and technical accelerating intense competition on resources, which makes it imperative for managers of these companies to pursue an advanced management style to be able to deal with different variables in efficiently and effectively ways.
The concept of strategic management present a model of current management and future for businesses and startup companies ,that enable them to determine their capabilities and potential competitive, and manage these capabilities in order to ensure the success in achieving its goals within the considerations of changing in external environment. As It is known, that most of literature related to theory and practice of strategic management concepts were the result from management efforts in developing countries, andthe application domain, with some of information ,that was coming from Japan and Near East (Gibson& Cassar, 2002).The concept of strategic management in developing countries and how to practicein those countries, it has been overlookedin management thinking,thoughta lack in adequate studies and information about it, which raises the question about theapplication of strategic management in developing countries.Some management researchers believe that practices ofstrategic management are in weak limits in business organizations in developing countries, with the exception of those sophisticated organizations.
Turkish Republic of Northern Cyprus (TRNC) as one of developing countries, there are few studies on strategicmanagement, but it isn't enough and didn't cover allsubject aspects, so this research presents a fertile ground for many research and future studies on strategic management and startup companies, so this research is find out the impact of the application and practice of strategic management on efficiency and effectiveness of performance in startup companies, to determine the actual application of Strategic management process and know the advantages benefits from that accrued from the results of the application and practice of strategic management in this important sector of economy.
Research Problem
Startup companies in the north of Cyprus, facing many challenges, foremost among management challenge that facing managers of those companies, and situation is further complicated in a business environment, that characterized by constant change, development of technology and a high competition on the resources, which makes it imperative for top managers of these companies , adopting advanced management style, to deal with environmental and economic variables in efficiently and effectively ways.The research problem is concentrated in the extent of apply and practice of strategic management in startups companies in Turkish Republic of Northern Cyprus (TRNC), and the impact these applied on the efficiency and effectiveness of performance in this sector.
Research aims& objectives
This research aims to achieve the following objectives:
1-Identify the extent of application and practice of strategic management in startup companies in TRNC.
2-Identify the performance of emerging companies in Cyprus by evaluating the senior management of these companies and their familiarity with the concepts and methods of strategic management.
3-Evaluate the performance of startup companies in TRNCby the senior management of these companies and their familiarity with the concepts and methods of strategic management.
4-Determine the impact of strategic management on startup companies performance in TRNC.
Research Questionshypotheses
The research seeks to answer on a series of questions related to the core of problemas follows:
1-Do top managers of startup companies have knowledge about concepts and methods of strategic management?
Top managers of startup companies have knowledge about the concepts and methods of strategic management.
2-Do the knowledge of startup companiesmanagers about concepts and methods of strategic management effect on the application and practice of strategic management?
There is a statistical significant relationship between knowledge of top managers about concepts and methods of strategic management and apply and practice in their companies.
3-Does/Do top managers of startup companies to identify the strengths and weaknesses of performance?
There is a statistical significant relationship between knowledge of startup managers in environmental analysis and applicationand practice of strategic management.
4-What is the impact of strategic management on startup companies performance in (TRNC)?
There is a statistical significant impact of strategicmanagement on efficiency and effectiveness of performance in startup companies of Turkish Republic of Northern Cyprus.
Research Methods
Research design
A case study approach used as an appropriate for this research, and this method it provides accurate and detailed data about the research subject, so its suitability for Strategic researches the research was used analysis method through statistical program (SPSS) for t analysis questionnaires and test hypotheses.
Research method
Quantitative method was used depend on the nature of the research, and direct Questionnaires was distributed on the research sample. The population represents all startup companies in TRNC, which there reached (12) startup companies, distributors on the three regions ( Kyrina, Famagusta, and Lafkosha), the researcher has been taking a random sample of three start-up companies (n=3).
Data collection process
The researcher collected data through (field study), which was obtained by distributing questionnaires to a sample study, which consisted top managers and administrative staff of three start-up companies in different sectors (general trade, real estate and technology).
Literature Review
1-Strategic management, concept and objectives
Strategic management refers to a series of decisions and actions that determine long performance for companies. Also as a group of decisions and actions for formulate and implement to strategies that designed to accomplish the objectives of the companies (HarmsSchwarz, 2001; Liao&Gartner, 2008).It can be defined as a process senior management determinesthe performance and direction of organization in the long term, through careful prepare and proper implementation and continuous evaluation of the strategy.Strategic Management also defined as anadministrative decisions and practices that determine the long-term performance for company,includes strategic decision making process (Meyer Neck& Meek, 2002).Strategic management track and holistic approach in manage the organization, and it's differs in the operational management, which that focus on a particular part of the company, for example, marketing.
This confirms that strategic management dealing with the company on basicconcept that as a single unit, in addition, strategic Management adopts a long-term vision and deal with overall goals (long-term) and these goals in factarepresentoutcome for main goals for each section of company departments. However, The strategic management to take factors that influence on internal and external environment of the company and how to adapt to this changed factors, strategic decision linked with the company activities , to keep pace the changes in the environment and enable the company to achieve the strategic goals (Miller& Ireland,2005).
1.1Strategic management objectives
Strategic Management seeks to achieve superiority over competitors and reduce their impact on companymarket share, which increase and build a strong competitive advantage for thecompany, and increase the value of the company from perspective of customers, shareholders and the community(RamachandranSud, 2006).Most researchers in strategic management field focused on create the organization from internal environment , through adjustments in organizational structure, procedures, rules and regulations , which is reflected on increases their ability to deal with external environment in efficiently and effectively., but take an important decisions affecting lead to increase company in marketshare and strengthen its competitive advantages , and increase customer satisfaction. So we can say that strategic management aimed to determine the priorities and the relative importance in developing long-term goals and annual objectives, policies and programs with and conduct allocation resource processes according to these priorities (Kraus,2009).Furrer and Thomas (2007)Explained that increase effectiveness and efficiency of strategic decision-making, need coordination and oversight all functional units in the company, and detection ,correction of deviations that may occur, and work on the reduced the recurrence and treatment before it happens , which are comes from a clear criteria , that presented in strategic objectives. A strategic management help to find objectively measure to judging on managers efficiency and determine the extent its success in achieving written goals, so manager who fail to achieve company goals , is a failed manager , Whatever the size claims in achievements and development the company.
Strategic management also contributes in collection data about the strengths, weaknesses, opportunities and threats, and analysis the results in detecting problems before they occur, rather than being company decisions are as a reaction to competitors decisions and strategies (i.e. other companies), and find system to strategicmanagement,that uses scientific methods to solve problems, even employees feel theimportance of scientific method to solve problems (DAVID, 2005; Porter Kramer, 2006).
2-Startup companies performance, and formulate strategies
A startup companies are a companies set up from initiatives, to turn from these concept into a small project, and then into company concept, usually start a small and work on development and growth, these companies offers a distinctive product or service. The questions about t strategies of startup companies considered as an appropriateintroductionto strategic management in entrepreneurship field, so that formulatethe concept and components of importance strategic management in business field (Smith, 2005).Most managers of startup companies concernis work in a highly competitive environment, which makethem to improve the performance of their companies and identify weaknesses, and clarify the objectives and strategies, which is helping to increase the capability ofmanagement operations, The conditions that surround startup company change very quickly , so strategic management provide a clear objectives and trends to future of company, also helps in managed the company in efficiently and effectively, thus preserving the company and ensure continuity in the market. Practice proved that startup companies were apply strategic management effect on the performance and increase their ability to grow, while a few theories in startup companies performance, because analysts performance forced on large companies more than a small companies (Mgt, 2009). The performance of startup companies came from the outputs or objectives that the company seek to, which is the final result of activity or effort, in addition is a practical behavior leads to achieve a planned goals which is a degree of achievement in efficiently and effectively. Therefore measure performance of startup companies is problematic, as the performance measurement depends on the organizational unit that will be under evaluated,and the goals that must be accomplished, the goals was previously identified in formulate strategies phase, should be used in the measurement of startup company performance when it turned into actual implementation(Prajogo& Brown,2006).
2.1 Startup companies, formulate strategies
Strategic formulation passing in three successive phases make the (Process) with five essential characteristics. The first is: cannot start from phase before finish the previous phase, second: The quality of each stage depends on the quality of the previous phase, Third: The phases of strategic management are overlapping and integrated, so any change that happens in any of them effects on other phases, whether previous or subsequent change is in the mission affected on change the concept of the internal environment and environment; fourth: strategic management is continually process. So process of evaluate and monitoring the changes that happen in internal and external environment are periodic intervals; fifth: should be considered strategic management as a necessary process that requires a flow information that by review the process and make corrective steps in any components of strategic management (Thonpson& Strickland,1998).
Figure (1), the main phases of strategic management.
At design and collect data phase, it also called strategic planning or formulate phase, the vision and mission of company develop and evaluate analysis of internal and external environment and identify the strategic gap, andformulate long-term goals with choose the best strategies and functionalstrategiesand unitsstrategies (Rebound, 2008).The implementation phase aimed to implement the strategies include formulate a short-term goals and make a policy and allocation human resources, in addition that requiredcreatethe company from inside, as may be that also required changes in organizational structure and the redistribute the powers and responsibilities and the develop a different systems, as information systems and determine the procedures; and change the concept of activities to identify workforce characteristics, with distribute it , to helpin implement the strategies (Risseeuw, 1994).All strategies are subject to evaluation process to extent how it appropriated with the changes that occur in the internal and external environment, this phase include evaluate the accuracy of forecasts,that plans contained with compared actual results with the expected goals from apply strategic and discovering the deviations that may be in the strategic design phase or in implementation phase , the company needs to collected data from internal environment and external environment in order, to judge on the success of strategies in achieving the goals ,that followed by taking corrective steps in strategies or to change some systems and structures in the work, which was reason for fail in achieving the goals , that the strategies was work on (Scholz,1991).
2.2 startup companies in Turkish Republic of Northern Cyprus (TRNC)
Most startup companies in Turkish Republic of Northern Cyprus (TRNC) longer confined in a narrow range, but they play an important role in increasing local economy, according to the most results of literature, that startup companies increased since 1999, in this context it important mentioned that 55% of companies in (TRNC) have been emerging in their start-up phase or are small projects, where economic growth in (TRNC) helped to promote startupsidea, and encourage innovations , which necessitated to work on the research, will help these companies in formulate strategies in market , that candidate to be a an expand market in the future, which may be required of these companies to some stage to stiff in a high competition ,which need to strategic management, however, there is a lack in strategic management studies which study the impact of strategic management on startup companies performance , especially in Turkish Republic of northern Cyprus(Ellinas& Kountouris,2004).
Data Analysis
Distribution process analysis
Questionnaire was distributed to three startup companies in the Turkish Republic of Northern Cyprus (TRNC), as Table (1) show below:
Table (1), research sample and distribute process.
Startup companies / Distributed forms / Returned forms / Response rateJEPA Company / 163 / 126 / 77.3%
Dovec Brothers / 25 / 23 / 92%
Liner company / 36 / 36 / 100%
Total / 224 / 185 / 82.6%
Resource: prepared by the researcher depend on a filed study data, 2016.
As table (1) shows, that (163) forms were distributed on respondents in JEPA companyand retrieved (126) forms are valid for analysis with response rate reached (77%) from the respondents. Also(25) forms distributed on respondents in Dovec Brothers company, which (23) forms were retrieved with responserate (92%) from the respondents. It was also (36) forms distributed on respondents in Liner with response rate 100% from the respondents.The total of forms that have been distributed to the three companies reached (224) forms and retrieved(185) forms from them with responserate has reached (82.6%) from the respondents this is an excellent rate.