Original Research

Investigating small, medium and micro-scale enterprises strategic planning techniques in Johannesburg central business district post-COVID-19 lockdown

Vukile M. Mkhonza, Portia P. Sifolo

Received: 21 Oct. 2021; Accepted: 21 Feb. 2022; Published: 29 Apr. 2022

Copyright: © 2022. The Author(s). Licensee: AOSIS.
This is an Open Access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

Background: Strategic planning assists organisations to capitalise on opportunities that arise and to minimise the threats posed by unstable market environments. Apart from the track record of poor performance amongst some small, medium and micro-scale enterprises (SMMEs) in South Africa, COVID-19 pandemic severely affected more than 55 000 South African SMMEs in March 2020 after the lockdown imposed by the government.

Aim: This research study sought to investigate strategic planning techniques or tools implemented by SMMEs post-COVID-19 lockdown in Johannesburg Central Business District (CBD).

Setting: The study was conducted at small, medium and micro-enterprises in Johannesburg Central Business District.

Methods: A quantitative study was conducted by using an online E-Survey Hero which was distributed to the sample of 169 respondents who were SMME owners and managers in Johannesburg CBD.

Results: The results revealed that most SMMEs owners had knowledge on the strategic planning techniques such as the strengths, weaknesses, opportunities and threats (SWOT) analysis, the political, economic, social and technological (PEST) analysis, financial analysis of the competitors and financial analysis of their own business.

Conclusion: Small, medium and micro-scale enterprises should take advantage of technology and invest in key skills needed for more effective strategic planning.

Keywords: strategic planning techniques; SMME performance; COVID-19 lockdown, business performance; CBD.

Introduction

Strategic planning is ‘the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organisation to achieve its objectives’ (David & David 2017:33). It is also referred to as a process that creates consistency between an establishment’s goals, possessions and its shifting prospects (Grant 2014:55), regardless of the geographic location. Hence, small, medium and micro-enterprises (SMMEs) play a critical role to the economy of the country. Therefore, enhancing SMMEs development remains at the top of the agenda for the South African government and the entrepreneurs. Shaping entrepreneurship and monitoring development thereof is critical in South African economic landscape, especially because strategic planning amongst SMMEs is a rare phenomenon (Wang, Walker & Redmond 2009:4).

The year 2020, presented challenges, not only to the economy of the country but several countries were affected, so as the entrepreneurs. According to the Global Entrepreneurship Monitor (2021:26), there was minimal contribution by entrepreneurs and SMMEs to gross domestic product (GDP) growth in South Africa, which already saw downgraded forecasts for 2020 of less than 1.0%. Moreover, South Africa continues to face economic development challenges. The disruptive context we live in demands that the entrepreneurs and the SMMEs adopt agile adaptive strategies for the success and prosperity of their businesses. The aim of the study is to investigate strategic planning techniques or tools implemented by SMMEs post-COVID-19 lockdown in Johannesburg Central Business District (CBD) with an intention to identify the adaptive strategies adopted post a long-term crises.

Literature review

Importance of strategic planning in an organisation

Strategic planning is critical when it comes to the performance of any organisation. Strategic planning creates a viable link between a business’s mission, vision, goals, objectives, strategic choices and resources (Sandada, Pooe & Dhurup 2014:661). It helps the managers to identify the cause of the problems and devise solutions to the problems, source resources of the business, understand the operating environment and define the purpose of the business (Anyieni 2013:4; Nkulu 2012:14). It helps the organisation to prioritise its use of resources to fit its goals in a bid to guide the direction and development over a period (Grant 2014:56). However, there is overwhelming evidence from the literature indicating that formalisation of strategic planning techniques amongst SMMEs is a rare phenomenon (HMC 2012; Wang et al. 2009:4). Smit, Botha and Vrba (2016:140) concurred that there are many barriers to strategic planning such as reluctance to planning, resistance to change, expenses and lack of confidence. Zou et al. (2021) affirmed that some SMMEs do not engage in formal strategic planning because they have no desire for their businesses to grow to the next level. Murimbika (2011:11) also echoed these views and argued that there is a dearth of information about the formalisation of strategic planning techniques or tools of SMMEs in South Africa. A lot of studies have been conducted on factors that contribute to the survival of SMMEs such as financing and neglecting the techniques that helps the SMMEs to grow and gain a competitive advantage. Although Nkulu (2012) provided a very informative study about strategic planning of SMMEs, the research was found lacking over the strategic planning techniques implemented by SMMEs as it focused on the relationship between entrepreneurship and SMMEs.

In a bid to try to breach the research gap, Sandada et al. (2014:659) conducted research on the techniques that are employed by SMMEs and found that strategic planning makes significant contributions to the business performance of SMEs, followed by strategy implementation incentives and evaluation and control. Alves et al. (2020) emphasised that little is known about how small businesses cope during and post the long-term crises such as COVID-19 pandemic. One of the coping strategies adopted by SMEs in Macao included the flexible human resource strategies such as product diversification, exploration of markets and increased learning (Alves et al. 2020). In a quest to investigate the strategic planning techniques or tools implemented by SMMEs post-COVID-19 lockdown in Johannesburg CBD, general strategies adopted by small businesses during the crises are critical to discuss.

Strategic planning techniques or tools implemented by small businesses during crises

The literature revealed that there were studies conducted prior to the COVID-19 pandemic that focused mainly on small businesses and dealing with crisis (Cordeiro 2013; Vargo & Seville 2011). According to Cordeiro (2013:22), only large organisations use a formal strategic planning process, small business owners and managers often plan poorly, even though the benefits from effective strategic planning are evident to most small businesses. Although the generic strategic planning techniques are the focus in this study, there is limited literature capturing the techniques used by the SMMEs post-COVID-19 lockdown in South Africa. The strategic approach adapted by a businesses during and post-COVID-19 crises could be disruptive or positive. John-Eke and Eke (2020:36) purported that for any organisation to succeed during and post any crises with minimal loss, training employees to manage crises within the shortest period of time to adapt to the changing circumstances is critical. Alves et al. (2020:2) concurred that deploying various responses associated with resilience to turn crisis-induced adversity into opportunity for small businesses is important, even though small businesses may consider long-term strategies focusing on financial and non-financial factors. Almudallal, Ashary and Muktar (2016) found that one of the key factors in a long-term survival is the ability of the managers or leaders of the businesses to think strategically and develop strategies in a practical approach to prevent crises or minimising the negative impact. Vargo and Seville (2011) commented that aligning capabilities and resources with threats and opportunities remain a critical element in monitoring the business environment. Hence, developing diagnostic tools to assist organisations in applying resilience concepts to the continuous improvement of the organisation is critical to support collaboration within sectors of the economy (Vargo & Seville 2011:5632). Perhaps looking at the effect of COVID-19 crises on businesses could be beneficial.

Effects of COVID-19 on businesses in South Africa

The Department of Small Businesses and Development (DSBD) (2019:14) in South Africa reported that the SMMEs were already facing challenges in access to markets with limited abilities to participate in upstream and downstream activities in large commercial value chains. COVID-19 just worsened this situation. One may argue that COVID-19 affected SMMEs to better position themselves from the African Continental Free Trade Area (AfCFTA). The COVID-19 pandemic created profound disruptions to the global economy. Mene (2020:13) reported that because of a lack of safety nets 21% of SMMEs were not able to reopen. In addition to this, Mene (2020:127) reported that the most affected areas in South Africa in the supply chain export loss are precious metals, ferrous metals, chemicals and motor vehicles parts. These sectors altogether, lost approximately R588 million in exports with a breakdown of export loss to China (R117 m), to the European Union (R306 m) and to the United States of America (R164 m). On the same note, Mene (2020:127) reported that in terms of import loss, the most affected areas are the motor and vehicle industry, machinery, chemicals, plastics and rubber, precious metals with their combined loss estimated at R980 m. The breakdown for import loss included R351 m from China, R532 m from the EU and R98 m from the United States of America.

Considering the SMMEs in export segments, it is very limited especially in exports of metals, but their combined presence was projected to be 72%. The same applies to the import segment where the presence was 72% with machinery, motor vehicles and parts and chemicals having the lowest figures. In support of this, Kunene (2020) argued that COVID-19 affected progress of many SMMEs with sectors such as alcoholic beverages and tobacco, accommodation and metals recording huge losses. In addition, Mene (2020:4) posited that travel and tourism were amongst the most affected sectors by the COVID-19 lockdown.

In response to the crisis, the South African government (from 27 March 2020) placed the country under a national lockdown to reduce the spread of the virus, resulting in the closure of many businesses (Kunene 2020:3). This affected many businesses including SMMEs as the lockdown resulted in lack of revenue, travel bans, training/bookings/projects and meetings were cancelled, projects were put on hold, employees had to work from home, events or projects were postponed and some people were exposed to COVID-19. In response to this, GEN (2020:8) stated that 92% of small businesses had been affected by COVID-19 in South Africa. GEN (2020:2) made some estimates that over 55 000 small businesses will not survive the pandemic and at least 42 350 workers in the SMMEs will lose their jobs. In support of this, Kunene (2020:1) highlighted that the government responded late to the challenges of SMMEs and for that reason many of the SMMEs will not survive the pandemic. Nearly 1000 businesses closed in South Africa in the first half of 2021 (Writer 2021). The following section highlights some of the effects of the hard lockdown in South Africa on SMMEs.

Effect of COVID-19 on SMMEs business processes

The outbreak of COVID-19 led to unprecedented restrictions to mobility (Mene 2020:22). Travelling through the highways, railroads and flights in the country were banned and the people were asked to stay at home as much as possible. There was total closure of borders, flight suspension to and from South Africa, and entry or exits bans that restricted travelling due to limited face-to-face interaction or services. Services such as cleaning, training, tutoring and installations, meeting the clients were not possible (GEN 2020:10). This was an indication that strategic planning techniques or tools to deal with such crises were not catered for in the decision making. Mobility restrictions, tight budgets and few resources hampered SMMEs to quickly adapt to change (Mene 2020:25). These restrictions led many of the SMMEs to work from home. However, not all SMMEs could work virtually as it is costly and sometimes impossible (because of the limited resources available).

The ban of public gatherings as a result of restricted movements in South Africa affected the Meetings Incentives Conferences and Exhibitions (MICE) in the events industry led to travel cancellations that fell by 35% in 2020 because of the loss of revenue from international business arrivals. However, this created the introduction of online meetings which minimised the revenues from the MICE sector. As a result of the contract and meeting cancellations, some of the investors pulled out of the deals whilst other businesses lost their contracts (GEN 2020:14). Some entrepreneurs had no income, families were affected and businesses were struggling (Kunene 2020:2). There were calls that businesses needed to practice remote working (GEN 2020:15), such practice affected human resources in general and this affected most of the communication patterns of SMMEs and the ability to create employment (Kunene 2020:6). The GEN (2020:9) reported that some entrepreneurs could not meet their clients’ requirement such as delivering orders. Mass gatherings such as sports were postponed until further notice. Photography was also affected as many of the events that were lined up in April, May and June were cancelled (GEN 2020:18). In addition to this, some of these business activities could not be conducted online such as wedding video shooting. Special projects such as Animal Rescue Dogs, which specialise in entertaining crowds with animals were negatively affected as there were no public gatherings.

Lack of revenue

Bouey (2020:13) stated that SMMEs were financially more fragile in 2020 and are normally cash-strapped when market demand is down. The GEN (2020:17) warned that 71% of the business will run out of cash because of shortage of income caused by the preventative measures put in place to curb the pandemic. The sources of cash of many SMMEs are loans, reserves and family amongst others, the continued lockdown measures led to the losses of jobs because of the limited support of the business (Kunene 2020:3). The DSBD (2020:13) highlighted that many small businesses were unable to increase their revenue and maintain their profitability because of the COVID-19 lockdown. In a survey of 233 SMMEs conducted in Gauteng province by Masadi (2020:3), 95% of the SMMEs stated that they were not able to pay their workers during the hard lockdown period. Masadi (2020:3) also observed that 93% of the SMMEs did not have other sources of income. This indicates that many of the factors were affected by the pandemic such as rentals, wages and salaries, investors, debts and assets amongst others. Fabeil, Pazim and Langgat (2020:838) confirm that many of the SMMEs were not in a business where they could use online modes as their selling platforms. This reveals limited online participation by the SMMEs. Magwentshu, Kalidaa and Rajagopaul (2020:2) argued that SMMEs in South Africa are not very structured as they rely substantially on their clients to pay their invoices on time, thus COVID-19 disruptions affected their growth, revenue and profitability. Masadi (2020:5) found that of the 233 SMMEs, 87% reported that they were not able to conduct business from home and 63% mentioned that they tried to use internet platforms such as Facebook but the responses were very low for survival. Bouey (2020:13) concurred that COVID-19 affected the global market trends and business growth. These views are in line with Mene (2020:3) who reported that COVID-19 came when the trade was already in turmoil with the world declining in all quarters of 2019 that has been fuelled by trade disputes between United States of America and China. COVID-19 worsened the growth and profitability of businesses worldwide. Moreover, the state of the economy in the country was not good. High unemployment and the degrading of the South African state to junk status affected the economy of the country. Moreover, the lack of employment and retirement led to many owners of small business to establish SMMEs and some of the entrepreneurs lacked the required skills in their businesses (Makwara 2019:8).

Inability to access relief funds

The government of South Africa tried to provide the rescue schemes of the SMMEs, namely the Debt Relief Finance Scheme, Resilience Facility and COVID-19 Agricultural Disaster Support Fund amongst several others. Many of the small businesses did not perform as expected before COVID-19 hit in South Africa. According to Kunene (2020:5), poor performance was caused by lack of infrastructure and lack of maturity required to make a formidable business. However, because of many requirements, Masadi (2020:9) reported that some SMMEs were not able to access the funds.

Research methodology

This research study adopted a positivist approach to find out the strategic planning techniques or tools implemented by some SMMEs in Johannesburg CBD, which is based in Gauteng. Although, there are 2.4 million SMMEs in South Africa (3Q2020), Gauteng is home to 783 410 (33.1%) SMMEs (Statistics South Africa 2020). Johannesburg CBD is the largest single metropolitan contributor to the national economic product with a GDP of 1.8% over the past 10 years.

Descriptive study was chosen to establish an accurate profile of the SMMEs in Johannesburg CBD as they occur in the social setting. The case study strategy was regarded as the most appropriate research strategy as it allows for a deeper and more contextual exploration. The target population included SMME owners and management in Johannesburg CBD made up of 300 SMMEs (SEDA 2019).

Stratified random sampling

Stratified random sampling approach is used in cases where the population does not have similar characteristics such that it can be grouped into specific categories or ‘stratum’ (Van Zyl 2014:96). The stratum was from different industries in which the SMMEs are operating (Figure 2) whereby 169 SMMEs owners and managers were sampled (based on a confidence level of 95% and an alpha level of 5%).

FIGURE 1: Small, medium and micro-scale enterprises (SMMEs) in South Africa and their contribution to the gross domestic product by province.

FIGURE 2: Composition of small, medium and micro-scale enterprise’s sampled.

The self-administered online questionnaire was regarded as the most appropriate research instrument to administer whilst observing COVID-19 rules and regulation. The focus was on the strategic planning techniques or tools implemented by SMMEs post-COVID-19 hard lockdown period in Johannesburg CBD, South Africa. The E-Survey Hero internet-based programme was used to distribute the link that was emailed to the respondents. A pop-up message was used to remind respondents about the completion of the questionnaire. The responses were captured online and results were presented in Excel sheets for cleaning and verification. Ten questionnaires were piloted 7 days before the actual study amongst 10 SMMEs in Johannesburg CBD to test validity and accuracy of the questionnaire.

Reliability of the research study

The Cronbach’s alpha was calculated on the three sections of the questionnaire to measure internal consistency of the questionnaire. The Cronbach’s alpha value on Strategic Planning Techniques or Tools used by SMMEs designated an Alpha value of 0.81; importance of strategic planning shows an Alpha value of 0.87 and the effects of COVID-19 pandemic designated an Alpha value of 0.89. Therefore, the questionnaire constructs had a Cronbach’s alpha above 0.80, which is well above the minimum acceptable reliability of 0.70. This indicates all the variables are acceptable for investigation purposes.

Data analysis

Data were analysed by using SPSS version 25 wherein the inferential statistics such as ANOVA and Chi-square were completed to measure relationships between variables (Selvamuthu & Das 2018:24). Aberson (2019:69) highlighted that the aim of conducting an ANOVA is to find out which of the relationships between the different variables were most significant. Chi-Square tests were carried out to find out the strength of the relationships between the variables.

Limitation of the study

The limitation of the study was that the research is based on the findings that were obtained using the online questionnaires. In addition to this, the questionnaire was distributed online and thus restricting access to those with internet access. In this regard, the results are only based on the responses from those who have access to the internet. This research was conducted post the hard lockdown period (between March and April 2020). It was important to make sure that the respondents are not harmed during research (Van Zyl 2014:85).

Ethical considerations

An informed consent was written using simple English. The respondents were informed about their contribution to the research study and were assured that taking part in the research was voluntary, anonymous and the research will not bring them any harm or compromise. They had the right and privilege to decline to participate. Whilst the emails of all targeted SMMEs were known, the completion of the questionnaire itself did not include submission of the email address, meaning that no individual response could be specifically linked to any participant. In addition to this, the researcher maintained anonymity by using a digital password where the responses were stored.

Presentation of results

This study sought to investigate the strategic planning techniques or tools implemented by SMMEs post-COVID-19 lockdown in Johannesburg CBD, Gauteng. The target population consisted of 300 SMMEs found in the Johannesburg CBD, however, only 173 invitations were sent out by mail of which four questionnaires were unusable. This indicates that the response rate was 97.68%, which is an acceptable response. Statistical tests such as ANOVA, Spearman’s rho and Chi-square were performed to determine the relationships and differences of variables. The mean, standard deviation, skewness and kurtosis of the results on strategic planning techniques will be presented.

Demographic information

The gender composition of the respondents show that of the 169 respondents, 33% of them were male and 114 (67%) were female. The high response rate of males is not a common factor in the businesses of South Africa and these results indicates that females are actively taking part in business. These results also indicate that SMMEs present more self-employment for individuals with limited opportunities such as females and young workers (Sandada et al. 2014:662).

Age grouping of respondents

The respondents were asked to indicate their age group. The age groups of the respondents are presented in Figure 3.

FIGURE 3: Age grouping of the respondents.

Of the 169 respondents, 54% belonged to 20–29 years age group, 23% belonged to 30–39 years age group, 20% belonged to the 40–49 years age group, whilst 1% belonged to the 50–59 years age group, the 60 years and above age group and those below the age of 20. Many of the respondents (54%) were in the 20–29 years age group. These results show that SMMEs in Johannesburg CBD are dominated by economically active people. This is in line with GEN (2018) that SMMEs helps in the country to solve the employment crisis and SMMEs are a means of survival for many young people in South Africa.

Highest academic qualifications of respondents

The respondents were asked to indicate their highest academic qualifications. These results are presented in Figure 4.

FIGURE 4: Highest education qualifications of respondents.

Figure 4 shows that 83% of the total respondents that own SMMEs in Johannesburg CBD had either a matric certificate or a diploma and undergraduate degrees. These results are in line with Bhorat et al. (2018:19) who reported that many SMME owners in South Africa are educated with a few of them just having a post-secondary education.

Total number of employees

The respondents were asked to indicate how many employees they have in their businesses. These results are presented in Figure 5, which indicates that 56% of the respondents have 1–9 employees, 18% of the respondents have 10–19 employees, 9% of the respondents have 20–29 employees, 8% of the respondents have 30–39 employees, 4% of the respondents have 40–49 employees and 5% have 50 and above employees.

FIGURE 5: Total number of employees in the business.

Most of the respondents who participated in the study have 1–9 employees. This indicates that most of the SMMEs in the Johannesburg CBD fall in the category of small businesses. Small business employs less than 50 employees (ILDP 2014:10).

Total number of years of operation

The respondents were asked to indicate how long they have been operating in the business. The results are illustrated in Figure 6.

FIGURE 6: Total number of years of operation.

FIGURE 7: Designation in the organization.

Figure 6 shows that 25% of the respondents have been in the business for less than a year, 31% of the respondents indicated that they have been operating for 2–5 years, 18% of the respondents indicated that they have been in the business for 6–10 years, 8% of the respondents have been in the business for 11–15 years and lastly, 19% of the respondents indicated that they have been in the business for 16 or more years. These results indicate that many of the businesses have been in operation for 2–5 years and the fact that 19% of the SMMEs have been in operation for 16 or more years.

Designation of the respondents in the organisation

The respondents were asked to indicate which position they hold in their organisations. Of all the respondents, 50% were founders/owners, 22% were in the management level, and 28% were in supervisory level as indicated in Figure 6. This indicates that many of the respondents were owners of the businesses.

In the following section, the strategic planning techniques which are implemented by SMMEs are discussed.

Presentation of results: Strategic planning techniques/tools

The purpose of this study was to investigate the strategic planning techniques implemented by SMMEs in Johannesburg CBD post-COVID-19 lockdown. The literature revealed that although the SMMEs implement generic strategic planning techniques or tools, they don’t consider them as formal. The respondents were asked to identify the strategic planning techniques/tools they implemented in their businesses in general. These strategic planning techniques/tools are presented in Table 1.

SWOT analysis

The results indicate that 78% of the respondents implemented the SWOT analysis technique in their business operations, whilst 28% indicated that they do not. Based on the results, the SWOT and financial analysis of business were commonly used as they rated high. These views were echoed by Herliana, Lawiyah and Aina (2018:5) who outlined that many SMMEs owners in Bandung used SWOT analysis for market penetration, networking, market development and horizontal integration.

Financial analysis of business

The respondents were asked if they use the financial analysis of business technique in their business. In response to this question, 89% of the respondents indicated that they use the financial analysis of business technique whereas 11% of the respondents indicated that they do not use the financial analysis of business in their operations. These results are in agreement with Wolmarans and Meintjes (2015:111) who outlined that SMMEs managers in South Africa used financial analysis in conjunction with management practices concerned with profitability and working capital. In addition, Brijlal, Enow and Isaacs (2014:9) reported that 54% of the SMMEs owners in Cape Town prepared documents such as balance sheets, income statements and cash flow statements for financial reporting and analysis.

PEST analysis

When the respondents were asked if they use the PEST analysis in their business, 56% of the respondents indicated that they use PEST analysis and 44% of the respondents indicated they do not use PEST analysis in their business. These results are in agreement with Rakesh (2014:18) who reported that the many SMMEs in India implemented PEST analysis as it helped them to understand their business environment, which continues to change. These results are also in agreement with Sandada et al. (2014:665) who highlighted that SMMEs in South Africa scanned their operating environment using PEST analysis and it helped them to understand their competitors, strategies and substitute products.

Benchmarking

The respondents were also asked if they use benchmarking technique in their business. In their responses, 61% of the respondents indicated they use benchmarking technique in their business and 39% of the respondents indicated that they do not use benchmarking technique in their businesses. These results concurred with Elaswad (2015:2044) that several SMMEs in Malaysia implemented benchmarking techniques such as total quality management and they performed better than their closest rivals who did not implement benchmarking technique. In support of this, De Rose and Yusof (2008:419) reported that although many SMMEs in automotive industry implemented benchmarking techniques, they were not successful as there are no correct and proved models and tools for benchmarking for SMMEs. However, these results do not support the views of Sandada et al. (2015:666) that SMMEs in South Africa do not implement benchmarking techniques in their businesses.

Porter’s five forces

The respondents were also asked if they use Porter’s five forces technique in their business. On this question, 51% of respondents indicated that they use Porter’s five forces technique in their business whereas 49% of the respondents stated that they do not use Porter’s five forces technique in their business. These results concur with Lumbanraja, Dalimunthe and Hasibuan (2018:8) that many SMMEs in Medan implemented Porter’s five forces such as maintaining relationships with the buyers and suppliers. The results further concur with Sandada et al. (2014:665) who reported that many SMMEs in South Africa rarely implement Porter’s five forces approach in their businesses. On the same note, Lumbanraja et al. (2018:8) highlighted that a number of SMMEs in Medan implemented Porter’s five forces unknowingly, especially on rivalry and substitute goods.

Core capabilities or competence analysis

When the respondents were asked if they use the core capabilities analysis in their business, 72% of the respondents indicated that they use the core capabilities or competence analysis technique in their business, whereas 28% indicated that they do not use the competence analysis technique in their business. These findings are in agreement with Dumbu and Chadamoyo (2012:11) who reported that SMME owners in Zimbabwe used their competencies to prepare for resistance, prepare financial statements, appreciate change, decision making and talent management. These results are also in agreement with Adendorff, Appels and Botha (2011:59) who highlighted that many of the SMMEs in South Africa rely on their own competencies as they own their equipment especially in construction and this helps them to save on their costs for hiring.

Financial analysis of competitors

The respondents were asked if they use the financial analysis of competitor’s technique in their business. On this question, 59% of the respondents indicated that they use the financial analysis of competitors in their business, whereas 41% of the respondents indicated that they do not use the financial analysis of competitor’s technique in their business. These results substantiate previous findings of Adendorff et al. (2011:47) who outlined that SMMEs in the construction industry analysed the financial status of their competitors for a specific tender. In addition to this, SMMEs analyse the competitors’ human resources capabilities and resources and determine which strategy they could adopt to fight competition (Wolmarans & Meintjes 2015:110).

Scenario planning or ‘what if’ planning

When the respondents were asked if they use the scenario planning or ‘what if’ planning technique in their business, 65% of the respondents indicated that they use the scenario planning or the ‘what if’ planning, whereas the 35% of the respondents indicated that they do not use the scenario planning or what if planning in their business. These results agree with Jannek and Burmeister (2008:15) that SMMEs employ scenario planning but in simple ways such as brainstorming and through the use of networks to identify, interpret and understand key signals in the external environment in order to rehearse possible futures. However, these results are contrary to previous findings by Amer, Daim and Jetter (2013:34) who stated that scenario planning is much common and can only be implemented by big organisations such as aerospace and petroleum and many SMMEs do not have enough capital required to operate in those industries. The findings presented by Amer et al. (2013:34) concurred with Nyuur (2015:20) that there are many hindering factors for SMMEs adoption of scenario planning such as the capital required and unhealthy degree of group thinking and lack of awareness.

Value chain analysis

When the respondents were asked whether they use the value chain analysis technique in their business, 67% of the respondents indicated that they use the value chain analysis in their business; whereas, 33% of the respondents indicated that they do not use the value chain analysis technique in their business. These results concurred with Anggadwita et al. (2019:5) who indicated that SMMEs in Indonesia in the coffee industry implemented value chain analysis technique to develop and maintain relationships with coffee farmers, coffee traders, processing industries and coffee shops. In support of this, Spencely and Ryland (2015:72) highlighted that SMMEs in the tourism sector of Botswana implemented value chain analysis as ways of strengthening their entry in the market and maintaining their relationships with intermediaries in the service delivery chain.

Portfolio matrices (e.g. BCG: growth-share matrix)

The respondents were also asked if they use the portfolio matrices techniques in their business. On this question, 47% of the respondents stated that they use portfolio matrices in their business, whereas 53% of the respondents stated they do not use the portfolio matrices techniques in their business. These results indicate that many of the respondents do not use the portfolio matrix technique. Furthermore, these findings are in agreement with Mohajan (2019:1) that BCG matrices are complex to conduct and as a result many companies do not conduct them as some do not have enough knowledge of the cash cows, dogs, stars and question marks of the BCG matrices. The findings of this study revealed that, SMMEs implemented strategic planning techniques and financial analysis was the technique mainly used by the respondents. In addition, the environmental scanning techniques such as the SWOT analysis and PEST analysis were also used by the respondents during the COVID-19 lockdown. This can be attributed to the changing environments as many SMMEs tried to understand their internal and external environments. However, portfolio matrix was the only technique that was not implemented by most of the respondents. This could be attributed to its complexity. The following section discusses descriptive statistics of the data.

Descriptive statistics of strategic planning techniques or tools

Table 2 shows the descriptive statistics of strategic planning tools with reference to the mean, standard deviation, skewness and kurtosis.

From Table 2, most of the standard deviation values are close to 1. This indicates that data were close to the mean. Table 2 also shows that all the skewness values were negative (indicating that most of the respondents agreed to the questions posed). Lastly, many of the kurtosis values indicated on the table were positive with SWOT analysis having the highest kurtosis (2.242), which is less than 3. This indicates that the data have a sharper peak as compared with the normal distribution indicating that most of the respondents agreed to use the SWOT analysis strategic planning technique or tool in their business.

Importance of strategic planning techniques or tools on business performance

Table 3 shows the descriptive statistics of the importance of strategic planning techniques or tools post- COVID-19 lockdown in Johannesburg CBD. The table shows the mean, standard deviation, skewness and kurtosis of data.

Table 3 shows that standard deviation values were close to 1, thus many of the responses were on the agreeable side. The skewness values are negative and this indicates that many of the respondents agreed to the questions posed (statements are indicated in Table 3). This indicates that many respondents agreed that strategic planning techniques or tools have an influence on business performance post-COVID-19 lockdown. All kurtosis values were positive and this indicates that the data have heavier tails. High kurtosis values indicate that the data have sharper peaks than the normal distribution.

Chi-square test

In this study, the Chi-square test was done to test the independence of variables and to test whether there was statistically significant relationship that exists between the variables. The Chi-square test was done to determine the relationships between strategic planning techniques/tools implemented during the COVID-19 lockdown in Johannesburg and business performance during the same period. Strategic planning allows the business to have a better understanding of the environment in which they operate, as well as clearly defines the purpose of the business, its values and the resources that are available (Gomera, Chinyamurindi & Mishi 2018:7). From the Chi-square test only three strategic tools, namely PEST analysis (p-value = 9.915), financial analysis of own business (p-value = 11.543) and financial analysis of competitors (p-value = 11.610) indicated a complete significant Chi-square set.

Table 4 indicates that there exists a statistically significant relationship between PEST analysis and making better decisions during the crises. These results are in agreement with Murimbika and Urban (2014:16) who argued that environmental scanning helps the business to know about information regarding the trends, events, external environment and other knowledge that can assist the business in planning and managing the business.

Table 5 indicates that there exists a statistically significant relationship between financial analysis of business and amount of revenue generated. In support of these findings, Sandada et al. (2014:667) argued that analysing the internal environment helps the business to solve many hindrances and gain considerable profits.

Table 6 indicates that there exists a statistically significant relationship between financial analysis of competitors and improved service delivery. These results are in line with Murimbika and Urban (2014:17) who outlined that strategic planning improves the business processes thereby enhancing quick product and service delivery.

Spearman’s Rho correlation analysis: Strategic planning techniques or tools and business performance during COVID-19 lockdown

A Spearman’s Rho correlation analysis was performed to determine the relation between strategic planning techniques/tools and business performance. The Pearson’s Chi-square indicated earlier that there exists a weak positive relationship between strategic planning techniques and business performance. Thus, the Spearman’s Rho was conducted to test further the relationships between strategic planning techniques and business performance. The Spearman’s Rho correlation results are presented in Table 7.

Table 7 illustrates the correlations between strategic planning techniques/tools and business performance. The results indicate that there exists a weak positive relationship between the two variables in the SMMEs sector. These results are in agreement with Sandada et al. (2014:667) that there is a weak relationship between strategic planning techniques/tools and business performance in SMMEs as many of them do not implement strategic planning techniques/tools. One of the most significant correlations is between: PEST analysis and strategic planning improve customer retention and loyalty (r = 0.258, p < 0.000). These results show that there is a weak positive relationship between environmental scanning tools and business performance, these results are in agreement with Tseka (2018:47) who found that there was a weak positive relationship (r = 0.24) between environmental scanning and business performance of SMMEs in South Africa.

Research findings

The purpose of this study was to investigate strategic planning techniques or tools implemented by SMMEs post-COVID-19 lockdown in Johannesburg CBD. The COVID-19 lockdown period presented an opportunity and the threat for businesses in general, hence, numerous businesses faced significant risks pertaining the business processes and systems. Hence, effective management of the crises and adoption of strategic planning techniques or tools must not be overlooked.

• The representation of 114 (67%) females indicated that many women are taking part in the business activities in the country.

This indicates that the country is moving away from a patriarchal society. One may argue that placing women in managerial, leadership or ownership position could be interpreted as part of strategic planning in an organisation.

• About 131 (77%) respondents were between 20 and 39 years, which this indicates that the SMME industry is primarily occupied by economically active people.

This reflects the character of the country as a whole (Smit et al. 2016:280). The findings reveal that SMMEs used their core capabilities in their businesses during the COVID-19 lockdown period.

• The results show that many SMMEs are implementing strategic planning techniques or tools in their business such as SWOT and PEST analysis, value chain analysis and financial analysis of business and competitors.

This finding is in agreement with Adendorff et al. (2011:59) who reported that SMME owners in the South African construction industry used core capabilities in their business to assess the strength and direction of competition. During the COVID-19 lockdown period, some strategic planning techniques such as portfolio matrices, specifically, the Porter’s five forces approach was indicated as too complex and difficult to implement. The results revealed that 90% of the respondents (alcoholic beverages and tobacco, transport, tourism, wood and wood products, construction and metal products being the severely affected) indicated that the COVID-19 pandemic negatively affected the market share growth of their businesses. Moreover, the literature indicated that the SMMEs in South Africa are not very structured as they rely on their clients to pay their invoices on time, thus the COVID-19 lockdown negatively affected their growth, revenue, profitability and employee skills development of SMMEs in the Johannesburg CBD.

• The findings revealed that there exists a statistically significant relationship between financial analysis of business and amount of revenue generated during the COVID-19 lockdown.

This finding is in agreement with Karel, Adam and Radomir (2018:59). In addition, the findings also showed that there was a positive relationship between financial analysis of competitors and improved speed on product and service delivery. The study conducted by Mkhonza and Sifolo (2021), showed that managing both the environments and mitigating against the risks that are posed by factors outside the SMMEs’ control, taking advantage of technology, monitoring the business structure and investing on the skills focusing on future of work is beneficial. From the study, the findings showed that there was a positive relationship between PEST analysis and making better decisions. Lastly, the results showed there exist a weak positive relationship between strategic planning techniques and business performance in SMMEs. All the p-values were more than 0.05 indicating that COVID-19 negatively affected their businesses irrespective of their gender.There was weak positive relationship between strategic planning techniques and business performance during COVID-19 lockdown. In addition to this, the findings from the study also showed that there was a weak positive relationship between environmental scanning tools and business performance.

Conclusions

Planned adaptive strategic planning techniques or tools are critical for the survival of the SMMEs as a source of job creation in the community. The strategic planning techniques or tools implemented by SMMEs post-COVID-19 lockdown in Johannesburg CBD were common strategic planning techniques such as financial analysis of their own businesses (89%), SWOT analysis (78%), core capabilities (72%), value chain analysis (67%), scenario planning (65%), benchmarking (61%), financial analysis of competitors (59%), PEST analysis (56%), Porter’s five forces (51%) and BCG matrix (47%). These results indicate that financial analysis was the most common strategic planning technique or tool during the COVID-19 lockdown in Johannesburg CBD. One can argue that financial management is the survival of the business that enables the business to plan and track its history, especially during the times of the crises. However, it must be observed that financial management alone does not guarantee SMMEs success, however some factors such as human resources contribute to the success of the SMMEs. Financial management must be employed together with other strategic planning techniques so that an SMME can achieve its intended objectives during the crisis period. One can argue that the COVID-19 lockdown affected the global market trends including entry to the African market as many SMMEs failed to open because of lack of revenue. The quality reputation was the least affected as it was not seen as a problem by SMMEs during the lockdown but surviving post-lockdown was identified as a challenge.

There is a weak positive relationship (r = 0.26) between strategic planning techniques or tools implemented during COVID-19 lockdown and business performance, this was attributed to the fact that the SMMEs do not implement strategic planning techniques formally. Although SMMEs implement almost all the strategic planning techniques or tools, others do not because of their complexity. Small, medium and micro-scale enterprises implemented strategic planning techniques or tools using simple methods which did not yield the desired results during the covid-19 hard lockdown period. These findings will help in the provision of recommendations to the owners and managers of SMMEs in Johannesburg CBD as to how they can improve their business performance during the crises.

Recommendations

There is a need to adopt digital technologies to enhance productivity and performance of the SMMEs to deal with the repercussion of COVID-19 pandemic whilst securing business continuity. Digital technology can assist owners, managers and supervisors of SMMEs to secure business continuity whilst improving business performance or formalising strategic planning techniques or tools. Financial management enables the business to plan and track its history. It is also helpful to promote awareness and improve service delivery through greater collaboration and cooperation. Therefore, formalising strategic planning techniques or tools in order to apply each strategic plan to improve business performance during the crises is paramount. Practical implications could include investing in digitisation as one of the strategies to improve business processes and business continuity (such as digital payments where possible).

Although SMMEs understand the environmental scanning techniques such as SWOT, PEST, benchmarking and financial analysis of competitors because of increasing level of competition, an ability to deal with turbulence and uncertainty in the business environment, developing a scenario-based planning is critical to better prepare for the crisis. Documenting strategic planning enables businesses to communicate their intentions to their employees, check their progress and evaluate and control the strategic planning process. This has an impact to resources allocation and information sharing. Documented business visions, mission statements and competent managers who possess conceptual, technical and interpersonal skills. In other words, investing in skills that consider the future of work is necessary to develop new business strategies and ensuring business continuity. Investing in capacity building can help SMMEs to have leaders who understand their growth, market access and sustainability. In addition to this, there is need for SMMEs to train and develop their employees so that they develop skills and abilities that are necessary to carry out the plans provided by their owners and managers. Even though COVID-19 negatively affected SMMEs they must take advantage of improved technology to improve their business performance.

Future research

Developing a benchmarking model for SMMEs as one of the adaptive strategies for strategic planning techniques or tools during any crisis is essential to measure resilience. Moreover, financial analysis of competitors and improved speed on product and service delivery as a focus area for SMMEs could be beneficial towards improving digitalisation as a coping strategy. Further studies could focus on the demographic profiles of the SMME managers, leaders and owners with a deeper focus on racial classification to identify whether demographics have an impact on strategic planning techniques, considering that government contributed a lot towards funding during the COVD-19 lockdown period.

Acknowledgements

The authors would like to express their gratitude to the Milpark Business School and the SMMEs in the Johannesburg CBD who participated in the study.

The authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article.

V.M.M. and P.P.S. contributed equally to this work.

This specific research received no funding from any agency in the public, commercial or not-for-profit sectors.

Data presented was derived from the study conducted by Mkhonza, V.M., 2020, ‘The role of strategic planning in SMME’s post COVID-19 lockdown in Johannesburg CBD’, unpublished masters thesis, Milpark Business School.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy of any affiliated agency of the authors.

References