Factors influencing the performance of SME food processing companies within the single European market

Abstract

The creation of the post-1992 European single market represents a significant change in the business environment confronting firms throughout Europe. Although there is extensive literature available on appropriate strategic responses to the single market scenario, very few of these writings contain guidance specifically related to the situation facing smaller firms. The objective of this study was to gain further understanding of which factors are likely to influence the performance of firms in the small and medium-size enterprise sector. This was achieved through a comparative study of approximately 200 UK and German small food processing firms. The major difference between UK and German companies are that the latter (i) identified a much broader range of factors which they believe will influence their performance and (ii) have adopted a strategic orientation towards managing those internal competencies necessary to sustain market performance over the longer term. In contrast UK owner/managers are mainly concerned with factors likely to affect short term financial performance. Viable strategic options for UK food processing companies seeking survival within the single market are discussed. It is concluded that these firms will need to adopt a strategy which places greater emphasis on the development of new, innovative products offering tangible differentiation based upon superior product performance. One possible way of implementing such a strategy is to create strategic alliances with other firms which can enhance internal capability and/or market management competency. A model is presented which might be utilised to determine how a strategic alliance could be used to improve a firm's strategic management capability within the post-1992 European market environment.