Rarely do SMEs act in a calculated, planned, strategic and deliberate way. Most often, they only react and do not consider consequences of the reaction.
This prevents them from successfully competing in the market as they lack three aspects of being a serious competitor:
- Ability to act which requires understanding of what the company can do with their resources. Hence the necessity for internal analysis;
- Motivation which accounts for incentives that drive the company. Hence the need for business planning;
- Awareness of the rivals and general competitive environment. The organisation must understand what changes and reactions are likely to take place. Hence the need for competitor and external environment analyses.