Most SMEs are internally focused. Their attempts to improve business by attending to internal factors may not necessarily work because the factors inhibiting the performance may reside in the external environment.
performance = ƒ (market structure and company’s internal variables)
And although the PIMS principle mostly relates to big business, it emphasises the interplay between the internal and external environments.
We need to understand how an organisation, with its resources and capabilities, can operate and perform in the market.
But what happens when the function (of PIMS) is weak, meaning that there is not enough ‘space’ for your organisation to perform well? Reconstruct the market i.e. modify the rules or create new ones.