Designing and Implementing SME Business Strategy

This report discusses the fundamentals of designing and implementing SME business strategy. It defines the issues and challenges faced by SMEs in relation to their business strategy, outlines the strategic challenges during the development and implementation of managing goods and service business, and defines the internal and external business environment with the help of selected frameworks. The report also discusses the mode of entry selected by business to enter into the new market and the influence of CSR practice.

DESIGNING AND
IMPLEMENTING SME
BUSINESS STRATEGY

Table of Contents
INTRODUCTION....................................................................................................................3
PART- 1.....................................................................................................................................3
Contemporary issues and challenges small and medium sized business faced concerning
SME’s strategy.......................................................................................................................3
Strategic challenges during the development and implementation of managing goods and
service business......................................................................................................................4
PART- 2.....................................................................................................................................5
Internal and external environment of SME............................................................................5
Mode of entry into new market..............................................................................................8
Influence of CSR practices and areas in strategy for future development of new market...10
CONCLUSION.......................................................................................................................10
REFERENCES.......................................................................................................................12

INTRODUCTION
Business strategy is the composition of decisions which are taken and formed by an
organization to accomplish their business targets through which a company can secure their
competitive position within the industry. A business strategy is the backbone of an
organization which can support them in working towards the accomplishment of desired
objectives (What is business strategy. (2017)). Monzo is a banking and finance company
which was started back in 2015. Monzo bank is an online bank which was founded by Gary
Dolman, Jason Bates, Joans Huckestein, Paul Rippon and Tom Blomfield. The company
offers pre-paid cards which are connected to an application that can track the expenses and
help consumers analyze their financial activity. The company was given full banking license
in 2017. The business strategy of Monzo focuses on making banking services easier for
consumers where they can spend, save and manage their money through on app and one place
(Monzo Website. (2022)). This report will discuss the fundamentals of designing and
implementing SME business strategy. In the first part, the report will define issues and
challenges which can be faced by business due to their strategy. The challenges which will be
faced by an organization due to the management of goods and service will be also outline in
this section. In next section, the report will define internal and external business environment
with the help of selected frameworks. Lastly, the mode of entry selected by business to enter
in Netherland’s market will be discussed which will be proceeded further with defining the
influence of CSR practice.
PART- 1
Contemporary issues and challenges small and medium sized business faced concerning
SME’s strategy
There are various issues and challenge which can be faced by any SME organization
in relations to their business strategy. Some of the challenges which have been faced by
Monzo in context of their business strategy are outlined below:
 Funding- The funding options has been a challenge for an organization which made
business face issues while forming any business strategy. Such challenges affected the
operations and its continuity can be hampered. In case of Monzo, the company can face
various funding issues where the company was not able to get appropriate funds which
has bene a major concern for the strategy of the organization.

 Skilled human resource/labor issues- Lack of skilled human resource/ labor has been a
challenge for the company to plan strategies as this affects their decision making and
productivity of the organization. In case of Monzo, the banking company faced various
issues related to lack of skilled labor which affected their overall organizational
performance and position within the industry.
 Lack of trust- As the brand name and goodwill of any organization is based on customer
trust, this can hamper the ability of an organization to sustain in the industry and such
challenges affects the position of an organization within the industry (Challenges faced
by MSME sector. (2021)). In case of Monzo, the company can face various challenges
related to trust as the company is based on digitalization or online services which can
make their customers face various privacy and security issues. Such challenges have been
negatively influencing the customer base of the banking company and made business face
various challenges to keep information of their customers secure.
Strategic challenges during the development and implementation of managing goods and
service business
The strategic challenges which can be faced by any organization can hamper their
development and implementation of strategy while managing goods and services. In context
of Monzo, the banking company will be facing various strategic challenges which can create
a barrier while designing and implementing strategies for managing goods and services are
explained underneath:
 Cybersecurity threats- The rapid advancements in technology have made business
encounter various cybersecurity threats which can sacrifice their collected
confidential information (Challenges business face. (2021)). In case of Monzo, the
online banking company faces various strategic challenges of cybersecurity which can
affect privacy and security of the confidential information of their consumers
accounts and affect their management of services offered by them to their customers.
 Skill gap- The skill gap has been a major strategic challenge which have been faced
by an organization due to the lack of knowledge and expertise of the candidates which
affects their ability to perform business activities. Such challenges create a hurdle for
companies to meet their objectives and leads to poor and dull performing
organization. In case of Monzo, the company face skill gap challenges in their
employees which affects their ability to perform up to the standards and create a

negative impact on their competitive position and defeats them from their competitor
companies within the banking and finance industry.
PART- 2
Internal and external environment of SME
In case of Monzo, PESTEL and SWOT analysis is further discussed below to
understand the internal and external business environment of SME company.
PESTEL analysis
PESTEL analysis is a tool which is used by marketing departments through which
they can observe and evaluate macro environmental factors which can create threat and bring
opportunities to business (PESTEL analysis. (2021)). This framework is used by companies
to understand the dynamics of external business environment and plan strategies accordingly
which will ensure strong and competitive position of organization within the industry. In case
of Monzo, a detailed PESTEL analysis of the organization is discussed below:
Political factors- There are various political factors which can create an impact on
the banking business, some of the political factors are- political interference, political
instability and change in regulations. Due to change and incline in political interference, this
can create negative impact and can bring threat to business and to their financial heaths. In
case of Monzo, the company can also be affected due to Brexit which lead to political
instability and such factors can affect the interest of stakeholders and investors. This is
responsible to create negative impact on the credit constraints and capital accumulation of the
company. Therefore, other political factors, such as election are also vital component which
creates an impact on Monzo where the banking company can be also suffer due to change in
new regulations and legislations.
Economic factors- The economic factors which are responsible to create an impact
on the banking industry and companies like Monzo are- economic losses, Brexit, inflation
rate and unemployment rate. Therefore, Monzo can face economic losses from fraud as such
factors are very high in banking and finance industry (Bianchi, C., Cosenz, F., & Marinković,
M. (2015)). However, Brexit is another economic factor which can result into incline in
unemployment rate and is also responsible to hamper the GDP and inflation rate.
Social factors- The socio-cultural factors, such as- change in consumer expectations,
demands and their beliefs are the factors which can bring change to the functioning and

operations of the banking and finance companies. In case of Monzo, the company can also
gain various opportunities due to incline in consumer interest in digital banking services.
Therefore, the switch to digital banking solutions can increase the demands of service offered
by Monzo bank through which they can strengthen their consumer base and maximize their
revenues.
Technological factors- There have been various advancements in technology and this
can bring different opportunities as well as threats to business offering digital services. The
use and advancement of technology in the banking sector has been continuously growing and
this has also made consumers face risk of privacy and security (Expósito, A., & Sanchis-
Llopis, J. A. (2019)). Therefore, the adaptation of digital services by banking companies,
like- Monzo make them face issues which can further lead to lack of customer satisfaction
and incline in consumer turnover.
Environmental factors- The rapid awareness related to environmental concerns is
creating pressure on companies to cut down their carbon footprints and invest more in
renewable energy. Therefore, such practices encouraged companies to invest in energy
management practices through which they can follow more environment friendly approaches
and this will be helpful in drawing consumer attention and in creating positive brand image
within the banking and finance industry. Therefore, through offering service with the help of
digital and online mediums, Monzo can reduce their carbon footprints from the environment
and still connect with their customers at larger level.
Legal factors- The legal factors, such as- risk of legislations and regulations is high
which has been an outcome of political instability. Due to rapid change in regulations and
other legal factors, this can make businesses like Monzo face various complicated issues
which can scrutinize their growth in rapidly developing market. Whereas, Brexit was able
observed as brining higher profitability to banking sector companies where they can connect
with their customer s through digital platforms and offer them variety of services. Such
factors and changes supported Monzo in creating stronger consumer base and generating
higher revenues.
SWOT analysis
SWOT analysis is the approach of identifying the competitive position of an
organization within the industry. Therefore, this strategic management tool is used to evaluate
strengths, weakness, opportunities and threats of an organization which are the components

of internal business environment (SWOT analysis. (2021)). A detailed study of SWOT
analysis in relation to the banking company, Monzo is addressed underneath:
STRENGTHS
 Strong growth in customer base- As
Monzo bank was previously known as
Mondo is a neo bank which measure the
key performance against the business
strategy of the company (Monzo SWOT
and PESTEL analysis. (2021)). The
bank is working towards offering
various service to their customers
through which they can retain and create
a strong customer base which will be
helpful in creating a strong hold within
the industry.
 Incline in partnership- As Monzo is
expanding their market and business,
this has been their strengths which has
supported the company due to their
incline in partnerships with other
companies. The company collaborates
with leading companies such as
TransferWise where they offer
international payment, transfer and
currency conversion services. By
offering variety of services with
different partnered company, the
company ensures hassle free customer
services through which they can
strengthen their position within the
industry and maintain a wide customer
base.
WEAKNESS
 Privacy and security issues- Due to
technological advancements, this has also
increased cyber threats which can hamper
the privacy and security of any company.
Such lack of privacy and security has been
a weakness for Monzo as this can validate
the privacy and security of the confidential
information of their consumers. The
unwanted hackers and interruptions is
weakness for Monzo which scarified
consumer data and make business face
severe loss and hamper their brand image
within the industry.
 Lack of support to consumers- In
case of Monzo, the company is not strong
enough to offer appropriate support
services to their customers which has been
a weakness for the banking company
(Moeuf, A and et.al. (2018)). Such
inabilities are responsible to negatively
influence their customer interest and lead to
consumer turnover.

OPPORTUNITIES
 Trading and investments- Monzo bank
can explore a greater number of
opportunities by engaging their
companies in trading and investments
banking services which are offered
through online mediums.
 Global expansion- The global
expansion of Monzo can support the
banking and finance company to
increase their market share and expand
their consumer base through which they
can generate higher revenues and
maximize business profitability.
THREATS
 Incline in competition- The rapid
advancement in digital services has
encouraged other traditional and digital
banks to make effective use of technology
and such factors has been increasing
business competition. Therefore, due to
such factors Monzo can face high
competition within the banking industry.
However, companies like Revolut, Curve,
Starling Bank and others possess high
threat to Monzo.
Mode of entry into new market
There are variety of methods which can be used by an organization in order to get
entry into domestic and global marketplace (Prieto‐Sandoval, V and et.al. (2019)). There are
different mediums which can be followed by companies for market entry are- exporting,
licensing, franchising, joint venture, partnership, mergers and acquisitions, foreign direct
investments, piggybacking and wholly owned subsidiary.
MODES TO
ENTRY
NEW
MARKET
Exporting
FDI
Licensing
Joint
venture
Franchisi
ng

Source: Created by self
 Exporting- Exporting is a medium of market entry well business directly sale goods
or services to another country. This form of market entry is highly popular to enter a foreign
market at lower risk and more cost effectiveness (Safar, L and et.al. (2018)). Therefore,
export is the medium in international trade where goods produced in one country are exported
to anther country.
 Foreign direct investments (FDI)- This form of business entry methods in new
market involves direct investments in facilities in foreign market. This will require capital to
cover the cost which will be incurred by the business (How to enter foreign market. (2022)).
this medium of business expansion into new market can be done through establishing a new
venture or by acquiring an existing operating company.
 Licensing- Licensing is another medium of market entry or business expansion into
new market. This medium of business expansions allows companies to property through
which they can target customers in the target market. This form of market expansion required
little investments and can be helpful for an organization in getting higher returns on
investments. Therefore, this form of market expansion methods, involves- trademarks,
patents and production techniques.
 Mergers and acquisitions- This is the medium of business expansion into market
where two companies merge to perform the organizational activity in target market (Methods
of international expansion (2020)). In this form of business expansion, a company either
merger with other company or takes over their control through which they can perform
according to themselves in the industry. Mergers and acquisitions can be positive market
entry which supports companies in making stringer brand presence within the industry. Joint
venture is the form of business entry method, two or more companies collectively and legally
work together and establish a jointly owned business. this will offer new business with
management team and share con troll of joint venture.
 Franchising- Franchising is based on marketing concepts which can be opted by an
organization as a strategy for business expansion into different markets. Therefore, it is the
arrangement where franchisor grants or license some rights and authorities to franchisee.
Franchising is the approach of market expansion where a franchisor is involved on order to
distribute the goods and services.
In case of Monzo, the company can expand their business through partnership or joint
venture business expansion method in the market of Netherlands in the coming 12 months of

time period. This approach of business expansion will help the brand in creating in larger
customer base and this will also hep the brand in enhancing their brand presence within the
industry. With the help of partnership, Monzo can expand their social network through which
they can get opportunity to connect with greater number of other companies and customers
which will help them in generating higher revenues and maximize business profitability
(Partnership pros and cons. (2022)). As this has been observed with the help of SWOT
analysis, the company gain various opportunities and working with the help of partnership
has been supportive and competitive business strategy for the banking and financial company
through which they are able to strengthen their position and face competition within the
industry.
Influence of CSR practices and areas in strategy for future development of new market
Corporate social responsibility is the concept which is focused by companies where
they integrate social and environment friendly practices through which an organization can
meet their responsibilities. CSR practices are highly influential and in case of Monzo, the
company can face influence of CSR in their strategy for their future development of new
market. The influence of CSR practice for the selected banking company is further discussed
below:
 Investing in green companies- As the awareness of companies and their knowledge
for using green practices has been increasing, this can create an influential impact in the
development of any organization. In case of Monzo, the company can collaborate with
companies following green practices which will be helpful in creating a positive impact n the
overall society (Uchegbulam, P., & Akinyele, S. T. (2015)). This will also support the
banking company to engage in development of the overall society through which they can
also promote environment friendly practices, such as cashless transactions where they can
support in avoiding making use of papers and make business digitalized.
 Skill development program- In case of Monzo, the company will be offering skill
development programs through which they can develop a strong market base and make their
customers more aware. As this is the responsibility of any organization to increase
transparency in their practices, this will be helpful in creating positive impact while
expanding their business into foreign marketplace through which they can maximize business
profitability and work towards reducing their carbon footprints from the society.

CONCLUSION
From the detailed study of above-mentioned information, it can be concluded that
business strategy is the stepping stone for any organization which supports them in making
progress step by step and accomplish all planned objectives within planned time frame.
Strategic management is the approach of formulation and implementation of the strategies
through which an organization can accomplish their objectives. It can be seen that there are
various issues and challenges which can be faced by an organization due to their strategy
formulation in implementation while operating at small and medium scale. It can be
understood that business environment platys a key role in making or shaking any business
and this can be identified with the help of different techniques and frameworks. Therefore, it
can be stated that there are various mediums of entering any market and this can offer various
opportunities and threats to nay business while expanding their business in domestic and
international marketplace.

REFERENCES
Books and journals
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management systems to foster SME competitiveness according to a sustainable
development perspective: empirical evidences from a case-study. International Journal
of Business Performance Management 31. 16(1). 84-108.
Expósito, A., & Sanchis-Llopis, J. A. (2019). The relationship between types of innovation
and SMEs’ performance: A multi-dimensional empirical assessment. Eurasian
Business Review. 9(2). 115-135.
Moeuf, A and et.al. (2018). The industrial management of SMEs in the era of Industry
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Prieto‐Sandoval, V and et.al. (2019). Key strategies, resources, and capabilities for
implementing circular economy in industrial small and medium enterprises. Corporate
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Safar, L and et.al. (2018). Concept of SME business model for industry 4.0
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Uchegbulam, P., & Akinyele, S. T. (2015). Competitive strategy and performance of selected
SMEs in Nigeria.
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