Methodological Approaches to Strategic Management of Small and
Medium-sized Businesses in the Context of the Negative Impact
and Continuing Nature of the COVID-19 Pandemic
Liudmila Yu. Filobokova
a
and Sergey I. Bogatyrev
b
MIREA - Russian Technological University, Moscow, Russia
Keywords: Covid 19 Pandemic, Strategic Management, Methodological Support, Non-formalized Approaches, Small
and Medium-sized Businesses.
Abstract:
The COVID-19 pandemic is a protracted process that has a negative impact on the development of the world
economic system and all its constituent elements. A high level of such influence is observed in small and
medium-sized businesses, which, due to their distinctive features, are most susceptible to the influence of
external factors. Changing the priority of buyers, shifts towards essential goods and the use of digital
technologies, a decrease in the purchasing power of the population, the need for flexible pricing and cost
management as living conditions, predetermine the need to adapt strategic management, which is often denied
by the founders and leaders of small and medium-sized enterprises. Methodological support of strategic
management of the SME sector acquires scientific and practical value when using non-formalized approaches
based on expert assessments for a long time lag. The purpose of the study is to develop and substantiate the
methodological support of strategic management of SMEs in the context of COVID-19, achieved by solving
such problems as: identification of key success factors (KSF) of SMEs; modification of the methodological
support of PESTEL - analysis of environmental factors; adaptation to the conditions of SME functioning,
methodological support, analytical tools, M. Porter's five competitive forces. Approbation (testing) of
methodological support allows it to be extrapolated to the practice of strategic management of SMEs in
Russia.
1 INTRODUCTION
Small and medium-sized businesses (SMEs) are
highly appreciated by the world community due to its
functional role and load in ensuring the development
of the world and national economies in the format of
sustainable socio-economic development.
At the end of 2020, the UN published an analytical
review, according to which about 90 % of all
economic entities in the world belong to the category
of micro, small and medium-sized enterprises, in
which up to 70 % of the entire working-age
population is involved, and the contribution to the
formation of world GDP exceeds 50 %.
To give a higher status to the system of "small and
medium-sized enterprises", June 27, 2017 by the
Resolution of the UN General Assembly was
a
https://orcid.org/0000-0003-4542-3835
b
https://orcid.org/0000-0003-4212-9948
proclaimed as the Day of Micro, Small and Medium
Enterprises.
Subjects of SMEs have a wide range of distinctive
features that make it possible to identify their totality
as an open, active, flexible and adaptive system,
which is a subsystem (or a meso-level system) in
relation to the systems of the regional economy and
the national economy.
One of the distinguishing features of SMEs is its
high dependence on the external environment (an
entrepreneur becomes such if he/she is able to meet
the rapidly changing needs of the external
environment) and this circumstance makes him/her
most vulnerable to the negative impact of the
COVID-19 pandemic.
A significant reduction in market demand and a
change in its needs negatively affected the overall
business sector in Russia, but this was most
Filobokova, L. and Sergey, I.
Methodological Approaches to Strategic Management of Small and Medium-sized Businesses in the Context of the Negative Impact and Continuing Nature of the COVID-19 Pandemic.
DOI: 10.5220/0011111600003439
In Proceedings of the 2nd International Scientific and Practical Conference "COVID-19: Implementation of the Sustainable Development Goals" (RTCOV 2021), pages 119-125
ISBN: 978-989-758-617-0
Copyright
c
 2023 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved
119

pronounced in SMEs, which in 2020 are
characterized by a significant decrease in the share of
participation in the formation of the country's GDP
(up to 18 %), capital turnover (proceeds from sales)
and other qualitative and quantitative indicators of
activity.
Both in the world economy and in Russia, almost
half of SMEs are engaged in three types of economic
activity:
- retail;
- services sector;
- construction.
These are the sectors of the national economy
most vulnerable to the negative impact of COVID-19.
There are not only threats of deterioration in the
values of qualitative and quantitative indicators of
SME activity, but also threats to its economic security
and the implementation of its strategic goals in the
socio-economic development of Russia - the
formation of a competitive environment in the
national economy.
Wherein, medical experts note that COVID-19
will not disappear from people's lives for many years
to come, and State Duma Deputy A. Fairakhov
believes that this infection will always coexist with
people, having a seasonal character, and Honored
Doctor of Russia T. Kusaiko notes that the
coronavirus will remain, its mutation will always be,
and we see how quickly it happens.
In this situation, which has a high probability of
further continuation, it is necessary to adapt all
elements of the national economy system and, above
all, the element most susceptible to negative impact -
SMEs in the interests of life support, solving the
stated goals and objectives.
Adaptation is achieved by effective management
measures, primarily at the strategic level with the
development of possible scenarios and models.
The purpose of the study is to develop and
substantiate methodological approaches to the
strategic management of small and medium-sized
businesses in the face of the negative impact and the
continuing nature of the COVID-19 pandemic.
To achieve the stated goal, the following tasks
were solved:
- to identify the key success factors (KSF) of SMEs
in the context of the long-term nature of COVID-19;
- to modify and test the methodological support of
PESTEL – analysis of environmental factors of
SMEs in Russia in the conditions of the long-term
nature of COVID-19;
- to adapt to the conditions of functioning of small
and medium-sized businesses with the long-term
nature of COVID-19, the methodological support of
analytical tools of M. Porter's five competitive
forces.
2 STUDY METHODS
There are many strategic management models
competitive advantages, differentiation, vertical
integration, etc., but a number of models were
specially developed for SMEs. Linneman Strategic
Management Models for SMEs; Green and Jones,
Shuman and Seeger, Aram and Cowan, Foster, Berry,
Beal have one foundation, are based on the same
concepts, they contain a search for opportunities to
adapt to constantly changing business conditions in
small organizational and economic forms of
management, and the authors note that the strategic
management process shall consist of four stages:
- thorough study (scanning) of the environment;
- strategy formulation;
- implementation of the strategy;
- evaluation and control (Kusajko, Fattahov, 2021).
Scanning is the collection and study of
information about the factors of the external and
internal environment, identification of strategic
factors that determine the future. The simplest and
most reliable way to perform a scan is SWOT
analysis, an abbreviation of which was first voiced in
1963 by Harvard Business School professor C.R.
Andrews, who holds that the assessment of internal
strengths and weaknesses leads to the identification
of distinctive competencies, and the assessment of
threats and the capabilities of the external
environment allows to identify potential success
factors (Houmvud, Endryus, 2021).
To assess (understand) the strengths and
weaknesses in the long-term nature of COVID-19 and
its negative impact on the development of SMEs, the
authors propose to modify the KSF (Key Success
Factors) toolkit, representing characteristics,
indicators and circumstances that, with proper
attention and management have a significant impact
on the success of an organization in a competitive
environment in a particular industry segment
(Endryus, 1981).
The key questions that need to be answered when
performing a research in the KSF format are:
- firstly, what are the needs of clients and what they
want to receive from SMEs;
- secondly, what resources are needed for SMEs in
order not only to survive, but also to maintain a
certain position in the competition.
In order to get an answer to the first question, the
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authors shall be positioned as a buyer, which allowed
them to formulate criteria for the attractiveness of a
purchased product (product, service, work) (Table 1).
The results obtained in the process of KSF
research are reflected in the understanding of the
strengths (S) and weaknesses (W) of SMEs, reflected
in the SWOT analysis matrix. In addition to the
strengths and weaknesses, the SWOT-analysis matrix
is supplemented by the results of the study of
opportunities and threats carried out using the PEST
(EL) – analysis and analysis of M. Porter's Five
Forces (Bushar, K., Koh, Dzh., 2012).
The abbreviation PESTEL corresponds to the first
letters of the main external factors that require
assessment:
- Political;
- Economic;
- Social;
- Technological;
- Environmental;
- Legal.
In carrying out the PESTEL analysis of SMEs
(Table 2), the authors used the following markers:
- N - currently affecting, the probability of the
influence ending within 12 months;
- NB - is currently in effect and will continue to
have an impact for more than 12 months;
- VPZ is not currently affected, but will have an
impact in the future.
- VUZ - affects short-term (period up to 6 months);
- P - has a positive effect;
- O - negatively affects;
- N - does not have a significant effect;
- CF - critical factors;
- OWF - very important factors;
- VF - important factors;
- SF - significant factors;
- NF - not important factors;
- VR - affects and will increase the impact;
- VP - affects without changing the significance
(with constant significance);
- NU - affects, but will reduce the impact.
The analysis of the five competitive forces of M.
Porter is an analytical toolkit that allows you to
explore the external microenvironment and outline an
Table 1: Identification of key success factors (KSF) of SMEs in the long-term nature of COVID-19.
Buyer inquiries
(what do customers want?)
How SMEs survive in the competition (need for resources)
Key Success Factors
(
KSF
)
Retail:
- convenience and availability;
- flexibility of pricing;
- value of goods;
- essential goods and, first of all,
food group and medicines.
Service sector:
- convenience and accessibility;
- price and value of the service;
- digital interaction: online and
offline.
Construction:
- flexibility of pricing;
- the possibility of mortgage
lending;
- quality of construction and
repair work.
Required internal potential:
- development of human capital;
- activation of innovative processes in the search for new
products and technologies;
- development of strategic thinking and introduction to the
practice of strategic analysis and strategic planning
management.
Required potential generated by the external environment:
- tax aspects (introduction of a number of targeted benefits);
- property aspects (minimization of lease payments, wide
involvement of government contracts in the implementation);
- administrative aspects (first of all, measures to preserve
workers, simplification of administrative regulations during
interaction);
- financial and credit aspects (providing loans both during the
pandemic and during the recovery period; reducing the cost
of settlement and cash services to banks, etc.);
- ecological aspects (revision of the norms and standards that
determine the size of the payment);
- social aspects (wider involvement in social projects and
programs, contributing, inter alia, to the development of
social entrepreneurship);
- educational aspects (development of the continuing
education system in accounting, tax aspects, financial and
strategic management in SMEs);
- accounting aspects (expanding the list of FSBU and PBU,
securing a simplified accounting method or exempting
certain methodological requirements from execution).
A high degree of
readiness for
innovations, innovative
processes, product
(work, service) updates.
A high degree of
flexibility in
relationships with real,
potential and latent
buyers.
Flexibility and
differentiated pricing.
Possibility of prompt
decision-making.
Readiness for
innovation and
widespread use of
digital technologies and
tools.
Methodological Approaches to Strategic Management of Small and Medium-sized Businesses in the Context of the Negative Impact and
Continuing Nature of the COVID-19 Pandemic
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Table 2: Assessment of the factors of the external environment for the development of SMEs in Russia in the context of the
long-term nature of COVID-19 using the PESTEL analysis toolkit.
Environmental factors
Time
influence
characteristic
Characterizati
on of
influence by
t
yp
e
Characteristic
of influence
on dynamics
Relative
significance
of the factor
Impact on SMEs in the
Long Term Nature of
COVID-19
P. Political:
- changing the political situation
in the countr
y
VPZ P VR OWF
The degree of
influence is high and
will
g
row
Е. Economic:
- the rate of inflation;
- effective demand of the
population;
- access to raw materials markets;
- access to financial markets;
- the need for re-profiling and
shifts in the
p
roduct ran
g
e
NB O VR OWF
The impact is high,
negative and will
grow
S. Sociocultural:
- readiness to implement social
projects
-participation in the medical
provision of the population
- level of social protection
VPZ P VR SF
The degree of
influence is moderate,
but has a positive
character with the
possibility of entering
new market segments,
thereby reducing the
level of social tension
T. Technological:
- participation in government
programs to support
technological re-equipment;
- renewal of equipment and
technologies
NB O VR OWF
The impact is high,
negative and will
grow
E. Environmental:
- introduction of environmental
management;
-ecological payments;
- "green" technologies
VPZ N VP SF
The degree of
influence is
insignificant, but will
increase
L. Legal :
- development of the legal
framework in the field of SMEs;
-development of administrative
re
g
ulations for su
pp
ort
NB P NU SF
The degree of
influence is moderate
and will decline
action plan (strategy, programs) with the maximum
use of competitive advantages.
Within the framework of this toolkit, five such
competitive forces are subject to assessment
(analysis), such as:
- intra-industry competition;
-the threat of the emergence of new players on the
market;
- the market power of buyers;
- the market power of suppliers;
- the threat of the appearance of substitute goods.
These five forces determine the attractiveness of a
particular industry for a particular entrepreneur, but
in this study, the authors consider only the three most
attractive spheres of the economy for SMEs (retail
trade, services and construction).
For a qualitative and quantitative assessment of
factors, the authors have developed and offer the
following scale of assessment points (Table 3).
Table 3: Scale of assessment of indicator questions
reflecting the five competitive forces of SMEs in Russia in
the context of the long-term nature of COVID-19.
The de
g
ree of influence of the com
p
etitive force Points
1. Degree of influence is extremely low 1
2. Degree of influence is low 3
3. Increased degree of influence 5
4. Hi
g
h de
g
ree of influence 8
5. Ver
y
hi
g
h de
g
ree of influence 10
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Table 4: Indicator questions for analyzing the degree of dependence of Russian SMEs on the competitive forces of M. Porter
in the context of the long-term nature of COVID-19.
Competitive
stren
g
th
Industry segment Indicator questions
Intra-industry
competition
1. Retail
2. Sphere of services
3. Construction
Are there many players operating in the industry market?
What is the structure of the industry market.
What are the prospects for the development of the industry segment.
What are the advantages of competitors.
The threat of the
emergence of
new players on
the market
1. Retail
2. Sphere of services
3. Construction
Are there any restrictions on the entry into the industry market of new players
who could potentially be competitors?
How difficult is it to enter the distribution channels.
How much will be required for new technologies.
How lar
g
e can be costl
y
“switches” to a new
p
roduct.
Market power of
buyers
1. Retail
2. Sphere of services
3. Construction
The industry market is represented by large and small buyers.
Can buyers dictate their terms of purchase and to what extent?
What share of the industry market is occupied by large businesses and leading
companies (excluding SMEs).
Bargaining power
of suppliers
1. Retail
2. Sphere of services
3. Construction
To what extent are relationships with suppliers developed and what character
they are?
Is it possible to change the supplier with minimal costs.
How flexible is the
p
ricin
g
and sales
p
olic
y
of su
pp
liers.
Threat of
substitute
p
roducts
1. Retail
2. Sphere of services
3. Construction
How easy it is to replace the offered product.
Whether the substitute is capable of replacing the offered product in whole or
in part.
When developing indicator questions, the authors
used the results of many years of expert research
conducted personally and with the involvement of
managers, specialists and founders of small and
medium-sized enterprises, as well as individual
entrepreneurs (Table 4).
The authors considered large businesses operating
in similar industry segments as the closest
competitors of the external microenvironment of
SMEs. In the process of testing the developed
methodological support, the following results were
obtained (Table 5).
Table 5: Results of the analysis of M. Porter's five forces
for SMEs in Russia in the context of the long-term nature
of COVID-19.
Competitive
strength
Industry segment Evaluation
p
oints
Intra-industry
competition
1. Retail
2. Sphere of services
3. Construction
8
5
3
The threat of the
emergence of new
players on the
market
1. Retail
2. Sphere of services
3. Construction
10
5
1
Market power of
buyers
1. Retail
2. Sphere of services
3. Construction
8
5
5
Bargaining power
of suppliers
1. Retail
2. Sphere of services
3. Construction
5
5
3
Threat of substitute
products
1. Retail
2. Sphere of services
3. Construction
8
5
3
TOTAL NUMBER
OF POINTS
1. Retail
2. Sphere of services
3. Construction
39
25
15
3 STUDY RESULTS
Based on the results of the study conducted by the
authors using the methodological support developed
by them for the strategic management of SMEs in
Russia in the long-term nature of COVID-19,
conclusions were drawn that allow the development
and implementation of well-grounded management
decisions.
Therefore, use of the modified methodological
support of PESTEL - analysis of environmental
factors of SMEs in Russia in the conditions of the
long-term nature of COVID-19, made it possible to
reveal that:
- in terms of time, the main factors influencing
SMEs have not been fully implemented, but they are
capable of having an impact in the future time period
(VPZ);
- the current changes in their majority can have a
positive impact on development of the system of
small and medium-sized businesses;
Methodological Approaches to Strategic Management of Small and Medium-sized Businesses in the Context of the Negative Impact and
Continuing Nature of the COVID-19 Pandemic
123

- according to their importance, the factors were
distributed between "very important factors" and
"significant factors";
- the external environment, having a certain
negative impact on the state and dynamics of
development of SMEs, does not form criticality for
the system and predetermines the need for its
adaptation and flexible response to changes in both
market demand and economic opportunities.
The results of the analysis of the degree of
dependence of Russian SMEs on the competitive
forces of M. Porter in the conditions of the long-term
nature of COVID-19 allow us to state that the highest
level of competition is observed in the retail trade,
and the lowest - in the construction sector.
The strategy for the development of small and
medium-sized businesses in the Russian Federation
for the period up to 2030 provides for three stages of
its implementation: the first stage - 2016-2018, the
second stage - 2019-2025 and the third stage - 2026-
2030.
The second stage provides for provision of
sustainable dynamics of the development of the
system of small and medium-sized businesses,
ensured by the achieved results of management at the
first stage of the strategy implementation.
The negative consequences and long-term nature
of COVID-19, along with other factors, do not allow
the system of small and medium-sized businesses in
Russia to ensure sustainable development dynamics.
Wherein, the given trajectory continues to be general
and requires adjustments taking into account changes
in the external environment.
Strategic approaches require flexible adaptation
of the methodological support for the management of
small and medium-sized businesses (as a subject and
object of management) to those negative
consequences that take place and will affect the state,
potential and development results in the medium
term. Non-formalized methodological approaches to
such management are reflected in this article.
4 DISCUSSION OF STUDY
RESULTS
The issues of the state and strategy of development of
small and medium-sized businesses in Russia receive
serious attention both from the scientific community
and from the government.
The audit of the ongoing national projects in the
field of small and medium-sized businesses, carried
out by the Accounts Chamber of Russia, allowed the
supreme body of state financial control not only to
state that this segment of the national economy is the
most important factor in ensuring socio-economic
development, but, despite the difficult situation, this
segment held out and did not significantly surrender
its positions Porter, M., 2016.
I. Savelyeva and V. Maydanik paid attention to
the methodological peculiarities of developing
strategies by small innovative enterprises, who noted
that a strategy shall be based on the potential of an
economic entity and be adapted to rapidly changing
environmental factors.
When investigating the problems of managing
small and medium-sized businesses, V. Klimova, A.
Klimova and S. Chekuldaeva note that the condition
for business communication and the standard form of
information transfer is business planning, which is so
necessary in ensuring the sustainable development of
small business (Savel'eva, I.N., Majdanik, V.I.,
2016).
K. Kurbanova, T. Zhumadieva and G.
Annakulieva pay attention to tax aspects and their
penetration into the digital economy in the context of
the COVID-19 pandemic, who note that this
circumstance affects all sectors of the economy,
including small and medium-sized businesses and
requires making strategic decisions (Klimova, V.,
Klimova, A., Ghekuldaeva, S., 2021).
The issues of assessing strategic financial stability
using non-formalized methodological support are
researched by L. Filobokova, who suggests
identifying 5 types of financial condition of small and
medium-sized businesses (Kurbanova, K.,
Zhumadilova, T., Annakulova, G., 2021).
In this article, the authors present the results of a
study conducted in the field of methodological
support for the strategic management of small and
medium-sized enterprises in the context of the
negative impact and continuing nature of COVID-19.
The presented methodological support is an
intermediate result of scientific research. The authors
believe that the negative impact and the continuing
nature of COVID-19 predetermine the study of their
relationship with the economic security of the system
of “small and medium-sized enterprises”.
5 CONCLUSIONS
The COVID-19 pandemic has entered life, affecting
all areas of activity, including entrepreneurship in
small and medium-sized businesses. The functioning
and development of the "small and medium-sized
business" system requires the development and
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justification of strategic management decisions,
taking into account the distinctive feature of such an
external factor. The peculiarities of the system itself
predetermine non-formalized methodological
approaches in the development of management
decisions, which make it possible to neutralize
negative consequences and bring the system to the
level of sustainable dynamics. These prerequisites
determined the purpose of the study carried out by the
authors and consisting in the development and
substantiation of methodological approaches to the
strategic management of small and medium-sized
businesses in the face of the negative impact and the
continuing nature of the COVID-19 pandemic. The
tasks that have been identified to achieve the set goal
have been solved. The author's developments have
passed practical testing (approbation) and can be used
in the practice of strategic management of small and
medium-sized businesses.
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Continuing Nature of the COVID-19 Pandemic
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