BS MANAGEMENT ACCOUNTING

BSMA Res. No______

Date:
THE STRATEGIC MANAGEMENT AND PERFORMANCE IMPLICATION OF MICRO
ENTERPRISES IN SURALLAH, SOUTH COTABATO.

RHE-ANNE L. ESPENORIO
HAZEL E. MAQUILAN

SUBMITTED TO THE FACULTY OF THE

COLLEGE OF BUSINESS ADMINISTRATIO
HERE AT
SULTAN KUDARAT STATE UNIVERSITY
IN PARTIAL FULFILLMENT OF THE
REQURIEMENTS FOR THE
DEGREE OF

BACHELOR OF SCIENCE IN MANAGEMENT ACCOUNTING

NOVEMBER 2023
 Chapter 1

INTRODUCTION

Background of the Study

Micro enterprises, also known as microbusinesses, are important to the

Philippine economy. According to the Philippines Statistics Authority (PSA,2023),
micro enterprises are small businesses with fewer than ten employees and
assets worth up to PHP3 million.

The strategic management of microenterprises plays a crucial role in their

performance and overall sustainability. This research focuses on the
microenterprises in Surallah, South Cotabato, a vibrant region in the Philippines
known for its entrepreneurial spirit and diverse micro-business landscape.
Strategic management involves the formulation and implementation of major
goals and initiatives by an organization’s top management, based on
consideration of resources and an assessment of the internal and external
environments in which the organization operates. In the context of
microenterprises, strategic management becomes even more critical due to their
limited resources and greater vulnerability to market dynamics.

The term “performance implications of micro enterprises” refers to the influence

that strategic management has on the performance of MEs. Performance can be
measured in a number of ways, including financial performance (e.g., sales,
profits), operational performance (e.g., productivity, quality), and customer
satisfaction. The term “performance” is used in foreign research and academic
literature to describe the outcomes of companies’ business operations (Kotane &
Kuzmina-Merlino,2017)

In Surallah, South Cotabato, microenterprises form an integral part of the local

economy. They range from small retail stores and food stalls to handicraft
producers and agri-based businesses. Despite their size, these enterprises
contribute significantly to the region’s economic growth, employment generation,
and socio-economic development. However, these enterprises face numerous
challenges such as limited access to finance, lack of business training and skills,
and difficulty in accessing markets. Strategic management can help these
enterprises navigate these challenges effectively, improve their performance,
and ensure their long-term survival. This quantitative research on the strategic
management accounting and performance implications of micro enterprises in
Municipality of Surallah has twofold:

Importance of Strategic Management Accounting: Strategic management

accounting is a critical tool for micro enterprises to effectively manage their
resources, make informed decisions, and achieve their objectives. By
understanding the strategic management accounting practices adopted by micro
enterprises in Municipality of surallah, we can identify the strategies that
contribute to their success or hinder their performance. This research will provide
valuable insights into the relevance and effectiveness of strategic management
accounting in the context of micro enterprises.

Local Context in Municipality of surallah, province of South Cotabato is a specific

geographic location with its own unique economic, social, and cultural
characteristics. By focusing on micro enterprises in this area, we can gain a
deeper understanding of the challenges and opportunities they face in their
business environment. This research will contribute to the local knowledge base
and provide recommendations tailored to the specific needs of micro enterprises
in Surallah, South Cotabato.

This study aims to explore the strategic management practices of Micro

Enterprises in Surallah, South Cotabato and their implications on business
performance. It seeks to understand how these enterprises formulate and
implement their strategies, how they measure performance, and how they
navigate both internal and external challenges. The findings from this study
could provide valuable insights for policymakers, business owners, and
researchers interested in micro-enterprise development. The performance of
Micro Enterprises in Surallah, South Cotabato can be influenced by various
factors including strategic management practices. Previous studies have shown
that strategic management practices can significantly impact the performance of
micro enterprises. These practices include low cost leadership strategy,
differentiation strategy, focus strategy, and combination strategies. However,
there is a need to understand how these practices are implemented in the
context of Micro Enterprises in Surallah, South Cotabato.

The purpose of this paper is to examine and evaluate the relevance and
effectiveness of strategic management accounting in the context of micro
enterprises in the Municipality of Surallah. by conducting this research, it may
find new findings and some problems with the use of SMA and performance
implications. In addition, it explores what causes these problems, which may
contribute to the study of SMA in developing the Micro enterprises businesses.

Statement of the Problem

Generally, the research seeks to determine the strategic management

accounting and the performance implications of micro enterprises in the
municipality of Surallah, Province of South Cotabato.

Specifically, the research will address the following key questions:

1. What is the level of the strategic management accounting practices adopted

by micro enterprises in the Municipality of surallah in terms of:

1.1. Budgeting;

1.2. Cost Management;

1.3. Performance Measurement;

1.4. Strategic Planning?

2. What is the level of the financial performance of micro enterprises in Surallah,

South Cotabato, in terms of;

2.1. Annual Revenue;

2.2. Profit Margin;

2.3. Performance Measurement;

2.4. Return on Investment

3. Is there a significant relationship between the strategic management
accounting and the performance implications of the micro enterprises in
Surallah, South Cotabato?

4. What are the possible engagements in terms of strategic management and

performance implications that can be endorsed based on the result of the study?

Conceptual Framework

The Input-Output (IPO) model represents a system in three stages: input,

process, and output. Inputs are modeled as consumables and efforts that are
introduced to a system at the beginning stage of the life cycle. Outputs are
modeled as the result produced by the system. (MacCuspie. Hayman,
Yakymyshyn, Srinivisan, Dhau, & Drake, 2014). The conceptual framework of
this study is designed around the Input-Process-Output (IPO) model, a widely
used approach in systems analysis and software engineering. This model
provides a clear, logical structure for the research, ensuring that all relevant
factors are considered and their relationships are properly examined.

The reason this study is framed as an IPO model is because it clearly delineates
the flow from input (data about strategic management accounting and financial
performance), through process (data collection and analysis), to output
(improved performance). This structure helps to maintain focus on the objectives
of the research and ensures a systematic approach to achieving them. It also
aids in identifying any gaps or weaknesses in the system, making it easier to
address them effectively.
 INPUTS
1. The level strategic
of
management accounting
performance of the
respondents was determines
in terms of: Budgeting, Cost
management, Performance
measurement, and Strategic
Planning.

2.The level of financial

performance of micro
enterprises in Surallah, PROCESS OUTPUT
South Cotabato which
includes: Annual Revenue, Improved strategic
Profit Margin, Performance management
measurement, and Return Data Collection
accounting and
on Investment. Survey performance of
3. Is there a significant Questionnaire micro enterprises
relationship between the in Surallah, South
Statistical
strategic management Cotabato
Analysis of Data
accounting and the
performance implications of
the micro enterprises in
Surallah, South Cotabato?
4. What are the possible
engagements in terms of
strategic management and
performance implications
that can be endorsed based
on the result of the study?

Figure 1 Conceptual Framework of the Study [Input-Process-Output (IPO) Model]

 Figure 1: In the Input stage, the study considers various factors related to
strategic management accounting performance and financial performance of
micro enterprises in Surallah, South Cotabato. These inputs are the raw data or
resources that feed into the system. The researchers included two input
components: the level of respondents' strategic management accounting
practices and the level of financial performance. The level of strategic
management accounting performance of the respondents was determined by:
Budgeting, Cost management, Performance Measurement, and Strategic
Planning. The second input are the level of financial performance of micro
enterprises in Municipality of Surallah, Province of South Cotabato which
includes: Annual Revenue, Profit Margin, Performance measurement, and
Return on Investment. The Process stage involves the transformation of these
inputs into meaningful information. In this study, it includes data collection
through a survey questionnaire and subsequent statistical analysis of the
collected data. The input data was collected from the micro enterprises owners
by facilitating survey questions. The collected data underwent statistical analysis
so that it can interpret the results. Finally, the Output stage represents the results
or outcomes of the process. In this context, it refers to improved strategic
management accounting and performance of micro enterprises. in this study, the
conceptual framework would likely involve an examination of how strategic
management principles are applied in micro enterprises in Surallah, South
Cotabato, and how these applications impact the performance of these
enterprises.

Hypothesis

Ha: There is a significant positive relationship between the

implementation of strategic management practices and the performance
of microenterprises in Surallah, South Cotabato.

Ho: There is no significant positive relationship between the

implementation of strategic management practices and the performance
of microenterprises in Surallah, South Cotabato.
 This hypothesis assumes that strategic management practices, when
effectively implemented, can lead to improved performance in microenterprises.
It will be tested through the research methods and analysis of the collected data.
If prove, it could provide valuable insights for microenterprise development in
Surallah, South Cotabato.

Theoretical Framework

According to Gure, A. K. & Karugu, J. (2018) Strategic management

practices significantly influence the performance of micro enterprises. These
practices often involve strategies such as low-cost leadership, differentiation,
focus, and combination strategies. The Porter’s Generic Strategies Model, which
includes cost leadership strategy, differentiation strategy, focus strategy, and
combination strategies, is often used in strategic management. These strategies
can significantly influence the financial performance of small and micro
enterprises. Rao, P., Verma, S., Rao, A.A. and Joshi, R. (2023) in the resource-
based view theory and resource dependence theory are also integral to strategic
management. They address why some organizations succeed or fail. The impact
of strategic management on MEs development depends on the architecture of
the regulatory and institutional framework inclined to support MEs in an
economy. Lack of access to credit is a major constraint inhibiting the growth of
the MEs sector. A framework for sustainable business practices for MEs includes
macro and micro determinants. The study at hand delves into the realm of
Strategic Management Accounting (SMA) and its implications on the financial
performance of micro enterprises in Surallah, South Cotabato.

According to Ojra, J., Opute, A.P. & Alsolmi, M.M. (2021) SMA, a concept that
encompasses techniques such as budgeting, cost management, performance
measurement, and strategic planning, is pivotal in providing insightful data about
a business and its competitors. This data is instrumental in formulating and
monitoring business strategies. The financial performance of these micro
enterprises is gauged through key metrics like annual revenue, profit margin,
and return on investment, Mendoza, Rufo Rosales, (2015). The Contingency
Theory posits that the effectiveness of management accounting systems,
including SMA, is contingent upon various organization-specific factors. This
perspective underscores the need for a tailored approach in implementing SMA
techniques.

The Resource-Based View (RBV) of Ma L, Chen X, Zhou J, Aldieri L (2022).

further complements this by suggesting that firms can gain a competitive edge
through effective resource management. In this context, SMA is viewed as a
strategic resource that can significantly contribute to financial performance.

The Balanced Scorecard framework also offers a comprehensive view of an

organization's performance by considering not just financial measures but also
other key performance indicators. Studies have indicated that the adept use of
SMA techniques can enhance decision-making processes and subsequently
improve organizational performance. However, it's important to note that the
impact of SMA on the performance of micro enterprises may vary depending on
factors such as business strategy, market orientation, and firm size. Potential
engagements based on the study's results could include the development of
SMA training programs, creation of customized SMA systems to cater to the
unique needs of micro enterprises, and implementation of regular performance
reviews.

The study considers various factors related to strategic management accounting

performance such as Budgeting, Cost Management, Performance Measurement,
and Strategic Planning. These are crucial elements of SMA that can significantly
influence the financial performance of a business. In addition to SMA
performance, the study also considers the financial performance of micro
enterprises in Surallah, South Cotabato, which includes Annual Revenue, Profit
Margin, Performance Measurement, and Return on Investment. These are key
indicators of a business’s financial health and success.

The theoretical framework also considers possible engagements in terms of

strategic management and performance implications that can be endorsed
based on the result of the study. This involves identifying strategies or
interventions that could potentially improve both SMA practices and financial
performance based on the findings of the research.This study aims to shed light
on these intricate dynamics and provide valuable insights that could help micro
enterprises in Surallah, South Cotabato optimize their strategic management
accounting practices and enhance their financial performance.

Significance of the Study:

The significance of this study lies in its exploration of the strategic

management and performance implications within the realm of micro enterprises
in Surallah, South Cotabato. By delving into this subject matter, we aim to
uncover valuable insights and contribute to the well-being of the local community
and the following.

Micro Entrepreneurs. The primary focus of the study would likely be the
micro entrepreneurs themselves. Researchers might conduct surveys,
interviews, or observations to gather data on their strategic management
practices and performance.

Local Community Members. Community members, including

consumers and residents, can play a role in the study, especially if it explores
the social and economic impact of micro enterprises on the local community.

Industry Experts and Consultants. Researchers may collaborate with

industry experts or consultants who have experience in strategic management
and can provide guidance and expertise.

Customers and Suppliers. The study might also involve customers and
suppliers of micro enterprises to understand their relationships and how they
affect strategic management and performance.

Academic Advisors and Future Researchers. If the study is conducted

as part of an academic program, academic advisors and researchers in the field
of business management, economics, or entrepreneurship could be involved.
Scope and Limitations

The scope of this study is focused on the strategic management

accounting practices and performance implications of micro enterprises in the
Municipality of Surallah, province of South Cotabato. It aims to understand the
strategies that contribute to their success or hinder their performance and
provide valuable insights into the relevance and effectiveness of strategic
management accounting in the context of micro enterprises. The study also
seeks to understand the unique economic, social, and cultural characteristics of
the Municipality of Surallah and how these factors impact the business
environment of micro enterprises.

However, this study has its limitations. The findings are specific to micro
enterprises in the Municipality of Surallah, province of South Cotabato, and may
not be generalizable to other types of businesses. The study relies on
quantitative research methods, which while providing valuable numerical data,
may not capture all nuances of the business practices and challenges faced by
these enterprises. Additionally, the study assumes that all micro enterprises in
the region have access to and use strategic management accounting practices,
which may not be the case in reality.

Definition of Terms

Micro Enterprises. A micro enterprise is a business operating on a very small

scale, especially one with a sole proprietor and fewer than six employees, with
an asset ranging from 3,000,000 or less.

Performance Implications: This term refers to the potential impact or

consequences that a certain action, decision, or strategy may have on the
performance of an individual, team, or organization. It’s often used in the context
of business and management to discuss how various factors might affect
productivity, efficiency, profitability, and other key performance indicators.

Strategic Management Accounting: Strategic management accounting is a

form of management accounting where emphasis is placed on information which
relates to factors external to the entity, as well as non-financial information and
internally generated information.

Budgeting: Budgeting is the process of calculating how much money you must
earn or save during a particular period of time, and planning how you will spend
it.

Cost Management: Cost management is the process of effectively planning and

controlling the costs involved in a business.

Performance Measurement: Performance measurement is the process of

collecting, analyzing and/or reporting information regarding the performance of
an individual, group, organization, system or component.

Strategic Planning: Strategic planning is the process of developing a defined

business strategy that helps your company’s direction. It involves prioritization,
efficient resource capacity planning, the optimization of operations, and the
assurance that all employees and stakeholders align towards the same goals6.

Annual Revenue: Annual revenue is the total amount of money a company

receives from normal business operations during a fiscal year or 12-month
period.

Profit Margin: Profit margin is a financial ratio that measures the percentage of
profit earned by a company in relation to its revenue. Expressed as a
percentage, it indicates how much profit the company makes for every dollar of
revenue generated.

Return on Investment (ROI): ROI (or return on investment) is a key financial

ratio that measures the gain/loss from an investment in relation to the initial
investment9.
 Chapter II

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter presents a review of related literature and studies of the

sub-topics Budgeting, Cost Management, Performance Measurement, Strategic
Planning, Annual Revenue, Profit Margin and Return on Investment. The chapter
also includes further references that will aid in the interpretation of the research
results.

Strategic Management Accounting Practices

Micro-enterprises play a vital role in the development of a nation by

creating employment, encouraging entrepreneurship, and balancing social
income Zakaria, Lidwaji, Anangwe., Abraham, Malenya. (2020). The level of
strategic management accounting practices adopted by micro enterprises can be
assessed based on several factors. Budgeting, cost management, performance
measurement, and strategic planning are important aspects of strategic
management accounting in micro enterprises.

According to (Nsoke et al., 2021), accounting practices can have a significant

effect on the growth of micro and small enterprises (MSEs). However, the study
does not specifically address the level of strategic management accounting
practices in MSEs.

In terms of budgeting, micro enterprises may not employ specialist project

managers or use recognized tools and techniques of project management, as
highlighted by (Turner et al., 2015). This suggests that the level of budgeting
practices in micro enterprises may be limited. Regarding cost management,
Prasad & Tata (2019) discuss the importance of quality management techniques
in the success of micro-enterprises. While this does not directly address cost
management practices, it implies that micro enterprises may prioritize cost-
effective and efficient operations. Performance measurement in micro
enterprises can be assessed using a Likert scale, as mentioned by (Mustapa et
al., 2018). This indicates that micro enterprises may have some level of
performance measurement practices in place, although the specific extent and
sophistication may vary. Strategic planning is a crucial aspect of management
accounting practices. Bryson (2016) provides a guide to strategic planning for
public and nonprofit organizations, which may offer insights applicable to micro
enterprises. However, the reference does not directly address the level of
strategic planning practices in micro enterprises.

Overall, the level of strategic management accounting practices in micro

enterprises may vary. While some aspects, such as performance measurement,
may be present to some extent, others, such as budgeting and strategic
planning, may be less developed. It is important to consider the specific context
and characteristics of individual micro enterprises when assessing their strategic
management accounting practices.

Budgeting

A study conducted in Tanauan, Leyte, by Reynalyn O. Barbosa (2021)

Philippines revealed that financial management practices such as costing and
budgeting are often practiced by Micro and Small Enterprises (MSEs). However,
internal control, working capital management, and long-term financing are rarely
practiced. This implies that while MSEs understand the importance of budgeting
in managing their finances, there is a need for them to also focus on other
aspects of financial management. The study further suggests that training
programs could be developed to enhance the financial management skills of
MSE owners. the literature suggests that strategic management accounting
practices can be beneficial for micro enterprises, particularly in terms of helping
with resource allocation and company management. Budgeting is a key strategic
management accounting practice that helps microenterprises to plan and control
their finances. It involves forecasting future revenues and expenses, and
developing a plan to achieve specific financial goals. Research on the level of
budgeting adoption by microenterprises is mixed. Some studies have found that
a high percentage of microenterprises use budgets, while others have found that
adoption rates are lower. For example, a study by the International Labour
Organization (ILO) found that 75% of microenterprises in developing countries
use budgets. However, a study by the Small Business Administration (SBA) in
the United States found that only 30% of microenterprises use budgets. The
level of budgeting adoption among microenterprises may vary depending on a
number of factors, such as the size and industry of the enterprise, the level of
education and experience of the owner-manager, and access to resources and
support.

Cost Management

Abdullah Abdurhman Alakkas (2023) discusses cost management from

various perspectives. Cost management involves applying effective methods to
control expenses, improve a business's financial condition, and reduce
unnecessary costs. It plays a crucial role in guiding a business toward
profitability by identifying the right strategies. Furthermore, cost management
aids in creating and monitoring budgets, making it easier for financial institutions
to support businesses and share insights on sound policies. It also allows SMEs
to anticipate future expenses, reducing the risk of overspending. Many
businesses incorporate cost management into their overall business model.
Additionally, when introducing it to a project, the anticipated value is calculated
during the planning phase, ensuring that all expenditures align with the cost
management plan once the project is underway. The Role of Cost Management
Strategies for SME Business: A Conceptual Framework” discusses the
importance of cost management strategies for Small and Medium Enterprises
(SMEs) in creating financial sustainability. The paper argues that cost
management is crucial for SMEs as it helps them to control their expenses,
improve their profitability, and ensure their long-term survival. The authors
suggest that SMEs should adopt cost management strategies such as activity-
based costing, target costing, and life cycle costing. Cost management is a key
strategic management accounting practice that helps microenterprises to control
their costs and improve their profitability. It involves identifying, tracking, and
analyzing costs, and developing strategies to reduce costs without sacrificing
quality or customer satisfaction. Research on the level of cost management
adoption by microenterprises is limited. However, the available evidence
suggests that microenterprises are generally not very sophisticated in their use
of cost management practices. For example, a study by the International
Finance Corporation (IFC) found that only 25% of microenterprises in developing
countries use formal cost management systems. The low level of cost
management adoption among microenterprises may be due to a number of
factors, such as the lack of resources and expertise, the time constraints faced
by owner-managers, and the difficulty of tracking and analyzing costs in small
and complex businesses.

Performance Measurement

According to Yirgalem Tadele Gerba & P Viswanadham (2016)

Performance measurement of small scale enterprises: Review of theoretical and
empirical literature discusses the multi-dimensional aspects of performance
measurement in small scale enterprises. The authors argue that performance
measurement is not just about financial indicators but also includes non-financial
indicators such as customer satisfaction, employee satisfaction, and process
efficiency. Another study conducted in the Philippines aimed to assess the
performance of micro and small enterprises using Cash Conversion Cycle. The
study found that the Cash Conversion Cycle is a useful tool for measuring the
performance of MSEs. Performance measurement is the process of collecting,
analyzing, and reporting on data related to the performance of an organization. It
is a key strategic management accounting practice that helps microenterprises
to track their progress, identify areas for improvement, and make better
decisions. Some studies have found that a high percentage of microenterprises
use performance measures, while others have found that adoption rates are
lower. For example, a study by the International Labour Organization (ILO) found
that 60% of microenterprises in developing countries use performance
measures. However, a study by the Small Business Administration (SBA) in the
United States found that only 20% of microenterprises use performance
measures. The level of performance measurement adoption among
microenterprises may vary depending on a number of factors, such as the size
and industry of the enterprise, the level of education and experience of the
owner-manager, and access to resources and support.
Strategic Planning

Strategic Planning and Business Performance of Micro Enterprises,

discusses the beneficial effect of strategic planning on the overall performance of
businesses. The authors argue that strategic planning helps businesses to set
clear objectives, develop strategies to achieve these objectives, and monitor
their progress. Another research paper by holátová, březinová & kantnerová
(2015) “Strategic management of small and medium-sized enterprises”
discusses the strategic management practices adopted by SMEs. The authors
suggest that strategic management is crucial for SMEs as it helps them to
navigate the competitive business environment. Strategic planning is the process
of developing and implementing a plan to achieve a specific goal or set of goals.
It is a key strategic management accounting practice that helps microenterprises
to identify their long-term goals, develop strategies to achieve those goals, and
allocate resources effectively. Research on the level of strategic planning
adoption by microenterprises is mixed. Some studies have found that a high
percentage of microenterprises use strategic planning, while others have found
that adoption rates are lower. For example, a study by the International Finance
Corporation (IFC) found that 40% of microenterprises in developing countries
use strategic planning. However, a study by the Small Business Administration
(SBA) in the United States found that only 15% of microenterprises use strategic
planning. The level of strategic planning adoption among microenterprises may
vary depending on a number of factors, such as the size and industry of the
enterprise, the level of education and experience of the owner-manager, and
access to resources and support.

The Financial Performance of Micro Enterprises

The level of financial performance of micro enterprises can be assessed

through various indicators such as annual revenue, profit margin, performance
measurement, and return on investment. Several studies have examined
different factors that influence the financial performance of micro enterprises.

One important factor is the level of financial knowledge and literacy of the
entrepreneurs. Liu et al. (2022) found that micro enterprises with a high level of
financial knowledge have greater familiarity with formal loan products, which can
positively impact their financial performance. Similarly, Budiasa et al. (2022)
analyzed the level of financial literacy in micro, small, and medium enterprises
and found that financial knowledge, financial ability, financial behavior, financial
attitudes, and financial performance are interconnected.

Another factor that affects financial performance is the availability of financial

resources and access to financing. Love (2019) highlighted the link between
financial development and financing constraints, showing that finance plays a
crucial role in the real decisions of firms. The significance of finances for the
financial performance of micro and small business enterprises was also
emphasized by a study conducted in Ethiopia ("Factors That Affect Financial
Performance of Micro and Small Business Enterprises in Dambi Dollo Town,
Oromia, Ethiopia", 2020). Additionally, the study by Megawati et al. Megawati et
al. (2021) emphasized the role of financial management in determining the
performance of micro businesses. Effective financial management practices,
such as budgeting, cash flow management, and financial planning, can
contribute to improved financial performance.

Furthermore, the size of the enterprise can also impact its financial performance.
Umeze and Ohen Umeze & Ohen (2015) focused on micro restaurant
enterprises and evaluated their profit status. They found that the financial aspect
of performance, including revenue and gross margin, is essential for assessing
the financial performance of micro enterprises.

In conclusion, the financial performance of micro enterprises is influenced by

various factors, including the level of financial knowledge and literacy, access to
financing, financial management practices, and the size of the enterprise. These
factors interact and contribute to the overall financial performance of micro
enterprises.
Annual Revenue

The annual revenue of micro enterprises is a critical factor in assessing

their financial performance. Study by Mendoza (2015) have shown that the
annual revenue of these enterprises can be influenced by various factors such
as the nature of the business, the location, and the target market. However, it’s
important to note that these studies often use secondary data from financial
statements, which may not always provide a complete picture of the enterprise’s
financial health. Furthermore, these studies typically analyze data over a three-
year period, which allows for a more comprehensive understanding of the
enterprise’s financial performance. Despite this, specific data on annual revenue
is often not explicitly mentioned in these studies. A number of studies have
examined the financial performance of microenterprises. These studies have
found that microenterprises typically have lower annual revenue than larger
businesses. For example, a study by the International Labour Organization (ILO)
found that the average annual revenue of microenterprises in developing
countries is $100,000. A study by the Small Business Administration (SBA) in the
United States found that the average annual revenue of microenterprises is
$200,000. However, there is a great deal of variation in the annual revenue of
microenterprises. Some microenterprises generate very little revenue, while
others generate significant revenue. For example, a study by the World Bank
found that the top 10% of microenterprises in terms of revenue generate 50% of
total revenue for all microenterprises. The annual revenue of a microenterprise
can be influenced by a number of factors, including the industry in which the
enterprise operates, the location of the enterprise, and the management skills of
the owner-manager.

Profit Margin

Another crucial factor in assessing the financial performance of micro

enterprises. A study conducted by John Guay Pagaddut (2021) established that
debt ratio, asset turnover, and gross profit margin have a significant effect on
return on assets. This suggests that a higher profit margin can lead to a higher
return on assets, which is a key indicator of financial performance. The study
also found that these factors are interrelated and can influence each other. For
instance, a higher debt ratio can lead to lower profit margins, which in turn can
affect the return on assets. Profit margin is a key financial indicator that
measures the profitability of a business. It is calculated by dividing net profit by
revenue. A higher profit margin indicates that a business is more profitable.
Some studies have found that microenterprises have lower profit margins than
larger businesses, while others have found that there is no significant difference
in the profit margins of microenterprises and larger businesses. For example, a
study by the International Labour Organization (ILO) found that the average
profit margin of microenterprises in developing countries is 10%, while a study by
the Small Business Administration (SBA) in the United States found that the
average profit margin of microenterprises is 15%.

Performance Measurement

An essential aspect of assessing the financial performance of micro

enterprises. Various measures such as the Cash Conversion Cycle have been
used to evaluate their performance. The Cash Conversion Cycle measures how
efficiently an enterprise can convert its investments in inventory and other
resources into cash flows from sales. A shorter Cash Conversion Cycle indicates
greater efficiency and better financial performance. This study revealed that the
cash conversion cycle and its components were found to be effective measures
of the performance of micro enterprises. Profit margin is a key financial indicator
that measures the profitability of a business. It is calculated by dividing net profit
by revenue. A higher profit margin indicates that a business is more profitable.
Research on the profit margin of microenterprises is mixed. Some studies have
found that microenterprises have lower profit margins than larger businesses,
while others have found that there is no significant difference in the profit
margins of microenterprises and larger businesses. For example, a study by the
International Labour Organization (ILO) found that the average profit margin of
microenterprises in developing countries is 10%, while a study by the Small
Business Administration (SBA) in the United States found that the average profit
margin of microenterprises is 15%.
Return on Investment Return on investment (ROI)

A key indicator of an enterprise’s financial performance. A study found

that debt ratio, asset turnover, and gross profit margin have a significant effect
on return on assets, which suggests that these factors could be used as
indicators for ROI in micro enterprises. The study also found that these factors
are interrelated and can influence each other. For instance, a higher debt ratio
can lead to lower ROI, while higher asset turnover and gross profit margin can
lead to higher ROI. Return on investment (ROI) is a financial performance
measure that measures the amount of profit generated relative to the amount of
investment made. It is calculated by dividing net profit by total investment. A
higher ROI indicates that a business is more profitable. Some studies have
found that microenterprises have lower ROIs than larger businesses, while
others have found that there is no significant difference in the ROIs of
microenterprises and larger businesses. For example, a study by the
International Labour Organization (ILO) found that the average ROI of
microenterprises in developing countries is 15%, while a study by the Small
Business Administration (SBA) in the United States found that the average ROI
of microenterprises is 20%. The ROI of a microenterprise can be influenced by a
number of factors, including the industry in which the enterprise operates, the
location of the enterprise, and the management skills of the owner-manager.

Strategic management accounting and performance implications

A study titled “Strategic management accounting and performance

implications: a literature review and research agenda” was published in the
Future Business Journal. The study utilized a qualitative approach that involved
a systematic review to synthesize existing literature towards understanding the
SMA foundation, contingency factors, and organizational performance impact.
The study argues that organizations aiming to enhance their competitiveness
and performance must develop and implement internal policies and procedures
such as SMA that are consistent with their business strategies.

Strategic Management Accounting (SMA) is a key factor in enhancing

organizational performance. It involves the use of management accounting
information to develop strategies that align with the organization’s goals and
objectives. The relationship between SMA and performance implications is that
SMA provides valuable insights that aid in strategic decision-making, which in
turn influences the performance of the organization. By implementing SMA
practices, organizations can make informed decisions that contribute to
improved operational efficiency, cost reduction, and overall profitability.
Therefore, the effective use of SMA plays a crucial role in driving organizational
performance and competitiveness.
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Alakkas, A., Alhebry, A., Alhumoudi, H., Al-Matari, E., & Khan, I. (2023). The
Influence of the Cost Management System on the Business Indicators of
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Barbosa, R. (2021). Financial management practices of micro and small

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Bryson, J. (2016). Strategic planning for public and nonprofit organizations: a

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Budiasa, I., Pratiwi, L., & Maharani, N. (2022). Financial literacy as an effort to
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Holátová, D., Březinová, M., & Kantnerová, L. (2015). Strategic Management of

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International Labour Organization. (2018). World Employment and Social

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THE STRATEGIC MANAGEMENT AND PERFORMANCE IMPLICATION OF MICRO ENTERPRISES IN

SURALLAH, SOUTH COTABATO.

Demographic profile

Instruction: Please supply all the requested information

Name (optional): ___________________________________ Marital status: ___________

Gender:

Male: Female: Other (please specify):

Age:

Under 18: 18-24 25-34 35-44 45-54 55 above

Educational Level:

High School or Below: Some College/Associate Degree

Bachelor’s Degree: Master’s Degree or Higher:

Please provide the following information about your business:

Name of business: ___________________________________

Type of Micro enterprises: Buy and sell Street vendors Plumbers shop
operators Shoemakers Caterers bakery owners tailors dry cleaner

Others please specify: __________________

Number of employees:

1-2 3-4 5-6 7-9

Years in business:

1-3 years 4-6 years 8-10 years 10-12 years

 Others please specify: ______________

General Instruction: Generally, this research seeks to determine the strategic management
accounting and the performance implications of micro enterprises in the municipality of surallah,
province of south cotabato. We appreciate your participation in this survey. Your responses will
contribute to our understanding of the strategic management accounting practices adopted by
micro enterprises in Surallah, South Cotabato.

Please read each statement carefully and indicate your level of agreement on a scale of 1 to 5,
where 1 represents ‘Strongly Disagree’ and 5 represents ‘Strongly Agree’. We are interested
in your honest opinion. Your responses will be kept confidential and will only be used for
research purposes.

Part 1: Please indicate your level of agreement with the following statements regarding the
strategic management accounting practices in your micro-enterprise.

(1) Strongly Disagree (2) Disagree (3) Neutral (4) Agree (5) Strongly Agree

BUDGETING 1(SD) 2(D) 3(N) 4(A) 5(SA)

1. Our micro-enterprise effectively utilizes budgeting as a
strategic management tool.
2. Our enterprise’s budgets are linked to our strategic
objectives.
3. The budgets in our enterprise are flexible and can be
adjusted for changes in business conditions
4. Our enterprise uses zero-based budgeting, where every
expense must be justified in each new period.
5. Our enterprise’s budgeting process is efficient and timely.

COST MANAGEMENT 1(SD) 2(D) 3(N) 4(A) 5(SA)

1. Our enterprise regularly analyzes the cost structure of our
products or services.
2. Our enterprise practices regular cost control measures to
ensure profitability.
3. We use our cost data to set prices for our products and
services.
4. We use cost information to make strategic decisions about
 pricing and production
5. Our enterprise regularly reviews our suppliers to ensure
we are getting the best value for money.

PERFORMANCE IMPLICATIONS 1(SD) 2(D) 3(N) 4(A) 5(SA)

1. Our micro-enterprise employs performance measurement
systems to monitor and evaluate our operations.
2. Performance metrics are used in our enterprise to
motivate and reward employees.
3. Our enterprise has clear, measurable performance goals.
4. Our performance measurement system helps us identify
areas where we can innovate or improve
5. Our performance measurement system is effective in
helping us to track our progress and achieve our goals.

STRATEGIC PLANNING 1(SD) 2(D) 3(N) 4(A) 5(SA)

1. We engage in strategic planning activities to guide our
micro-enterprise's future direction.
2. Our strategic plan is reflected in our daily operations and
decision-making processes.
3. We regularly review and update our strategic plan based
on changes in the business environment
4. We use SWOT analysis (Strengths, Weaknesses,
Opportunities, Threats) as part of our strategic planning
process.
5. Our strategic planning process helps us stay competitive
in our industry.

Part II - Please indicate your level of agreement with the following statements regarding the
financial performance of your micro-enterprise.

(1) Strongly Disagree (2) Disagree (3) Neutral (4) Agree (5) Strongly Agree

ANNUAL REVENUE 1(SD) 2(D) 3(N) 4(A) 5(SA)

1. The annual revenue of the micro enterprise has

increased in the past years.
2. We are able to generate sufficient revenue to cover our
operating expenses and make a profit.
3. The micro enterprise’s annual revenue allows for
business expansion.
4. The micro enterprise’s annual revenue allows for
reinvestment into the business.
5. The micro enterprise’s annual revenue has potential for
growth in the next fiscal year

PROFIT MARGIN 1(SD) 2(D) 3(N) 4(A) 5(SA)

1. Our micro enterprise has a healthy profit margin

2. The profit margin of my micro enterprise is competitive

in the market.
3. The profit margin of my micro enterprise is sufficient to
support business growth and investment.
4. I am confident in the ability of my micro enterprise to
maintain or improve its profit margin in the future.
5. The micro enterprise’s profit margin meets its financial
goals.

PERFORMANCE MEASUREMENT 1(SD) 2(D) 3(N) 4(A) 5(SA)

1. The micro enterprise regularly measures its financial

performance.
2. The micro enterprise compares its financial
performance with other similar-sized businesses in
Surallah.
3. The results of the performance measurement are used
to make strategic decisions in the micro enterprise.
4. Performance measurement results are used to assess
the effectiveness of business strategies in the micro
enterprise
5. Performance measurement results are used to assess
customer satisfaction and loyalty in the context of the
micro enterprise.

RETURN ON INVESTMENT 1(SD) 2(D) 3(N) 4(A) 5(SA)

 1. Return on Investment (ROI) is a critical metric for
evaluating the financial performance of micro
enterprises..
2. The enterprise’s ROI meets its financial goals.

3. ROI calculations are regularly reviewed and updated

based on changes in market conditions or business
strategies.
4. ROI calculations are used in decision-making
processes for new investments or projects
5. Effective management of investments can significantly
impact the financial success of micro enterprises.

Part III- Please indicate your level of agreement with the following statement regarding the
relationship between strategic management accounting and the performance of your micro-
enterprise.

(1) Strongly Disagree (2) Disagree (3) Neutral (4) Agree (5) Strongly Agree

QUESTIONS 1(SD) 2(D) 3(N) 4(A) 5(SA)

1. Does your enterprise use strategic management accounting?

(Yes/No) .If yes, how often do you use strategic management
accounting tools in your decision-making process?
2. We use strategic management accounting tools and techniques
to track and measure our progress towards our strategic goals.
3. We use strategic management accounting information to make
informed decisions about our business.
4. We believe that our strategic management accounting system
is a valuable asset to our micro-enterprise.
5. We believe that strategic management accounting is essential
for the success of micro-enterprises.

Part IV- Please indicate your level of agreement with the following statement regarding the
engagement in strategic management and performance implications by choosing the most
appropriate option:

(1) Strongly Disagree (2) Disagree (3) Neutral (4) Agree (5) Strongly Agree

ENGAGEMENT IN STRATEGIC MANAGEMENT AND 1(SD) 2(D) 3(N) 4(A) 5(SA)

PERFORMANCE IMPLICATIONS
1. We should use strategic management accounting tools
and techniques to track and measure our progress
towards our strategic goals.
2. We should use strategic management accounting
information to make informed decisions about our
business, such as resource allocation, product
development, and pricing.
3. We should regularly review our strategic plan and
performance measures to ensure that they are still
relevant and effective.
4. We should use strategic management accounting
information to identify areas where we can improve our
performance.
5. We should use strategic management accounting to
support our micro-enterprise's growth and
development.