In order for company to successfully operate in the modern world it must be strong and flexible; strong in the sense that it can compete in the market and flexible related to fast-response towards environmental changes. Strategic management involves analysis and decision-making for a profitable strategy in an organization. The key strategy is to maintain competitive advantage. By designing a strategy (which inherently means creating strategic plan) the organization must assess and allocate its resources & budget and also determine the most efficient plan in order to maximize return on investment. Organizations must be aware of the competitive atmosphere if they want to be successful and stay on the market. The company must perform benchmarking to screen strengths and weaknesses of competitors, and analyse ways in which their products and services reach customer needs. The main drivers of development in any modern economy are small and medium enterprises. Deriving a positive business climate encourages procreation of new SME’s, which means an expansion of competing organizations. Therefore, strategic management is a key factor for creating sustainable competitive advantages in small and medium entrepreneurship which then becomes significantly valuable. Empirical research connected with master thesis will be examined in three small and medium enterprises: TOVEDO Ltd., MDM Ltd. and ANTON Ltd. The objective of case study is to examine whether small and medium enterprises in Croatia have a clearly defined strategy for the development of their business, if they do not, how and on which basis the company should create its own unique strategy which will help them to differentiate in the market and be better than competitors.