Skip to main content

Developing Strategic Plan in Business (Part 3)


Effect not Equal to Cause when Planning a Strategy

When reviewing a business it is essential to cut through the symptoms of problems and reach the underlying causes. Questions which can assist in revealing the real causes include:
·         "What stopped the business from?"
·         "What caused the cause of?"
·         "Why didn't the business achieve a 25% return?"
By way of an example consider why this company may be unable to increase its market share:
Because it cannot penetrate major customers, because its product range is too narrow because the company doesn't have the capability to produce additional products, because of shortcomings in R & D because of a lack of expertise and resource because R & D is not an immediate priority because of a lack of profits because of a high interest burden because the company is over-reliant on borrowings because the shareholders won't/can't raise additional permanent capital.
The moral in this case is that there are no major customers due to under-capitalization!

 SWOTs - Keys to Business Strategies

Having built up a picture of the company's past aims and achievements, the all-important SWOT (strengths, weaknesses, opportunities and threats) analysis can commence.

Strengths & Weaknesses

Strengths and weaknesses are essentially internal to the organization and relate to matters concerning resources, programmes and organization in key areas. These include:
  • Sales - marketing - distribution - promotion - support;
  • Management - systems - expertise - resources;
  • Operations - efficiency - capacity - processes;
  • Products - services - quality - pricing - features - range - competitiveness;
  • Finances - resources - performance;
  • R&D - effort - direction - resources;
  • Costs - productivity - purchasing;
  • Systems - organization - structures.
If a start-up is being planned, the strengths and weaknesses are related mainly to the promoter(s) - their experience, expertise and management abilities - rather than to the project.
The objective is to build up a picture of the outstanding good and bad points, achievements and failures and other critical features within the company.

Threats & Opportunities

The external threats and opportunities confronting a company, can exist or develop in the following areas:
  • The company's own industry where structural changes may be occurring
    (Size and segmentation; growth patterns and maturity; established patterns and relationships, emergence/contraction of niches; international dimensions; relative attractiveness of segments)
  • The marketplace which may be altering due to economic or social factors (Customers; distribution channels; economic factors, social/demographic issues; political & environmental factors)
  • Competition which may be creating new threats or opportunities
    (Identities, performances, market shares, likely plans, aggressiveness, strengths & weaknesses)
  • New technologies which may be causing fundamental changes in products, processes, etc.
    (Substitute products, alternative solutions, shifting channels, cost savings etc.)
Against an uncertain and shifting background, the objective must be to identify and prioritize the key SWOTs in a one-handed manner.

Develop Business Strategies

Once the SWOT review is complete, the future strategy may be readily apparent or, as is more likely the case, a series of strategies or combinations of tactics will suggest themselves. Use the SWOTs to help identify possible strategies as; Build on strengths, Resolve weaknesses, Exploit opportunities, and Avoid threats.
The resulting strategies can then be filtered and moulded to form the basis of a realistic strategic plan.

 Simple & Short Strategic Plans

Notwithstanding that "battles are often lost for want of nails", a company rarely succeeds or fails for minor or trivial reasons. The causes are usually substantial and are often self-evident, at least to an outsider. For example, the business was completely over-borrowed; management was weak; a major new product opportunity was identified; legislation changed; a major competitor went bust or expanded; the company never reinvested.
It should be possible in the course of a few pages to set down the main elements of a business's vision, mission, values, objectives, goals, strategies, SWOTs etc. The compilation of a short report along these lines is likely to prove much more difficult than a lengthy dissertation which mixes up details and principles, and confuses the broad picture.
Independent advisers or non-executive directors can play a valuable role in this process because they can readily adopt the role of devil's advocate and also bring external knowledge and expertise to bear.

Comments

Post a Comment

Popular posts from this blog

Where to get Ideas that will put Money into your pocket

Ideas it is said, rules the world. This statement is as true as the spoken words of God. Ideas put food on the table, ideas puts money in the pocket. Ideas sets one apart from the crowd. Ideas are vital ingredients that the soup of this world cannot do without. So where can you get ideas that will put money into your pocket? The first place to get good ideas is within you. You hear me right – within you is full of ideas that can make you one of the richest person the world has ever known. Lets look at it this way, when God created the world, did He created us with the cars we drive today? Okay, lets look at it another way, when God created us, did He created us with the light bulb we are using today? I am sure you are understanding yourself now. When God created us, did He created us with the computer? So if God did not created us with these things, where did they come from? They were all hidden within us. Some hundred years back, Henry Ford has an idea within him that he wants people ...
Post a Comment
Read more

The Importance of Integrity to the success of your Business

Can your integrity and character recognize each other if they meet in the dark? I want you to ponder over this question, have an answer to it before continuing the reading of this article. Let me asked you in another way, ‘can somebody believe you for who you are?’ Do you keep your words? If you promise to do something, do you keep your promise? These are very vital questions that deal directly with your integrity, reputation and character. They determine how your customers, friends, colleagues and even family members look at you. If you made a promise to your child, keep it. Don’t underrate him/her. Because, what they see you doing as a father or mother, they will eventually follow suit. It is better not to promise than promise and fail to keep it. If you know what you are promising is not possible for you to keep, apologize to the person and explain why you can’t keep your promise. It may hurt initially, but the pains can be easily absorbed more than that of disappointment. If you p...
Post a Comment
Read more

Are You Hanging Out with Losers?!

Look at your friends, your family and your colleagues.  Are they generally successful, or do their lives smack failure?  Are they motivated to be their best, or do they complain about hard knocks?  Do they pay attention to health, or are they out-of-shape?  These are important questions for every professional because recent scientific research reveals that you’ll be inexorably pulled down (or up) to the level of the people around you. The scientific study, described in the New York Time Magazine article “ Is Happiness Catching ” tracked the lives of several thousand people in the town of Framingham , MA.  It documented the existence of a phenomenon known as “social contagion” whereby some clusters of friends “infect” each other with unhappiness and bad habits, while other clusters spread the general happiness and healthy behaviour that are the foundation of success, both in profession and general life. This research is imp...
Post a Comment
Read more