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

Future Trends and Techniques in Segmentation

Segmentation consists of group of buyers or a process of identifying groups of buyers who share similar set of need and wants.  It is the breakdown of the market for a particular product or service into segments of customers, which differs in terms of needs, wants, lifestyle, religion, income level, gender, buying process etc, and their response to marketing strategies. Today’s organisations need fresh thinking on how to operate and compete in the new economy characterised by hypercompetition, customization and digitalisation. An organisation cannot serve all the consumers in the entire market, the consumers are too many and are too diverse in their buying process.  An organisation therefore, needs to identify the market segment(s) it can best serve. Organisations been aware of these facts has been segmenting their products offerings to target a particular segment(s) of the market rather than using the old method of mass-marketing.  ...
Post a Comment
Read more

iPHONE/iPAD MONEY MAKING REVOLUTION

In this new world of information technology, it is only ignorance that will still keep you in poverty or wants. New technological innovation comes into the market everyday with the potency of wealth . ARE YOU ONLY USING IT OR MAKING MONEY FROM IT AS WELL? iPhone/iPad App business is booming! It is the new way to become the millionaire you always wanted to be. Most of us are not so good with figures so we tend to get scared when technology is involved. But things has gone beyond those days of figures and numbers. This is an era of internet where even the most timid make money without knowing how to add 1 + 1. The best way to know something you don’t have knowledge of is to learn from those who know it. Age, class, race or   religion has no barrier in the internet world. There is no limit in what you’ll know, only your thinking can limit you. Learn how to create iPhone/iPad App or Game with no programming skills and hit pay dirt with it in the App Store! It is as easy as A-B-C. H...
Post a Comment
Read more

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