| |
| |
|
Strategic Planning Information presented by the business editors of z4b.com |
|
|
|
6 Steps To Laying Out Your Competitive Strategy
Why do so many companies languish and watch as their business turns into a zero profit zone, while others seem to thrive? When you look at your business, whether it's a new venture or a company with a long history, can you answer the following questions?
Companies that fail to answer these questions, and don't believe they are of paramount importance, relegate themselves to marginal profitability at best and failure at worst. But companies that can answer these questions are able to raise the value bar for their customers and reap the benefits of success. Of course, being able to answer 3 simple questions does not ensure success, but it is an important step in creating a strategic and focused operation which leads to a successful business. With today's business environment being so competitive, businesses need to re-invent the rules on which they compete in order to be successful. Companies like Wal-Mart have figured this out and have redefined competition in their market by delivering a unique value to a selected customer group. By maintaining a focus and discipline, they make it difficult for other companies to compete under old competitive terms. Simply, competitive strategy has never been more important to success in today's business environment. It does not matter what type of business you are in or whether you are small, big or just starting out, a company can not survive without an adequate and focused strategic plan to best the competition. Yet many companies fail to execute a successful strategy; it is these companies that languish in the zero profit zone. In simple terms, for a company to achieve success and enter the profit zone it must first decide where it will stake its claim in the marketplace and what kind of value it will offer its customers. A company needs a clear marketing thrust, a precise knowledge of its customer base, and a product or service with a niche or some competitive advantage to be successful. Unfortunately, many entrepreneurs and business owners get stuck in the process of defining their competitive strategy. They often have the idea and the product, but being the technician they are not sure how to define its market. Even worse, many entrepreneurs assume or guess their target market and often glaze over a competitive strategy, usually to the detriment of the business. So what are the steps to laying out a competitive business strategy? While there are different methods you can follow, I have laid a series of 6 basic steps to help you. 1. Financial perspective This step may not seem to have much to do with strategy, but it is important to determine the value of success quickly. Why? Because, in simple terms if the venture can't deliver significant returns, it may not be worth the risk, and you have to ask yourself if it is worth continuing with your business. In this scenario you complete a reverse income statement. You start by defining how much profit you want to see at the end of a certain time period, and then determine the amount of revenues needed to generate that profit and the costs to deliver that profit. Do the numbers add up and make sense? The goal here is to be objective, if the expected revenue is not sufficient to generate your required profit at the end based on an estimate of costs, don't simply fudge the numbers and assume you can reduce costs or increase revenue. Be diligent in your assessment. 2. Understand the industry and competition In step 2 you are going to assess your industry and the competition. This basically comes down to assessing 5 factors: 3. Understand the Customer Perspective In step 3 you assess your customer. This is a key step, get it wrong and you may not be able to recover. In fact, the customer value proposition and how it translates into growth and profitability for the company is the foundation of strategy. Start by asking your self a couple basic questions: To achieve my vision, how must my customers look? Who are the target customers that will generate growth and a profitable mix of products/services? Next, ask yourself what is the value proposition which defines how the company differentiates itself to attract, retain and deepen relationships with the targeted customers? There are basically 3 value propositions or disciplines that you can choose from: In order to help you determine which of these value propositions you decide on, you may want to work through a value chain: 1. Determine your customer priorities 2. Determine the channels needed to satisfy those priorities 3. Determine the offering (products) that are best suited to flow through those channels 4. Determine the inputs (materials/knowledge etc) required to create the product 5. Determine the assets/core competencies essential to the inputs (ask yourself, in order to satisfy my customer at which processes must I excel? For example, product design, brand and market development, sales, service and operations and/or logistics). 4. Finish the business model The business model shows how all the elements and activities of a business work together as a whole by outlining how the business generates revenue, how cash flows through the business and how the product flows through the business. By this time, you should understand the revenue capability of the business, how the industry works and your competition, who you customer is, what you are going to offer them and how you are going to offer it. By drawing a flow chart that shows how these activities are linked together you will understand how the business activities flow to generate projected profit, which you determined in step 1. This is also a good step to see if something is missing in your analysis. 5. Construct the business plan By the time you get to this step most of your work is done. If you are looking for financing, a formalized plan will have to be completed. If you do not need financing, simply make sure the preceding tasks are documented so that they can be reviewed and changed as time progresses (strategy is an ongoing process, not a one time task). 6. Learning and growth perspective In this last step, you ask yourself how/where the organization must learn and improve in order to become and remain successful. For example, determine the skills, capabilities and knowledge of employees needed, the technology needed and the climate and culture in which they work. About The Author Jeff Schein is a CGA and offers consulting and advice in the areas of business planning, business modeling, strategic planning, business analysis and financial management for new ventures and growing small businesses. Visit www.companyworkshop.com or mailto:jeff@companyworkshop.com You have permission to publish this article electronically or in print, free of charge, as long as the bylines are included. A courtesy copy of your publication would be appreciated. Send to:jeff@companyworkshop.com
MORE RESOURCES:
Strategic-Planning - Google News |
|
|
|
RELATED ARTICLES
The Top 10 Priorities That Guard Your Five-Star Reputation Making money doesn't make your reputation.. Business Plan Long Term Goals Writing a business plan is not an easy endeavor, nor is predicting the future. You will need to spent adequate time in preparing your long-term goals and objectives. Sales Planning and Business Plans Writing a business plan can be tricky when all the books on the subject fail to keep updating their editions. One significant factor is the sales planning in business plans, yet few books show examples of how to explain online sales which will contribute to your over all stores sales in your retail outlet. Action Planning ACTION PLANNING: Action Planning is a process to develop strategies for changes in the organization based on an analysis of the problems which precipitate the need for change. It is a collaborative method of planning which involves the people working in the organization and permits the people who will be influenced by the decisions and change to have influence on the product or outcome. Leverage - A Small Step For You /A Big Change For Your Career Cassy was an employee of a nonprofit who had been at her job 5 years. She came to me because she felt that the organization she was working for didn't value her and was upset because others had been promoted but she had not. College Students and Graduates to Run Company Outlets or Franchises Does your overall business strategy include the recruitment of college students to run your locations? Are you a franching company and looking for young, talented, hardworking and dedicated franchisees? There are some things to think about before you deploy such a strategy. There are both positives and negatives to focusing your recruitment efforts on college students, for instance best reason's to use college students include some of the following:They May Have Rich Parents Who Can Pay Outright For A Franchise;They May Have Parents Who Are Willing To Co-Sign For A Franchise;They are Young With Plenty Of Energy;They Have Little Business Experience And Will Not Try To Rewrite Our System;They Are Used To A Very Structured Environment;They Want To Succeed;They Might Have A Business Degree;They Are Sociable Animals And Good With People;They Will Study Our Operations Manual Cover To Cover;They Will Make Two To Three Times As Much With A Franchise Than Their First Corporate Job;They Love To Have Fun And This Is A Fun Job. A Backup To The Internet Is Vital & Now Cost Effective It doesn't take a Terrorist Act, Tsunami or Earthquake to put a business heavily dependent on the internet in the dark and effectively out of business??for hours or even days into weeks.Actually, a misguided backhoe, a lightning bolt, a car accident involving a phone pole or cable box, a flooding rain or an electrical "brown out" can do it in a flash. Microsoft Great Plains Implementation: Pharmaceutical Corporation Specifics - overview Microsoft Business Solutions Great Plains serves mid-size and large clients in horizontal and vertical markets. Historically Great Plains Software was encouraging ISV partner to write third party modules and later on - Great Plains Software had a chance to select the product for incorporation into their core set of modules: Manufacturing, Project Accounting, Purchase Order Processing, Collection Management, etc. SWOT Analysis If you've ever listened to Warren Buffett talk about investing, you've heard him mention the idea of a company's moat. The moat is a simple way of describing a company's competitive advantage. ERP Role in Selling Your Mid-size Business - Microsoft Great Plains and CRM Example If you own the mid-size business and actively work in it as executive manager or lead, say marketing, - you probably know exactly what needs to be done on the daily basis to keep it running. However, in many cases this business critical knowledge exists in your head only. The Chasm of Change---- Restructuring ----- The Goliath Richard L. Daft one of the country's recognized academic leadership experts raises the question, "What kind of people can lead an organization through major change?" A Turn-A-Round restructuring qualifies as major change and requires transformational leadership. Site Selection and Demographic Tips for Establishing Outlets Many cities have home pages on the Internet. Many of these cities use these sites to promote their town. A Rough Cut on Feasibility A piano tuner recently moved to Buffalo, NY, and would like to assess the business possibilities for him in his new home. He plans to estimate how many piano tuners the greater Buffalo area can support, and compare that to the number listed in the phone book. Why You Need a Business Planning System NOT a Business Plan When someone mentions business planning we have been conditioned to think about writing a business plan. There are hundreds of books and articles, tons of software, an army of consultants, and a multitude government programs to help you write a business plan. Take A Systems View To Ensure Your Business Stays Healthy How are you feeling today? Good, not so good, great? Let me ask the same question in a different way: How is your gastro-intestinal system functioning today? What about your lymphatic system? How's the old circulatory system flowing along? Are all your bodily systems aligned, in sync, and cranking at peak performance?In order to get everything done perfectly and on time, your body must use many systems that effectively work side by side. Just as it is important to take a systems view when it comes to your body's health and well-being, it is equally important that you have a clear understanding of your business and its organizational systems. Three Steps to Give Your Strategic Plan Traction We all agree Strategic Planning is a critical part of a company's success. All too often, however, strategic plans stall before they ever make it to execution - or they gradually lose momentum. 5 Strategies That Will Boost Your Business Productivity Today! - Part 2 Growing your own small business can be one of the most exciting journeys you could ever embark upon!But it's important that you continuously implement new and fresh ways to generate sales and improve your profitability in order to stay ahead of the market!Here are the next 5 Strategies to help you propel your business to new heights of success!1. Develop your own Loyalty ProgramIf you have a look in my wallet, I have a Jesters Pies Card, a Subway Card and a Video Ezy card - all of which entitle me to something for nothing once I have made enough purchases!Some people will call me cheap?I just think it makes sense! If I'm going to buy something anyway?why not go somewhere that rewards me for my loyalty?If people have to buy your type of product or service from somewhere, why not make it more attractive for them to buy from you?Create your own loyalty program and create regular, satisfied customers who get rewarded for giving you their business!2. Are You Aware of Planning in Business? Human beings are rational agents. Rationality endorses one to take up planning in every sphere of life from shifting to a new house to marriage, as well as business. Mining Market Data With a heightened awareness of opportunity, ideas can often be generated by market research. The National Women's Business Center (NWBC) defines market research as "a systematic, objective collection and analysis of data about your target market, competition, and/or environment with the goal being increased understanding. Executive Summary for Business Plans of Franchisees Writing a business plan for a franchised outlet of a larger company to get funding or find investors is difficult because the franchisor already has a plan which is working, but until you are privy to it upon purchase you actually know relatively few details. The franchisor must keep this information proprietary to insure competitors do not steal the information, but the franchise buyer needs the information to prepare a business plan to get a loan from a bank.
|
| home | site map |
| © 2006 |