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Planning For Your Business
Strategic Management: Critical Steps for Developing
Competitive Edge and Innovative Strategies
Introduction
Many intelligent people have extremely innovative
ideas. Most ideas never make it outside of the
brain. A few find their way to the development
table. These people develop plans and grand schemes
concerning how they are going to sweep the globe
with their new, "totally unique and never before
thought of" product or service, making millions of
dollars in a few short years. Most of these projects
never see the day of light. Those that are based in
solid business fundamentals have a tough enough time
succeeding for any period that makes an impact on
the market. Of those plans that become profitable
businesses, the good majority will fail in three to
five years. What sets the long-term successes apart
from the "one hit wonders"? The answer lies in the
business plan and how it is developed.
Developing and exploiting a
competitive edge in the market is the key to
success. Without this edge, the chances of success
are slim. Venture capitalists know this and
therefore look long and hard for the things that set
the "wanna bes" apart from the "could very well bes".
Most start-up businesses that want to make a
difference in the market need outside capital to get
the operations running. In order to be successful in
the fund raising venture, CEOs need to understand
the fundamentals of developing and exploiting this
edge.
Develop a Vision and
Mission Statement The founders must have an
image in their mind regarding what they want to
achieve, where they want to go and how they want to
get there. This vision gives future employees
direction, determines future decisions and helps
motivate staff in difficult times. When this vision
is written on paper, in the form that answers the
question, "What business are we really in?" in such
a way that it becomes tangible, it becomes an
expression of how the company distinguishes itself
from others in the market, and shows in no uncertain
terms what the mission of the business really is.
This becomes the Mission Statement.
Determine Core
Competencies, Target Market and Desired Market
Position Companies must determine what they
are good at, where they want to be and at what
position in the market they desire to achieve. If
they can do this, and do it better than their rivals
then they will have an edge by understanding the
consumer better and thus be able to meet the
customers' needs in ways that the competition
cannot. These core competencies consist of unique
products, services, and capabilities that they do
better than everyone else. They can then take these
competencies and utilize them to specialize in a
certain portion of the market. When they define
their position they are able to determine the target
and develop the specific strategies needed to
succeed.
Perform a S.W.O.T.
Analysis of theCurrent and Future Business Situation
All organizations need to learn about their own
Strengths and Weaknesses within the company that can
affect their actions in the market. What are they
good at, and what are they not so good at. By
understanding the strengths, they can develop plans
to capitalize on those points while at the same time
diminishing the weaknesses, or trying to find ways
to turn the weaknesses to advantages through
research, development, and or other means. It is
important to understand the strengths because in the
future those advantages may disappear, or be
nullified through changing market circumstances.
External circumstances
occurring outside the organization will influence
the success of the organization. By finding out the
potential opportunities to "get ahead" and then
capitalizing on them, it may give the organization
the edge that it needs to skate past the rivals who
are struggling in the same market. A good example of
this is the implications that the Kyoto Accord has
on automobile makers developing hybrid vehicles. As
Japan is lagging behind on their agreement, the
government will start to impose stricter
regulations, forcing consumers to utilize less
gasoline-powered vehicles. The companies that have
been working on hybrid, or electric, or use a bio
fuel will be able to attract these consumers to
their segment.
Looking at it from the other
side of the coin, there are threats like the Kyoto
Accord which can severely damage the way a business
profits. For those organizations relying upon diesel
transport fleets, such as large transport companies,
the costof fines due to not getting rid of the
dieselcould have serious ramifications on their
operating profit margins, thus affecting how the
investors see the health of the organization. The
largest external threat to an organization is the
ever-changing, constantly mutating demographic
spread. This can make successful companies obsolete
if they are unprepared for the change.
By putting these Strengths,
Weaknesses, Opportunities, and Threats together in a
chart for the managers to see, this S.W.O.T can help
to predict the future necessary actions a company
may be required to take in order to stay in the
market.
Identify Key Success
Factors Critical factors to success are
relationships between the business variables that
companies have control over and the factors that
influence their ability to actually compete in the
market. By knowing what these factors are, and
exploiting them in such a way as to bring events to
the desired conclusion, businesses have a greater
chance of succeeding in their business plans.
Analyze the
Competition (Due Diligence) Whenever a
company takes on a new venture, be it an M&A,
entering a new market, developing a new product, it
is essential to the future success of the business
to perform a comprehensive occupational due
diligence program. This kind of research will
provide information about everything a company needs
to know concerning the rivals in the business. It
should prevent being caught off guard by "surprises"
that might have been predicted and neutralized in
advance. Performing this extensive market research
can also identify new market opportunities, changing
segments, as well as unexpected market competition
that arises like a phoenix out of nothing to "storm
the castle". Reaction time to market changes can be
improved by constantly looking at the market and
predicting advance occurrences.
These days information
transfer is so rapid that the advantage of "time" no
longer seems like an option. Once when Sony had
three years of time from launch of new product, they
now have apparently three months. The old saying
"You snooze, you lose" has never been more true than
now. If you don't anticipate your rival's
strategies, then your strategies will be anticipated
and beaten by your rivals. There no longer is time
for a "long slow think".
Create Goals and
Objectives By creating goals and objectives
the management team begins turning ideas and dreams
into real, concrete places to go and things to do
once there. Goals are the long-range things that a
company wants to get done and the objectives are the
detailed specific, measurable, attainable, realistic
and timely steps on what you set out to do. It is
important to get S.M.A.R.T.
Formulate Strategies
to Accomplish the Goals Once goals and
objectives have been written out and solidified
hard-core strategies on how to actually reach the
objectives and goals must be planned in great
detail. These strategies are a company's roadmap
that will show them where they want to go, how to
get there, and what to do if they get off track.
Strategies fulfill the mission, the goals and the
objectives. It is important not to be a "me too"
because then the company is too late and can only
pick up the leftovers which hardly make for
delicious meals.
Translate Strategies
into Action When a company has gotten to
this stage, it is time to take action and "run the
programs" that have been designed to succeed in the
market while returning the best possible ROI
available. Projects are defined by determining
purpose, scope, contribution to market, available
resources, requirements to succeed in market, and
the timing of entry. I would suggest that at this
time it is also essential to determine future exit
strategies, as well as the costs to overcome the
barriers to exit. Companies that have come this far
will most likely have an excellent plan for short,
medium and long term in a format that can be
understood and acted upon by the employees.
Establish Accurate
Controls Once the plan has been activated,
it is necessary to see how well it is working in the
market. In order to do this the organization must
determine the standards against which performance is
actually measured. There are many ways to do this,
and new ways are being developed every year that
seem to be the "answer to the deficiencies of the
past". It used to be sufficient for a company to
look solely at their financial measures such as ROI,
ROE, ROM and Operating Profits, and so forth. But as
time progressed and business shifted from a
product-oriented market to a knowledge-oriented
market, the important factors changed. One of the
recent tools that organizations attempt to utilize
(though actually quite difficult and extremely time
intensive to employ) is the Balanced Scorecard. This
is a set of four measures that an organization
collects data about, and then reviews to see how
well they are performing.
The four perspectives of the
balanced scorecard are:
- 1. Customer
Perspective - How does the customer see us in
the market? Are we successful? Are we meeting
their needs? Are we lacking in something?
- 2. Internal
Perspective - What do we do in the company
that we can modify and adjust in order to improve
our operations?
- 3. Innovation and
Learning Perspectives - How can we improve
our investment in knowledge, developing it in such
a way as to have a new competitive advantage over
our clients? How can we increase our knowledge?
- 4. Financial
Perspective - The "traditional" way of
looking at the company from an investor point of
view in order to determine how healthy we are
"financially", which translates into "how
profitable are we"?
Conclusion
Companies that take these steps seriously when
developing their business plans stand a much better
chance of succeeding in their venture. With the
success ratio climbing, investors will be more
interested in looking to funding start-ups more
readily. Of course there are still a huge number of
variables that venture capitalists look to in
addition to a sound business plan but to take the
original idea this far, and be this serious about
it, the entrepreneur is performing a comprehensive
due diligence program that will surely improve
chances of longer term success in the market. If
after performing all of these activities, the
business is still having trouble, it may be that the
original plans and goals of the CEO were "off the
mark". In many cases the operators take the blame
for not being able to achieve the expected
objectives. But more often than not the CEOs plans
are the cause of friction and potential failure. In
this situation it is crucial that the CEO be willing
and able to realign the goals and objectives they
originally developed for the company's future. This
is the realm of Second Generation Knowledge
Management and "Double-Loop Learning".
Cameron has
lived and worked in Japan for over 18 years.
Originally a researcher and educator he has a
penchant for details and a natural born flair for
communication "soul to soul".
His extensive
experience in the culture, coupled with language
fluency and a deep understanding of Japanese ethics,
morals and thought processes has allowed him to
develop a special niche market in the business
world.
While working to
develop a global presence for a titanium raw
material / parts & accessories distributor for the
eyeglass manufacturing world for 5 years, Cameron
saw the difficulties small/medium sized
manufacturers were having themselves trying to
expand their businesses outside of Japan. He decided
to assist those kinds of businesses get started
successfully.
Currently
Cameron owns and operates a SOHO business designed
to help Japanese and foreign companies come together
in business in a very efficient, effective, and
cost-effective successful manner.
Reach Cameron @:
http://www.intrmarketsolutions.com
Visit his blog
@:
http://360.yahoo.com/intrmarket
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