A Business Strategy to Increase Turnover
|Where is the business trying to get to in the long-term (direction)|
|Which markets should a business compete in and what kind of activities are involvedin such markets|
|How can the business perform better than the competition in those markets|
|What resources (skills, assets, finance, relationships, technical competence, facilities)are required in order to be able to compete|
|What external, environmental factors affect the businesses’ ability to compete|
|What are the values and expectations of those who have power in and around the business|
Strategy at Different Levels of a Business
Strategies exist at several levels in any
Corporate Strategy– is concerned with the overall purpose and scope of the business to meet stakeholder expectations. This is a crucial level since it is heavily influenced by investors in the business and acts to guide strategic decision-making throughout the business. Corporate strategy is often stated explicitly in a “mission statement”.
Business Unit Strategy – is concerned more with how a business competes successfully in a particular market. It concerns strategic decisions about choice of products, meeting needs of customers, gaining advantage over competitors, exploiting or creating new opportunities etc.
Operational Strategy– is concerned with how each part of the business is organised to deliver the corporate and business-unit level strategic direction. Operational strategy therefore focuses on issues of resources, processes, people etc.
How Strategy is Managed – Strategic Management
In its broadest sense, strategic management is about taking “strategic decisions” – decisions that answer the questions above.
In practice, a thorough strategic management process follows this process shown in the figure below.
This is all about analysing the strength of businesses’ position and understanding the important external factors that may influence that position. The process of Strategic Analysis can be assisted by a number of tools, including:
|PEST Analysis – a technique for understanding the “environment” in which a business operates|
|Scenario Planning – a technique that builds various plausible views of possible futures for a business|
|Five Forces Analysis – a technique for identifying the forces which affect the level of competition in an industry|
|Market Segmentation – a technique which seeks to identify similarities and differences between groups of customers or users|
|Directional Policy Matrix – a technique which summarises the competitive strength of a businesses operations in specific markets|
|Competitor Analysis – a wide range of techniques and analysis that seeks to summarise a businesses’ overall competitive position|
|Critical Success Factor Analysis – a technique to identify those areas in which a business must outperform the competition in order to succeed|
|SWOT Analysis – a useful summary technique for summarising the key issues arising from an assessment of a businesses “internal” position and “external” environmental influences.|
This process involves understanding the nature of stakeholder expectations (the “ground rules”), identifying strategic options, and then evaluating and selecting strategic options.
Often the hardest part. When a strategy has been analysed and selected, the task is then to translate it into organisational action
The most under-rated of them all SWOT
Once you know your macro goals and marketing strategies, analyze your company strengths in all areas pertaining to the four P’s. For example, your manufacturing facility directly affects the quality of your product. In a restaurant, the kitchen is responsible for product quality. Determine what competitive advantages you have in terms of product development so you can take steps to maintain them. You might have big enough profit margins that you can lower your prices, helping you take market share from competitors or making it difficult for new businesses to enter your market. Review the effects of adding wholesalers, outside rep companies or online sales.
Start by reviewing your strategic vulnerabilities rather than looking internally at departmental performance. A poorly performing department might cost you money but have little effect on your strategic plans. For example, examine where your competition holds an edge and figure out why it does. Determine if you are vulnerable to a serious setback if one or two customers leave you or demand lower prices, and then take steps to expand your customer base or diversify your product line. If you are in a mature market with little room to grow, your only option for increasing profits might be cutting costs, diversifying or acquiring another business. After you have examined your strategic weaknesses, evaluate how your departments might be contributing to these problems and how you can solve these problems at the departmental level.
Review the four P’s again and determine if any marketplace needs aren’t being served. Determine if you can improve your product or add complementary items to your line to serve those needs. Evaluate the effects on sales volumes and gross profits of different price points. Analyze the effects of using new distribution channels. Test different advertising, promotional and social media options you haven’t tried. Share your findings with your department heads and solicit their opinions about how they can provide increased benefit to help the company with its long-term strategies.
Using the information you found in your analysis of your weaknesses, determine what internal and external factors could trigger them. For example, evaluate what would happen to your sales if your competitor lowered its prices, began selling online or took one of your largest customers. Examine everything that could go wrong with your business and create plans to prevent these occurrences or to respond to them if they happen.
For any business that has the intentions of growing and increasing turnover, you will only achieve success with a
By Robert Burrus