Friday, May 31, 2013

Start To Build Your Business Strategy Blueprint

Strategy noun: long-term plan or policy; art of war; art of moving troops, ships, aircraft, etc. into favourable positions (Oxford Dictionary) "The important decisions, the decisions that really matter, are strategic. They involve either finding out what the situation is, or changing it, either finding out what the resources are or what they should be. Among these are all decisions on business objectives and on the means to reach them." (Peter Drucker, "The Practice of Management") Strategy. A term used in the theory of games to describe the set of choices a player will make in each possible set of circumstances. (A Dictionary of Economics) How an organization interacts with the stakeholders in its business environment through its current and planned portfolio of products in large part defines its business strategy. (Robert J. Thomas, "New Product Development") From these varied definitions we see strategy as something that involves identifying where resources are and where they're needed, and the art of deploying those resources favourably; deciding on business objectives; and above all it is certainly about choices. My clients have all been able to grow their businesses and in the early years, a lot of this growth is tactical and not strategic. That is, most business owners work very hard in their businesses to drive growth, and they've been a key part of that growth. At some point though, every entrepreneur needs to stop and consider if that is how they wish to continue working and growing their business. When do business owners mostly start thinking about strategy? When they have to make more decisions about resources When they have to decide whether to pursue new opportunities When they need to make decisions about how big the company could be When growth in the business has reached a plateau When they're in trouble When they're overloaded When they're confused When they want to fast-track their progress When something significant changes their life Sometimes, it's when they have an 'Aha!' moment Challenging circumstances lead most business owners to think about strategy, and then strategy itself can be challenging! When you're ready to start developing you business strategy, you need to look at the process from several different aspects: Know what it takes to build a high-value business, and make sure you have one Know how to select a best-fit strategy, that's right for now Know which business model will optimise growth, suit your lifestyle & give you leverage

A Compass to Guide You and Your Business

You can greatly increase your chances of business success by creating a business strategy and adopting a habit of keeping that strategy up-to-date. The purpose of a business strategy is so that you can use it regularly to assess your company's performance against the goals you have set. It can also act as an early warning system to alert you against going astray and gives you a guide to why you're not keeping on track. Having a business strategy will be useful and sometimes vital to investors and banks when you need them to consider funding your business. It is also a useful tool in allocating resources and identifying growth potential. On a practical note, it will help to ensure that you meet certain key targets and manage business priorities effectively. A good business strategy should have a time-frame, typically 12 or 24 months, and should include: o A summary - what your business does, its development, where you want to take it, strategy for improving sales and the process to achieve the desired growth. o Marketing plans - your aims and objectives. o Operational details - Is the location of your business relevant? What suppliers, premises and equipment are needed? o Financial forecasts - including profit and loss, cashflow and sales forecasts and audited accounts. o Main objectives - Clearly define your aims and objectives for your business with dates for completion. o Exit plan - Some business owners like to include a departure date and circumstances into their business strategy. For example, family succession or floatation. Most businesses choose to assess progress every 3 or 6 months. These meetings should involve key members of staff and the same goes for setting up the original strategy. It is important to include those people who will be responsible for implementing your business strategy on a day-to-day basis.

Aspects & Levels Concerned in Business Strategy

In business, it is important to set a goal. It is also important to achieve that goal. The attainment of business goals is possible through effective business strategies. Business strategy is the plan that defines the following aspects of your business plan: Direction. Every strategy should be geared towards the identification and attainment of long-term goals. The direction of the business plans that you will formulate should be consistent to the realization of these long-term objectives. Market or Scope. It is also important to include the market in the evaluation of your strategies. In this manner, you will be able to determine your competitors and perform the activities needed in maintaining the competition in the market. Advantage. This involves the determination of the things that will make you stand out against you competitors and how you can use them well toward the attainment of your business goals. Resources. This includes every single factor that will serve as your asset in the market. Skills, expertise, finance, relationships, manpower, and facilities are part of the resources that you can utilize in your strategy. Environment. This refers to the external factors that are involved in the market's competition. This can be broken down into two groups: the macro factors which involve the political, legal, social, and cultural factors and the micro factors which involve customers, competitors, and suppliers. Stakeholders. These are the people who have the power and influence in the market. Their values and expectations play a big role in the competition and in the formulation of your strategy as well. You can see that in the formulation of your business strategy, most of the aspects that you have to deal with are concerned with the market and the competition. More importantly, strategies are created in order to create a substantial effect in the organization of the business. Business strategies are created in accordance to the levels of the business. Strategies can be formulated in the corporate, business unit, and operational level. In the corporate level, the strategies are formulated in accordance with the overall purpose and scope of the enterprise. Corporate strategies are those that you normally see in the mission statement of businesses. In the business unit level, strategies are created to achieve competitiveness in the market. These are strategic decisions influencing the product choices, customer needs, market competition, and new opportunities in the market. In the operational level, the strategies are concerned with the organization of the business and its parts. This is the application of the corporate and business unit strategies in the operations of the business. A business strategy can influence the overall performance of your enterprise. Because strategies are created at all levels of the organization and imposed to achieve business objectives, it is imperative that the formulation of these strategies should be directed toward its implementation in the organization. An effective strategy is possible by understanding the nature of each aspect that influences the market. More than the formulation of these strategies, it all boils down to how they can be implemented within the organization and how they can affect the actual and potential marketplace.

Vital in Getting Ahead of Competitors

Businesses need a business strategy to rise above their competitors. Formulating and planning the strategy for the business needs some goals as a basis though. Start with Some Goals In Mind It's very important that the business state its goals first. The business has to state its long term goal and short term goals as well. With that, a business strategy can be formulated. Strategies are formulated as to how such goals can be achieved. Setting goals should be given a timeframe. This way, the strategies formulated for each can be evaluated after such time. Goals should also be measurable so there would be a way to indicate whether strategies and implementation were effective. It's also important to keep the strategies up to date. If the business did not achieve its goal for a certain period, then the strategies need to be reviewed and adjusted. Markets also evolve and change, hence the need for updating strategies. Coming up with a Marketing Plan Completing a marketing plan is a very important part of formulating a business strategy. The marketing plan would contain a background of the business. More importantly, it would contain core marketing strategies for the business. Of course, strategies would generally be based on research and analysis. A list of strengths and weaknesses should be listed and analyzed. Opportunities and threats are also looked into if the business wants to be thorough. Financial Forecasts Included Well, this is usually included in the marketing plan as well. Financial forecasts should be included to assess how profitable the business is going to be or expected to be. Aside from that, it is from the financial forecasts that the business would know how to manage its finances and anticipate its cash flow, inventory and other financial matters. Business Strategy: Evaluation While the marketing plan is that important, checking how well the strategies did is really important if the business wants to achieve not only its short terms goals but also its long term goals. It is important that evaluation is done so strategies can bring the business ahead of its competitors. Looking at Your Business and Knowing Your Customers and Competitors The business strategy should not only be about the company. It should also look at what is happening in the market. The business must be conscious of what its competitors are doing so it can strategize on how to get ahead of them. For instance, a business could decide to pursue a price based strategy in order to get a lion's share of the market. On the other hand, one can also pursue a differentiation-based strategy. Again strategies should be based on what the company sees will bring it ahead of its competitors. But the other half it though is knowing the company customers. If the company knows its customers, well then it will be able to anticipate how it would react to every price change, for example, or how it will appreciate additional features. Of course, the decision on which strategies to take should always be based on the combination of all these factors. Again, the time frame and evaluation is important. Keeping the strategies updated is vital too.

Blue Ocean Strategy - The Future Of Business Strategy?

I was in Star Bucks Club Ultima this afternoon to talk with a friend regarding a new business that he is planning to start. One of the things that he mentioned was this unique business strategy that's quite different from what we traditionally learn in business school. According to him, this strategy sorts of deviates from normal business concepts that we hear and read from the usual management gurus. This strategy is called "Blue Ocean Strategy" I was intrigued by the idea so I did a little bit of research on the subject. Blue Ocean Strategy is a corporate strategy that aims to tap unclaimed markets making competition irrelevant. The strategy is embodied in the book entitled "Blue Ocean Strategy" by Professors W. Chan Kim and Renee Mauborgne and Published by Harvard Business School Press. The authors claim that the Blue Ocean Strategy is a result of several years of study of strategic moves by over 30 industries in a span of 100 years. In the book, "Blue Ocean" refers to an untapped market, a market wherein there is only little or no competition at all enabling anyone to claim the market for his own since it is not yet too crowded. In contrast, "Red Ocean" refers to a market where competition is very high. The market is considered as very crowded already since almost everybody is producing the same type of service and the same kind of goods. The Blue Ocean strategy is simply to innovate something; something that makes people gives a higher value for a certain product or service. Since doing this would require additional cost, the cost that is incurred by the value added is reduced by eliminating product or service features that the market does not really care about. In order that this can be understood well a "local" application must be cited. According to my friend a classic example of how the Blue Ocean Strategy was used here in the Philippines is the strategic moves of the Gokongwei group. As we all know, the Gokongwei group owns Mobile phone company, Sun Cellular and airline Cebu Pacific among other companies. Since the market for mobile phones has already been saturated by both Smart and Globe, what Sun Cellular did is to create a "new market" by adding value to products already found in existing markets. As a result of this "added" value, (By making sun to sun calls free) a new untapped market was opened. It could be said that Sun Cellular is not competing directly with Globe and Smart but rather they have raised awareness among the people to buy into this "new market." As a result, most people now have two cellular phones or two sim cards in a dual sim phone. In this way Sun Cellular is not "out-performing" Smart and Globe but rather they have created a new market, making competition irrelevant. In the airline industry, Cebu Pacific has managed to apply the Blue Ocean Strategy by adding "value" to what people really want, which is to "fly." People don't care about a newspaper, a hot meal or a fancily dressed flight stewardess. What people care about is that they can "fly." In order to do this airline fares must go down since this is what people care about. This in a sense allowed Cebu Pacific to tap into the "untapped" market. The existing market is referred to as "customers who can only afford to fly." The untapped market is "every can fly." This is embodied in Cebu Pacfic's advertisement "Now every JUAN can fly" (A play on the words "every juan" = "everyone", with "J" being pronounced as "H", Juan is the "universal" first name of Filipinos just like John is for the Americans). Cebu Pacific has managed to slash down fares by reducing cost on service features that most people do not really care about such as hot meals etc. Being involved with the International Marketing Group (IMG), I can now clearly see that they have employed the Blue Ocean Strategy in the way they do business. I do not know if they have being doing this consciously or unconsciously. Instead of selling insurance products directly, IMG teaches it's clients and brokers the concepts of financial planning and management. (albeit not in a very organized manner) Product is not given primary importance. The financial broker shows his client his need for financial planning. The financial broker who is well versed in financial planning concepts then introduces products that suits the client needs. The untapped market of financial planning needs by the people is claimed by IMG and the added cost for this value service is compensated by reducing cost with regards to training agents and marketing efforts since IMG works on a model that allows insurance and financial services company to "outsource" their marketing and training. Other insurance companies have already followed this path. The trend now is that insurance agents are now becoming financial planners. My friend's proposed business has a similar concept but it is something more than financial planning. He wants to introduce a value added service to clients that will enable him to add value to existing service in order to capture "untapped markets" However I could not discuss the details of the plan yet, but I am sure that employing the Blue Ocean Strategy would enable him to succeed in the new business that he is thinking. Perhaps in the proper time I could help him promote his business by writing an article on it, probably when the final details of the plan have been ironed out. However you might want to check out his website at [http://www.premierebusinessinc.com] In Traditional Business strategy we talk about "crushing the competition" whereas in Blue Ocean Strategy we talk about "Creating new markets with little or no competition." Instead of "Strategic Planning" Blue Ocean Strategist resort to "Strategic thinking." Instead of "cutting prices" to capture a market, Blue Ocean Strategy is to add "value" to products and services to claim an untapped market. I could personally say the Blue Ocean Strategy is a unique strategy. Critiques may say that the Strategy has already existed a long time ago and that principles that are said to be unique to the strategy can be found in other traditional business strategies as well. For me, the critics may just be jealous that they were not the first ones to embody the "strategy" in compact form. The critic's contention are not valid at all since our way of discovering something or learning something is to build upon the knowledge that has been universally accepted by the majority. A new theory is always built upon something that has already been long time accepted as a scientific principle or even theory. (Just like the theory of relativity rest upon the foundations of the principles of thermodynamics, electricity, gravity etc.) Whatever the Critics have to say, the strategy certainly is here to stay and is sure to have an effect on the way future entrepreneurs, managers and leaders will think and do business in the years to come.