As readers may have knowledge of I return from a background in huge blue chip businesses, where I spent a fair no. of time helping predominantly huge clients with strategic issues and during the final ten years I've started and built a couple of smaller businesses. SME owners and directors need to ponder about strategy, but they need to concentrate upon those elements that are going to make the greatest impact by all means view the business strategy tomes from close to close whether you want, but lewis diagram to release you, a busy SME director, most of what you own to have knowledge of about strategy and analysis sequential to make a start. There is more details at Unconsultancy - specialist tiny business consulting. 1 4 Variations of Excellence.
Many commentators should agree that a business has the choice to excel that means really excel such that the market recognises that excellence in one or 3 of 3 likely areas:. Operational excellence which means doing things really efficiently and that is why probably being can deal with higher volumes and that is why passing on cost savings to clients consequently it is likely to ponder of examples where operational excellence was so valued by the customer that she should be prepared to pay a premium for it alone. An example may be EasyJet. Customer intimacy which means that you own processes and staff who treat clients as royalty or at fewest good colleagues and they look loved and valued by your business. An example may be Paul Lewis.
Product leadership which means that your product or service is highly differentiated from alternatives and substitutes in ways that clients value. An example may be Apple. Like a start-up or tiny business you can not be can afford a McKinsey assignment to address your strategy issues, but you can apply two of their most powerful weapons to your advantage. MECE stands for mutually exclusive, collectively exhaustive apply it to your problems and you should look best results. MECE is a useful model for analysing a business difficulty becauseit aids clean thinking by ensuring that categories of details do not overlap, and by reducing the possibility of overlooking details by requiring thatall of thecategories of details taken together should deal with all possibleoptions.
Details should be grouped into categories such that eachcategory is separate and distinct without any overlap mutually exclusive, and all of thecategories taken together should deal with allpossible choices collectively exhaustive. A primary issues list should contain no fewer than two, and no higher than 5 issues, with 3 being the necessary number. Let us speak that Acme Widgets Ltd use a MECE tree diagram to help them locate the source of declining profitability. The diagram like an entire represents the difficulty at hand; each branch stemming from the starting node regarding the tree represents a primary issue that wants to be considered; each branch stemming from two of these primary issues represents a sub-issue that wants to be considered; and so on. The difficulty to be addressed in this case is how can Acme Widget Ltd increase widget sales?.
The issues tree may look like this:. You shall hopefully locate that analysing issues below to the constituent components creating use of this technique shall clarify where the real issues lie and they shall now be in more bite sized chunks and so be easier to handle. 3 Markets and amp; Industries. The expressions What is your market? and What business are you in? are thrown around pretty well interchangeably what exactly do we mean when we speak market and industry. Whether you use the definitions that I suggest then a best deal more clarity shall begin to appear around the potential strategy that you should adopt.
I suggest that market should mean a team of people or organisations who have the desire and amp; ability to buy products to satisfy a sure need or need ie buyers and amp; their needs. Market that is why is not about your product or service consequently of course related. I suggest that you provide a reasonable no. of time thinking about who the buyers of your products or services are or should be and what traits or characteristics they share. By being can describe your market s accurately and precisely you can subsequently be can focus your sales and marketing efforts distant more effectively.
When thinking about markets ie buyers you should also consider:. How attractive are your products and services to these buyers. And how attractive is the market to you is it clearly defined, growing, shrinking, are external influences going to affect its volume in future, are they easy or difficult to persuade to buy, and so on. I'd suggest that business should mean sellers that release products or services that are similar or substitutes. Sellers sell into markets.
So let us speak that you own founded a business offering disposable cardboard location mats for university canteens where businesses can advertise themselves to students. The classic Dragons Den question is so what competitors do you have?. Of course you should be wrong to speak none we are the only people doing these advertising place-mats. Rather you own to ponder about what business you can be in, and the answer is likely to be the provision of advertising to target students business so your competitors should with Facebook, regional radio, advertising hoardings, Google Ads, free magazines etc. The key thing when defining your business is similar or substitute offerings you can ponder that you can be special but if your potential clients think about something else then that something else is within similar business as you!.
When thinking about business ie other sellers you should also consider:. Can you sustain any advantage indeed do you own any advantage?. How attractive is your business more on this below. 4 Attractiveness of an Industry. Of course different industries have different grades of attractiveness and you should be aware of that right at the outset.
But it isn't necessarily the case that you should only operate in attractive industries and disregard unattractive industries. Good business should be created in unattractive industries and it is perfectly likely to fail within what should be viewed as an attractive industry. The analysis that you perform to establish that an business is attractive should be carried out by the rest regarding the business world too, so others may stampede into the business and change its attractiveness barely quickly. Business analysis does not make sure that that you own picked a winner, it just means that you can be well informed about your business environment. The defining work on business analysis was carried out by Professor Michael Porter of Harvard Business College and published in his 1979 pamphlet Competitive Strategy Porter's 5 Forces.
Competition: How tough is the rivalry posed by the present competition? The different factors, include: the many firms within the industry, rate of market growth, economies of scale, customer switching costs, grades of product differentiation, diversity of competition, position of exit barriers. Barriers to entry: What is the threat posed by new players entering the market? The different factors include: capital costs of setting up,highly specialised equipment, position of protection of compulsory intellectual property, scale and branding of existing competitors, government regulations. Substitutes: What is the threat posed by substitute products and services? The different factors include: the cost tocustomers of switching to a substitute, buyer propensity to substitute; relative price-performance of substitutes, product differentiation. Supplier bargaining power: How many bargaining force do suppliers have? The different factors include: many likely suppliers and the strength of competition between them, whether suppliers make differentiated products, importance of sales volume to the supplier, cost to the buyer of changing suppliers, vertical integration regarding the supplier or threat to grow to vertically integrated ie the degree to which a firm owns its upstream suppliers and its downstream buyers. Customer bargaining power: How many bargaining force do clients have? Factors that shall effect the bargaining force of a customer include: volume of products or services purchased, many other customers, brand name strength, product differentiation, availability of substitutes.
Understanding how your business compares to the competition and to clients perceptions of price is an definitely key element of strategy. A best method to shape an improved understanding is to establish the key important dimensions by asking the people who matter, clients and then representing them graphically creating use of a spider diagram for example below. You can map how your business measures up and how the competition measure up and then it shall be readily apparent where regions of competitive advantage or disadvantage lie. Dear old SWOT strengths, weaknesses, opportunities, threats it hardly wants any introduction. After a business clearly identifies an objective that it wants to achieve, SWOT analysis involves examining the strengths and weaknesses regarding the business internal factors? and considering the opportunities presented and threats posed by business conditions, for example, the strength regarding the competition external factors.
Don't fall into the trap of SWOT becoming 3 lists two of pros and the other of cons and make sure that you use it critically and with clean prioritisation. So for example, weak opportunities should not balance tough threats. Strictly speaking this isn't a pure strategy tool but a very powerful sales strategy analytical tool nonetheless. If your difficulty is with generating interest and awareness, then look at your PR where are your target market seeing you talking about what you do? Are you engaging with your target market? If your difficulty is with generating leads, then how well are you explaining how you meet your target market's wants with your products or services? If your difficulty is with converting leads into serious buyers, how well are you encouraging your buyers to take action? How well are you demonstrating your credibility and expertise to solve their problems? If your difficulty is with closing the sale, what objections are you hearing from your potential buyers? How are you overcoming these objections?. Repeatedly the purist may argue that this is marketing strategy rather than pure business strategy but we do not mind what you call it due to the fact that it all helps to being a more successful business.
There isn't the space here to do justice to the 5 p's of marketing but to skim the surface they can be a framework for evaluating the marketing strategy for a product. Price: the pricing strategy employed by a firm for an exact good or service shall hold a significant effect on profit. Product: differentiation is a source of competitive advantage. Product differentiation creates price within the mind regarding the consumer. Position or Place: the physical location of a good or service should be a source of competitive advantage.
Promotion: is used to enhance the perception of a good or service within the minds of customers. A promotion shall draw peoples attention to any features of an things that they may locate attractive. 9 Strategic Advantage. Following on from his work which resulted within the 5 Forces, Michael Porter suggested that businesses can adopt two of 4 generic business strategies, as represented within the diagram below. The differentiation and cost leadership strategies seek competitive advantage in a broad section of market or business segments.
By contrast, the differentiation focus and cost focus strategies are adopted in a narrow market or industry. I shall write about this more fully in a strategy for smaller businesses booklet soon to be published, but for now it may be greatest just to suggest some example businesses that may fit into each quadrant:. 10 Product and amp; Service Life Cycle. The product lifecycle curve was originally the brainchild of another best management thinker, Theodore Levitt and was first published within the Harvard Business Review in 1965. Repeatedly space here does not let for a full description.
Introduction: Like an special product many time shall be spent by the organisation to make awareness of it's presence amongst its target market. Profits are negative or low. Growth: If consumer clearly look that this product shall benefit them in some ways and they accept it, the organisation shall look a period of rapid sales growth. Maturity: Rapid sales growth cannot final forever. Sales slow below as the product sales reach peak as it was accepted by most buyers.
Decline: Sales and profits begin to decline, the organisation shall try to change their pricing strategy to stimulate growth, however the product shall neither need to be modified, or replaced within the market.
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