Planning Ahead: Business Strategy in 2017

There is a phrase which perfectly encompasses the month of November: ‘To be early is to be on time, and to be on time is to be late.’ When it comes to planning the impending year, November is the month which sets the dividing line between strategically on time and strategically late. The New Year waits for no one and your business strategy for 2017 must be in place long before January 1. Here are a few thoughts to keep in mind ahead of the holiday rush.

Take a Look Around

Start by revisiting your business plan. Ensure it is still aligned with your company goals, and make plans to change anything that does not fit with your expectations for 2017. However, it is nearly impossible to know what changes need to be made without reviewing the previous year. Take stock of which strategies equalled success and which ones squandered company time. What was achieved with each company milestone? Taking a closer look at your company’s past year will provide the baseline needed for smarter allocation of resources in the year to come.

Beyond the business plan, it is key to take this time to look at your employees. Offer them feedback so every team member knows where they stand and what to expect. Good record keeping will keep everyone on the same page.

Investing is the Key to the Future

Now is the time to supercharge your business. Two components for consideration are people and technology. If 2015 was a success, it’s possible that your business has become increasingly busy. If 2015 left more to be desired, it’s possible a fresh take is what’s needed. Either way, more feet on the floor could be the answer – whether that’s additional team members to take on overloaded tasks or a new executive role to bring an outside perspective.

Technology is another area of investment that cannot be overlooked. Even the grandest plans can be held back by outdated hardware or software. Make the jump to a new computer or programming that can help your company to be more efficient, more creative, and more successful. We have a great recommendation that supports all three of those initiatives.

Motivate Your Employees

The end of year slump is real. If you want your team’s motivation to last well through their New Year’s resolutions, then practice makes perfect. Afterall, it takes about a month (give or take, according to this study) to form a habit, and only eight percent of people succeed in their own resolutions. You can motivate your team not only by being a good leader but by giving clear and actionable goals. You cannot go it alone – it is crucial to have the support and energy of your team behind every strategic goal.

So, take a good look around your current organization. What was great and what needs to be changed? After all, a goal without a plan is just a dream and planning ahead means 2017 won’t take you by surprise.

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Bargaining power of suppliers: Porter’s Five Forces

The presence of powerful suppliers reduces the profit potential in an industry. Suppliers increase competition within an industry by threatening to raise prices or reduce the quality of goods and services. As a result, they reduce profitability in an industry where companies cannot recover cost increases in their own prices.

Porter’s five forces

The bargaining power of suppliers comprises one of the five forces that determine the intensity of competition in an industry. The others are barriers to entry, industry rivalry, the threat of substitutes and the bargaining power of buyers.

Power of supplier group

The following conditions indicate that a supplier group is powerful:

·         It is dominated by a small number of companies and is more concentrated than the industry to which it sells

·         It is not required to contend with substitute products for sale in the industry

·         The industry is not one of the supplier’s important customers

·         Its products are an important part of the buyer’s business

·         Its products are differentiated or there are built-up switching costs

·         It poses a definite threat of forward integration

Bargaining Power of Buyers: Porter’s Five Forces Analysis

The presence of powerful buyers reduces the profit potential in an industry. Buyers increase competition within an industry by forcing down prices, bargaining for improved quality or more services, and playing competitors against each other. The result is diminished industry profitability.

Porter’s five forces analysis

The bargaining power of buyers comprises one of Porter’s five forces that determine the intensity of in an industry. The others are barriers to entry, industry rivalry, the threat of substitutes and the bargaining power of suppliers.

The power of an industry’s important buyer groups depends upon:

·         Characteristics related to its market situation.

·         The relative importance of its purchases from the industry as compared with its overall business

How to assess the power of a buyer group

The following conditions indicate that a buyer group is powerful:

·         The buyer group is concentrated, or purchases large volumes relative to the seller’s sales

·         Products purchased from the industry represent a significant percentage of the buyer’s costs or purchases

·         Products purchased from the industry are standard or undifferentiated—alternative suppliers are easy to find and competitors are played against each other

·         Few switching costs exist (little penalty for moving to another supplier)

·         Profits earned are low (greater incentive to reduce purchasing costs)

·         Buyers pose a significant threat of backward integration—buyers demand concessions, and may engage in tapered integration (producing some components in-house and purchasing the rest from outside suppliers)

·         The industry’s product is not important to the quality of the buyer’s products or services

·         The buyer has full information (their knowledge of demand, market prices and supplier costs provides them with leverage)

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Integrating Intuition and Analysis

The strategic management process can be described as an objective, logical, systematic approach for making major decisions in an organization. It attempts to organize qualitative and quantitative information in a waythat allows effective decisions to be made under conditions of uncertainty. Yet strategic management is not a pure science that lends itself to a nice, neat, one-two-three approach.

Based on past experiences, judgment, and feelings, most people recognize that intuition is essential to making good strategic decisions. Intuition is particularly useful for making decisions in situations of great uncertainty or little precedent. It is also helpful when highly interrelated variables exist or when it is necessary to choose from several plausible alternatives. Some managers and owners of businesses profess to have extra ordinary abilities for using intuition alone in devising brilliant strategies.

Although some organizations today may survive and prosper because they have intuitive geniuses managing them, mostare not so fortunate. Most or ganizations can benefit from strategic management, which is based upon integrating intuition and analysis in decision making. Choosing an intuitive or analytic approach to decision making is not an either–orproposition. Managers at all levels in an organization inject their intuition and judgment in to strategic-management analyses. Analytical thinking and intuitive thinking complement each other
  

Operating fromtheI’ve-already-made-up-my-mind-don’t-bother-me-with-the-factsmode is not management by intuition; it is management by ignorance. Drucker says, “I believe in intuition only if you discipline it. ‘Hunch’ artists, who make a diagnosis but don’tcheck it out with thefacts, are the ones in medicine who kill people, and in management kill businesses.”  As Henderson notes: The accelerating rate of change today is producing a business world in which customary managerial habits in organizations are increasingly in adequate. Experience alone was an adequate guide when changes could be made in small increments. But intuitive and experience-based management philosophies are grossly inadequate when decisions are strategic and have major, irreversible consequences.

In a sense, the strategic-management process is an attempt both to duplicate what goes on in the mind of a brilliant, intuitive person who knows the business and to couple it with analysis.

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Strategy-Formulation Framework

Learning Objectives

After understading this topic you able to understand the basic phenomena of strategy formulation frame

work and also under stand the stages of strategy formulation frame work.

Objectives:

Objective placing an important role in strategic management Strategic analysis and choice largely involves

making subjective decisions based on objective information. This topic includes important concepts that

can help strategists generate feasible alternatives, evaluate those alternatives, and choose a specific course of

action. Behavioral aspects of strategy formulation are described, including politics, culture, ethics, and social

responsibility considerations. Modern tools for formulating strategies are described, and the appropriate role

of a board of directors is discussed.

A Comprehensive Strategy-Formulation Framework

Important strategy-formulation techniques can be integrated into a three-stage decision-making framework,

as shown below. The tools presented in this framework are applicable to all sizes and types of organizations

and can help strategists identify, evaluate, and select strategies.

Stage-1 (Formulation Framework)

1. External factor evaluation

2. Competitive matrix profile

3. Internal factor evaluation

Stage-2 (Matching stage)

1. TWOS Matrix (Threats-Opportunities-Weaknesses-Strengths)

2. SPACE Matrix (Strategic Position and Action Evaluation)

3. BCG Matrix (Boston Consulting Group)

4. IE Matrix (Internal and external)

5. GS Matrix (Grand Strategy)

Stage-3 (Decision stage)

1. QSPM (Quantitative Strategic Planning Matrix)

Stage 1 of the formulation framework consists of the EFE Matrix, the IFE Matrix, and the Competitive

Profile Matrix. Called the Input Stage, Stage 1 summarizes the basic input information needed to formulate

strategies. 

Stage 2, called the Matching Stage, focuses upon generating feasible alternative strategies by aligning key external and internal factors. Stage 2 techniques include the Threats-Opportunities- Weaknesses Strengths (TOWS) Matrix, the Strategic Position and Action Evaluation (SPACE) Matrix, the

Boston Consulting Group (BCG) Matrix, the Internal External (IE) Matrix, and the Grand Strategy Matrix.

Stage 3, called the Decision Stage, and involves a single technique, the Quantitative Strategic Planning Matrix

(QSPM). A QSPM uses input information from Stage 1 to objectively evaluate feasible alternative strategies

identified in Stage 2. A QSPM reveals the relative attractiveness of alternative strategies and, thus, provides

an objective basis for selecting specific strategies.

All nine techniques included in the strategy-formulation framework require integration of intuition and analysis.

Autonomous divisions in an organization commonly use strategy-formulation techniques to develop

strategies and objectives. Divisional analyses provide a basis for identifying, evaluating, and selecting among

alternative corporate-level strategies.

Strategists themselves, not analytic tools, are always responsible and accountable for strategic decisions.

Lenz emphasized that the shift from a words-oriented to a numbers-oriented planning process can give rise

to a false sense of certainty; it can reduce dialogue, discussion, and argument as a means to explore

understandings, test assumptions and foster organizational learning. Strategists, therefore, must be wary of

this possibility and use analytical tools to facilitate, rather than diminish, communication. Without objective

information and analysis, personal biases, politics, emotions, personalities, and halo error (the tendency to put

too much weight on a single factor) unfortunately may play a dominant role in the strategy-formulation process.

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RESEARCH AND DEVELOPMENT ISSUES

Learning objectives

The main objective of this chapter to enable to students about research and development issue relating

to strategy implementation.

Going public means selling off a specific percentage of the business to others in order to raise capital;

consequently, it shifts the owners' control of the firm. Going public is not recommended for companies that initial costs can be too high for the firm to generate sufficient amount of cash inflows to make going public worthwhile. The firm must have sufficient amount of capital to bear out lawyer,

underwriter and other documentation cost in order to form the business. In addition to initial costs

involved with a stock offering, there are costs and obligations associated with reporting and

management in a publicly held firm. For firms with more than $10 million in sales, going public can

provide major advantages:

1. It can allow the firm to raise capital to develop new products,

2. To build plants,

3. Expand, grow, and market products and services more effectively.

Before going public, a firm must have quality management with a proven track record for achieving

quality earnings and positive cash flow. The company also should enjoy growing demand for its

products. Sales growth of about 5 or 6 percent a year is good for a private firm, but shareholders expect

public companies to grow around 10 to 15 percent per year.

Research and Development (R&D) Issues

Research and development (R&D) management can plays part in strategy implementation.

"New products and improvement of existing products that allow for effective strategy implementation"

OR

"New products and improvement of existing products that allow for effective

strategy

implementation"

These individuals are generally charged with developing new products and improving old products in a

way that will allow effective strategy implementation. R&D employees and managers perform tasks that

include

1. Transferring complex technology,

2. Adjusting processes to local raw materials,

3. Adapting processes to local markets,

4. Altering products to particular tastes and specifications.

Strategies such as product development,market penetration, and concentric diversification require that new products be successfully developed and that old products be significantly improved. But the level of management support for R&D is often constrained by resource availability:

Technological improvements that both affect consumer and industrial products and services shorten

product life cycles. Companies in virtually every industry are relying on the development of new

products and services to fuel profitability and growth.

Surveys suggest that the most successful organizations use an R&D strategy that ties external

opportunities to internal strength and is linked with objectives. Well-formulated R&D policies match

market opportunities with internal capabilities and provide an initial screen to all ideas generated. 

R&D policies can enhance strategy-implementation efforts to:

1. Develop robotics or manual-type processes.

2. Spend a high, average, or low amount of money on R&D.

3. Perform R&D within the firm or to contract R&D to outside firms.

4. Use university researchers or private sector researchers.

5. Emphasize product or process improvements.

6. Stress basic or applied research.

7. Be leaders or followers in R&D.

There must be effective interactions between R&D departments and other functional departments in

implementing different types of generic business strategies. Conflicts between marketing,

finance/accounting, R&D, and information systems departments can be minimized with clear policies

and objectives. Table gives some examples of R&D activities that could be required for successful implementation of various strategies. Many American utility, energy, and automotive companies are employing their research and development departments to determine how the firm can effectively reduce its greenhouse gas emissions.

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5 Successful Marketing Strategies Learned from Steve Jobs...

As a big Apple use, I’ve always been fascinated by Apple’s ability to take something that no one even knew they wanted, create it, market it and then sell millions of them at a super high price point.

I mean after all, anyone that can launch a product and have customers happily camping outside in the wind and rain to get their hands on a copy needs to be paid attention to.

So with that in mind, here are 5 successful marketing strategies we can all take from the life of Apple’s visionary, Steve Jobs:

It’s about people, not stuff. I don’t think I have ever heard Steve Jobs babble about the latest greatest features of Apple’s products. Rather, he always spoke in terms of how those products made life easier for others. I truly believe that if you focus on solving the problems of others, you will never lack for anything.

“It’s not about pop culture, and it’s not about fooling people, and it’s not about convincing people that they want something they don’t. We figure out what we want. And I think we’re pretty good at having the right discipline to think through whether a lot of other people are going to want it, too. That’s what we get paid to do.” – Steve Jobs on CNN Money

Keep it simple. Why are Apple products so popular? Why do they create raving fans who wouldn’t think of leaving to go to the competition? I believe it’s because the products are so simple to use – they’re intuitive. You don’t need instruction for most of them, you can simply turn them on and get started. And whatever you need? It’s right there at your fingertips, or downloadable as an app. Always design your products and services for maximum user friendliness and you cannot go wrong.

“That’s been one of my mantras — focus and simplicity. Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.” Steve Jobs in BusinessWeek, May 25, 1998

Think big. REALLY BIG. Steve Jobs and Apple weren’t just about technology, they were about leaving the world a better place than they found it. Small dreams and goals yield small results. Big dreams and goals can move mountains, create fortunes and change the world.

“I want to put a ding in the universe.” -Steve Jobs

Focus your energy. While it might seem smart to conquer half a dozen markets just in case half of them don’t pay off, you’ll never fully realize  big success that way. Instead, carefully choose your market and then focus all of your energy on truly great products and services within your marketplace. You didn’t see Apple building vacuum cleaners – in fact if you look close you’ll realize they didn’t put out a lot of products for a hundred billion dollar company. But what they did produce totally ROCKED, because they focused on doing those things RIGHT.

“We don’t get a chance to do that many things, and every one should be really excellent. Because this is our life. Life is brief, and then you die, you know? And we’ve all chosen to do this with our lives. So it better be damn good. It better be worth it.” Steve Jobs in Fortune

“I’m as proud of what we don’t do as I am of what we do.” Steve Jobs in Businessweek

“Quality is more important than quantity. One home run is much better than two doubles.” Steve Jobs in Businessweek

Be Passionate. Why do you suppose Steve Jobs took a salary of $1 a year? It wasn’t just that he wasn’t concerned about money – I think he was truly passionate about his company, his products and changing people’s lives. When you love what you’re doing, it takes on a life of its own. It’s no longer work, it’s the highest form of play, and it’s also when you’re the most successful.

“Being the richest man in the cemetery doesn’t matter to me … Going to bed at night saying we’ve done something wonderful… that’s what matters to me.” Steve Jobs, The Wall Street Journal, May 25, 1993

“Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it. And, like any great relationship, it just gets better and better as the years roll on. So keep looking until you find it. Don’t settle.” Steve Jobs, Stanford commencement speech, June 2005

In closing…

“Here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes… the ones who see things differently — they’re not fond of rules… You can quote them, disagree with them, glorify or vilify them, but the only thing you can’t do is ignore them because they change things… they push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do.” – Think Different, narrated by Steve Jobs

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