Topic 1-Strategic Planning for Small Business (1).pptx

Source: Entrepreneurship and Small Business Management/Third Edition MR. ROBERT G. MEDINA
STRATEGIC
PLANNING
FOR SMALL BUSINESS
TOPIC #1

TOPICS UNDER THIS MODULE:
• Strategic Planning
• Implementing Strategic Plans
• Fundamental Strategies for Small
Business
• Strategy Concerns of Small Business
• Reasons Why Small Business
Operators Ignore
Strategic Planning

OBJECTIVES:
a. discuss the importance of strategic planning;
b. determine the steps in strategic planning
c. identify the fundamental strategies for small business
d. explain why small business operators ignore strategic planning

It refers to the process of
determining the primary
objective of the entrepreneurship
and then adopting the course of
action & allocating resources to
achieve those objectives.
STRATEGIC PLANNING

The definition involves 3 steps:
• Determination of the
objectives.
• Adoption of course of action.
• Allocation of resources.
STRATEGIC PLANNING

1. DETERMINING THE OBJECTIVES
The Mission Statement refers to the basic description of
the fundamental nature, rationale, direction of the firm.
1. How the entrepreneur intends to use his resources
2. How the entrepreneurs expect to relate to the ever
changing environment
3. The kinds of values the entrepreneur intends to offer to
his customers.

1. DETERMINING THE OBJECTIVES
Strategic Objectives are specific performance targets that the
entrepreneurship hopes to accomplish. The objectives define,
in specific terms, how the firm’s mission will be realized.
Examples:
Expand production capacity by 50% within 2 years
Increase sales by 50% by 2012
Increase market share by 10% every two years
Increase the number of outlets by 3 within 3 years

2. ADOPTION OF
COURSE OF ACTION
After the primary (or strategic) objectives
are established, the entrepreneur must develop
strategy which is alternately called course of
action.
In developing realistic strategies, the
entrepreneurs can make use of the most popular
tools. These are the following:
• SWOT analysis; and
• Forecasts of future sales performance

2. ADOPTION OF
COURSE OF ACTION
SWOT ANALYSIS is an organized method
of assessing a firm’s strengths and
weaknesses with external environment
that confront the firm.

2. ADOPTION OF
COURSE OF ACTION
STRENGTH refers to a skill, a competence, a valuable
organizational resource or competitive capability, or an
achievement that gives the firm a market advantage.
WEAKNESS refers to something a company lacks or does poorly
or a condition that puts it at a disadvantage.
OPPORTUNITY refers to the chance offered by the external
environment to improve the firm’s situation significantly.
THREATS refer to a challenge posed by an unfavourable trend
or development in the external environment that would lead to,
in the absence of purposeful entrepreneurial action, the erosion
of the entrepreneurship’s position.

EXAMPLES:
STRENGTHS
1. A recording firm's unique line-up of contract
singers.
2. A company’s ownership of the land that is the
source of high grade material required for
producing its products;
3. The strategic location of the Firm’s sales offices;
and
4. The firm’s exclusive supply contract with a
reliable manufacturer.
2. ADOPTION OF
COURSE OF ACTION

EXAMPLES:
WEAKNESSES
1. Lack of qualified managers
2. Poor design of the firm’s products
3. Low employee morale; and
4. Poor location of the firm’s sales offices.
2. ADOPTION OF
COURSE OF ACTION

EXAMPLES:
OPPORTUNITIES
1. For a motorcycle trading firm: the escalating
cost of fuel ;
2. For a small restaurant : the withdrawal from
business of a major competitor;
3. For a tailor residing in provincial city; the
absence of a reliable tailoring shop;
4. For a newspaper dealer: an exclusive supply
contract for the entire province offered by a major
national publisher.
2. ADOPTION OF
COURSE OF ACTION

EXAMPLES:
THREATS
1. To the grocery store : the proposed opening of a mall in
the vicinity
2. To the restaurant located along the highway: the
proposed construction of a diversion road by passing the
highway and the restaurant.
3. To the local dealer of skin-whitening soap and cream: the
proposed dissolution of the company supplying the
product.
4. To the local operator of 20 units Of public utility tricycles:
the proposed City ordinance banning tricycles from plying
The major streets of the city.
2. ADOPTION OF
COURSE OF ACTION

Strategies for a Going Concern
1. Segment markets – identify the market
segment with which it has expertise then
compete.
2. Efficient use of research and development
3. Think Small
2. ADOPTION OF
COURSE OF ACTION

Why Small Business Operators
Ignore Strategic Planning
1. Lack of Expertise – Few small business
operators are trained in strategic planning.
2. ADOPTION OF
COURSE OF ACTION

2. Inability to Get Started – Lack of sufficient
exposure to planning activities.
2. ADOPTION OF
COURSE OF ACTION

3. Uncontrollable, often Intangible Variables.
2. ADOPTION OF
COURSE OF ACTION

4. Resource Poverty – Planning requires time,
but the small business operators oftentimes
does not have it.
2. ADOPTION OF
COURSE OF ACTION

5. Focus On Daily Operations – Keeps the
small business operator so busy, left with no
time for planning.
2. ADOPTION OF
COURSE OF ACTION

6. Failure to Realize the Importance of
Strategic Planning.
2. ADOPTION OF
COURSE OF ACTION

Forecasts of Future Sales
Performance
 Forecasts are supplementary tools for SWOT analysis.
 It is an estimate or prediction of the future sales or
income of the firm.
 It may be SHORT-TERM (one year or less), MEDIUM-
TERM (one to five years), LONG-TERM (over five years).
 SALES FORECASTS are often determined through a
combination of statistical and intuitive forecasts
tempered by the experience of the entrepreneur.
2. ADOPTION OF
COURSE OF ACTION

The specific aim of planning is to be able
to deploy the right quality and quantity of
resources in the various activities required to
achieve the objective. The resources would be
indicated in terms of human and nonhuman
elements.
3. DEPLOYING THE RESOURCES

Fundamental Strategies for Small
Business
There are certain basic strategies that are necessary for the
survival of small business.
These are the following:
1. The flexibility strategy
2. The strategy of effectiveness as priority
3. The strategy of starting simple

Strategy Concerns of Small Business
In determining what strategy to adapt, the entrepreneur is
confronted with two general situations:
1. Is he organizing a new business? or
2. Is he currently running an old business?

New Business- this refers to one that will be
operated for the first time by the small business
operator. If so, his options consist of the following:
1. acquiring an existing business;
2. organizing a new business; and
3. buying a franchise.

SUMMARY
Small business needs to be successful. The high rate of small business failure makes
the need more urgent.
Strategic planning provides an answer. In strategic planning, the major objective of the
organization are determined, and strategies are formulated to achieve those objectives.
A carefully designed plan for achieving the objectives is called a STRATEGY.
The strategy adapted will depend on whether a new business is being considered or an
old business is currently operated.
Important as it is, small business operators often ignore strategic planning for various
reasons.

Topic 1-Strategic Planning for Small Business (1).pptx

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