Testing your Strategy & Business Planning Process, the 10 most critical factors

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How does your business strategy and business plan stack up against the ten most critical factors of success.

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Testing your Strategy & Business Planning Process, the 10 most critical factors

  1. 1. 1© Grant Thornton International. All rights reserved.10 timelessstrategy tests
  2. 2. 2© Grant Thornton International. All rights reserved.The problem with strategy…our strategy will lead us to successOur strategy defines our differentiation…We have clear capabilities……that fully support our strategySource: Booz&Co%%%%
  3. 3. 3© Grant Thornton International. All rights reserved.10 tests: separating the wheat from the chaffHave you translated your strategy into an action plan?Is there conviction to act on your strategy?Is your strategy contaminated by bias?Does your strategy balance commitment and flexibility?Does your strategy embrace uncertainty?Does your strategy rest on privileged insights?Does your strategy put you ahead of the trends?Is your strategy granular about where to compete?Does your strategy tap a true source of advantage?Will your strategy beat the market?
  4. 4. 4© Grant Thornton International. All rights reserved.Will your strategybeat themarket?
  5. 5. 5© Grant Thornton International. All rights reserved.Will your strategy beat the marketPorters 5 ForcesWhat is it?• Analyses the level of competitive rivalry within an industry atthe business unit or divisional level, not for the wholeorganisation• Examines the bargaining power of customers and suppliersand the threat of new entrants and substitutesHow do you use it?• Determine the overall level of each factor (High, Medium, Low)and then determine the overall level of competitive rivalry• Five forces are not independent of each other, one can triggereffects into another• Competitive strategy may be concerned with disrupting theseforces rather than just accommodating to themWhen do you use it?• When there is a need to have a clear understanding of the levelof competitive rivalry within the industry that the business unitis competing in.CompCOMPETITIVERIVALRYPotentialEntrantsSuppliersBuyersSubstitutesBargainingPowerThreat ofsubstitutesBargainingPowerThreat ofentrants
  6. 6. 6© Grant Thornton International. All rights reserved.Will your strategy beat the marketSWOT AnalysisWhat is it?• Assessment of business strengths, weakness,opportunities and threats• Strengths and Weaknesses are factors internal tothe organisation• Opportunities and Threats are factors external to theorganisationHow do you use it?• Management interviews/questionnaires to determinestrengths and weaknesses• Industry research to determine opportunities andthreats• Key is to leverage strengths to exploit opportunities,defend against threats, protect weaknesses fromthreats and opportunities available to competitors,When do you use it?• Simple useful tool for any review• Quick way to determine how to leverage strengthsand defend from threatsSTRENGTHS WEAKNESSESOPPORTUNITIES THREATS
  7. 7. 7© Grant Thornton International. All rights reserved.Will your strategy beat the marketCompetitive PositioningWhat is it?Tool which identifies the market the business is targeting orpotentially should be targeting based on price (compared tocompetitors) and perceived value from customerHow do you use it?Use management interviews/questionnaires andindustry/market research reports to determine:• Price compared to competitors• What customers value and segment themappropriatelyDetermine based on SWOT analysis where the organisationshould be positionedWhen do you use it?for a business that has declining salesfor a business that has no clear sales strategyPERCEIVEDADDEDVALUE Low HighPRICEUnsustainableStrategiesHybridLow priceNo FrillsDifferentiationFocusedDifferentiation
  8. 8. 8© Grant Thornton International. All rights reserved.COMPANYPROFILESTRENGTHSWEAKNESSESOPPORTUNITYTHREATCOMPEDITIVEPOSITIONINGCompetitorsCustomersSuppliersNewEntrantsProductSubstitutesEconomicPoliticalSocialEnvironmentalLegalTechnologicalSWOTPortersPESTLE
  9. 9. 9© Grant Thornton International. All rights reserved.Does your strategy tap atrue source of advantage?
  10. 10. 10© Grant Thornton International. All rights reserved.Positional and Capability AdvantagesPositional Advantages• Market DominanceCapability Advantages• Access to unique resources– Saudi Aramco• Innovation and R&D– Google• People (?)Source: The Australian
  11. 11. 11© Grant Thornton International. All rights reserved.Is your strategygranularabout whereto compete?
  12. 12. 12© Grant Thornton International. All rights reserved.Does your strategy put youaheadof thetrends?
  13. 13. 13© Grant Thornton International. All rights reserved.Does your strategyrest onprivilegedinsights?
  14. 14. 14© Grant Thornton International. All rights reserved.Insight comes from many different sources.Whence comes insight?• Board• Staff• Customers• Commissioned research– Internal data– External data• External experts orprovocateurs• Problem analysisTOPDOWNBOTTOMUP
  15. 15. 15© Grant Thornton International. All rights reserved.Does your strategyembrace uncertainty?
  16. 16. 16© Grant Thornton International. All rights reserved.Scenario PlanningForecasts are not predictionsScenario planning is auseful tool fordiscussing possibilitiesin an uncertain futureSupplyDemandHighHighLowLowProfessional ServicesLand of the giantsNiche marketsBoom timesBread crumbs
  17. 17. 17© Grant Thornton International. All rights reserved.Does your strategy balancecommitment and flexibility?
  18. 18. 18© Grant Thornton International. All rights reserved.A few big decisionsTiming is criticalMany smaller decisionsDelay where possibleFlexibility CommitmentThere is unavoidable tension betweenflexibility and commitment.
  19. 19. 19© Grant Thornton International. All rights reserved.Is your strategycontaminatedby bias?
  20. 20. 20© Grant Thornton International. All rights reserved.Is thereconvictionto acton your strategy?
  21. 21. 21© Grant Thornton International. All rights reserved.Have you translated your strategyinto an action plan?
  22. 22. © 2011 Grant Thornton Australia Ltd | February 2012The RoadmapFinanceCustomer MarketInternalGrowth &DevelopmentSet next year’sbudgetRestructure Boardof Directors(Phase 1)ReintroduceRemunerationCommittee0 – 3 Months 3 – 6 Months 6 – 12 MonthsAppoint Sales teamCreate websiteIntroduce Salesteam into clientconversationPolish shop reviewOutsource internaloperations (e.g. IT)Find sub-contractorinstallation teamsIT reviewUpgrade & reviewemploymentcontractsUpdate &implementorganisational chartReview jobdescription in all 5areasAppoint SeniorLeadership TeamHR development &training forindividualsAppoint companymentorAppoint ExecutiveAssistant (EA) toManaging DirectorReviewManagementReporting (M1)Restructure Boardof Directors(Phase 2)ReviewShareholdingsEstablish clientsSales strategyProcurementstrategySponsorship &communityinvolvement effortEnvironmentalreviewSet next year’sbudgetUpdate businessplanCompany directortrainingReview/refreshmanualsStorage reviewReview IJF MaycoReview outsourcingcomponents forassemblyRisk review onproducts &suppliersConstructionstrategy(ECH ExpansionHealth & Aged Care)EstablishcompetitorsManufacturingoutsourcing – local(painting, etc)FF&E marketEstablishprocurementbased on product(e.g. China, India,Vietnam)Establish productcoreReview showroomlocation(with productlibrary included) 22StrategicDirection
  23. 23. 23© Grant Thornton International. All rights reserved.The results:65%(3 or fewer)25%(4 – 6)10%(7 – 10)
  24. 24. 24© Grant Thornton International. All rights reserved.Strategy• Takes time• Requires effort• Builds on capability• Needs commitment

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