Strategy for small busines
•
0 likes•270 views
Starting your strategy journey, How to plan your business development. For a FREE downloadable version please visit www.incrementa.co.uk
Recommended
More Related Content
What's hot
What's hot (18)
Viewers also liked
Viewers also liked (20)
Similar to Strategy for small busines
Similar to Strategy for small busines (20)
More from Incrementa consulting
More from Incrementa consulting (20)
Recently uploaded
Recently uploaded (20)
Strategy for small busines
- 1. Strategy for small business July 2013
- 2. Most people’s view of strategy Strengths Weaknesses Opportunities Threats SWOT
- 3. Strategy What is strategy • Likely to be involved with the long term direction of the organisation, i.e. 3-5 years • Likely to involve all the activities of an organisation • Usually the decisions are about trying to gain an advantage over the competition. • They normally attempt to match the activities of an organisation to its external operating environment • They can be affected by the values and expectations of the organisations stakeholders. (Individuals or organisations that are affected by the organisations decisions, i.e. customers)
- 4. Strategy Strategy Defined “Strategy is the direction and scope of an organisation over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations” Johnson and Scholes (2005) Lost Boy: “Injuns! Let’s go get em!” John Darling: “Hold on a minute. First we must have a strategy” Lost Boy: “Uhh? What’s a strategy?” John Darling: “Its, er…. It’s a plan of attack.” Walt Disney’s Peter Pan In Grant (2002)
- 6. Small Business Strategic Route MapSmall Business Strategic Route Map Internal AssessmentInternal Assessment External AssessmentExternal Assessment PhysicalPhysical FinancialFinancial HumanHuman IntangibleIntangible MicroMicro MacroMacro PortersPorters BenchmarkBenchmark PESTLEPESTLEVRIOVRIO Strengths / WeaknessesStrengths / Weaknesses Opportunities / ThreatsOpportunities / Threats SWOTSWOT TOWSTOWS SuitabilitySuitability AcceptabilityAcceptability FeasibilityFeasibility Strategy for GrowthStrategy for Growth
- 7. External Macro Environment - PESTLE analysis • Political • Economic • Social • Technological • Legal • Environmental
- 8. External • Political future − Political parties and alignments at a local, national level and European level − Legislation – i.e. taxation and employment law − Relations between the government and the organisation − Government attitude towards monopolies and competition
- 9. External • Economic future − Inflation − Consumer expenditure and disposable income − Interest rates − Currency fluctuations and exchange rates − Public and private sector investment − Energy, transport and communication costs
- 10. External • Social Future − Shifts in values and culture − Changes in lifestyle − Attitudes to work and leisure − Demographic changes – for example changes in age variations of the population
- 11. External • Technological Future − Local, regional and national government investment policy − New patents and products − Research initiatives − Speed of change and adaptation to new technologies − Level of R+D expenditure
- 12. External • Environmental future − Green issues and policies that effect the environment − Renewable energies − Rubbish, waste and its disposal
- 13. External • Legal future − Competition law and government policy − Employment and safety law − Product safety issues
- 14. External • Micro environment − Five Forces model helps identify the changes in another sources of competition within an industry − Each force is not independent of each other. Pressures from one can cause Competitive Rivalry Potential Entrants Buyers Substitutes Suppliers Threat of Entrants Bargaining Power Threat of Substitutes Bargaining Power
- 15. • Threat of entry − Dependent upon the ability to overcome the barriers to entry − These factors need to be overcome to compete successfully − They can be viewed as providing only delays and not permanent barriers to entry − Economies of scale − Capital requirement of entry − Access to distribution channels − Experience − Expected retaliation − Legislation or government action − Differentiation
- 16. • Threat of substitutes − Substitution reduces demand for a particular class of products or services, e.g. email reducing the demand for postal services − This depends on whether the substitute provides a higher perceived benefit or value − Substitution may take different forms − Product for product substitution – email vs postal service − Substitution of need – more reliable appliances require less maintenance − Generic substitution – indirect competition
- 17. • Power of buyers and suppliers − Buyer power high when − Few buyers − Alternative sources of supply − Component or material cost is high percentage of total cost − Switching cost is low
- 18. • Power of buyers and suppliers − Supplier power high when: − Few suppliers − Switching costs are high − The brand of the supplier is powerful
- 19. • Competitive rivalry − Market growth rates affect rivalry
- 20. Development Growth Shakeout Maturity Decline Few early adopters Growing adopters Growing selectivity of purchase Saturation of users Repeat purchase alliance Drop off in usage Few competitors Entry of competitors Fight for share Undifferentiated product / services Many competitors Likely price cutting for volume Shakeout of weakest competitors Fight to maintain market share Difficulties in gaining new share Emphasis on efficiency / low cost Exit of some competitors
- 21. Internal Internal Resource Audit • Tangibles − Physical – i.e. office space, production space − Finances – i.e. available budget / finances − Human – i.e. the skills and experiences of the staff • Intangibles – i.e. brand awareness, service quality
- 22. Internal Typical Audit Questions • Physical − What physical space is there? − Is there room for expansion? − Is there any unique / specialist space? − Is there any specific / unique equipment?
- 23. Internal • Financial − How strong is the financial position of the organisation? − How is the organisation funded? − Is there a reliance on public sector funding? − Is there free capital for expansion / development?
- 24. Internal • Human − Have the staff got specific / unique skills and experiences? − How strong is the contact base for each member of staff? − What are the recruitment strategies? − How are the staff motivated? − What is the turnover of staff?
- 25. Internal • Intangible resources − How strong is the brand of the organisation? − How loyal are the customers? − What relationships have the staff built? − What is the reputation of the company? − What are the perceived levels of service?
- 26. Resources, competences and competitive advantage Same as competitors’ or easy to imitate Better than competitors’ and difficult to imitate Resources Competences Threshold Resources Threshold Competences Unique Resources Core Competences
- 27. • Translating resources to competences − Competences develop over time within an organisation − Some are so difficult to imitate that they become a competitive advantage. − These are known as “core competences” − It is the identification of these that is important within the internal analysis.
- 28. Resources to competences V Valuable R Rareness I Imitable O Organisation
- 29. • Derived SWOT and TOWS − Once we have the five factors for each aspect of the SWOT − Now investigate the relationships and implications of the factors. −How can strengths be used to take advantage of opportunities? −How can strengths be used to avoid or defuse threats? −How can weaknesses be overcome to take advantage of opportunities? −How can weaknesses be overcome to counteract or minimise threats? TOWS matrix investigates these relationships
- 30. Strengths (S) Weaknesses (W) Opportunities (O) Threats (T) SO Strategies WO Strategies ST Strategies WT Strategies TOWS Matrix
- 31. • SO Strategies: − Generate strategies that use strengths to take advantage of opportunities • ST Strategies − consider a business’ strengths as a way to avoid threats • WO Strategies − Attempt to take advantage of opportunities by overcoming weaknesses • WT Strategies − Are basically defensive and primarily act to minimise weaknesses and avoid threats
- 32. • Success Criteria How to evaluate the strategies formed from the TOWS exercise − Suitability The extent to which new strategies would fit with future trends and changes in the environment and how the strategy might stretch and exploit the core competences − Acceptability Concerned with the expected performance outcomes. Will the strategy deliver what is expected? − Feasibility Can the strategy be made to work in practice?
- 33. • Suitability Do the strategies: − Exploit opportunities in the environment and avoid threats − Capitalise on an organisations strengths and avoid or remedy weaknesses − Address stakeholder expectations • The relative suitability of strategic options can be understood by: − Ranking − Decision trees − Scenarios
- 34. • Acceptability − Some criteria for understanding acceptability of strategic options: −Profitability −Cost Benefit analysis −Sensitivity analysis −Stakeholder reactions • Feasibility − Financial feasibility − Resource deployment
- 35. Summary • Environmental influences in two ways −Macro environment – general influences −Micro environment – specific to the industry / sector • Basis of all effects from the environment are dynamic, e.g. changes over time, changes to competitors • Therefore organisations need to continually review and address these environmental changes • Strategic capability is the ability to provide products or services with features that are valued by customers. • Competitive advantage is therefore achieved by organisations that are able to do this better that their competitors in ways that are difficult to imitate
- 36. • Strategic capability starts with resources. Some resources may be unique to an organisation and be the basis of competitive advantage. • Some activities or processes may be core competencies that underpin an organisations competitive advantage • Strategic competitive advantage can be obtained by matching external factors with an organisations core competences. • Once a series of strategies have been derived from the TOWS matrix each one should be assessed. • The one strategy that “fits” across the suitability, acceptability and feasibility measurements can be implemented • Implementation can be difficult but for small businesses it can be much easier than larger businesses – speed boat vs oil tanker!