Strategic Management Formulation Guide with Templates

STRATEGIC PLAN FORMAT &

TEMPLATES The outcome of these templates is that you must be able to audit an existing strategic plan and develop an improved strategic plan.

Dr Dennis Mark Laxton

STRATEGIC PLAN FORMAT and TEMPLATE

Strategy Development Process

• Environmental Scan

Assessment

• Background

Information

• Situational Analysis

• SWOT – Strength’s,

Weaknesses,

Opportunities,

Threats

• Situation – Past,

Present and Future

• Significant Issues

• Align / Fit with

Capabilities

• Mission & Vision

• Values / Guiding

Principles

• Key Objectives

• Performance

Measurement

• Targets / Standards of

Performance

• Initiatives and

Projects

Baseline Components

• Performance

Management

• Review Progress –

Balanced Scorecard

• Take Corrective

Actions

Down to Specifics Evaluate

Where we are

• Gaps • Action Plans • Feedback upstream

– revise plans

Where we want to be How we will do it How are we doing

Part A: Analysis of the current strategy

Note: All Strategic plan proposals should be accompanied with a ‘Table of Contents’ and should

be in the order depicted below.

1. Executive Summary

Give brief outline of the current Organisation

Background to the organisation

Current Vision

Current Mission

Current Goals and Objectives

Current Strategy

Current organizational structure

Current finances and any relevant supporting documentation.

2. Industry (Environmental) Analysis

External Environment (select only the relevant and critical factors)

Factor Impact on this organization When will this impact occur

In the short, medium or long term

Political

Economical

Environmental

Social

Technological

Legal

International

Physical (infrastructure)

Other

When conducting a detailed industry and market analysis you need to identify and quantify key market

opportunities/gaps, barriers to market entry, threats, compliance requirements, risks, performance

multipliers, critical success factors etc that must be considered when developing high priority product

development, marketing and business strategies. All budgetary and financial constraints must be

factored in to this planning.

Global/National Trends, Developments, Cycles and Changes of Relevance

Macro-environment (eg, political, economic, legal, social/cultural, demographics, technology)

Industry

Markets, Customers and Suppliers

Competitors and their Products

Questions typically asked during the analysis would include:

- What are the industry's economics, critical success factors, key risks, competitiveness, compliance

and standards requirements, emerging trends and key technologies?

- Who are the key customers and major competitors in each target markets?

- What are the sizes of the target markets? Are they growing? If yes, at what rate?

- What market share does each major competitor hold in your primary markets

- What are the strengths and weaknesses of major competitors and their products?

- What are the competitive price points for products in each market?

- What competitive advantages must your products have to successfully enter and compete in target

markets? How will you differentiate your products and add more-customer-value than competitors?

- Key questions about your primary customers:

* Specifically what need or problem does your product target?

* Who will make the decision to purchase your products?

* What are their decision criteria?

* Where are the products bought?

* How are the products bought?

* When are the products bought?

* Why are the products bought?

- How well do you know your primary customers and key competitors?

- How strong are your relationships with key customers and key stakeholders. How do you involve

them in product development? What factors will be critical to building strong and enduring brands with

them?

- What levels of demand for your products are realistic across your primary markets?

- In order of priority what are your primary markets? Why?

- How will your primary competitors react when you enter their markets, now and over the next two

years? What are you going to do about their responses?

- What are the major barriers to market entry?

- What are the critical success factors for each market?

- What key product distribution, product support and customer service issues must be considered?

- Which companies and products are likely to become competitors in the future?

- What new or emerging technologies and substitute products are likely to become threats in the future?

3. Market Environment (current situation)

(Complete the scorecard from the SEA Model)

Record the data for the SEA Model onto the grid and discuss the key findings below the grid

Draw a Horizontal Bar Chart on the Scoreboard from the questions total score below

Check No.1

Rivalry Among

Competitors

Check No.2

Threat of new entries.

Check No.3

Buyer gaining

Power.

Check No.4

Threat of substitutes.

Check No.5

Meeting customer needs.

Check No 6

Supplier gaining power.

Check No 7

Management

commitment.

Check No 8

Employee commitment.

Check No 9

Shareholders

expectations

Check No10

Complementor gaining

power

0 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42

Good strategic advantage Average strategic advantage Low strategic

advantage

Refer to the Questionnaire below to use for the above SEA Model Grid

1. DENNIS LAXTON'S Check for rivalry amongst competitors

WHICH OF THESE CONDITIONS APPLY TO YOUR

COMPETITORS?

Circle the most appropriate answer

RIVALRY

High Average Low

1. How concentrated is the existing number of competitors?

Many

[ 3 ]

Oligopoly

[ 2 ]

Monopoly

[ 1 ]

2. What is the market share of the major competitor? Rising

[ 3 ]

Stable

[ 2 ]

Declining

[ 1 ]

3. Are your competitors merging with or acquiring similar companies?

Rising

[ 3 ]

Less

[ 2 ]

None

[ 1 ]

4. How do customers’ attitudes appear towards competitors?

Positive

[ 3 ]

Neutral

[ 2 ]

Negative

[ 1 ]

5. Do competitors offer better service and quality than you do?

Yes

[ 3 ]

Same

[ 2 ]

No

[ 1 ]

6. Extent of alliances between Competitors and customers.

Many

[ 3 ]

Some

[ 2 ]

Few

[ 1 ]

7. Is industry capacity greater than market growth? Higher

[ 3 ]

Same

[ 2 ]

Lower

[ 1 ]

8. What are the current and future market growth trends? Declining

[ 3 ]

Stable

[ 2 ]

Rising

[ 1 ]

9. Technological, quality and service innovation levels of competitors?

High

[ 3 ]

Average

[ 2 ]

Low

[ 1 ]

10. Service demands trends of major customers in the industry.

Rising

[ 3 ]

Stable

[ 2 ]

Declining

[ 1 ]

11. What are the customer backup and support levels of competitors?

High

[ 3 ]

Average

[ 2 ]

Low

[ 1 ]

12. Do customers see major differences between your company & competition?

Rising

[ 3 ]

Average

[ 2 ]

None

[ 1 ]

13. Market share trend of the major customers switching to competitors.

Rising

[ 3 ]

Stable

[ 2 ]

Declining

[ 1 ]

14. Competitors pricing compared to your business enterprise?

Lower

[ 3 ]

Same

[ 2 ]

Higher

[ 1 ]

Sub Totals (Add up each column vertically)

Grand Totals (Add up the three sub-totals)

2. DENNIS LAXTON'S Check for Threat of New Entries

DO COMPANIES OUTSIDE YOUR INDUSTRY MEET

THESE CRITERIA?


RIVALRY

High Average Low

1. How strong is your companies brand awareness in the marketplace?

Weak

[ 3 ]

Average

[ 2 ]

Strong

[ 1 ]

2. How strong is the competitors’ product differentiation? High

[ 3 ]

Same

[ 2 ]

Low

[ 1 ]

3. Who has access to the same distribution channels? Many

[ 3 ]

Few

[ 2 ]

None

[ 1 ]

4. Who can meet the quality and service requirements of the market?

Many

[ 3 ]

Some

[ 2 ]

None

[ 1 ]

5. Who has license or patents for products? Many

[ 3 ]

Some

[ 2 ]

None

[ 1 ]

6. Does your company have a switching cost on its customers?

None

[ 3 ]

Some

[ 2 ]

Many

[ 1 ]

7. How many competitors have the necessary technical skills?

Many

[ 3 ]

Some

[ 2 ]

None

[ 1 ]

8. Who has necessary technology to produce the product or service?

Many

[ 3 ]

Some

[ 2 ]

None

[ 1 ]

9. Technological, quality and service innovation levels of competitors?

Many

[ 3 ]

Some

[ 2 ]

None

[ 1 ]

10. How many competitors have the necessary backup and support skills?

Many

[ 3 ]

Some

[ 2 ]

None

[ 1 ]

11. Who has ability to modify and copy the original patent?

Many

[ 3 ]

Some

[ 2 ]

None

[ 1 ]

12. Does your company have a switching cost on its suppliers?

None

[ 3 ]

Some

[ 2 ]

Many

[ 1 ]

13. Is your company threatened by government legislation?

Very

[ 3 ]

Average

[ 2 ]

None

[ 1 ]

14. How attractive is this industry to competitors? Very

[ 3 ]

Average

[ 2 ]

Little

[ 1 ]



3. DENNIS LAXTON'S Check for Buyer Bargaining Power


INDUSTRY?


RIVALRY

High Average Low

1. Buying power is concentrated in the hands of few customers.

1-5 Co's

[ 3 ]

10-20 Co’s

[ 2 ]

21 + Co's

[ 1 ]

2. Mix of customers accounting for the majority of your sales?

Declining

[ 3 ]

Stable

[ 2 ]

Rising

[ 1 ]

3. Buyers using their group power when negotiating terms?

Always

[ 3 ]

Sometimes

[ 2 ]

Never

[ 1 ]

4. How dependent are your sales on specific industries? Very

[ 3 ]

Average

[ 2 ]

Little

[ 1 ]

5. How important is your product as an input to your customers?

Little

[ 3 ]

Some

[ 2 ]

Very

[ 1 ]

6. Could any of your customers integrate with your industry?

Easily

[ 3 ]

Maybe

[ 2 ]

Difficult

[ 1 ]

7. How important is the Government as a buyer in this industry?

Very

[ 3 ]

Little

[ 2 ]

Not

[ 1 ]

8. How well does your customer see your product differentiation as compared to other suppliers?

Same

[ 3 ]

Little

[ 2 ]

Much

[ 1 ]

9. Technological innovation levels of your competitors? High

[ 3 ]

Average

[ 2 ]

Low

[ 1 ]

10. Could any of your customers integrate with your competitors?

Easily

[ 3 ]

Maybe

[ 2 ]

Difficult

[ 1 ]

11. How important is the export market as a buyer? Very

[ 3 ]

Little

[ 2 ]

Not

[ 1 ]

12. How well does your customer see your service differentiation as compared to other suppliers?

Same

[ 3 ]

Little

[ 2 ]

Much

[ 1 ]

13. Information systems innovation by your competitors? High

[ 3 ]

Average

[ 2 ]

Low

[ 1 ]

14. Do your information systems have any competitive advantages?

None

[ 3 ]

Average

[ 2 ]

Many

[ 1 ]



4. DENNIS LAXTON'S Check for Threat of Substitution


INDUSTRY?


RIVALRY

High Average Low

1. How many potential product substitutes can you identify?

Many

[ 3 ]

Few

[ 2 ]

None

[ 1 ]

2. How are these substitutes priced in comparison to your product?

Lower

[ 3 ]

Same

[ 2 ]

Higher

[ 1 ]

3. How many suppliers of these substitutes are there? Many

[ 3 ]

Some

[ 2 ]

Few

[ 1 ]

4. What are the supply trends of substitutes? Rising

[ 3 ]

Stable

[ 2 ]

Declining

[ 1 ]

5. What is the level of unusual competitive activity at your customers?

High

[ 3 ]

Average

[ 2 ]

Low

[ 1 ]

6. What is your product cost trends compared to the industry?

Rising

[ 3 ]

Same

[ 2 ]

Declining

[ 1 ]

7. Do substitutes offer the same function as your product?

More

[ 3 ]

Same

[ 2 ]

No

[ 1 ]

8. What is your material cost trends compared to the industry?

Rising

[ 3 ]

Same

[ 2 ]

Declining

[ 1 ]

9. Do substitutes offer the same features and benefits as yours?

More

[ 3 ]

Same

[ 2 ]

No

[ 1 ]

10. Does your product have value benefits over substitutes?

The customers perception, not yours.

None

[ 3 ]

Some

[ 2 ]

Definitely

[ 1 ]

11. What are your product backup levels compared to the industry?

Worse

[ 3 ]

Same

[ 2 ]

Much better

[ 1 ]

12. Do substitutes offer additional warranties compared to your product?

More

[ 3 ]

Same

[ 2 ]

Less

[ 1 ]

13. Do substitutes offer additional back up compared to your product?

More

[ 3 ]

Same

[ 2 ]

Less

[ 1 ]

14. Does your product have better reliability over substitutes? The customers perception, not yours.

None

[ 3 ]

Some

[ 2 ]

Definitely

[ 1 ]



5. DENNIS LAXTON'S Check for Meeting Customer needs

DO COMPANIES IN YOUR INDUSTRY MEET CUSTOMER

NEEDS?


RIVALRY

High Average Low

1. Do you regularly ask what your customer wants and needs?

No

[ 3 ]

Seldom

[ 2 ]

Yes

[ 1 ]

2. How frequently are you in contact with your customer? Rarely

[ 3 ]

Seldom

[ 2 ]

Frequently

[ 1 ]

3. Are you innovative in meeting customer needs? Rarely

[ 3 ]

Seldom

[ 2 ]

Always

[ 1 ]

4. How Flexible are you in meeting customer demands? Rarely

[ 3 ]

Sometimes

[ 2 ]

Always

[ 1 ]

5. Do you consider customers vital or disruptive pests? Pests

[ 3 ]

Mixture

[ 2 ]

Vital

[ 1 ]

6. Are your customers also buying from your competitors?

Yes

[ 3 ]

Some

[ 2 ]

None

[ 1 ]

7. How many customers do you service? Few

[ 3 ]

Limited

[ 2 ]

Many

[ 1 ]

8. Is your product suitable for Many industries? No

[ 3 ]

Limited

[ 2 ]

Many

[ 1 ]

9. Could your technology be used to gain new customers?

Unlikely

[ 3 ]

Maybe

[ 2 ]

Definitely

[ 1 ]

10. Do you share marketing ideas with customers? Never

[ 3 ]

If asked

[ 2 ]

Frequently

[ 1 ]

11. Are you perceived as a reliable supplier to your customers?

Rarely

[ 3 ]

Usually

[ 2 ]

Always

[ 1 ]

12. Could your service backup be used to gain new customers?

Unlikely

[ 3 ]

Maybe

[ 2 ]

Definitely

[ 1 ]

13. Do you share features and benefits with customers? Never

[ 3 ]

If asked

[ 2 ]

Frequently

[ 1 ]

14. Are you perceived as a quality supplier to your customers?

Rarely

[ 3 ]

Usually

[ 2 ]

Always

[ 1 ]



6. DENNIS LAXTON'S Check for Key Supplier Bargaining Power


INDUSTRY?

RIVALRY

Circle the most appropriate answer High Average Low

1. Are you reliant on a few suppliers? 1-3 Co's

[ 3 ]

5-10 C0's

[ 2 ]

20 + Co's

[ 1 ]

2. Do your suppliers also supply to your competitors? Yes

[ 3 ]

Some

[ 2 ]

No

[ 1 ]

3. Are any of your suppliers linked to your competitors? Many

[ 3 ]

Some

[ 2 ]

None

[ 1 ]

4. What is the relationship with your suppliers? Poor

[ 3 ]

Fair

[ 2 ]

Good

[ 1 ]

5. What is the importance of your industry to your supplier?

Vital

[ 3 ]

Balanced

[ 2 ]

Not

[ 1 ]

6. Does your supplier keep stock for you? Never

[ 3 ]

Some

[ 2 ]

Usually

[ 1 ]

7. Does your supplier determine terms or do you? Supplier

[ 3 ]

Negotiate

[ 2 ]

We do

[ 1 ]

8. Does your supplier also market a product similar to yours?

Yes

[ 3 ]

Some

[ 2 ]

Never

[ 1 ]

9. Does your supplier supply substitutes for your product?

Yes

[ 3 ]

Some

[ 2 ]

No

[ 1 ]

10. Are your suppliers reliable on quality, lead-time, quantity, etc?

Rarely

[ 3 ]

Usually

[ 2 ]

Always

[ 1 ]

11. Does your supplier determine the quality level or do you?

Supplier

[ 3 ]

Negotiate

[ 2 ]

We do

[ 1 ]

12. Does your supplier also market a competitive product to yours?

Yes

[ 3 ]

Some

[ 2 ]

Never

[ 1 ]

13. Does your supplier have the appropriate modern technology

No

[ 3 ]

Some

[ 2 ]

Yes

[ 1 ]

14. Is your suppliers flexible on quality, lead-time, quantity, etc?

Rarely

[ 3 ]

Usually

[ 2 ]

Always

[ 1 ]



7. DENNIS LAXTON'S Check for Management commitment and involvement

TO WHAT EXTENT ARE YOU PREPARED TO:


RIVALRY

Not at all Somewhat Absolutely

1. Invest a substantial amount of personal and organisational time.

[ 3 ] [ 2 ] [ 1 ]

2. Hold line managers accountable for quality levels and progress.

[ 3 ] [ 2 ] [ 1 ]

3. Regularly conduct strategy and progress meetings. [ 3 ] [ 2 ] [ 1 ]

4. Regularly organise and attend structured Strategic and Total Quality Management training courses.

[ 3 ] [ 2 ] [ 1 ]

5. What is the importance of your company to your well being?

[ 3 ] [ 2 ] [ 1 ]

6. Commit the financial and human resources needed to implement Strategic and Total Quality Management

[ 3 ] [ 2 ] [ 1 ]

7. Integrate improvement efforts with current financial resources to achieve effective Strategic implementation and Total Quality Management.

[ 3 ] [ 2 ] [ 1 ]

8. Visibly promote and live a strong commitment to the Strategic and Total Quality Management process.

[ 3 ] [ 2 ] [ 1 ]

9. Support an orderly implementation project plan with full commitment.

[ 3 ] [ 2 ] [ 1 ]

10. Repeatedly reinforce the Strategic and Total Quality Management process implementation project.

[ 3 ] [ 2 ] [ 1 ]

11. Integrate improvement efforts through team efforts. [ 3 ] [ 2 ] [ 1 ]

12. Publicly promote and live the commitment to the Strategic and Total Quality Management process.

[ 3 ] [ 2 ] [ 1 ]

13. Support an orderly implementation resource plan with full commitment.

[ 3 ] [ 2 ] [ 1 ]

14. Repeatedly monitor the Strategic and Total Quality Management process implementation as a project.

[ 3 ] [ 2 ] [ 1 ]



8. DENNIS LAXTON'S Check for Employee commitment and involvement.

TO WHAT EXTENT ARE YOU PREPARED TO:


RIVALRY

Not at all Somewhat Absolutely

1. Invest a substantial amount of personal and organisational time.

[ 3 ] [ 2 ] [ 1 ]

2. Hold line managers accountable for quality levels and progress.

[ 3 ] [ 2 ] [ 1 ]

3. Regularly conduct strategy and progress meetings. [ 3 ] [ 2 ] [ 1 ]

4. Regularly organise and attend structured Strategic and Total Quality Management training courses.

[ 3 ] [ 2 ] [ 1 ]

5. What is the importance of your company to your well being?

[ 3 ] [ 2 ] [ 1 ]

6. Commit the financial and human resources needed to implement Strategic and Total Quality Management.

[ 3 ] [ 2 ] [ 1 ]

7. Integrate improvement efforts in Strategic and Total Quality Management with current financial resources.

[ 3 ] [ 2 ] [ 1 ]

8. Visibly promote and live a strong commitment to the Strategic and Total Quality Management process.

[ 3 ] [ 2 ] [ 1 ]

9. Support an orderly implementation project plan with full commitment.

[ 3 ] [ 2 ] [ 1 ]

10. Repeatedly reinforce the Strategic and Total Quality Management process implementation project.

[ 3 ] [ 2 ] [ 1 ]

11. Integrate improvement efforts through team efforts. [ 3 ] [ 2 ] [ 1 ]

12. Publicly promote and live the commitment to the Strategic and Total Quality Management process.

[ 3 ] [ 2 ] [ 1 ]

13. Support an orderly implementation resource plan with full commitment.

[ 3 ] [ 2 ] [ 1 ]

14. Repeatedly monitor the Strategic and Total Quality Management process implementation as a project.

[ 3 ] [ 2 ] [ 1 ]



9. DENNIS LAXTON'S Check for Shareholders expectations. (From the shareholders perspective

WHICH OF THESE CONDITIONS APPLY TO THE

COMPANY:


INVESTMENT ATTRACTIVENESS

Poor Average Excellent

1. Is this a unique company in the market place that is sought after?

No

[ 3 ]

Average

[ 2 ]

Very

[ 1 ]

2. What is the level of the company’s profitability compared to industry? Hold line managers accountable for quality levels and progress.

Lower

[ 3 ]

Average

[ 2 ]

Higher

[ 1 ]

3. Does the company have a good return on investment as compared to others?

Lower

[ 3 ]

Average

[ 2 ]

Higher

[ 1 ]

4. What is the feedback you get from the company? (Market perceptions.)

Poor

[ 3 ]

Fair

[ 2 ]

Excellent

[ 1 ]

5. What is the importance of this industry to your portfolio?

Vital

[ 3 ]

Balanced

[ 2 ]

Not vital

[ 1 ]

6. Does the company constantly keep ahead of technology trends?

Never

[ 3 ]

Average

[ 2 ]

Always

[ 1 ]

7. What is the state of the company’s cash flow and investment ability?

Poor

[ 3 ]

Average

[ 2 ]

Excellent

[ 1 ]

8. What is the growth trend of the industry the company currently in?

Very slow

[ 3 ]

Stable

[ 2 ]

Fast growth

[ 1 ]

9. What is the company’s record of implementing strategies & tactics?

Very poor

[ 3 ]

Average

[ 2 ]

Excellent

[ 1 ]

10. Is this company very reliable on quality, lead-time, quantity, etc?

Rarely

[ 3 ]

Usually

[ 2 ]

Always

[ 1 ]

11. Is it possible for the company to maintain its growth levels?

Impossible

[ 3 ]

Probably

[ 2 ]

Definitely

[ 1 ]

12. What is the long-term financing ability of the company to grow?

Poor

[ 3 ]

Average

[ 2 ]

Excellent

[ 1 ]

13. Does this company have poor record of achieving long-term objectives?

Yes

[ 3 ]

Average

[ 2 ]

No

[ 1 ]

14. Is the company sought after by knowledgeable investors?

Rarely

[ 3 ]

Usually

[ 2 ]

Always

[ 1 ]



10. DENNIS LAXTON'S Check for Key Complementor bargaining power


INDUSTRY?

RIVALRY

Circle the most appropriate answer High Average Low

15. Are you reliant on a complementors to get business? Always

[ 3 ]

Balanced

[ 2 ]

Not

[ 1 ]

16. Do your complementors work with competitors? Yes

[ 3 ]

Some

[ 2 ]

No

[ 1 ]

17. Are any of your complementors linked to your competitors?

Many

[ 3 ]

Some

[ 2 ]

None

[ 1 ]

18. What is the relationship with your complementor? Poor

[ 3 ]

Fair

[ 2 ]

Good

[ 1 ]

19. What is the importance of your industry to your complementor r?

Vital

[ 3 ]

Balanced

[ 2 ]

Not

[ 1 ]

20. Does your complementor keep stock for you? Never

[ 3 ]

Some

[ 2 ]

Usually

[ 1 ]

21. Does your complementor determine terms or do you? Supplier

[ 3 ]

Negotiate

[ 2 ]

We do

[ 1 ]

22. Does your complementor also market a product similar to yours?

Yes

[ 3 ]

Some

[ 2 ]

Never

[ 1 ]

23. Does your supplier supply substitutes for your product?

Yes

[ 3 ]

Some

[ 2 ]

No

[ 1 ]

24. Are your complementor trustworthy and reliable? Rarely

[ 3 ]

Usually

[ 2 ]

Always

[ 1 ]

25. Does your complementor determine the quality level or do you?

Supplier

[ 3 ]

Negotiate

[ 2 ]

We do

[ 1 ]

26. Does your complementor also market a competitive product to yours?

Yes

[ 3 ]

Some

[ 2 ]

Never

[ 1 ]

27. Does your complementor have the appropriate modern technology

No

[ 3 ]

Some

[ 2 ]

Yes

[ 1 ]

28. Is your complementor flexible on quality, lead-time, quantity, etc?

Rarely

[ 3 ]

Usually

[ 2 ]

Always

[ 1 ]



Discuss the key issues from above and the impact on the market and your organisation

4. Internal Environment (Current situation) Complete the SWOT

analysis for the organisation

In this section you need to identify your organisations and product's key strengths and weaknesses as

they relate to key market opportunities and threats. Then develop strategies to address each issue (eg,

build on strengths and correct weaknesses) for each product in your product portfolio. When preparing

this section consider the following framework for clustering key issues and related strategies. All

budgetary and financial constraints must be factored in to this planning.

Describe your current and near-future products?

What gives your products a clear competitive advantage?

What are the benefits and value provided to customer as opposed to 'features'?

What are the environmental and social impacts and implications?

What regulations, standards and codes must be complied with?

At what stage is each product in its life-cycle? For example: - Research completed

- Prototype completed

- In-house testing

- Customer testing

- Market ready

- First up-grade completed

Circle the appropriate answer

Which of these conditions

apply to this company?

Major strength: Average

strength:

Average

weakness:

Major weakness:

1. Does the company have a

clearly defined and

appropriate vision?

Totally adequate

[1]

Few mistakes

[2]

Lots of mistakes

[3]

No Vision statement

[4]

2. Does the company have a

mission statement to

support the vision?

Totally adequate

[1]

Few mistakes

[2]

Lots of mistakes

[3]

No Vision statement

[4]

3. Does the company have

clearly defined long-term

objectives and values?

Well defined

[1]

Loosely defined

[2]

Unclearly defined

[3]

No long term

objectives

[4]

4. Is the strategy consistent

with the environment?

Very consistent

[1]

Somewhat

consistent

[2]

Vague strategy

[3]

No at all consistent

[4]

5. Does the strategy provide a

differential (KSF)

competitive advantage?

Very well

defined

[1]

Well defined

[2]

Poorly defined

[3]

Not provided

[4]

6. Do the policies, styles of

management & philosophy

conflict with the strategy?

Not at all No

conflict

[1]

May rarely conflict

[2]

Often may conflict

[3]

Continuous conflict

[4]

7. Is the existing organisation

compatible with the

strategy?

Very compatible

[1]

Needs few

changes

[2]

Needs many

changes

[3]

Not at all compatible

[4]

8. Are the organisation

resources capable of

implementing the strategy?

Very capable

[1]

Capable but slow

[2]

Need more

training

[3]

Not at all capable

[4]

9. Are there identified and

capable management to

implement the strategy?

Identified and

capable

[1]

A few undefined

[2]

Many undefined

[3]

Not defined in

strategy

[4]

10. What is the extent of

understanding of the

strategy in the company?

Well liked,

understood

[1]

Few staff against it

[2]

Many staff against

it

[3]

Unclear and disliked

[4]


Which of these conditions apply

to this company?

Major

strength:

Average

strength:

Average

weakness:

Major weakness:

1. What is the extent of the

strategic risks in this

strategy?

Minor risk

calculated

[1]

More risk

calculated

[2]

Risk not

calculated

[3]

Very high risk

[4]

2. Do the potential benefits

justify the risk involved to

implement the strategy?

Most definitely

[1]

Benefits

outweigh risks

[2]

Benefits equal

the risks

[3]

Benefits less than

risks

[4]

3. What are the

consequences of accepting

the risk and strategy and

failing?

Design new

strategy only

[1]

A minor money

loss

[2]

A major money

loss

[3]

Liquidation of

company

[4]

4. Does the strategy have any

effect on the company’s

image?

Significant

positive effect

[1]

Average positive

effect

[2]

Slightly negative

effect

[3]

Very negative effect

[4]

5. Are the key assumptions

realistic and aligned

realistic with the strategy?

Very realistic

[1]

Somewhat

realistic

[2]

Not very realistic

[3]

Not at all realistic

[4]

6. Can the industry growth in

the strategy be sustained

in the long-term?

Most definitely

[1]

Probable not

sure

[2]

Will start

declining

[3]

Will not be able to

[4]

7. How does product liability

affect the company with

this current strategy?

No effect

Insured in full

[1]

Minor liability

[2]

Increased liability

[3]

Maximum liability &

closure

[4]

8. Does the strategy allow for

market trends and

identification of fads?

Definitely

[1]

In slight depth

[2]

In little depth

[3]

Not at all (ignored)

[4]

9. Is the industry capable of

maintaining the required

growth rate?

Long-term

stability

[1]

Medium term

only

[2]

Short term only

[3]

Not able to at all

[4]

10. Are there any adverse

seasonal risks that the

strategy has ignored?

None at all are

left out

[1]

A few left out

[2]

Many left out

[3]

Totally left out

[4]

11. Are the complementary

companies involved in the

strategy stable?

Very stable

[1]

Stable

[2]

Changing

stability

[3]

Not at all stable

[4]


Which of these conditions

apply to this company?

Major

strength:

Average

strength:

Average

weakness:

Major weakness:

1. What are the overall

product returns

expressed as a

percentage of sales?

0 - 1 %

[1]

2 - 4 %

[2]

5 - 7 %

[3]

8 % +

[4]

2. What is the overall

internal product

rework as a % of

total production?

0 - 1 %

[1]

2 - 4 %

[2]

5 - 7 %

[3]

8 % +

[4]

3. Is the company

loosing sales due to

product failures &

what % of sales?

0 - 1 %

[1]

2 - 4 %

[2]

5 - 7 %

[3]

8 % +

[4]

4. Is the product line

too wide and

diversified to control?

Not at all

[1]

Wide but still in

control

[2]

Is getting out of

control

[3]

Cannot control

[4]

5. What percentage of

the product failures is

a result of product

design?

0 - 1 %

[1]

2 - 4 %

[2]

5 - 7 %

[3]

8 % +

[4]

6. Is there a formal

system such as ISO

2000 etc to ensure

product control?

Full system

[1]

Partial system

[2]

Putting in a

system

[3]

No system at all

[4]

7. Does the product

range have unique

features and benefits

over competition?

Lots more

f/benefits

[1]

A few more

f/benefits

[2]

Same as

competitor

[3]

Less than competitors

[4]

8. Does the company

have internal quality

service strategy

currently in its

strategy?

Very good

[1]

A few problems

[2]

Many problems

[3]

No internal service

[4]

9. Do product faults get

recorded and

eliminated?

Good follow up

systems

[1]

A few problems

[2]

Very weak

systems

[3]

No systems at all

[4]

10. Do service faults get

recorded and

eliminated?

Good follow up

systems

[1]

A few problems

[2]

Very weak

systems

[3]

No systems at all

[4]


Which of these conditions apply to this

company?

Major

strength:

Average

strength:

Average

weakness:

Major

weakness:

1. Current ratio =

Current assets have : owe Current

liabilities

2,2 : 1

[1]

1,8 : 1

[2]

1,3 : 1

[3]

0,9 : 1

[4]

2. Acid test ratio =

current assets (inventory) current

liabilities

1,8 : 1

[1]

1,2 : 1

[2]

0,9 : 1

[3]

0,6 : 1

[4]

3. Debtors days =

Trade debtors * 365

Credit sales

15 days on

average

[1]

30 days on

average

[2]

40 days on

average

[3]

50 days on

average

[4]

4. Creditors days =

Trade creditors * 365

Purchases or cost of sales

50 days on

average

[1]

40 days on

average

[2]

30 days on

average

[3]

15 days on

average

[4]

5. Number of days stock =

Finish stock * 365

Cost of sales

1 - 30 days

[1]

31-60 days

[2]

61-90 days

[3]

90 + days

[4]

6. Liquidity days measure =

creditors - Stock - Debtors

days- days-days

90 + days

[1]

61-90 days

[2]

31-60 days

[3]

0-30 days

[4]

7. ROI = net profit

fixed assets + current assets-current

liabilities

Far above

market % rate

[1]

Just above

market % rate

[2]

Below the

market % rate

[3]

Far below

market % rate

[4]

8. Return on capital employed

Profit before interest & tax capital

employed

Far above

market % rate

[1]

Just above

market % rate

[2]

Below the

market % rate

[3]

Far below

market % rate

[4]

9. Return on shareholders funds

Net profit after tax

shareholders funds

Far above

market % rate

[1]

Just above

market % rate

[2]

Below the

market % rate

[3]

Far below

market % rate

[4]

10. Gearing ratio

long term debt (ltd)

ltd + shareholders funds

0 – 20 %

[1]

21 – 40 %

[2]

41 - 60 %

[3]

60 % +

[4]

11. Debt : Equity =

Long term liabilities have : owe

Shareholders funds

1 : 2,2

[1]

1 : 1.8

[2]

1 : 1.3

[3]

1 : 0,9

[4]

12. Interest cover =

Profit before interest & tax

Interest paid

11-12 times

per year

[1]

8-10 times per

year

[2]

5-7 times per

year

[3]

1-4 times per

year

[4]


Which of these conditions apply to this

company?

Major strength: Average strength: Average

weakness:

Major

weakness:

1. Net asset turnover

Sales

Fixed assets + (CA – CL)

10 - 12 times /

year

[1]

8 –10 times / year

[2]

6 – 8 times / year

[3]

1 - 5 times per

year

[4]

2. Solvency ratio =

Total assets have : owe

Total liabilities

2,2 : 1

[1]

1,8 : 1

[2]

1,3 : 1

[3]

0,9 : 1

[4]

3. Fixed asset turnover =

Sales

Fixed assets

10 - 12 times /

year

[1]

8 –10 times / year

[2]

6 – 8 times / year

[3]

1 – 5 times per

year

[4]

4. Earnings per share(cents)=

Net profit after tax (cents profit per

share issued)

Number of shares issued

Excellent

[1]

Good

[2]

Average

[3]

Poor return

[4]

5. Earnings yield (%) =

Earnings per share

Market price per share

20 - 30 + %

[1]

15 - 19 %

[2]

9 - 14 %

[3]

0 - 8 %

[4]

6. Dividends yield (%) =

Dividends declared (%of dividend

paid against current share cost)

Market Price per share

20 – 30 + %

[1]

15 - 19 %

[2]

9 - 14 %

[3]

0 - 8 %

[4]

7. Gross profit percentage =

Gross profit * 100

Sales

Far above %

market rate

[1]

Just above market

% rate

[2]

Below the

market % rate

[3]

Far below market

rate %

[4]

8. Net profit percentage =

Net profit after tax * 100

Sales

Far above %

market rate

[1]

Just above market

% rate

[2]

Below the

market % rate

[3]

Far below market

rate %

[4]

9. Sales growth (%) =

Current-previous yrs sales

Previous year’s sales

3 - 5 + %

[1]

1.5-2.9 %

[2]

0.9-1.4 %

[3]

0 - 0.8 %

[4]

Discuss the key issues from above and the impact on the organisation

5. Internal Environment (Current situation) Complete the Value Chain

analysis for the organisation

The idea of a value chain was first suggested by Michael Porter (1985) to depict how customer value

accumulates along a chain of activities that lead to an end product or service. Porter describes the value

chain as the internal processes or activities which a company performs “to design, produce, market,

deliver and support its product.” He further states that “a firm’s value chain and the way it performs

individual activities are a reflection of its history, its strategy, its approach to implementing its strategy,

and the underlying economics of the activities themselves.”

Porter describes two major categories of business activities: primary activities and support activities.

Primary activities are directly involved in transforming inputs into outputs and in delivery and after-sales

support. These are generally also the line activities of the organization.

They include:

Primary Activities

inbound logistics—material handling and warehousing;

operations—transforming inputs into the final product;

outbound logistics—order processing and distribution;

marketing and sales—communication, pricing and channel management; and

service—installation, repair and parts.

Support activities

These are support primary activities and other support activities. They are handled by the organization’s

staff functions and include:

procurement—purchasing of raw materials, supplies and other consumable items as well as assets;

technology development—know-how, procedures and technological inputs needed in every value chain

activity;

human resource management—selection, promotion and placement; appraisal; rewards; management

development; and labour/employee relations; and

Organisational / firm infrastructure—general management, planning, finance, accounting, legal,

government affairs and quality management.

Conduct a SWOT analysis on the organisation’s current Value Chain.

Use these points below as a guideline:

They include:

Primary Activities






Support activities

These support primary activities and other support activities. They are handled by the

organization’s staff functions and include:

procurement—purchasing of raw materials, supplies and other consumable items as well as

assets;

technology development—know-how, procedures and technological inputs needed in every

value chain activity;

human resource management—selection, promotion and placement; appraisal; rewards;

management development; and labour/employee relations; and

Organisational / firm infrastructure—general management, planning, finance, accounting,

legal, government affairs and quality management.

Discuss the key issues from above and the impact on the organisation

6. Internal Environment (Current situation) Complete the Porters Four

Corners Model

Michael Porter’s Four Corners Model is a great tool that is used for better clarity of competitive

intelligence (CI), as compared to a SWOT Analysis. Although the Four Corners Model has been around

for some time, it is just beginning to become accepted as the go to method of forecasting the

competitions next moves. As part of any great CI analysis process, using the Four Corners Model will

allow companies to get actionable data on the direction that their competition is headed.

This is an advantage over the widely adopted model of the snapshot or static view that can be provided

by a SWOT analysis; competitor’s strengths, weaknesses, opportunities, and threats.

By tying the capabilities of a competitor to their underlying motivations for business success, the Four

Corners Model is able provide the necessary and actionable CI information with remarkable success.

Unlike the SWOT analysis that only gives you snapshot, albeit a very valuable glimpse, the Four

Corners Model is able to give a trend or predictive value of your competition’s possible course of action.

Drawing the data and analysis from financial goals, company culture, past business philosophies,

current organizational structure, and all of the other relevant CI sources, the model is able to trend the

competitor’s strengths, weaknesses, perceived culture, values, and assumptions on their current goals.

By looking at the motivations, capabilities, and assumptions, the Four Corner’s Model for CI analysis can

provide organizations with actionable predictions of the future actions or reactions of one or more of their

competitors. The accuracy of these predictions depend on the overall quality of data that is put into the

analysis, as well as the volume of data. As with any analysis, the key component to accuracy of the end

product, is the accuracy of the input data. Using the Four Corner’s Model in combination with the SWOT

analysis and a range of other CI analysis tools will give the best results, and provide your company with

a range of actionable data regarding your competitors.

Working to develop a competitive intelligence process that includes the Four Corner’s Model will ensure

that you have at least one predictive tool available. While it is great to know what your competition is

doing at the present moment, it is even more valuable to have an idea of what they are going to do next,

and how they would/will react in the future. It is important to iterate often with your CI process, so that

you can have the very best actionable information when you need it to make the most educated

decisions.

Summarise the key findings from the Porters Four Corners Model

7. Strategic positioning of the organisation (Current situation). Complete the

Porters Generic Strategic positioning Grid below and evaluate this positioning

decision.

The Generic strategies

Summarise the key findings from the Porter’s Four generic strategies

8. Benchmarking (Current situation)

Benchmarking

Best practices

A best practice is a technique, method, process, activity, incentive, or reward that is believed

to be more effective at delivering a particular outcome than any other technique, method,

process, etc. when applied to a particular condition or circumstance. The idea is that with

proper processes, checks, and testing, a desired outcome can be delivered with fewer

problems and unforeseen complications. Best practices can also be defined as the most

efficient (least amount of effort) and effective (best results) way of accomplishing a task, based

on repeatable procedures that have proven themselves over time for large numbers of

people.]

Select and discuss relevant best practices for the industry and your organisation.

Benchmarking is the process of comparing one's business processes and performance

metrics to industry bests and/or from other industries. Dimensions typically measured are

quality, time, and cost. Improvements from learning mean doing things better, faster, and

cheaper.

Benchmarking involves management identifying the best institutions in their industry, or any

other industry where similar processes exist, and comparing the results and processes of

those studied (the "targets") to one's own results and processes to learn how well the targets

perform and, more importantly, how they do it

Select and discuss relevant benchmarks for your organisation.

Gap Analysis

Based on the above analysis, identify the gap between the optimised allocation and integration of

the inputs, and the current level of allocation. This helps provide the institution with insight into

areas which could be improved. The gap analysis process involves determining, ‘where you

are now’ and ‘where you want to be’.

Part B: Creating the proposed strategy

STRATEGIC BUSINESS PLAN

for

(company name)

for Period

Approved by (name), (position), on (date)

Update Status: (amendment number), on (date)

TABLE OF CONTENTS

Some Thoughts on Writing this Plan before you Start

Clearly identify the readers of this document. Then write the plan in a style that is easily understood by readers

Remember that this plan is a working document that has the clear purpose of initiating focussed action and generating clear and measurable results. Avoid the excessive use of descriptive adjectives to 'pad' or over-sell the plan. Flowery, highly descriptive language can cloud key issues, blur the plan's focus and slow/confuse its implementation

Keep the plan 'tight'; ensure it remains concise, balanced, clear and logical. Where possible use quantitative rather than qualitative information. Remember the KISSS approach to planning; keep it simple, short and specific. Interlink all Sections, with the Market Analysis providing a clear focus for all subsequent sections.

Focus on facts and information from credible and reputable sources. Where possible avoid critical dependencies on one source of information. Build redundancy in to information sources. Validate, validate, validate all key information used in the plan

Always remember that faulty assumptions and faulty logic are some of the greatest hazards to business performance and business planning. Also remember that a good plan implemented today will always beat an excellent plan implemented some time in the future. So, get the plan completed and in to action as soon as is practicable. Also, plans must be adaptive to changing circumstances. If the plan is not performing be prepared to complete 'major surgery' on it.

Some Thoughts on a Format for Each Section

The following is a simple, but effective planning format that will fit many of the sections in this plan. The format is

not rigid and should be adapted to the requirements of individual Sections as applicable. The four sub-sections

that comprise the format are as follows:

Current Situation Clearly and concisely present the current situation with any contributing history, and any trends, cycles, changes

or future developments that are relevant

Key Issues Clearly define the most urgent and important issues as they relate to the current situation for this Section, and the

overall purpose of this plan and the company's Mission. Key issues are usually those strengths, weaknesses,

opportunities, threats, capability gaps and impediments that impact on business performance

Strategies to Address the Key Issues

Formulate strategies using the SMAAART acronym to address the key issues. SMAAART - Specific, Measurable,

Action-orientated, Achievable, Affordable, Relevant and Time-bound

Key Performance Measures and Targets Establish key performance measures/indicators, performance targets and time lines in conjunction with the

strategies to assess and improve performance

Five Tests for a Good Strategic Business Plan

Comprehension

Am I satisfied that all readers of this plan will clearly understand it?

Appropriateness

Am I satisfied that the strategic/business directions proposed are aligned with the

company's constitution?

Sustainability

Am I satisfied that the strategic/business directions proposed are of a nature and quality

that should ensure the future?

Feasibility

Am I satisfied that:

* All company implications of the strategic/business directions proposed have been

considered thoroughly,

* Implementation is possible, and

* All supporting goals, objectives and strategies are realistic, practically achievable,

affordable and comprehensive?

Accountability

Am I satisfied that:

* Management accountability is clearly defined,

* Management is adequately resourced and well prepared to implement this plan,

* Effective remedial action has been planned in the event a management shortcoming

occurs with plan implementation?

EXECUTIVE SUMMARY

The Executive Summary is the last section written. It should be restricted to two to three pages in length. In

essence the Executive Summary is a very effective distillation of the overall business plan into a 'hard hitting'

summary of key performance initiatives and performance targets. Typically it would include the following:

The Business Opportunity

Strategic positioning and strategies adopted

The Product

The Market Strategy

The Management Team

Profit and Cash Projections

Investment Needs

Returns to Investors

SECTION ONE

STRATEGIC FOCUS

The Aim of this Plan

What do we wish to achieve with this plan?…start, grow, consolidate, downsize or exit.

Our Mission

A Mission Statement clearly defines the primary purpose or reasons for our existence. It is heavily

focused on Customer Value. It is also vital to achieving organisational alignment

A mission statement typically provides clear and concise answers to the following questions:

What products and services do we deliver?

Where and when do we deliver our products and services?

Which customer groups are our primary groups?

Where are our primary customers

What tangible value do our products and services deliver to customers?

What is our competitive advantage?

What additional community and environmental benefits do we generate?

Answers to the above questions provide a start-point for preparing a statement that clearly positions the company

in the minds of key stakeholders and customers

Core Organisational Competencies

Which core organisational skills and competencies are vital to achieving our mission

Organisational Values

What core organisational values must be imbedded in our organisation to establish a culture capable of achieving

our Mission?

Highest Priority Goals

List up to six of your highest priority goals in order of priority. Use the SMAAART acronym to write clear, concise

action-oriented goal statements. SMAAART Goals - are Specific, Measurable, Action-oriented, Achievable,

Affordable, Time-bound. An example of a SMAAART Goal: By 30 June 2016 to construct and commission a

world-standard production and delivery facility capable of producing two 20 metre road bridges per month for

direct installation in to Alberton’s public road system.

In essence strategic goals progressively take the company to its next level of performance and keep it there.

Goal One.

Goal Two

Goal Three

Goal Four

Performance Objectives

The performance objectives below, in combination, form a performance scorecard for easily tracking the

performance improvements generated by this plan. Section 17 provides the inputs for this scorecard. The

planning team determines the composition of the performance scorecard.

Performance

Area

Performance

Measures

Target Time Frame

Financial

Performance

Customer and

Market

Performance

Internal Efficiency

and Effectiveness

Long Term

Development and

Innovation

SECTION TWO

THE BUSINESS

Provide a concise overview of the business. Areas for consideration when preparing this section to include:

Owners/Directors/Shareholders/Shareholdings

A brief history of the business

Corporate and business cultures

Nature of the business and it main activities

Location

Current stage in its life cycle

Past performance and key achievements

Key business advisors - Solicitor, Banker, Accountant, and Consultants

Relationships with key stakeholders

Competitive strengths and weaknesses

SECTION THREE

OVERVIEW OF THE INDUSTRY ANALYSIS

The long-term strategic plan is now to be created based on the segments key success factors, the Environmental and SWOT analysis. The key objectives are the:

o Elimination of weaknesses found through the above analysis.

o Changing of strategic plans to cater for the threats.

o Creating strategic plans to exploit the opportunities.

o Creating strategic plans to build on the current strengths.

o SECTION FOUR

STRATEGIES TO ADOPT

Select the Generic strategies

Select the revised (if required) Porter’s appropriate positioning from the four generic

strategies

TYPES OF ORGANIZATIONAL STRATEGIES TO ADOPT

Strategic planning takes place on three different and distinct levels: corporate, business, and

functional.

A. Corporate Strategy Corporate strategy is an organizational strategy that determines what businesses a

company is in, should be in, or wants to be in, and what it wants to do with those businesses.

1. There are three main types of corporate strategies:

a. A growth strategy is a corporate strategy that is used when an

organization wants to grow and does so by expanding the number of products offered or markets served, either through its current business(es) or through new business(es).

b. A stability strategy is a corporate strategy characterized by an absence of significant change in what the organization is currently doing.

c. A renewal strategy is a corporate strategy designed to address organizational weaknesses that are leading to performance declines. Two such strategies are retrenchment strategy and turnaround strategy.

2. Corporate Portfolio Analysis is used when an organization’s corporate strategy involves a number of businesses. Managers can manage this portfolio of businesses using a corporate portfolio matrix, such as the BCG matrix. a. The BCG matrix is a strategy tool that guides resource allocation decisions

on the basis of market share and growth rate of SBUs.

B. Business (Competitive) Strategy A business strategy (also known as a competitive strategy) is an organizational strategy

focused on how the organization will compete in each of its businesses.

1. The Role of Competitive Advantage. A competitive advantage is what sets an organization apart, that is, its distinctive edge. An organization’s competitive advantage can come from its core competencies.

2. Quality as a Competitive Advantage. If implemented properly, quality can be one way for an organization to create a sustainable competitive advantage.

3. Sustaining Competitive Advantage. An organization must be able to sustain its competitive advantage; it must keep its edge despite competitors’ action and regardless of major changes in the organization’s industry.

4. Michael Porter’s work explains how managers can create and sustain a competitive advantage that will give a company above-average profitability. a. Industry analysis is an important step in Porter’s framework. He says there

are five competitive forces at work in an industry; together, these five forces determine industry attractiveness and profitability.

Porter proposes that the following five factors can be used to assess an industry’s

attractiveness: 1) Threat of new entrants. How likely is it that new competitors will come

into the industry? Managers should assess barriers to entry, which are factors that determine how easy or difficult it would be for new competitors to enter the industry.

2) Threat of substitutes. How likely is it that products of other industries could be substituted for a company’s products?

3) Bargaining power of buyers. How much bargaining power do buyers (customers) have?

4) Bargaining power of suppliers. How much bargaining power do a company’s suppliers have?

5) Current rivalry. How intense is the competition among firms that are currently in the industry?

5. According to Porter, managers must choose a strategy that will give their organization a competitive advantage. Porter identifies three generic competitive strategies. Which strategy managers select depends on the organization’s strengths and core competencies and the particular weaknesses of its competitor(s). a. A cost leadership strategy is a business or competitive strategy in which

the organization competes on the basis of having the lowest costs in its industry.

b. A differentiation strategy is a business or competitive strategy in which a company offers unique products that are widely valued by customers.

c. A focus strategy is a business or competitive strategy in which a company pursues a cost or differentiation advantage in a narrow industry segment.

6. An organization that has been not been able to develop either a low cost or a differentiation competitive advantage is said to be “stuck in the middle.”

7. Subsequent research indicates that it is possible, though very difficult, for organizations that are stuck in the middle to achieve high performance.

C. Functional Strategy Functional strategy is the strategies used by an organization’s various functional

departments to support the business or competitive strategy.

MARKETING AND PRODUCT STRATEGIES

Apply the Ansoff’s Matrix

Igor Ansoff was a Russian/American mathematician who applied his work to the world of business. His

most famous work is the Ansoff Matrix. The purpose of this matrix is to help managers consider how to

grow their business through existing or new products or in existing or new markets. In this way he was

helping managers to assess the differing degrees of risk associated with moving their organisation

forward.

Marketing strategies

Ansoff’s matrix suggests four alternative marketing strategies which hinge on whether products are new

or existing. They also focus on whether a market is new or existing. Within each strategy there is a

differing level of risk.

The four strategies are:

1. Market penetration – This involves increasing market share within existing market segments. This can be achieved by selling more products/services to established customers or by finding new customers within existing markets.

2. Product development – This involves developing new products for existing markets. Product

development involves thinking about how new products can meet customer needs more closely and outperform the products of competitors.

3. Market development – This strategy entails finding new markets for existing products. Market

research and further segmentation of markets helps to identify new groups of customers.

4. Diversification – This involves moving new products into new markets at the same time. It is the most risky strategy. The more an organisation moves away from what it has done in the past the more uncertainties are created. However, if existing activities are threatened, diversification helps to spread risk.

How to maintain Market Leadership by applying the Strategy

Product Innovation : Launch new ideas and products constantly.

Quality Strategy: Design and sell products that are above average industry and customer requirements quality expectations.

Product Flanking: Produce or sell your product or service in different sizes or forms to satisfy the varying consumer demands. This gives your brand more shelf space and prevents competitors from moving into unmet needs in the market.

Multi-Brand Strategy: Market several brands in the same product strategy.

Brand Extension Strategy: Use your existing strong brand name to launch new products.

Heavy Advertising: Spend extensively on advertising.

Focus on New Trends: Keep up to date with market trends and fads required. This strategy requires technological innovation and extensive use of information technology.

Superior Service: Focus on providing unmatched customer services at consistent and well-controlled standards that are communicated to the marketplace. Exceed and delight consumers by beating their expectations.

Financing Strategies: Provide financial assistance to make the purchase as easy as possible.

Provide a Full Line Strategy: To provide a one-stop shopping experience.

SECTION FIVE

MARKETING

Based on discussions at previous sections develop a concise set of highly focussed marketing strategies

for your most attractive and highest priority markets. These strategies will guide your market entry,

market development, and brand building activities. Establish budgets for these activities. Set realistic

and measurable performance targets and time lines for each market entry/development strategy. These

targets are critical to designing and building business and production capacities aligned with expected

market demands on entry, and in to the future.

In essence marketing strategies in combination create the well differentiated, high value and compelling

proposition to customers that persuades them to purchase from you rather then a competitor. These

strategies should build on the competitive strengths of the company while exploiting the weaknesses of

key competitors. A highly competitive, high-value proposition to customers is typically created around

the following drivers of competitive advantage:

Product benefits highly valued by the customer

Product distribution eg, simple, speedy and easy customer-access to the product

Product promotion

Customer communication, interaction and feedback

Product support for the life of the product

Customer service

Product pricing and purchasing

Product presentation and packaging

Product compliance with all relevant legislation

SECTION SEVEN

CREATING A VALUE CHAIN STRATEGY TO DELIVER THE

STRATEGY

Discuss how the value chain will be used to deliver the strategy

Use these points below as a guideline:

They include:

Primary Activities






Support activities

These support primary activities and other support activities. They are handled by the

organization’s staff functions and include:

procurement—purchasing of raw materials, supplies and other consumable items as well as

assets;

technology development—know-how, procedures and technological inputs needed in every

value chain activity;

human resource management—selection, promotion and placement; appraisal; rewards;

management development; and labour/employee relations; and

Organisational / firm infrastructure—general management, planning, finance, accounting,

legal, government affairs and quality management.

Other key issues are typically identified following an evaluation of key production and delivery performance-

drivers. Typical areas to be addressed during this evaluation include:

- Plant design, location, size and site requirements

- Access to key manufacturing technologies

- Production capacity and capability requirements

- Criteria for selecting contractors and suppliers

- In-house versus out-sourcing of manufacturing requirements

- The manufacturing and production standards, codes, regulations and OH&S requirements that must

be complied with

- Equipment needs

- Inventory management

- Manufacturing processes - configurations and technologies

- Product and production costings

- Purchasing systems

- Quality control systems

- Manufacturing resources planning

- Material requirements planning

- Warehousing

- Scheduling and dispatch

- Material supplies and inventory

- Critical/key inputs to all manufacturing and production processes

- Risk management

- Key staffing and skills requirements

- Clear linkages to, and feedback loops with the company's marketing, product development, and R&D

functions

- Work systems and teams for staff

- Designing, testing and improving all production and delivery systems to meet market demands and

expected growth

- Key performance measures and targets for controlling and improving all production and delivery

systems to increase production efficiencies and effectiveness.

- Benchmarking and best-practice

SECTION EIGHT

BUSINESS SYSTEMS AND PROCESSES

Based on the plans/strategies developed and performance targets established in sections One to Eight identify

key issues - strengths, weaknesses and gaps - within the business systems and processes that drive business

performance. Then develop strategies to address these issues.

Performance reviews to improve internal business systems and processes typically include an assessment of the

following performance areas:

Quality Management (eg, ISO 9001 - Quality Standard, AS 4269 - Complaints Handling Standard)

Risk Management (eg, AS/NZS, Risk Management Standard)

Regulatory Compliance (eg, AS 3806, Compliance Program Standard) Information Management and Security (eg, Security Standard AS/NZS ISO/IEC 17799:2000)

Financial management Managing the environmental and social impacts of business operations

Performance improvement across the business, to include performance indicators and targets

Future planning and ongoing innovation (eg, new product development & process innovation)

Employee performance and morale

Stakeholder relationships

Board and management performance

SECTION 9

STAKEHOLDER RELATIONSHIPS AND ALLIANCES

Describe the current situation and list those key stakeholders that currently contribute to business performance.

Identify key issues - strengths, weaknesses and gaps - that relate to improving stakeholder relationships and

alliances. Then develop strategies to address each key issue.

Stakeholder groups typically include customers, suppliers of good and services, employees, regulators, the

environment, community, government departments and investors. Questions asked during the stakeholder

analysis include:

Are all of our key stakeholders clearly identified?

Who will become key stakeholders in the near future?

Are their expectations and requirements clearly understood?

Are they regularly consulted?

Are they kept updated, and involved in those business decisions that will affect them?

SECTION 10

ORGANISATIONAL AND MANAGEMENT

Current organisational structures and human resource capabilities will most likely require improvement

to meet these increasing business demands.

Areas to be addressed typically include:

Organisational Chart - show current structures and future structures

The Management team with brief resumes - show the situation now and in to the future

Staffing requirements - now and in to the future

Job descriptions and work design for management and staff - now and in to the future

Human performance standards, measurement and feedback - now and into the future

Management and staff training and development - now and in to the future

Recruitment and induction - now and in to the future

Encouraging innovation across the company

Providing leadership and building morale

Training needs analysis - now and in to the future

Occupational health and safety

Industrial relations

Wages and on-costs

Other relevant human resource issues

SECTION 11

ENVIRONMENTAL AND SOCIAL IMPACTS

Conduct the analysis and planning for this section across the following stages:

Current Situation

Key Environmental and Social Issues

Key Strategies

Performance Measures and Targets

SECTION 12

RISK FACTORS AND REGULATORY COMPLIANCE

Risk Management

Establish key risks to the overall business and its performance by identifying high priority risks within each

performance area represented by the sections of this plan. Quantify these risks by assessing the gravity of their

impacts on the business should they be realised, and determining the probability that they will be realised.

Following quantification of the risks establish an order of priority for their control. Then develop risk management

strategies - with performance measures, targets and time lines - that address the highest priority risks.

The Australian Risk Management Standard AS/NZS 4360 provides a good framework for conducting risk

management activities within this sub-section

Regulatory Compliance

Conduct an audit of regulatory compliance requirements across each area of the business as represented by the

sections of this plan. Develop strategies to address regulatory gaps and weaknesses. Australian Compliance

Programs Standard AS 3806 provides a good framework for developing an effective compliance management

system.

A regulatory compliance audit would typically embrace:

Corporate governance

Taxation

Superannuation

Employing staff

Health and safety

Trade Practices

Intellectual Property Rights

Environmental Issues

The Privacy Act

SECTION 13

CORPORATE GOVERNANCE

Areas to be addressed by this section typically would include:

Corporate Structures

Company Constitution

Board of Directors - Size and Composition

Duties and Responsibilities of the Board

Board Performance

Advisors to the Board

Shareholder Agreements

SECTION 14

FINANCIALS

Based on the strategies and plans formulated, costings calculated, and sales projected develop a set of financials

for the duration of the plan. These financials should include cash flows, profit and loss, balance sheets,

investment requirements, and key financial performance indicators and related performance targets.

SECTION 15

APPLICATION OF INVESTMENT FUNDS

This section should be linked to all prior planning and at minimum address the following:

What will be the total investment requirement across the duration of this plan - when and how much?

Which investors will be involved; how much will they provide and when will they provide it?

How will the funds be used at each round of investment?

What will the capital structure and ownership be after each round of investment?

SECTION 16

STRATEGIC ACTION PLAN

Primary Goals, Objectives and Strategies

The Aim of this section is to integrate all strategies developed across previous sections into a cohesive and

balanced plan of highly focussed action that will achieve the overarching purpose of this Strategic Business Plan.

Firstly…..High-priority, clear, action-orientated, time-bound and practicably achievable goals are formulated

around clusters of 'like' strategies developed across the previous sections. Goals mark a clear and well-marked

pathway for achieving the aim of this plan. To ensure the plan has a sharp focus the number of key goals should

be restricted to six or less when ever possible. A clear time frame and performance target should be integrated in

to each goal statement. An example of a goal statement: By 30 June 2002 to construct and commission a world-

standard production and delivery facility capable of producing two 20 metre road bridges per month for direct

installation in to Australia's public road system.

After each goal has been clearly formulated develop a set of supporting objectives and strategies. Objectives

define the best pathway for achieving each goal. Strategies define the pathway for achieving each objective.

Objectives and strategies are also written using the SMAAART acronym - Specific, Measurable, Action-orientated,

Affordable, Achievable, and Time-bound. The final step in developing an interacting hierarchy/network of

focussed action is the Task plan. This plan allocates people and resources to completing those tasks required for

achieving each strategy. Vital budget and resource considerations are integrated in to the overall planning

process to ensure all planned actions are affordable.

The interacting hierarchy/network of action for achieving the aim of the plan is illustrated below. The

hierarchy/network of focussed action is not a rigid structure and, where possible, should be adapted to the each

situation to ensure it provides fast, effective and relatively simple action pathways for delivering results of

significance.

Key Strategic Goal

Objectives to achieve the strategic goal

Strategies to achieve each objective

Task Plans to achieve each strategy

Plan Implementation

Typically management in consultation with staff and key stakeholders implements each Goal and its

supporting objectives, strategies and action/task plans. Balanced teams can be effectively employed to

implement strategies and supporting action/task plans.

The strategy-implementing function consists of seeing what it will take to make the strategy work

and reach the targeted performance on schedule-the skill here is being good at figuring out what

must be done to put the strategy in place, execute it proficiently and produce good results. The job

of implementing strategy is primarily a hands-on, close-to-the-scene administrative task that

includes the following principal aspects:

Building an organisation capable of carrying out strategy successfully

Developing budgets that steer resources into those internal activities critical to strategic success.

Establishing strategy-supportive policies.

Motivating people in ways that induce them to pursue the target objectives energetically and, if need be, modify their duties and job behavior to better fit the requirements of successful strategy execution.

Tying to reward structure to the achievement of targeted results.

Creating a company culture and work climate conducive to successful strategy implementation.

Installing internal support systems that enable company personnel to carry out their strategic roles effectively day in and day out.

Institute best practices and programs for continuous improvement.

Exerting the internal leadership needed to drive implementation forward and to keep improving on how strategy is being executed.

The administration aim is to create "fits" between the way things are done and what it takes for

effective strategy execution. The stronger the fits, the better the execution of strategy. The most

important fits are between strategy and organisational capabilities, between strategy and the

reward structure, between strategy and internal support systems, and strategy and the

organisations culture (The latter emerges from the values and beliefs shared by organisation

members, the company's approach to people management, and ingrained behaviors, work

practices and ways of thinking).

Fitting the ways the organisation does things internally to what it takes for effective strategy

execution helps unite the organisation behind the accomplishment of strategy.

SECTION 17

PLAN IMPROVEMENT

Performance Measurement

The plan's performance should be assessed against its effectiveness in achieving its high priority goals

and performance targets.

Apply the Balanced Scorecard

The balanced scorecard is a strategic planning and management system that is used extensively in

business and industry, government, and nonprofit organizations worldwide to align business activities to

the vision and strategy of the organization, improve internal and external communications, and monitor

organization performance against strategic goals. It was originated by Drs. Robert Kaplan (Harvard

Business School) and David Norton as a performance measurement framework that added strategic

non-financial performance measures to traditional financial metrics to give managers and executives a

more 'balanced' view of organizational performance. While the phrase balanced scorecard was

coined in the early 1990s, the roots of the this type of approach are deep, and include the pioneering

work of General Electric on performance measurement reporting in the 1950’s and the work of French

process engineers (who created the Tableau de Bord – literally, a "dashboard" of performance

measures) in the early part of the 20th century.

Gartner Group suggests that over 50% of large US firms have adopted the BSC. More than half of major

companies in the US, Europe and Asia are using balanced scorecard approaches, with use growing in

those areas as well as in the Middle East and Africa. A recent global study by Bain & Co listed balanced

scorecard fifth on its top ten most widely used management tools around the world, a list that includes

closely-related strategic planning at number one. Balanced scorecard has also been selected by the

editors of Harvard Business Review as one of the most influential business ideas of the past 75 years.

The balanced scorecard has evolved from its early use as a simple performance measurement

framework to a full strategic planning and management system. The “new” balanced scorecard

transforms an organization’s strategic plan from an attractive but passive document into the "marching

orders" for the organization on a daily basis. It provides a framework that not only provides performance

measurements, but helps planners identify what should be done and measured. It enables executives to

truly execute their strategies.

This new approach to strategic management was first detailed in a series of articles and books by Drs.

Kaplan and Norton. Recognizing some of the weaknesses and vagueness of previous management

approaches, the balanced scorecard approach provides a clear prescription as to what companies

should measure in order to 'balance' the financial perspective. The balanced scorecard is a

management system (not only a measurement system) that enables organizations to clarify their vision

and strategy and translate them into action. It provides feedback around both the internal business

processes and external outcomes in order to continuously improve strategic performance and results.

When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise

into the nerve center of an enterprise.

Kaplan and Norton describe the innovation of the balanced scorecard as follows:

"The balanced scorecard retains traditional financial measures. But financial measures tell the story of

past events, an adequate story for industrial age companies for which investments in long-term

capabilities and customer relationships were not critical for success. These financial measures are

inadequate, however, for guiding and evaluating the journey that information age companies must make

to create future value through investment in customers, suppliers, employees, processes, technology,

and innovation."

Adapted from Robert S. Kaplan and David P. Norton, “Using the Balanced Scorecard as a Strategic

Management System,” Harvard Business Review (January-February 1996): 76.

Perspectives

The balanced scorecard suggests that we view the organization from four perspectives, and to develop

metrics, collect data and analyze it relative to each of these perspectives:

The Learning & Growth Perspective

This perspective includes employee training and corporate cultural attitudes related to both individual

and corporate self-improvement. In a knowledge-worker organization, people -- the only repository of

knowledge -- are the main resource. In the current climate of rapid technological change, it is becoming

necessary for knowledge workers to be in a continuous learning mode. Metrics can be put into place to

guide managers in focusing training funds where they can help the most. In any case, learning and

growth constitute the essential foundation for success of any knowledge-worker organization.

Kaplan and Norton emphasize that 'learning' is more than 'training'; it also includes things like mentors

and tutors within the organization, as well as that ease of communication among workers that allows

them to readily get help on a problem when it is needed. It also includes technological tools; what the

Baldrige criteria call "high performance work systems."

The Business Process Perspective

This perspective refers to internal business processes. Metrics based on this perspective allow the

managers to know how well their business is running, and whether its products and services conform to

customer requirements (the mission). These metrics have to be carefully designed by those who know

these processes most intimately; with our unique missions these are not something that can be

developed by outside consultants.

The Customer Perspective

Recent management philosophy has shown an increasing realization of the importance of customer

focus and customer satisfaction in any business. These are leading indicators: if customers are not

satisfied, they will eventually find other suppliers that will meet their needs. Poor performance from this

perspective is thus a leading indicator of future decline, even though the current financial picture may

look good.

In developing metrics for satisfaction, customers should be analyzed in terms of kinds of customers and

the kinds of processes for which we are providing a product or service to those customer groups.

The Financial Perspective

Kaplan and Norton do not disregard the traditional need for financial data. Timely and accurate funding

data will always be a priority, and managers will do whatever necessary to provide it. In fact, often there

is more than enough handling and processing of financial data. With the implementation of a corporate

database, it is hoped that more of the processing can be centralized and automated. But the point is that

the current emphasis on financials leads to the "unbalanced" situation with regard to other perspectives.

There is perhaps a need to include additional financial-related data, such as risk assessment and cost-

benefit data, in this category.

Plan Review and Up Date

To ensure the plan continues to provide a sharp focus and remain responsive to change it should be

formally reviewed and updated every six months, at the achievement of a Strategic Goal and at any

other time deemed necessary. Implementation of this plan is to be a fixed agenda item at meetings of

the Board of Directors.

REFERENCES:

Asheeq Lombard, Principles of Strategic Management: Assignment, 2014

University of the Witwatersrand., (2014)., Overview of the Faculty of Commerce, Law and Management.,

last accessed on November 10, 2014, http://www.wbs.ac.za/download.php?data_id=396

Wits Business School., (2014)., WBS Vision and Mission., last accessed on November 10, 2014, from

http://www.wbs.ac.za/download.php?data_id=396

Dennis Laxton., (2014)., Principles of Strategic Management (power point slides)., pp 1-180, Wits Business

School.

Business Daily Live, last accessed November 10, 2014, from

http://www.bdlive.co.za/articles/2011/12/22/sa-s-business-schools-ranked-tops-again

2013/2014 QS Global 200 Business Schools Report

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