Facts about strategy formulation you would not have learnt

Corporate management spend quite a lot of time on crafting useful business strategy. In doing so it undoubtedly dwells on analysing the external environment. Strategy formulation follows as the next logical step only if the assessment is thorough, impartial and objective, as this blog post illustrates: 

Understanding external environment mandates that company looks at the players as well as the elements prevailing in the market. How the overall industry behaves is only one part of the assessment, the vital other part is how the market leader conducts his business. How he foresees trends and discernible changes that would break out in near future. Would these changes impact the present state of affairs positively or negatively under normal conditions?

Equally important, is the elements that play out in the market at the present moment and in the foreseeable future. Amongst many of these elements, the following stand out in terms of significance and overall impact: 

a) Social dynamics and demographic structure cast a spell over buying patterns within a market

b) Technology used at present and innovations that are likely to take place in future. Whether these innovations could be disruptive to existing players

c) Size of the market and how the likely growth under normal circumstances compares with the aftermath of major innovations hitting the market

d) How the capacity of the existing players would function? Will there be appreciable changes in enhancing booked capacity and/or utilization level of overall capacity. Put differently, will there be a state of excess capacity that could drag down the efficiency of the players

e) Finally, in the downstream, how the barriers of entry works to stop unwanted new entrant flooding the market with cheap goods, becomes major challenge. The path ahead is rosy or not depends on the interplay between the current participants in the market and the potential new entrants into the market.

 

Cheers! 

 

Muthu Ashraff

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist

 

 

Strategy formulation: Five serious issues demanding your attention

Formulating business strategy is not the type of task for amateurs. As a business strategist you have to be serious about six issues before you ever undertake strategy formulation. These six issues are of “make or break” nature demanding serious attention from corporate management:

1. First of all you must be very clear about the internal dimension of the business you are in. Significantly the major part of this dimension is connected with human interaction. Whether you go for top down or bottom up approach you have to understand that, the personal dynamics of the organization is the key factor. Being friendly with staff, you must understand how they are motivated to work and how they are driven to achieve set goals.

2. Alertness is key for assessing strengths and weaknesses of staff members. You must be super intelligent to recognize the nuances of their speech, rhythm of body language, shades of opinion, nature of attitude and finally quality of efforts. This is where you waddle between skills and drive. For example, the most talented or articulate person in your business may not have similar level of dedication towards his job!

3. Getting into critical point quickly is the next issue meriting your attention. Time is always limited and you must be trained to find the “fruit covered by leaves”. Unless you can get a hang of what the staff are trying to convey and the finer points that they mention or allow you to draw without even uttering tem, you will continue to read the leaves and miss the fruit.

4. Thinking strategically is the issue most of us talk about but never get it right. You have to master strategic thinking by envisaging how the future course of action evolves and how beneficial it is to the business and its stakeholders, including the staff members. Smart thinking apart, you must be able to communicate with others how the future is going to be and  what resources and technology would be required along with the type of new skills the business must develop in order to cope up with future demands.

5. Creative solution to problem is an area where an accomplished business strategist excels. Here the strategist must follow a set of analytical tools available in the public domain as well as his own proprietary tools that he keeps to himself. Box type strategic tools promoted by consultancy firms are of limited use in this ever changing business environment. Incidentally, major breakthrough in product innovation has come into light not by using any of these box type tools but by innovative and imaginative thinking. Success of Starbucks coffee is a fitting example!

 

Cheers!

 

Muthu Ashraff

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist

Three questions you must answer before crafting business strategy

Business strategy is serious affair because you have got to answer three questions before you really start formulating strategy. Unless you get the right and most importantly honest answers to the three questions you will not be able to do an effective strategy formulation.

1. Where were you?

This question solicits precise answer about your concept of your business, your business policy and your past performance in terms of product line, target market, customer capture & retention, revenue generation, bottom line and how you have fared in terms of sales growth and beating your nearest competitor. You have to give a pecking order where you are exactly placed. If you are not on the top five you must explain where you are lagging: in the product features or market structure.

2. Where are you now?

This must sum up your present state of affairs in terms of cost-revenue dynamics, product line, market share and the structure of market itself. According to BCG Matrix you may fall into one of the categories:  Stars, Cash-cows, Question Marks, and Dogs. Assume you are in the square of question marks. This is the space for firm with low market share in a high-growth market. If you are in this sector there is big potential for breakthrough with suitable strategy to succeed as market leader in the future.

On the contrary, if you are in the low market share in a fairly mature market with average growth then you are dubbed as dogs. You must review your position and progresses objectively so that you know exactly where you are now.

3. Where you wish to go?

I am not suggesting that you can catapulted from dogs to stars overnight. But with the same objectivity guiding you, quietly work on where you can go from here to somewhere you are comfortable in terms of product improvement or innovation that satisfies a need presently observed in the market or a need you can create in the market by yourself.

Secondly, you must tabulate in terms of time scale what products you are going to introduce, what market share you wish to have and how realistic are your expectations in terms of market penetration & success that can come in the wake of your promotional campaigns.

Thirdly, you need to assess  finance, human resource, logistics required for you to operationalize you program of action along with ascertaining the risks associated with it and the revenue profile you would have generated in the future. When this is complete you have already got details necessary for your strategy formulation.

 

Cheers!

 

Muthu Ashraff

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist

This is what happens when you use conceptual thinking for strategy formulation

Whether you are in politics, military or business you cannot do without training yourself in the art of conceptual thinking. More so, in the case of business strategy formulation where conceptual thinking is much needed as you face market that is in constant state of flux. You have to get the right business strategy. And that comes only out of conceptual thinking.

First and foremost aspect that you notice when you apply conceptual thinking is the understanding of underlying relationship of all factors. Searching for new and existing elements, surveying individual elements, setting how these elements go for backward or forward integration, setting patterns and trends in order to understand connection and relationship are some of the processes that you can perform easily. More often than not, a conceptual thinker lands on a connection between and amongst the factors that were never perceived to exist previously.

Issue recognition is yet another feature of conceptual thinking that contributes immensely towards strategy formation. In business strategy, conceptual thinking guides you to move in tandem by listing all known issues even checking on for any other un-known ones or known but un-fathomed ones. It sheds light over identifying important or critical variables and prods you to go deeper into analysing these with a view to get the right variables in place resulting in an effective business strategy.

Last but not least is that you are able to produce business strategy that is logical & rational taking into count the needs of the market place, goals of the company and the development of product/service so that you are able to get the perfect  value proposition. As a bonus, you also can configure aspects of strategy implementation and strategy evaluation within your business strategy document.

 

Cheers!

 

Muthu Ashraff

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist