Sun Tzu: Your competitor is around the corner what you must do?

Grand strategist ever to live, Sun Tzu gives nuggets of advice on strategy in easy to understand idiom. When you are faced with a new and strong competitor around the corner how you must proceed. Sun Tzu guides you:

If you wait it out thinking that the competitor would move away without fight to finish you are just day-dreaming.  By remaining in friendly terms and talking to you on building relationship he is practising classic deception. First and foremost you must do what Sun Tzu advises: In war, practice dissimulation, and you will succeed. That is concealing your intention, plan and business strategy. Let him grope in the dark. Like in war business cannot conceal its capabilities. None the less, a firm is always advised to keep its intention unknown to competitors.

Fighting straightaway by cornering the competitor is of no avail. Because Sun Tzu says: If you lay siege to a town, you will exhaust your strength. You have to unnecessarily spend time and labour in keeping your competitor under check 24/7 and 360 days. But at the same time if you wait till you can garner sufficient resources to have frontal attack on a future date you are committing hara-kiri. As Sun Tzu tells: If you set a fully equipped army in march in order to snatch an advantage, the chances are that you will be too late. So you have to find via-media that slowly and steadily destroys the competitor.

How can do this? You must simply tweak your strategy so that the enemy is placed in an un-favourable situation and you get a favourable situation. For example, assume both you and competitor use a key supplier on critical material. You sign-up with this key supplier on exclusive, priority and favourable terms secretly. This classic move is given to you by Sun Tzu when he commands: By altering his arrangements and changing his plans, he keeps the enemy without definite knowledge.

Now that you have got at the jugular vein of the competitor, expand your sales by engaging in marketing campaign extolling your product and bring substitutes products including the one supplied by the competitor under mild rebuke.

Now the balls are set rolling. Be in your elements, maintain composure pretend that everything is normal with you. Gleefully remember what Sun Tzu raps on your shoulder: Disciplined and calm, to await the appearance of disorder and hubbub amongst the enemy: this is the art of retaining self-possession.

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist

Ten characteristics of effective business policy

Principles, norms, rules and standards brought together as guidelines for conducting a business is what business policy stand for. Such a business policy must lead the operators of business to make proper action and decision. To be effective as business policy it must have ten characteristics.

1. Broad but specific: Guidelines given in a business policy statement must stipulate what is required to be done, in broad manner but in specific words

2. Clear but concise: Issues surrounding business conduct must be explained with clarity but in nutshell without digressing or loading too many ideas that border on ambiguity

3. Uniform yet flexible:  Norms and principles need to be uniformly applied by the operators of business policy. Never the less, there must be a degree of flexibility in-built so that operators have the freedom to go up or down  in executing policy as circumstanced dictate

4. Simple yet comprehensive:  The business policy statement must be written in simple language using straightforward idiom without sacrificing sufficient details

5. Stable yet adaptable:  One thing that makes business policy unique and sacrosanct is the stable manner it is enshrined and implemented. Policy remains static but practice differs. This we call as adaptability factor in a policy statement. Once again it is the circumstances that shape adaptability which cannot be forecast or predicted at the time of penning business policy document

6. Directional:  Policy gives the operators the direction where to go and how to go. It prods them how to proceed under “if and when” scenario

7. Dependable:   Operators must get an impression and confidence too while implementing business policy. More so, in planning & control of business where operators If they feel they cannot depend on the policy to guide them have to run around like headless chicken

8. Internal consistency: This requirement is a must for any document whether it is policy statement or accountancy reports. For example, in a discount policy, operators in production and marketing departments are advised how it will be consistently applied. Otherwise there could be clash between these two departments

9.  Multiuse: Business policy is not restricted to one department or single activity. It entails every activity that is done in the conduct of business without brooking delay, negligence and postponement on the part of anyone in the firm

10. Delegates authority: A business policy works well only when it delegates authority to heads of departments to do what is required of them. Such delegation must be hierarchical with allowable limits and referrals when exceeding limits.

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist

Quick guide to engines and driving forces in business strategy

There are four engines in business strategy: create value, deliver value, capture value and corporate value. Each engine has four driving forces under its control. Here is the scheme of engines and associated driving forces in business strategy:


Engine: Create value

This engine propels the production or operation function of a firm. Creating value is its ultimate purpose. This engine has four driving forces: 

1. Product its features and functions

2. Production capacity that includes capabilities, operational excellence, cost effectiveness, critical components and key activities

3. Resources supplies, utilities, support services along with human intervention bringing out the finished product

4. Technology includes innovation, research & development to keep the product updated and in-form.

Engine: Deliver value

This engine masters the marketing function of the firm. Delivering value is the key purpose. This one too has four driving forces:

1. Market needs assessment

2. Segmentation of the market in terms of assessment, demography, geography and purchasing power

3. Customer relationship using different ways in capturing, holding and nurturing customers to enshrine loyalty and ensure repeat purchasing patterns

4. Channels that cover sales, distribution, after-sales service.

Engine: Capture value

This engine is concerned with the finance function. Capturing value is the key purpose. It has four distinct driving forces:

1. Cost leadership where the final tally of cost of production and ex-sale cost is efficiently managed

2. Revenue stream that brings out the net profit, return on investment and return on equity

3. Pay-out to equity shareholders in the form of dividends

4. Efficient management of borrowed-funds to lessen interest burden.

Engine: Corporate value

This engine is concerned with the firm as a whole. Up-building corporate value is the guiding purpose. It has four driving forces:

1. Retention of profit to be ploughed back into business to enlarge size of operation

2. Capitalizing on the geographical expansion of the business

3. Enhancing growth of firm horizontally and vertically

4. Futuristic philosophy that entail survival even when faced with innovative disruption by competing firms.

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail:   cosmicgems@gmail.com

Blog:   Business Strategist